Verb Surgical - Surgery in the Digital Age

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THE MEDTECH STRATEGIST © 2016 Innovation In Medtech, LLC. All rights reserved.

10 SURGICAL ROBOTICS

Verb Surgical— Surgery in theDigital Age

KEY POINTS

n Johnson & Johnson and Verily, Google’s life

sciences company, have joined together to

create Verb Surgical, which hopes to develop

a new plaorm in surgical robocs that blends

Ethicon’s experse in surgical devices with

Verily’s experse in high-tech capabilies like

advanced analycs and enhanced visualizaon.

n Verb execuves concede that surgical robot-

ics pioneer and leader Intuive Surgical hasdone an excellent job of launching the roboc

revoluon but argue at the same me that with

advances in technology, surgeons want more

and that robocs per se are only part of the

value equaon.

n Certainly, Ethicon’s deep background in surgi-

cal tools, close relaonships with customers,

and a strong presence in the operang room

provide an important base for Verb. But it is the

informaon technology component that has the

potenal to create a truly disrupve technolo-

gy—one that by incorporang Big Data and dataanalycs, can enable beer decision-making in

the OR.

n No small part of what Verb is trying to do lies

in democrazing robocs and, by extension,

surgery itself, bringing advanced technology to

ORs around the world with an aordable system.

Verb's plaorm represents the latest revoluon

in surgery, something they’re calling Surgery 4.0.

The challenge for medical device companies over the

past decade or so has been that the twin impulses thatdrive medtech development—advances in technology

and crippling health system cost pressures—too oendrive in opposite direcons. Twenty or even ten yearsago, device companies were rounely rewarded foreven incremental improvements in technology with

price increases and high margins as physicians and

surgeons turned eagerly to new tools that promised to

deliver beer paent care.

No more. Today, device companies oen nd cus-tomers—now dened more broadly than just physi-cians—pushing back against costly devices that might

enable beer outcomes but don’t reduce the costs ofa broader episode of care. Sll, the temptaon to seedevice development in purely technological terms is

heightened today because of the new capabilies ofinformaon technology that, having inltrated all oth-er aspects of our lives, are beginning to make in-roads

into healthcare.

by

DAVID CASSAK

MAY 13, 2016 | VOL. 3, NO. 8

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MAY 13, 201

11SURGICAL ROBOTICS

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Contact Kristy Kennedy at 480.985.9512 • [email protected]

From sensor-based devices and enhanced imaging to ad-

vanced analycs and machine learning, the new technologyhorizons that companies like Apple, Samsung, and, most ofall, Alphabet/Google have brought forward are being incor-

porated into products that, in some cases, enhance the ther-

apeuc impact of those devices, and, in others, generate awhole new category of products.

Pharmaceucal companies have already begun to tapinto informaon technologies, for example to drive beercompliance to drugs or, through Big Data, to more precisely

idenfy target populaons. But the medtech industry seemsparcularly well-posioned to adopt and benet from thefruits of high tech—in part because they are very oendevice-based, in part because, medical devices are usually

somewhat passive in the role they play.

Perhaps not coincidentally, the growing role of informa-

on technology comes at a me when robocs, the medtechindustry’s original futurisc technology, seem to be takingo. For a lot of dierent reasons, the uptake on surgical ro -bocs was slow for a long me—only industry leader Intui-ve Surgical Inc. achieved real—in fact outstanding—suc-

cess, although as more of an outlier than an exemplar. Morerecently, thanks to companies like Blue Belt Technologies

(now part of Smith & Nephew plc), TransEnterix Inc., Titan

Medical Inc. and Corindus Vascular Robocs Inc., to name

just a few, robots are hot again.

Big deals like Stryker Corp.’s $1.6 billion acquision ofMako Surgical, and Auris Surgical Roboc Inc.’s ability toraise $230 million in early nancing from hedge funds at-test to the new perceived value around robocs. And witha market cap that in early May stood just over $23 billion,any aempt by one of the big mul-naonal device giantsto take out Intuive would, factoring in an acquision pre-mium, likely price the company higher than the $21 billionJohnson & Johnson paid for Synthes a couple of years agoand even higher than the $25 billion Abbo Laboratories has oered for St. Jude Medical.

What would happen if you could marry robocs with theenhanced capabilies of high tech? Could you, at once, rec-oncile the twin dynamics of advanced

technology and cost reducon, with

technology that both enhances out-comes and reduces costs through beer,more ecient procedures? That’s thepromise of Verb Surgical Inc., the jointventure launched last year by surgical

device giant, Johnson & Johnson and tech leader Alphabet(formerly known as Google). Through their respecve op-erang companies (Ethicon and Verily), J&J and Alphabethope not just to develop a beer robot, but to transform

surgery, democrazing the technology with lower priced op-ons that allow for a wider disseminaon around the globewhile incorporang capabilies like advanced analycs andenhanced imaging that bring surgery into the Digital Age.(Since Google’s recent reorganizaon and name change,

Google and Verily, which used to be known as Google LifeSciences, are now divisions of Alphabet.)

Reading the LandscapeAs noted, surgical robots per se are far from new. Intuive

pioneered roboc surgery more than 20 years ago. So whataccounts for the heightened interest these days? Recent-ly, argues Verb CEO Sco Huennekens, surgical giants likeJ&J's Ethicon and Covidien have realized that “both Intuiveand robocs as a plaorm would start to encroach on andthreaten their businesses over me.” And, in fact, Medtron-ic plc, too, recently acknowledged that it has launched its

own program in robocs (see “Top Stories of 2015: The Yearin Review, Digital Collaboraon: MedTech Meets HighTech,” The MedTech Strategist, January 16, 2016).

Dave Herrmann, Verb’s VP of Markeng, worked at Ethi-con Endo-Surgery and Ethicon Inc. for nearly eight years, fol-lowed by a two year snt at J&J’s Vision Care business, before joining the J&J/Verily joint venture late last year. Herrmannbelieves that if the surgery giants were late in embracing ro-

bocs, it’s because they were “assessing the landscape andseeing what their opons were.” Those opons, he says,included building their own robots, working with Intuiveto provide surgical tools for its da Vinci system, and, taking

a more distant stance, providing educaonal programs onrobocs, helping their surgeon customers gure out whenrobocs are appropriate for a procedure and when not.

In a certain sense, Verb embraces and combines all three,providing J&J with a proprietary system (albeit co-ownedwith Verily), a plaorm for Ethicon’s other surgical toolsand devices, and an important educaonal tool for its cus-tomers. That said, it is Alphabet’s contribuon of expersearound informaon technology (IT) that will truly dier-enate Verb’s system from others currently on the mar-ket. J&J—or Covidien, for that maer—could have bought

Intuive at any me over the past 20years, granted its astronomical share

price, but it’s unlikely that any robocplaorm developed by the surgical gi-ants, either alone or in partnership

with (or by acquiring) Intuive, wouldhave produced a signicantly dierent

robot than those available today. (For a dierent perspec-ve, see “Where Do Surgical Robocs Go from Here?— An Interview with Fred Moll,” The MedTech Strategist, Feb-ruary 29, 2016.)


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A Surgical Soluons CompanyIndeed, Verily/Alphabet’s contribuon to Verb represents

something that neither pure-play surgical instrument com-

panies like Ethicon nor, for that maer, roboc companies

like Intuive could bring to the table, including capabilies

like advanced soware and systems architecture, cloudcompung, dashboards and augmented reality displays,

analycs built around Big Data, advanced visualizaon and

opcs, machine learning, and cybersecurity to name just

a few (see Figure 1) “They’re one of the biggest players in

the world in cloud services, and Alphabet’s plaorm is one

of the most advanced AI [arcial intelligence] machine

learning plaorms available,” says Huennekens. The tech

giant has “world-class capabilies in developing user inter-

faces and user experiences across everything from YouTube

to Google Search to any number of consumer-interfacing

products they oer. And we have an opportunity to include

that technology in our systems.”

