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This Tiny Startup Has Scored "Microchip Medicine" Breakthrough

A tiny startup has received FDA approval to sell a novel new drug-tracking sensor that could literally save your life one day.

It's a "pill" as big as a grain of sand and it could also mean huge profits for Big Pharma companies in the not-too-distant future.

You see, each year millions of American s throw away tons of unused drugs. What happens is they start feeling better and just stop taking their meds. Eventually those pills get tossed in the trash can.

No one seems to know the full dollar value of all those unused drugs but many experts say this waste costs Big Pharma millions in profits in lost refills.

Not only that, but doctors around the world worry about the rise of drug-resistant bacteria which also stems from patients not taking their full regimen of antibiotics.

It's why doctors always tell their patients to take all their antibiotics even after they feel better. Otherwise, the few germs that manage to survive become more powerful and thwart the effects of stronger drugs taken at larger doses.

Enter a tiny new startup called Proteus Digital Health Inc. The company has developed a new electronic sensor that could transform the way millions of Americans manage their drug intake.

The move puts Proteus front and center in the hot new field of "microchip medicine."

Experts call it that because patients either swallow a microchip that releases doses into the bloodstream or ingest a small medical monitor like the one Proteus makes.

Proteus has the backing of a dozen firms. They include:

  1. Novartis AG (NYSE: NVS), one of the world's biggest drug makers.
  2. Medtronic Inc. (NYSE: MDT), a big-cap medical device firm.
  3. Kaiser Permanente Ventures, the venture arm of the large HMO.
  4. On Semiconductor (NASDAQ: ONNN), a mid-cap maker of chips and other devices.

No doubt, Proteus has some great technology behind it. Here's how it works.

The Promise of "Microchip Medicine"

Patients swallow a digital sensor that is embedded in either a benign pill or in the prescription drugs themselves.

Once the sensor reaches the stomach, it gets its power by contact with stomach fluids. The micro device then sends a unique signal that checks the ID and timing of drugs in the patient's system.

In turn, the data gets transmitted through the user's body tissue to a patch worn on the skin. The patch also detects the signal and marks the precise time the patient swallowed the sensor. The platform can also collect other health data such as heart rate, body position and level of activity.

This is the part that may trouble some privacy advocates: The patch relays patient data to a mobile phone app. With the patient's consent, the company says, doctors or family members could sign up to receive a copy of that data.

Proteus says this system will help people maintain healthy lifestyles. The firm also says the device will help doctors provide better, data-driven healthcare.

But I know from experience that some will label this type of tech "intrusive." I first wrote about this field back in March.

At the time, I got several comments on the story from folks worried that microchip medicine signals the rise of Big Brother in America.

Let me be frank. Anyone who thinks this type of digital tech will remain free from hacking or spying is naive.

But that's true with just about everything we do in the digital world today, from sending text messages to email to Web searches.

As I see it, microchip medicine could become a benefit of living in what I call the Era of Radical Change. High tech is shifting the world around us in ways that will help us live longer, healthier lives.

And with microchip medicine we have the chance to prevent millions of deaths. Each year in the U.S. alone, more than 100,000 people die from taking legally prescribed drugs.

Most often, this occurs when a patient takes two or more compounds that don't react well with each other. This is a big threat for older people who often see more than one doctor and take several drugs.

Helping a Young Schizophrenic Cope…

So, while this new tech raises some concerns I believe the reward is worth the risks. It could help many patients recover from disease more quickly. It could also be a boon to those who have to take drugs for their entire lifetime.

But don't take my word for it. Let's hear from a patient who very much believes in the Proteus system.

Her name is Lisa Halpern, and she struggles with mental illness.

Lisa is bright enough to have attended both Duke and Harvard. But at one point, her bout with mental illness left her with an IQ of just 70, which borders on being mentally retarded.

It was so bad she began getting lost on her three block walk home from school.

In a profile on the company's Website, Halpern says she believes the Proteus micro-sensor would be a big help if she forgot to take her meds. What's more, she could decide who besides her doctor — such as her parents — could have access to her drug data.

"The beauty here is that a blip doesn't have to turn into a full-fledged relapse," Lisa says of her battle against schizophrenia. "There's no doubt that this system would be incredibly helpful for those living with complex diseases, their families, and doctors. Life-changing, in fact."

To me, that's not some dark conspiracy theory but the chance to make a positive impact in lives of people who desperately need help.

For investors, it's the best of both worlds– a way to make money while working to improve the lives of millions.

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About the Author

Michael A. Robinson is one of the top financial analysts working today. His book "Overdrawn: The Bailout of American Savings" was a prescient look at the anatomy of the nation's S&L crisis, long before the word "bailout" became part of our daily lexicon. He's a Pulitzer Prize-nominated writer and reporter, lauded by the Columbia Journalism Review for his aggressive style. His 30-year track record as a leading tech analyst has garnered him rave reviews, too. Today he is the editor of the monthly tech investing newsletter Nova-X Report as well as Radical Technology Profits, where he covers truly radical technologies – ones that have the power to sweep across the globe and change the very fabric of our lives – and profit opportunities they give rise to. He also explores "what's next" in the tech investing world at Strategic Tech Investor.

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  1. A Olivito | August 9, 2012

    Thank you for your mention of Proteus Digital Health Inc.

    Why not give us a stock symbol so we can look it up? I did type in the full name but no info.
    Can you help me here?

  2. Duke Moscrip | August 9, 2012

    Michael Robinson
    How does the chip finally leave one's body? How long can it last in the stomach? Does it represent a threat as any foreign object would be in the body?

  3. Edward H. Rudberg | August 9, 2012

    Dear William and Michael,
    This is a very interesting device. It could be a ground-breaking development for the future of medicine treatment?
    The stock had a number, OS1. I did find that it is a collaboration with another company…a Japanese company, I think? Is this stock listed on a German stock exchange? It came up seemingly so? I have only been buying stocks in the USA stock exchanges.
    If I wanted to buy this stock, what needs to be done?

    Thank you.

    Ed Rudberg

  4. Nancy | August 9, 2012

    This is a privately held company. I don't know why he is writing about it.

    • Alan | August 9, 2012

      I agree Nancy, why is hw writing about a company only insiders own. Just more useless fodder.

  5. Tim | August 9, 2012

    Useless information … It's a private company … Why bother…???

  6. Stone | November 2, 2012

    Am I the only one who thinks this is something straight out of George Orwell's 1984?? I don't want my medicine micro chipped, I don't want my kids micro chipped and I darn sure don't want to be micro chipped. This crazy stuff is always done under the guise of saving someones life but that's not the real purpose.

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