Executive Interview Series on Growth

Axel Scherer

Axel Scherer, Neches Professor of Electrical Engineering, Medical Engineering, Applied Physics and Physics at Caltech, and Director of the Caltech Global Health Initiative.

Growth Through Disruption: Leveling the field with game-changing technology


By Colin White, PhD, President Invetech

Technology is always promising to deliver something tomorrow that is not available today. It is this promise that underpins growth-oriented investments in fundamental research and breakthrough product development. In IVD, one such promise is personalized medicine, where an individual's genetic information is used to predict disease development, thereby enabling tailored-to-fit treatments.

As the Neches Professor of Electrical Engineering, Medical Engineering, Applied Physics and Physics at Caltech, as well as being the Director of the Caltech Global Health Initiative, Axel Scherer strives for research outcomes that would bring personalized medicine to routine clinical practice.

Professor Scherer's research focuses on the design and micro-fabrication of optical, magnetic and fluidic devices, with revolutionary findings in the miniaturization and demonstration of microfluidic "laboratories" and single cell analysis systems.

Professor Scherer has co-founded several companies in the area of silicon photonics and biomedical diagnostics, as well as co-authoring over 300 publications with over 50 patents on the area of micro-fabrication and more generally the design of devices.
Given my own firm belief that new technology can disrupt markets and bring dramatic growth for companies commercializing these technologies, I am very pleased to be catching up with Professor Scherer today as part of Invetech's Executive Series on Growth.


Colin: Axel, good morning, and thank-you for your time.

Axel: Good morning Colin. How are you doing?

Colin: I'm doing very well, thank you.

Axel, I thought just by way of background, it might be appropriate if you gave a thumbnail sketch of your group at Caltech. What is its role and how does it operate?

Axel: We have a group at Caltech where we are trying to miniaturize devices. We have about 15 students and post-docs that are working on various projects to miniaturize a variety of different devices, ranging from tiny silicon structures (that we make into transistors and lasers) to diagnostic tools. The group consists of an interdisciplinary selection of people doing electrical engineering, physics, biology and chemistry. The idea is to build systems, and we commercialize as we go. We have a couple of devices that have made it into companies; one of them being a silicon photonics company, and more recently, a qPCR molecular diagnostics company.

Colin: The field certainly is evolving both technically and commercially. Looking forward, what opportunities do you see for new diagnostic devices and in what particular applications?

Axel: Yes, over the last 30 years or so, the methods for detecting diseases have developed. They were originally focused on identifying diseases by using the molecular signature of the DNA. These fingerprinting techniques have now gotten to the point where they are available for clinical use, and there are a lot of assays available to measure all sorts of different diseases. We are very interested in building more efficient, less expensive systems that allow us to use these molecular diagnostics tools. As you might know, a couple of years ago you would have had these devices in hospitals and big laboratories, but right now we are trying to push these kinds of devices closer to the patient, or what we would consider the point-of-care. In order to do that, we need to automate these systems so that you can actually operate them in places that don't have the labor, skills or technique support that is available in these medical centers.

Colin: Do you see that trend continuing, that trend towards point-of-care use for some of these devices?

Now the point-of-care is shifting towards the supermarket pharmacies and ultimately to the family physician. At the very end, the point-of-care may be in our homes.

Axel: Yes, I see the point-of-care evolving.The point-of-care used to be for the patient going to the hospital or to the medical center, and now the point-of-care is shifting towards the supermarket pharmacies and ultimately to the family physician. Now the point-of-care is shifting towards the supermarket pharmacies and ultimately to the family physician. At the very end, the point-of-care may be in our homes. The idea is that we are trying to make it easier for the patient to get the care. For example, right now the process is that if I go to the doctor's office to get a blood test, he or she would tell me that I have to go to a phlebotomist where I give my blood. Then I wait for a while not knowing the answer of the blood test until a couple of days later. So the idea is that nowadays you would want to make this more convenient. You'd have a one-stop shopping: you go to the pharmacy, get your blood test taken, then immediately get results so as to purchase the appropriate medication.