Indeed, if Verb represents a kind of marriage of Ethicon’s

surgical experse with Alphabet’s high-tech capabilies, the

queson the joint venture implicitly raises is, to what de-

gree—if at all—companies that only possess surgical exper-

se can incorporate the high tech capabilies that are part of

Alphabet’s oering into their systems. “Technologies evolve

and dierent opportunies present themselves over me,”

Huennekens says. Intuive’s success—state-of-the-art tech-

nology and an astronomical market cap—has been “fabu-

lous,” he goes on. In key metrics of robocs capabilies—pre-

cision and control, visualizaon, marketability, and physician

ergonomics—the da Vinci system “does a very good job in allof them,” he says.

But looking ahead, Huennekens goes on, the me has cometo think of “a future in which we’re moving from large robocsystems to something enrely dierent,” something Verb ischaracterizing as Digitally-enabled Surgery, a technology plat-form that embraces, at once, small roboc systems and ad-vanced surgical tools, as well as advanced visualizaon, ma-chine learning, data analycs for performance tracking andbenchmarking, connecvity both inside and outside the OR,and more. It’s a more comprehensive, holisc approach tosurgery, which is why Verb describes itself not as a next-gen-eraon robocs company, but as a “surgical soluons com-pany.” “And robocs is only part of that,” says Huennekens. “Ithink Intuive denes itself as a robocs company. We’re nota robocs company.”

In its embrace of Verily as a partner, J&J, too, is acknowledg-ing that robocs is only part of the equaon. Even before join-ing forces with the tech leader, J&J had spent the last threeor four years in a partnership with SRI Internaonal (formerly

Stanford Research Instute)—interesngly, the organizaonthat developed the technology that became Intuive’s da Vinci 20 years ago—to focus on enhancements in the robocs plat-form itself. SRI has “a tremendous capacity in robocs usedin defense, industrial, consumer and medical markets,” saysHuennekens. (J&J’s work with SRI will become part of Verb.)

At the same me, incorporang an experse in surgicaltechnology and the OR is just as crical to Verb’s vision.Huennekens notes that Verb will focus its relaonship onVerily, which will link Verb into areas of Alphabet that workon Big Data and machine learning iniaves, and other pro-grams in advanced visualizaon, connecvity, video analyt-

ics, and proctoring, as well as more tech-specic capabiliessuch as user interfaces and experiences with augmentedreality and decision-making tools.“There’s a whole host of technolo-gies that Verily and Alphabet bringto the table that we can use in con-

juncon with the roboc technol-ogy J&J has been developing withSRI,” he says.

Transforming the ORIn visualizaon, for example,

Verb hopes to capitalize on Ver-

ily’s experse in imaging to do ad-vanced anatomical and pathologi-

cal idencaon of ssue states.And in an OR with intra- and inter-operave connecvity, data andimaging come together to allow

for experience sharing, remoteguidance, and tele-monitoring.

Figure 1

The Marriage of Surgery and High Tech

Source: Verb Surgical Inc.

Data-Driven SurgeryProcedure-Enabling

Advanced Tools

Advanced Imaging

Direct PatientAccess, Highly-

Flexible, ExpandedReach


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13SURGICAL ROBOTICS



Certainly, Ethicon’s deep background in surgery, surgical in-struments and tools, close relaonships with customers, andstrong presence in the operang room provide an importantbase for Verb. But it is the high-tech component that has thepotenal to create a truly disrupve technology. Huennekensoers an example of the role that big data and data analycs

can play in beer decision-making in the OR. “We can envi-sion a world in the future in which we take 10,000 prostatesurgeries and run them through an algorithm that produces

a tremendous amount of learning relave to things like anat-omy, task learning, performance, and things like that,” hesays. Those things can then “be built into the device.” Insteadof the convenonal model in surgery which emphasizes theuniqueness or individuality of each procedure—the see-one,do-one, teach-one model—Verb envisions a plaorm that in-corporates big data and data analycs and, aggregang theexperience of thousands and thousands of procedures, of -fers “a cumulave learning experience” that can be part ofthe tools the surgeon uses, he goes on.

And just as important as improved clinical outcomes andsurgical techniques, there’s also an economic play here.Posioning itself as a surgical soluons company, Verb ex-ecuves see themselves not just advancing surgical tech-nology by incorporang digital high tech capabilies, but inthe process also democrazing surgery. That means bring-ing roboc plaorms to surgeons working in hospitals thatcan’t aord $2 million systems. “We want to bring the ca-pability to advance surgical procedures to all geographies

of the world in any economy,” says Huennekens. Indeed, inemerging markets where there are few resources in each

facility and an oen smaller clinical base, Verb’s plaorm,he goes on, “can be very eecve in helping with training,proctoring, and market adopon.”

In such a vision, the technical and clinical capabilies ofrobocs is only a part of the value proposion. During hisdays as CEO of Volcano (now part of Philips Healthcare)Huennekens and his team did extensive research into howhospitals used expensive capital equipment such as theIVUS (intravascular ultrasound) systems Volcano manu-factures. They found that hospitals want plaorm tech-nologies that have broad applicability and are constantly

in use—technology that is connected to everything else in

order to opmize its impact, whether in the cath lab or theoperang suite. Way more oen than not, he says, stand-

alone IVUS systems sat in a hall way, waing to be used.“Nothing that had wheels on it was ever used more than10% of the me,” he says. “Once we integrated it and putmulple apps on it, it was used in 40-50% of the cases.”Huennekens believes Verb’s surgical soluon plaorm willface the same challenge: the equipment “has to always bethere, always be on, integrated and serving mulple appli-caons,” he says. “Robocs is just one of the technologieswe’ll oer in transforming the OR.”

Connecvity Encourages AdoponConnecvity, mobility, and broad applicability are cri-

cal to Verb’s concept of a new surgical reality. Huennekensdraws parallels with more mundane technologies. “Mobil-ity means the dierence between using a mobile phone

and a rotary phone that’s nailed to the wall in your house,”he says. About connecvity, he points out, if every meyou wanted to use the air condioning in your car, you hadto carry an air condioning unit to your car, plug it in, andmake sure it synced with all of the electrical systems, you’drarely bother, he notes. “Maybe on cross-country trips inthe summer,” he says. “But you wouldn’t use it on a day-to-day basis.” Making sure that Verb’s technology is connectedto other devices and pieces of equipment and is broadly ap-plicable “eliminates the fricons of use,” says Huennekens.

Certainly ease-of-use is part of the value proposion, butit’s also about dramacally enhancing or augmenng thevalue of the tools surgeons have at their disposal. And in

an OR environment that today is dominated by stand-aloneequipment and individual tools, what Verb calls “single pointsoluons and a lack of integraon,” the vision of a connectedOR is truly transformave. In today’s OR, says Huennekens,“Everything is siloed; there’s no integraon of informaon ina way that augments or builds on itself.” In the future, ev-erything, including non-clinical funcons, will be integrated.That’s why Verb describes what it’s doing as disrupve not just from a technological perspecve, but from a business-model perspecve as well, with implicaons far beyond theOR, including supply chain management.

Verb execuves believe that as roboc systems connect

with and enhance other aspects of the hospital and ORtheaters, adopon and use will soar. Indeed, for all of thesuccess of Intuive Surgical and the current buzz aroundrobocs in general, Dave Herrmann points out that robocsurgery today is sll “a niche.” In urology, gynecology, tho -racic and general surgery, more than 12 million surgeriesare performed around the world each year—that number

is closer to 20 million if one includes orthopedics and headand neck—but only about 650,000 of them are done usinga robot. “It’s less than 5% of the total,” says Herrmann, whoargues that the real issue isn’t whether a robot is used, butwhether the procedure is done in an open or minimally-

invasive manner. Verb believes that around 50% of all sur-

geries could benet from some form of roboc technology,“plus some of the other tools we’re bringing to the tablearound machine learning, advanced visualizaon, and oth-er technologies,” Herrmann says.

Verb will inially focus on a subset of 12 million surgeriesin urology, gynecology, thoracic and general surgery “butwhen you look at our technology, it can apply more broadly

than just those areas,” adds Huennekens. Verb’s plaorm


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will be “both vercally and horizontally applicable,” he goes

on, meaning it can embrace procedures in other clinical

spaces as well as those of varying degrees of complexity

(see Figure 2).

Why Now?Twenty years ago, it seemed as if large surgical device

companies like Ethicon and US Surgical were lile interested

in the roboc revoluon that Intuive was launching. Per-

haps that was because they were skepcal of the reach and

aracon of the new technology; perhaps it was because the

business model was so dierent. To companies with a strat-

egy built around selling high volumes of disposable instru-

ments, mul-million dollar pieces of capital equipment were

hard to wrap their minds around.

But those days are over and both Ethicon and Covidien

(which embraces the former US Surgical business) are now

making aggressive pushes into advanced robocs. MichaelDel Prado, Group Chairman for Ethicon, notes that “Ethicon

has had a long history of shaping the future of surgery with

the goal of improving the standard of care in surgery glob-

ally.” Key to that, he goes on, has been developing new tools

that drive the adopon and penetraon of minimally-invasive

surgery (MIS). In surgical sub-segments like bariatrics and

others, he says, penetraon of minimally-invasive surgery is

more than 90% today, much of that due to beer instrumen-

taon that enables surgeons to perform more complex pro-

cedures, such as, but not limited to, tools that allow for beerarculaon and powered moon in endo-cuers and energydevices—in the process overcoming early opposion to MISon the part of many if not most surgeons. “We now make[our instruments] smaller in order to access dicult anato-mies and address intraoperave complicaons,” he notes.

“We’ve been able to build a number of fairly large and suc-cessful plaorms in surgery.”

Ethicon’s recent embrace of robocs is, in that context, yetanother stage in the company’s eorts to build on technologythat enables and enhances MIS. “I think it’s been proven thatrobocs will play a key role in further driving the adoponof minimally-invasive surgery, especially in procedures where

the anatomy is dicult to access,” Del Prado goes on.

As noted, J&J’s rst steps in developing a robot began wellbefore the collaboraon with Alphabet was announced, andthe decision to launch Verb reects in many respects a matu-

raon of both robocs technology generally speaking andJ&J’s innovaon eorts more specically. Asked why Ethi-con is jumping on the robocs band wagon now, Del Pradonotes, “Over the past few years, we’ve engaged a numberof stakeholders and customers—roboc users, roboc rejecters, and even economic decision-makers—in order tounderstand the unmet need as far as roboc surgery is con-cerned. I believe we’ve gained a lot of insights and knowledgein this space. We think this is the right me to take robocsurgery to the next level.”

J&J’s early research focused onwhat Del Prado calls “gaps in the cur-rent robocs oerings and aspira-

ons about where robocs shouldgo,” and led the company to SRI, thePalo Alto-based research rm thathas done extensive and pioneeringwork in robocs in a number of in-dustries. Says Del Prado, “A few yearsago, we started working with SRI torm up the concept, validang theunmet need in roboc surgery andthe technical feasibility of the work

that we’re trying to do, and togeth-er with SRI I think we were able tobuild not only a concept but a good

prototype that we could bring into

product development with some en-

hancements.”

In turn, Ethicon’s work with SRIled to the joint venture with Verily.Ethicon’s discussions with doctorssuggested that physicians, on the

whole, are “eager and excited to

Figure 2

Minimally Invasive Procedure Penetraon(US, 2015)

*Laparoscopy



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15SURGICAL ROBOTICS



hear about our collaboraon with Verily and Verb,” says DelPrado. “The partnership has drawn a lot of kudos and enthu-siasm across the board,” an excitement that stems, he says,from “the vision of taking roboc surgery to something dif -ferent, a transformave plaorm.” Del Prado notes that thereare lots of companies with the capabilies to develop surgical

robots and a number of companies already in that space. Thepartnership of Ethicon, Verily, and Verb, however, representssomething dierent, as the joint eort capitalizes on the ca-pabilies of each.

In Ethicon’s case, says Del Prado, that means oering in-sights into advanced surgical devices and instruments as

well as into what goes on in the OR. Del Prado points toEthicon’s “global footprint” in both technology and sur-geon educaon and notes, about the former, that the ad -vances Ethicon has introduced over the years “lend them-selves to expanding [the company’s oering] into robocsurgery.” That experse, combined with the tech capabili-

es of Verily, especially around data aggregaon and anal-ysis to beer inform surgeon decision-making, will “createa plaorm that’s truly disnguished from incumbent tech-nologies in terms of advanced imaging, machine learning,

and augmented reality,” he says.

Verily’s contribuon is crical because it will help Verb de-liver something that, in J&J’s thinking, redenes robocs. DelPrado says that as Ethicon execuves discussed the direc-on of their robocs eort, they came to the conclusion that“the best approach to truly deliver atransformave technology” lay notin simply delivering a robot that is

an extension of the surgeon’s hands.

“That wouldn’t suce,” he says. In-deed, Ethicon ocials believe Intui-ve had done that and done it well.Rather, Del Prado says, “the prom-ise of really advancing the standard

of care lies in connecng all of thesecapabilies,” i.e., Ethicon’s strongfoot print and advanced instrumen-

taon with the capabilies of Verily.“We believe that’s the way to deliv-er a truly transformave plaorm,”he says.

Del Prado says that the vision andgoal of Verb’s advanced robocs “isreally to democraze surgery.” Thatsaid, he’s far from dismissing out ofhand convenonal surgical robocs.“The soluon we’re trying to deliverneeds to incorporate some tradi-

onal robocs’ benets—that’s thecket to play and there’s an expecta-

on and experience [in the market] around dexterity, reach,and visualizaon,” he says. “Our system needs to have that.”

But those capabilies are only the beginning. Ethicon’sdiscussions with its customers idened crical needs inareas such as beer work ow, greater exibility in how sur-

geons interact with both the paent and the robot, and bet-ter decision-making in general, with a goal, says Del Prado,

of “making the surgeon and the procedure beer.” Ethiconeven envisions a plaorm that is expandable, that is, onethat will work just as well in enhancing work ow and deci-sion-making with hybrid procedures, those in which part of

the procedure is done using robocs technology and partwith more convenonal techniques, as well as with pure,non-roboc MIS (see Figure 3) . Democrazaon also meansdeveloping a system that costs less so that hospitals all over

the world can access roboc surgery aordably.

For now, J&J’s robocs eorts are being spearheaded bythe company’s surgical device operang company, Ethicon.But Del Prado says, he could see sharing its insights and the

plaorm with other operang companies, such as DePuy.Aer all, orthopedics has been a major target of robocscompanies, from early plays like RoboDoc (from Curexo

Technology Corp.), to more recent companies like MakoSurgical and Blue Belt Technologies. “I think we’re alwayslooking for ways to leverage and dene synergies,” he says.“There has to be a base oering and we’re very focusedright now on making sure we deliver on that. But as we gain

Figure 3

The Evoluon of Surgical Robocs

*MIP=Minimally Invasive Procedures


Past


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more insights and more experience in the eld, the poten -al to expand into other areas will be there.”

Building on “a robust and well-tested product concept,”Del Prado argues that the “superior capabilies across thepartners,” Ethicon, Verily, and Verb, should make the robot-

ic system that emerges that much more powerful. “I thinkthe team that we’ve put together in the creaon of Verb candeliver on a very compelling vision,” he says.

Collaboraon, Not CompeonHaving successfully sold Volcano to Philips in early 2015,

Sco Huennekens was more interested in sing on someboards than jumping back into a start-up when a recruiterencouraged him to talk to J&J execuves about the VerbCEO posion. Huennekens was leery at rst, but soon gotexcited about what J&J and Alphabet are trying to do. “I canreally only think of one or two areas in medtech that are

legimately $10-20 billion opportunies,” he says. “This is a

$10-20 billion opportunity that translates directly to paentimpact. “ He adds, “This is going to transform surgery.”