Colin: Certainly as a time-poor person, the idea that it can all be done at the one place is very attractive. I know one of the barriers to realizing the point-of-care vision is often cost and making it as cost-effective for the single sample as it would be through a high volume laboratory. Do you have any perspective on this? Do you think the costs can be done on a competitive basis?

Axel: Yes, there are two types of costs. The one cost is the instrument cost, which tells you how much the instrument is worth, as well as how much it takes to build one. The other cost is the running cost, which are the costs for laboratory technicians doing the work on sample preparation and so on. Both of these really have to be reduced in order to get the systems into, for example, the Supermarket Pharmacy. We do that by automation and by building these systems in a way similar to how we would build a consumer electronic system.

U.S. healthcare costs, as you know, have increased over the last 50 years by over 8 times. At the same time, if you just look at our salaries (adjusted for inflation), they have only increased by 12% or so. At the same time, we see this trend in the electronics consumer industry where we have this massive miniaturization, with the great capabilities that we now have in cell phones and laptops, and what we would like to do is take advantage of this technical improvement to deal with these increasing healthcare costs.

Typically, I tell my students that there probably shouldn't be a big difference between a DVD player (which you can buy at the store for $49) and a PCR machine, because a PCR machine actually has fewer components and is not as difficult to build. But we still see that PCR machines costs about 1000 times more than DVD players. So we'd like to change that. The big problem for this kind of technology introduction has been that at the moment you introduce new technology into the healthcare system, you actually have an improvement in the patient's outcome…but you also have an increase in the cost of healthcare. We would like to reverse that trend and build systems where technology allows us to save money, rather than spend more.

Colin: Yes, certainly the DVD player is an interesting example, and I would agree that the complexity of the two products is not that far apart. But clearly the demand for DVD players and volume in which they are produced is significantly higher. Do you see any encouraging signs from the technology side that would allow PCR machines be cheaper or the same price as DVD players in the future?

Axel: Yes, I think that is the great opportunity here. The PCR machine is more expensive because there is a small market for it, and it's also a heavily regulated market.

However, the interesting opportunity is that as patients take the healthcare into their own hands, there will be opportunities for patients to use molecular diagnostics much the same way they would consume electronic devices.

For example: if I could measure something like whether I would have a heart attack in the next three days, then I might be persuaded to buy an instrument that might allow me to make sure that I don't get a heart attack…or if I do have one, I can take the appropriate medication and see my cardiologist. This turns out not to be just fiction; there are people working on building assays that predict things like heart attacks.

We are working with Eric Topol, a cardiologist at Scripps, and he is developing a test just like this where you can predict heart attacks a couple of days in advance.

If you have those kinds of applications, then it becomes very easy to convince people to use these kinds of tests in order to monitor their own health. If the devices are in the same order of cost as a game machine or some sort of video game system, then people are going to buy them.

Colin: Certainly at my age and physical condition, I would be motivated to purchase such a thing. I just wanted to come back to the question: do you think you could build such a system for something of the order of a few hundred dollars?

Axel: Yes. It's very interesting, because if you take away all the development costs, the instruments themselves don't cost that much, so you can build a system for about $500 (a qPCR machine, for example). For about $800, you can build a system that is fully automated. We have actually developed these kinds of systems, and the Bill and Melinda Gates Foundation support our work. The main application was initially to use these systems in the developing world where there is a huge demand for doing pathology tests for infectious disease, but there is not enough technical capability to prepare samples.

In many ways, what we have been able to do is build a completely automated system at a reasonably low cost. The biggest issue in the developing world is the infrastructure where samples can't be easily moved into major medical health centers, so there is limitation to centralizing blood laboratories. It's much better to work sample-to-answer in real-time systems at the point-of-care. Now, what is interesting is that we've come full circle to where these systems are quite useful also at home.

Colin: Indeed, it's a very interesting trend, where do you see it moving in our medical care system?

We are starting to empower the patient with getting information to manage their own medical condition efficiently

Axel: We are starting to empower the patient with getting information to manage their own medical condition efficiently, so that you don't have to go to the doctor's office and wait in line and so on and so forth. If we build these systems, we can actually have a patient that can monitor himself or herself. We can, through digital medicine, then compare our own medical condition with millions of other people who have had similar medical conditions. We can make sure that we have very precise amount of medication, so that we don't over-medicate or under-medicate ourselves.