That impact on surgery and paent care are certainly cen-tral to what Verb is trying to do. But the company is also in-triguing for its technology implicaons—for the way it takeshigh tech concepts that have transformed virtually every

other aspect of our lives and applies them to medical tech-

nology. Over the past several years, as high tech companieslike Google, Qualcomm, and Samsung have shown an evergreater interest in healthcare, there’s been much specula-on about the role these tech giants will play, especially inmedical devices.

In pharma, things like paent tracking and Big Data haveclear and complementary implicaons, but no one is sug-gesng that Alphabet or Samsung are going to be acvedrug discoverers or developers. But the role of high-tech inmedtech is dierent. While tech companies clearly won’tbring drugs to market, they are introducing devices. If wear-ables and other consumer-oriented plays seem far removed

from, say, TAVR or orthopedic implants, tech devices thatmonitor paents, provide real-me feedback, and bring con-necvity to paents and their physicians legimately play arole in enabling care and enhancing the therapeuc impactof more tradional devices. Moreover, the ability of these

new tech soluons to transform convenonal medtech can’tbe ignored (see “Medtech: What’s in a Name?” The MedTechStrategist, March 16, 2016). “We’ve got two of the top tenmarket-cap companies in the world collaborang to trans-form an industry,” says Huennekens about the opportunityhe saw. “That’s a very interesng and compelling situaon.”

Certainly some of the appeal of the joint venture lies inbringing together two extremely strong brands in their re-specve elds—Ethicon in surgery and Alphabet/Verily in

advanced data analycs. As Michael Del Prado notes, “Our

partner [Alphabet] really owns the data space; they’re themost respected search engine in the world and their ca-

pabilies are appreciated not just by surgeons but by eco-nomic decision-makers as well. I think one of the things that

aracts them [i.e. surgeons and hospital execuves] to our

partnership is the promise of what this can deliver.” Togeth-er, he says, “our capabilies in surgery and theirs in terms of

managing data and providing analycs have really elicited alot of excitement with our customer groups.”

Why then create a separate company and brand around

Verb? Why not ride the wave of interest in bringing togethertwo powerhouses like J&J and Alphabet? Because, say ex-

ecuves from both companies, the joint venture is aboutmore than just a markeng play, more than just an aempt

to capitalize on two strong brands. Says Ethicon’s Michael

Del Prado, “Very clearly, the creaon of Verb allows [Verbexecuves] to move with a lot of focus and speed. And I

think they’ve demonstrated that already.” At the same me,he goes on, Ethicon ocials “connue to lend [Verb] a lot of

support in terms of interfacing with the plaorm and withour advanced instrumentaon” while Verily “connues to

provide [Verb] with technological assistance to capitalize on

the core capabilies of Verily.”

More broadly, given the resources, both technical and eco-nomic, that tech companies like Google and Samsung bring

to bear, some medical device execuves have begun to won-der about the role that high tech and, more to the point, high

tech giants will play in the future. Phrased dierently, somehave asked whether the medical device industry of the future

will be dominated not by companies like Medtronic and J&J,but by companies like Alphabet/Verily and Apple.

Verb suggests another possibility: that the future relaon-ships between medtech and high tech will be more collab-

orave than compeve—an implicit recognion, perhaps,that for all of the resources each brings individually, neither

J&J nor Alphabet could do alone what both can accomplishtogether. Perhaps that’s why, notwithstanding the strong,

recognizable worldwide brands of each company, execu-

ves at both companies felt it was important to give the joint venture a name that plays o neither: Verb—meant to

suggest acon, movement, progress.

Notwithstanding the resources their two giant partners

bring, Verb execuves embrace the culture of a start-up. J&J

and Alphabet “are major backers and they sit on the board,”notes Dave Herrmann. “But this was always meant to be an

independent company with the ability to move quickly and

aract top talent into a start-up environment, which will al-

low us to make this happen as quickly as possible.” Adds Sco

Huennekens, Verb “is about trying to create the innovaon,creavity and urgency that come in a start-up environment.”


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17SURGICAL ROBOTICS



An Open SystemNot that Verb is running away from its relaonships with

J&J and Alphabet. Says Huennekens, “We want to be able toleverage all of the benets of Alphabet’s and Verily’s tech -nology and J&J’s global footprint and market leadership

but retain the benets of a start-up.” Today, Verb’s boardincludes two J&J representaves and two Verily representa-ves and meets quarterly. “We run exactly like a VC-funded

start-up,” he notes—with all of the funding provided byVerb’s two joint venture partners.

Verb has enough capital to operate for the next fouryears, long enough, Huennekens says, for the company tolaunch its rst robot, and can also draw on non-monetaryresources of its partners, if the need arises. The company

had about 40 employees at the end of last year and expectsto have closer to 100 by the middle of this year, a gurethat doesn’t include the teams from SRI, J&J, and Alphabet

who are also working on the project. (Independent of itsrelaonship with Verb and J&J, SRI, who serves Verb as acontract vendor doing work in R&D rather than as a jointventure partner, has recently spun out two other health-

care-oriented roboc systems.)

Adding the resources of SRI, Ethicon, and Verily to its own

100-person sta, Verb has the wherewithal to do much ofits technology development in-house. Even before the of -cial launch of the company, Verb’s partners had invested$50 million in early eorts to explore what a novel robocs

system might look like—and that doesn’t include the hun-dreds of millions of dollars that both Alphabet and J&J haveinvested over the years in relevant independent research

that will help drive Verb going forward.

In addion, even with all of the repower that Verb’sfounders bring to the table, Huennekens says the company

is posioning its plaorm as an open system and is willingto consider collaboraons, either through acquision orsome kind of licensing arrangement, with other start-ups

developing novel technologies. Those might include sur-

gical tools convenonally-described and apps that enablesome more high tech-oriented capabilies. Huennekenssays he can envision a scenario where, in a narrow market

of, say, 20,000 annual procedures, Verb might not idenfythe opportunity as a high priority, but another company

comes along with a tool necessary to do that procedure.“Will we nd a way to make sure that tool can work on our

plaorm?” he asks. “Absolutely.”

Surgery 4.0Asked if J&J considered any partners other than Alpha-

bet/Verily in launching its roboc program, Michael DelPrado notes that potenal partnerships are “something welook at constantly everywhere. Verily is a terric partner in

this venture.” But like Huennekens, Del Prado goes on to saythat Ethicon, too, won’t object to bringing other companies

onto the plaorm, if the opportunity is there, especially if

the technologies those companies bring are “outside [Ethi-con’s] core capabilies.” Says Del Prado, “This is a complex

project that will require a lot of other partners to bring it

to fruion.” Even with Ethicon’s already large footprint inthe OR and its history of driving innovaon in surgery, he

believes bringing other companies into the mix “will drive a

lot of value for our customers.”

That said, clearly Verb’s strength, its dening character-isc, lies, as noted, specically in the collaboraon of J&J

and Alphabet and in the complementary capabilies that

each corporate partner brings: Ethicon, a leader in surgi-cal technology; Alphabet, with its pioneering work in things

like machine learning, big data, and augmented reality. But

just because you can build a powerful new robot doesn’tmean that surgeons will use it. As Dave Herrmann notes,

current roboc systems account for only 3-5% of all sur-geries worldwide and in clinical spaces like orthopedics in

parcular, the response to new robots has historically beenchilly. Surgeons, especially general surgeons, have tradi-onally been a conservave lot, especially when it comes

to new technology. What makes Verb execuves condent

surgeons will more eagerly adopt a next generaon robot?

Huennekens concedes that the path to new technology

adopon isn’t always smooth. “Any me you have an es-

tablished market, there are fricon points as it evolves,” he

says. But Verb’s foray into what it calls digitally-enabled sur-gery represents what Verb execuves believe constutes

the fourth major advance in surgery; “Call it Surgery 4.0,”

he says. If Surgery 1.0 was open surgery and Surgery 2.0

came with the introducon of minimally-invasive surgery,then the rst generaon of robots was Surgery 3.0, he says.

The marriage of a roboc plaorm with the capabilies ofhigh tech ushers in a new, fourth stage.

“The response we’ve goen from physicians is o the

charts,” Huennekens says. “Physicians want to work with

us. They’re very open to the idea of advancing surgery tothe next level.” Just as importantly, if surgeons have been

slow to adopt new technologies in the past, he insists, it’s

Some have asked whether the medicadevice industry of the future will be

dominated not by companies likeMedtronic and J&J, but by companie

like Alphabet/Verily and Apple


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not all their fault—device companies share the blame. It’sa common complaint about the evoluon of MIS beyondlap cholecystectomy, and one of the foundaonal mythsof rst-generaon robocs. While MIS was popular with

paents, employers, and payors surgeons hated it because

the early MIS instruments were s and dicult to oper-ate, making more complex procedures uncomfortable forsurgeons and potenally dangerous for paents. “I thinkthere’s an opportunity now to create value for surgeonsand hospitals in a way that will drive MIS adopon well be -yond what was historically possible with [exisng] laparo-scopic tools and training,” Huennekens goes on. “It’s mefor Surgery 4.0.”

Such a plaorm represents “the gateway to the 21st cen-tury OR,” says Huennekens, and would feature data aggre-gaon, physiologic sensors, smart navigaon, new visualiza-on systems, and semi-autonomous feature sets, among

other capabilies that he says constute what might becalled a form of “Google-ness.” (Huennekens notes thatthere is even a Google-ness “to [Verb’s] name,” suggesnga cultural anity with the tech giant.) Such an approach dif -fers from, say, Google’s high prole driver-less cars whichare fully autonomous: the driver is a passenger who rides

and plays no role in the operaon of the car. Surgical toolsrather lend themselves to semi-autonomous capabilieswhich keep the driver in command, but make his or her

driving easier, such as power steering and brakes.

A Proprietary RailroadThere are some obvious areas where Google-ness might

apply in the OR—advanced visualizaon systems for theclosed spaces of MIS, for example, video analycs in assess-ing anatomy, and machine learning to improve decision-

making. Understandably, Verb ocials are reluctant to gointo great detail about how such advanced feature sets

might work in surgery or to speak specically about whatGoogle-izing surgery really means.

Despite the importance of Big Data and advanced analyt-

ics to Verb’s vision, company ocials insist the collecon of

data doesn’t necessarily imply Verb needs to have a largeinstalled base. Even granng compliance with HIPAA regula-ons, Huennekens says simply, “There are lots of ways tocollect data,” including ways not ed to Verb’s plaorm.

Clearly, key to Verb’s success lies in the combinaon of

skills and experse inherent in J&J and Verily to createsomething unparalleled in the industry and dicult to copy

by other companies. At the same me, the issues of inte -graon, connecvity, and open systems raises quesons forVerb and its partners. While Verb hopes to capitalize onEthicon’s large footprint in surgical instruments and tools,Ethicon hopes to leverage the appeal and installed base of

Verb’s plaorm to strengthen its posion in the OR and in-

crease sales of its devices. Says Dave Herrmann about Ethi-con, “They have great market share and great relaonshipswith customers.” But what if customers love the robot, butlove equally the instruments and tools they now buy from

a company other than Ethicon? “That’s perfectly ne,” says

Huennekens who adds that some “high-end instrumenta-on will be proprietary,” but that, as noted, Verb’s plaormis being designed as an open system, able and willing to ac-

commodate instruments developed by other companies. “Iwould say that under the right circumstances, we would al-

low [other companies] potenally to work on the system,”he adds.

It's only natural that there would be a greater sensiv-

ity to working with large competors like Medtronic/Covi-dien and even Intuive, as Verb assesses future partners.Though company execuves expect Alphabet/Verily’s par-cipaon will distance the company from the rest of the

eld and result in a plaorm signicantly dierent thananything else on the market, Huennekens does acknowl-edge a compeve angle. Talking about the recent inter-est in robocs on the part of surgical giants like Ethiconand Covidien, Huennekens says, “Both J&J and Medtronicrecognized that Intuive could over me connue to move

into their area [i.e., surgical instruments and tools] and dis-intermediate them from their customers; that they coulddevelop a proprietary railroad that they can’t operate on.The compeve threat and the convergence of technologymeant they had to act.”

Volcano, he notes, developed IVUS and FFR (fraconal

ow reserve) systems that “let other companies operate onour plaorm, but we weren’t going to let Boston Scienc

or St. Jude Medical do so. They had to develop their ownplaorms.” Smaller companies, the kind Verb is open toworking with, present a dierent kind of compeve issue,since they face what Huennekens calls “a chicken-and-eggproblem:” how to build an installed roboc base without

the ancillary devices that enable the surgery. J&J—and Covi-

dien by extension—expect to use their extensive reach intothe OR to posion their roboc systems. “They can go into

The company is posioning its plaormas an open system and is willing toconsider collaboraons, either throughacquision or some kind of licensingarrangement, with other start-upsdeveloping novel technologies.


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19SURGICAL ROBOTICS



accounts where they already have relaonships and oereconomic soluons to implement their roboc plaorms,”he says, “leveraging o of their instrument and broader J&Jbusinesses.” Intuive, he notes, doesn’t have that capabil-ity—at least not yet.

And though Verb execuves are already thinking of thecompeve landscape ahead, they say that in the rst fewyears, most of the company’s revenues will come from mar-ket expansion, increasing current roboc procedure pen-etraon from the current 5% or so to something closer to50%, rather than taking market share from Intuive or dis-placing its installed base. Comparing the ancipated Verbplaorm to current roboc technologies, Huennekens says,“It’s like moving from mainframes to PCs, from land-basedrotary phones to mobile phones. The current robots “areuseful and have done some incredible things. But there arelimitaons to the current technology. Will we be able to doprostatectomies? Yes. But we’ll do so much more.”

KOL or No KOL?Of course, Verb execuves expect that Intuive will step

up its game as well—the company’s recent growth spurtindicates an expansion of indicaons beyond prostatecto-mies. But Huennekens argues that Verb—and by extension,Covidien—won’t have the burden of an established leaderlike Intuive as it faces obsoleng its current successful sys-tem. “Every company that is a leader and has a legacy facesthe same challenge,” he says. “As Paon said, you don’twant to pay for the same dirt twice. New entrants don’tface that.”

Given his me at Ethicon, Dave Herrmann has spent thebeer part of the last decade talking with surgeons aboutsurgical instruments and technology. “I think we’re nowseeing a groundswell of support [behind the noon of next-generaon robocs],” he says. “Intuive has made surgeonsaware of what technology can do to complement their skills

and help them achieve certain goals and accomplish certain

tasks in the OR,” he goes on. “Even if they aren’t necessarilyusing da Vinci for all of their cases or aren’t even adoptersof robots at all, at least they see the potenal.” In turn, assurgeons nd out more about what Verb is doing, he says,“There’s a lot of appete for them to partner with us to cre-ate Surgery 4.0.”

And, in fact, Verb ocials note that they had over 100surgeon visits to either SRI, Ethicon or Verily over the pasttwo years, before the ocial launch of Verb, to get an ear-ly insight into what the company is doing. “The feedbackhas been extremely posive,” says Huennekens. Central tobringing surgeons on board has been the parcipaon ofEthicon, which seems to have leveraged its footprint in theOR in these early discussions and will be crical to the even-tual launch of Verb’s plaorm. “There’s so much interest in

what we’re doing and in partnering with us,” says Dave Her-rmann. “And obviously Ethicon’s done most of the legwork

in developing those relaonships.”

Verb found that many surgeons cited key aributes such

as precision and control, visualizaon, and the ability to

dissect in ght places, as imperave in roboc systems— aributes all currently available on just about every system.