That's precision management – you can't do that if you don't have the feedback. So we are building these systems to build the feedback that allows patients to medicate themselves. And this is not unusual. It turns out that for decades, diabetes patients have been empowering themselves to inject their own insulin and to dose themselves by using glucometers. We also built these kinds of glucometer systems that allow us to measure continuously, for things like metabolism, blood glucose and many others. If you can do that, you end up having capability that allows the patient to establish a baseline, and then they can medicate themselves.

Colin: Yes, I am quite familiar with the glucose-monitoring market, having worked in that area. Typically you would see the patient wearing a patch that measures the glucose concentration and then having that transmitted to a reader. How do you see that translate into more general disease monitoring?

Axel: The general continuous glucose monitors use specific enzymes that allow the glucose to convert into ions readable with a potentiostat. What we can do is easily change that enzyme from glucose oxidase (or some molecule like that) to a different type of enzyme that measures other metabolites. For example, there is a lactose oxidate that has been developed that could replace those patches by functionalizing with different enzymes.

These devices have to be small, implantable without surgery, and be capable of functioning for long periods of time.

In our group, we're trying to go one step further and say, ok, we'd like to increase the longevity of these devices to several months. What that requires is to make fully implantable systems that allow us to avoid the risk of infection. These devices have to be small, implantable without surgery, and be capable of functioning for long periods of time. We actually have done a lot of work in creating these kinds of systems and building them at a relatively low cost. This will allow us to then do disease-monitoring where we can measure what happens to our body. The opportunity is that we don't then just look at the disease state; we can look at our baseline—our healthy state—and compare it with the diseased state.

Colin: Yes, the idea of health monitoring, or monitoring a person's normal state, is quite exciting. Do you think that this will be the precursor to getting to truly preventative healthcare?

Axel: Yes, I do. We all know the quote "an ounce of prevention is better than a pound of cure"— phrase was coined, I think, by Henry de Bracton in 1240 – a long time ago! Since then, we have all been trying to figure out how to predict and avoid disease. We are very close to this, because we can predict if we have a deviation from our baseline at the very earliest stage of a disease. At that point, it is still possible to treat the disease with the least invasive approach.

We have the method and technology now to do health-based medicine, rather than disease-based medicine.

What I am suggesting here is that we have the method and technology now to do health-based medicine, rather than disease-based medicine, where we can identify our healthy state and then measure our metabolism and see whether we deviate from it. If we are predisposed to a number of chronic diseases, like heart disease, cancers, or diabetes, we can now have the instruments that allow us to identify if we are going down into a diseased state and then we can correct it early on.

Colin: While the vision is exciting, I think we can both acknowledge that the challenges of maturing and commercializing these types of new technologies are often underestimated from an investment, skills and timeline perceptive. What is your advice to companies who want to participate in this new era of personalized medicine?

Axel: I think we all have to change our mindset in the health diagnostics field to try to reduce cost and to do it in the same aggressive way that people that are doing consumer electronics are reducing costs. The cost of healthcare, as I mentioned, often times increases as we introduce technology: every time a new technology is introduced, even though the care improves, the cost increases. So what we would like to do is reverse that trend; in order to do that, we have to look at the entire system. We have to look at not only the instrument cost, but also who is going to using the instrument. Is it the patient, is it going to be a nurse or somebody in a pharmacy? Then we have to automate the systems accordingly.

The idea is that we can now build these systems, and we can use the capabilities that have evolved in the consumer electronics market to build these systems at a relatively low cost. I think there are going to be lots of players making these kinds of lower-cost systems.

In order to build these systems and be competitive, the instrument costs and automation are very critical.

Colin: Axel, your vision is certainly an exciting one, and the progress you have made is a credit to you, your colleagues, and the teams that work with you. Many thanks for speaking with me today.

Axel: Thank you Colin, it's really a pleasure to talk to you about something that I really enjoy.

Colin: Terrific, thank you very much.