“We’ll have those and more,” says Sco Huennekens. At thesame me, those surgeons cited other capabilies they'd

like to have, like mobility, expanded reach, mul-quadrantsurgery, greater exibility in the use or applicaon of the

system—i.e., the ability of the hospital to opmize the use

of the system once they’ve made the investment in it—andadvanced instrumentaon such as harmonics, clip appliers,

and staplers.

Dave Herrmann notes that Verb is developing a set of

clinical priories and assembling a roster of KOLs to ad -

vise company ocials as they go forward. More, implicitin the company’s vision of Surgery 4.0 is a new kind of role

for surgeons in improving surgical techniques. Given thedata analycs and advanced learning available on Verb’s

plaorm, using the company’s robot “will almost be like

having the collecve knowledge of top leaders in the eldas part of the tools available to [surgeons] in the OR,” says

Sco Huennekens, who believes that Verb’s plaorm willenhance the ability of highly skilled, high-volume sur-

geons, but will especially benet those who do relavely

few procedures a year.

The role of KOLs in Verb’s development, however, raises

another queson about the marriage of medtech and hightech. Some digital health investors note that a crical dier-

ence between convenonal medtech development and dig-ital tech development is that for many digital technologies,

convenonal KOLs working at academic medical centers

aren’t the best people to turn to for insight and guidance inlaunching new products. Those academic centers tend to be

conservave and highly sophiscated in their take on new

technology; beer, say digital investors, to start in smaller,community hospitals where pedigrees are less impressive

but doctors are oen more open to new ideas.

And that’s not just true of digital technology. Recalling the

early days of MIS, Sco Huennekens says that “there was alot of resistance” to the new surgical techniques from KOLs.

“It was people like [surgeon] Eddie Joe Reddicks and others

that really pushed for the adopon of minimally-invasivesurgery,” he says. That’s why, Huennekens insists, for all

of the advanced technology at its disposal, Verb is devel-

oping its plaorm based on the feedback it is geng fromsurgeons, not on the ability to build sophiscated features

into the system. “This isn’t coming from us,” he says. “Thisis about making their vision a reality.”


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Disrupng the MarketDave Herrmann says Verb tries to have a good mix of sur-

geons, including those from both community hospitals and

academic centers. The company also tries to make sure itrecruits a range of surgeons that include roboc enthusi-

asts, roboc rejecters, and those he calls, “naïve,” surgeonswho aren’t currently robot users but haven’t nally madeup their minds. Not surprisingly, he says, most robot us-ers and naïve surgeons tend to be posive about the storyVerb is telling them; but even robot rejecters, he says, aresomemes recepve. If they’ve rejected robots in the past,it’s oen because they’ve had a bad experience with one.“They told us that there had been some limitaon,” he says.The robot “didn’t allow them to do what they wanted, but ifthere were a robot that did, they’d use it.”

As noted, Verb’s short term goal is to have its rst plat-form ready for commercializaon within four years. ButVerb’s aim isn’t just to introduce a new robot; it’s to “disruptthe surgical robocs market,” says Sco Huennekens, with“a more surgeon-centric plaorm with greater dexterity,” aswell as “a modular system” that is also more cost eecve,which will open up the global opportunity.” To the end, hesays, “we want to be about both technology disrupon andbusiness model disrupon.”

Verb ocials note that despite Intuive’s huge successand large installed base—with over 2,000 units in US hos-pitals—da Vinci ’s reach into the global surgery marketfalls short. “They’re in a majority of large US hospitals, butthey’re in a minority of actual ORs,” says Dave Herrmann.

Huennekens hearkens back to the story of IVUS. “Ev-ery hospital owns one [i.e. an IVUS machine], but it oen just sits in the hall. It only gets used in a limited numberof procedures. That’s where we are with surgical robots.”Robots are used in large numbers in some procedures, suchas prostatectomies, where the penetraon rate is well over50%, he goes on. “In any other procedure, it’s much lower.”

Verb ocials concede that Intuive is leading the way tothe next phase of adopon in robocs. The company postedstrong growth last year—around 15%—and, says Huennek-ens, “they’re making progress in other areas [beyond pros-tatectomy], such as gynecology, colorectal and hernia.”

That’s why Verb’s posioning—and its value proposi-on—has to be about more than just a beer robot. Theeconomics of Verb’s plaorm are crical: gone are the dayswhen hospitals eagerly embraced robocs and were will-ing to pay $2 million for a system that was as much aboutmarkeng clout as beer surgical techniques. Huennekensenvisions a technology that is less expensive to buy and useand more widely adopted due to things like “data and imag-ing integraon, reduced OR footprints, and a lower price.”

But it’s more than that. Huennekens notes that Volcano’sbusiness model was, similarly, about building an installed

base around an expensive piece of capital equipment. “Wewere able to take dierent approaches for dierent kindsof customers in dierent geographies,” he says. In robot-ics, he goes on, “we think there are dierent approaches

when you have a partner like J&J with a mulbillion-dollarinstrument business.”

Verily, for its part, brings “the ability to develop sowarefor the system to connect and manage instruments and

instrument costs that are used in the procedure” and thatconnecvity, in turn, es to “supply chain management andstandardizaon protocols, as with any manufacturing pro-cess,” he says. Huennekens notes that over me, Volcanodeveloped the ability to tell hospitals how producve theywere using FFR equipment and how producve each FFRstaon was. “We were able to help them become as auto-mated and run as lean as possible,” he goes on. ORs, too,

show signicant variability: some surgeons do a procedurein 36 steps, others may do the same procedure in 17, 30or 42, he says, illustravely. “How do we get to some levelof standardizaon? How can we improve quality and im-prove documentaon of that?” Huennekens asks. Leverag-ing Alphabet’s Big Data and machine learning experse is abig part of it. “Building elements of that into [the system]changes the value proposion and doesn’t cost a lot to de-liver,” he says.

Democrazing SurgeryHuennekens’ focus on business model disrupon, rath-

er than just technological disrupon, is about more than

changing the model for roboc and surgical equipmentcompanies. It’s also about changing the healthcare systemoverall. Verb’s plaorm will bring down the cost of sur-gery, he says, and, in the process, “democraze it,” makingit “available across the globe, not just in rst-world placesthat can aord [expensive systems].”

Verb’s openness to working with other companies, notedearlier, is also part of its business model disrupon. “Othersystems are closed plaorms,” says Huennekens. “We’reopen to partnering with other companies and having the

plaorm be as versale as possible. We’re willing to havediscussions around using other companies’ tools, which can

change the cost-eecveness equaon as well.”

Even as they seek to lower the cost of surgery and bringa greater cost-eecveness to new parts of the globe, Verbexecuves understand the scope of their eort. Creanga new surgical soluons plaorm will, says Huennekens,“wind up cosng a quarter of a billion dollars by the mewe get to commercializaon,” an eort that will require thedeep pockets of corporate giants like J&J and Alphabet. Al-though Fred Moll’s Auris Surgical Robocs was funded by


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21SURGICAL ROBOTICS



PE investors, few venture investors would likely fund sucha project. Moreover, he argues, companies like J&J and Co-vidien have to make those kinds of investments “to protectand grow their businesses.” Ten years from now, Huennek-ens says, “I think we’ll see three successful companies inthis surgical soluons space: Verb, Covidien, and Intuive.”

But could the compeve landscape be even broader?Verb execuves believe that the current $2 billion robot-

ics market could eventually be ve, perhaps even ten mesthat size. In just eight key surgical procedures they predictthat, given the current low penetraon rates, just address-ing unmet clinical needs has the potenal to expand robocprocedures within several years of Verb’s launch, more thandoubling the market by 2025. Late last year, Toyota an-nounced that it was comming $1 billion to open a robot-ics center in Silicon Valley, with broad industrial and com-mercial applicaons that will include healthcare. “Are Appleand Microso looking into this as well? I’m sure they are,”

Huennekens goes on. “Anyme you get into markets thatare $10-20 billion in size, it aracts the aenon of compa-nies like Apple and Samsung and Alphabet.”

Huennekens notes that there are ve basic risks that anystart-up faces: nancing risk, development or technical risk,clinical risk, regulatory risk, and market risk. “When I leVolcano, I promised myself I’d never do another start-upbecause I didn’t want to deal with the dierent risks,” hesays. But Verb, he argues, is immune in a lot of ways fromeach of those risks. With deep-pocketed partners like J&Jand Alphabet, Verb appears to have lile risk of running outof money. As for technical and development risk, Huennek-

ens notes that “we’re adapng [roboc] technology thatalready exists.” There is a me element, he acknowledges,“but the development risk is migated as much as we couldhave hoped.”

In a similar vein, regulatory risk is lower because robocsystems are 510(k) devices—they’re tools in the hands ofsurgeons, rather than enablers of completely new proce-

dures. And there’s lile clinical or market risk because, asHuennekens says, “We know surgery works, we’re just try-ing to develop ways to do it beer.”

A Culture Clash?

As the roboc race heats up, so does the cost to play.As the stakes get higher, are Verb’s partners commied towhat could be an expensive project? Michael Del Pradostops short of an explicit commitment, but he does say, “Ithink the partnership is very strong.”

Intriguing as that partnership between medtech giant J&Jand tech giant Alphabet is on paper, and as compelling as

the technology vision, could obstacles arise precisely be-

cause of the dierent backgrounds and cultures of each

partner? Two decades ago, many medtech companies, par-cularly those developing coronary stents, enthusiascallyembraced the noon of drug/device convergence, whichheld the promise to greatly enhance the clinical value of

medical devices.

But industry execuves quickly found enormous culturaldierences between pharma and medtech. Medtech isbuilt on short product life cycles and quick developmentmes, achievable with relavely small development dol-lars, and pharmaceucals are expensive to develop andhighly risky to bring forth, but thrive on long patent lives

once a drug is approved. It ’s not much of stretch to say thatbeyond drug-elung stents, there’s not much to show forthat early enthusiasm around drug/device convergence.

Then too, beyond dierent product development cycles,the philosophies of the IT and MedTech worlds with re-spect to how to introduce products to the market are

dierent. Medical device companies are very customer-

driven and have historically taken their lead in productdevelopment from their customers, with many months, if

not years of prototyping and proof-of-concept before they

actually introduce the product (granted a role for regula-

tory agencies as well). Consumer-driven tech companiestend to lead with technology they think their customers

want and then modify and iterate based on feedback from

the market place.

Couldn’t one make a similar argument about cultureclashes between medtech, a highly regulated industry that

requires enormous clinical validaon before product ap-proval, and high tech, with rapid development cycles that

make medtech look snail-like and product developmentthat is about constant user feedback in real me?

Sco Huennekens notes that there are “mulple ele-ments to our Digitally-Enabled Surgery 4.0 soluon,” in-cluding hardware associated with the robot itself and its

components; disposable and reusable surgical instrumen-taon; the visualizaon system and its components; andadvanced soware. And the product life cycles for eachvary in length, from seven years on hardware one year on

Verb’s plaorm will bring downthe cost of surgery, says Huennekens

and, in the process, “democraze it,making it available across the globe

not just in rst-world places that canaord expensive systems


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soware upgrades and new instruments. “In medtech, youhave markets like large, non-invasive imaging with longer

development cycles, and other markets, like catheter and

instruments with faster innovaon cycles that are oen in -cremental in nature,” he goes on. “We’ll have both.”

Huennekens sees no culture clash in a joint venture that

includes a medical device partner and a high tech partner.“We are beneng from Alphabet’s and Verily’s develop-

ment process and cycles for soware and J&J’s experse

in advanced instrumentaon and medtech.” In fact, es-tablishing Verb as a separate, independent company was,

early on, intended to migate any potenal clash. “Both

Google and J&J recognized the need for an independentcompany with strong leadership, and start-up incenves

and its own culture,” he goes on. “Both pares havestrongly supported this.” As Verb’s CEO, Huennekens says

he’s been aware of his role and responsibility in formingan independent culture while at the same me, “trying toincorporate all of the best elements of our partners to cre-

ate value for clinicians and paents rst of all and for Ver -

ily and J&J as a by-product.”

Creang Its Own CultureHuennekens admits to having been “a bit concerned

about this” when he rst contemplated joining Verb. Hespoke with senior execuves at both J&J and Verily, “and

both assured me that if there were ever any issues, I had the

ability to pick up the phone and they would address them

immediately.” A year into the project, he says, the only me

he’s picked up the phone “was to say everything is goinggreat and to thank them for their support.”

For their part, neither of Verb’s partners seem parcu-

larly concerned about the dierent me lines inherent in

medtech and high tech product development and dierentcustomer feedback models. Vikram Bajaj, Verily’s CSO, notes

that such dierences in perspecve and approach are things

Verily encounters not just with its partners, but inter-

nally as well, as the company brings together teams

of people with diverse areas of experse. Alphabet/

Verily works hard, he says, to create a culture that

“spans and imports the best elements of all of the

product development paradigms,” whether rooted

in high tech, medtech, or biopharmaceucals.

Bajaj notes that within Verily, there are projects,

such as those in nanotechnology, that are sll at

the basic discovery stage and ten years away from

any applicaon. At the same me, there are also

projects that are closer to a typical medical device

development meline, and others sll that, as Bajaj

puts it, “operate on a soware development scale.”

One of the things that Verily does well, he goes on

“is to reconcile all of these dierent world views,”

which in turn, he believes, gives Verily an advantage

that no other tech company has “in approaching

the industry in an integrated manner.” “One of thethings that our partners enjoy most about working

with us is that we have reconciled these perspec-

ves and don’t consider them to be at odds,” he

says. (For more on Verily, see the sidebar, “Verily:

Googling Surgical Robocs”.)

Ethicon’s Michael Del Prado, too, believes that

concerns about culture clashes and/or simply dif-

ferent approaches to the project are misplaced. “I

think all of the pares are very unied around the

vision of democrazing surgery and making sure

that our technologies are brought to bear to de-

liver a transformave soluon—and I think it’s verycomplementary,” he says. “We’ve been in the [medi-

cal] device space for so long, the culture around de-

livering in a regulated device environment is very

strong. Google has always been very invenve, very

creave. But importantly as well, Verb is creang its

own culture; it’s very aspiraonal and yet also very

collaborave and very focused on execung against

a clear plan. I think it’s working very well.”

Twenty years ago, at the dawn of the MIS revolu-

on and fresh out of Harvard Business School, Sco

Huennekens found himself working for a small sur-

gical device company in Orange County, CA, BirtcherMedical Systems, teaching surgeons how to do a

then-novel procedure: the laparoscopic cholecys-

tectomy. “It’s very interesng coming back to sur-

gery 20 years later, seeing the advances that have

been made,” he says. “It really isn’t all that dier-

ent.” If Verb has its way, Huennekens won’t be able

to say that much longer.

There could easily be a culture clashbetween medtech, a highly regulatedindustry that requires enormousclinical validaon before productapproval, and high tech, with rapiddevelopment cycles that makemedtech look snail-like.


14/15

MAY 13, 201

23SURGICAL ROBOTICS



It’s tempng to think that whilesurgical robocs is a natural move forEthicon, for Alphabet, it’s somewhato point, an outlier for the tech giantwhose forays into a wide range of in-

dustries have transformed lives across

the globe. But as Verily’s CSO VikramBajaj notes, a play in surgical robocsactually ts nicely within the life sci-ence projects that Alphabet, throughits Verily unit, has undertaken. “Wehave internal programs that are de-

veloping new tools to peer into biol-

ogy and reveal things within [the hu-man body],” he says. The collaboraonaround a new robocs program owednaturally from that: As Verily startedto explore the applicaons of its pro-grams, it found itself working more

and more on what Bajaj calls “anatomi-cal, funconal, and molecular imagingtools in surgery.” In the future, Bajajconnues, “everything from surgicalplanning to decision-making to surgical

training” will be aided by “recent revo-luons in advanced biomedical imag-

ing [and by] data analysis and machinelearning.”

More to the point, these tools indata analysis and machine learning

represent an important next step inrobocs, as Verily sees it. Bajaj notesthat current roboc systems “havemade surgeons much more dexter-ous,” but they haven’t really helpedwith decision-making in the OR inways that might lead to improved

paent outcomes. “We’d really like

to improve paent outcomes as thenext step,” he says. “And we thoughtthat through our alliance with J&J, wecould do that in Verb by maximizingthe surgeon’s contextual awarenessduring the procedure,” with technol-ogy that both “leverages knowledgeabout the procedure” and also “aug-ments the [surgeon’s] judgment with

advanced anatomical, funconal,and molecular imaging.”

A High-TechHealthcare Company

In dening Verily’s mission thisway, Bajaj implicitly rejects the no-on that Verily’s role in the joint ven-ture is limited to bringing high-tech

capabilies to the partnership andmore explicitly rejects as well thecharacterizaon of Verily as simply a

high tech company. “We are a health-care company, a very unique health-

care company,” he says. “We havebrought together people from many

dierent disciplines, ranging frombiology to electrical engineering to

quantum opcs to soware engi-

neering and even to more tradionalclinical disciplines.” Moreover, Verilyhas created an environment where

all of these dierent disciplines worktogether to solve problems in health-

care. “And we take a very long per-

specve,” says Bajaj.

In that context, Verily’s contribuon

to the J&J collaboraon representswhat Bajaj calls “the fusion of severaldisciplines,” including advanced opcsto foster a detailed understanding of

the operang environment, as well as

tools “to resolve anatomical funconin greater detail, including biological

and molecular mofs.” He goes on,“We combine all of that with a tremen-dous capability in informaon and im-

age analysis.” And in so doing, “we re-ally hope to give the surgeon a kind of

situaonal awareness that he’s neverhad before.”

Surveying the current oeringin surgical robocs, Alphabet ex-ecuves are rumored to have com-mented that what they saw passing

for robots weren’t real robots. Bajajwouldn’t comment—he’s not an ex-

pert in industrial robocs, he says.

But he does see in the development

of Verb’s plaorm a clear evolu-

on beyond surgical robocs today.

“Over the last decade, advances in

surgical robocs have transformed

them from tools that merely improve

the dexterity of the surgeon to sys-

tems in which advanced imaging is

increasingly a necessary component

of the procedure,” he says. “The next

step is to bring situaonal aware-

ness and intelligence to the surgical

robot.” Doing so means developing

visualizaon tools and decision-mak-

ing systems “to process a lot of imag-

ing informaon and present it to the

surgeon at the best possible moment

during the procedure,” Bajaj goes on.

“That’s the evoluon we see.”

Verily: Googling Surgical Robotcs

“We are a healthcarecompany, a very

unique healthcarecompany,” Bajaj says.

“We have broughttogether people

from many dierentdisciplines, ranging

from biology toelectrical engineeringto quantum opcs to

soware engineeringand even to moretradional clinical

disciplines.”


15/15

THE MEDTECH STRATEGIST © 2016 I i I M d h LLC All i h d


How evoluonary—or revoluon-ary—would such a plaorm be? Froma broader perspecve, technology,generally speaking, and Alphabet more

specically have signicantly changed

the way we do things in everyday life.They’ve introduced new concepts suchas search engines that were unheard

of two decades ago. Surgeons are no-toriously slow to adopt new tools and

new ways of doing things—witness ro-

bocs’ own early failures in orthopedicand cardiovascular surgery—prefer-

ring tradional, more tacle ways ofperforming surgery. Will the plaormVerb envisions require major changesin the way surgeons experience thesurgical procedure, perhaps fostering

some resistance along the way? Bajajnotes that one of Verb’s goals is “toaddress the issue of surgical training

in order to really understand how sur-

gical skill is learned and modeled.” AsVerb’s learning progresses, the toolsand techniques that will dene Verb’splaorm, he goes on, “far from beinga problem, will, we think, improve up-

take and make it easier for surgeons to

learn these procedures.”

Verily has lined up its own networkof KOLs, independent of those con-

sulted by Ethicon, and early feedbackhas been extremely encouraging, ac-cording to Bajaj. Those KOLs “view thiscollaboraon as bringing new hopeto a eld which seems crowded, butwhich is dominated by players who

have very similar soluons,” says Ba- jaj. “We’re doing something dierent,something our collaborators and our

advisors think is really fundamentally

going to transform the eld.”

It’s not clear whether Verily consid-

ered other potenal partners as it pur-sued its early work in imaging tools,

but Bajaj says Ethicon made for a nat-ural choice because of the company’shistory and footprint in the OR andbecause Verily has had close relaon-ships with J&J for some me, formedwhile working together on other proj-ects. “The union of our technology

and J&J’s technology in this eld wasvery logical,” he says. “The arrange-ment came together very quickly.”

But with two of the most widely rec-

ognized brands in the world in J&J andGoogle, why create a new company

with a new name? Bajaj says that allinvolved in the joint venture “recognizethe advantages of the parent brands,”and argues that Verb “imports thoseadvantages.” At the same me, he adds,“we did want this to be an independententy that really combines the very bestelements that each company can oer. Ithink where we have landed combines

all of those things in a posive way,while preserving exibility for the com-pany to act independently in what is a

specialized and compeve space.”

A Hybrid Stronger thaneach Parent

That noon of surgical robocs as“a specialized and compeve space”goes a long way in explaining why Ver-ily chose to partner as it developed new

imaging tools. Ethicon’s broad reachand leadership, combined with its deep

understanding of the OR, will help steerthe development of the advanced tools

that lie within Verily’s area of experse.Some industry observers argue that onereason why tech giants like Alphabet

and Samsung have turned to industrypartnership is precisely because they

lack the clinical experse to inform theirtechnology plays.

But couldn’t Verily, as part of Googlewith its vast resources, simply hire an

army of physicians and other clinicians

to build an in-house clinical under-

standing and capability? In fact, Ba-

jaj notes, the noon that Verily lacksclinical experse is wrong. “We actu-ally do have—and it’s very unique atVerily—hundreds of sciensts, wet labsciensts, and a growing clinical teamin-house, and we do run clinical trials,”he says. “We do work of increasing so-phiscaon alone or with partners. Itis a core feature of our culture.”

But clinical experse by itself “isn’ta reason to go it alone,” Bajaj goes on.“If we can realize an outcome for pa-ents that is far beer and faster witha partner, then we want to pursue

that outcome through partnerships.I think we have been very strategicand diligent in pursuing our current

partnerships.” Such partnerships,which include collaboraons with eyecare companies like Alcon (a division

of Novars AG) and pharmaceucalcompanies such as Sanof SA and Bio-

gen Inc., among others, as well as with

other J&J operang companies, “com-bine our culture and capabilies withthose of our partners,” he goes on.“But it’s not as though we’re lacking

in the scienc and clinical nuance.It’s in fact one of the core things thatdierenates us from other tech com-panies that have made an entry into

the healthcare space. We’ve investedin scienc and clinical rigor from thevery start.”

As tech heavyweights like Alpha-

bet plunge deeper and deeper into

healthcare and, more importantly,

as the technologies they bring play

an ever greater role in re-shaping

how care is delivered, some industry

observers see an important shi in thedelivery of care and a re-conguraonof the medtech landscape, away from

the primacy of medtech giants like J&Jand Medtronic toward an industryled by companies like Alphabet. Bajajbelieves that “there is a transforma-on” coming to the medtech industry.But, he adds, “we’re very humbleabout our role in it and measured” inthe impact Verily will have. That’s inlarge part why Alphabet likes to joinforces with others. “We want to part-ner with companies like J&J to reallyeect a transformaon that combinesthe best each company has to oer,”he says. “That’s central to our busi-ness model right now—and it will

catalyze the transformaon that we

see coming.”

—David Cassak

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Verb Surgical - Surgery in the Digital Age

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