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Crossing Sand Hill: A Q&A With Biotech Venture Vet Nina Kjellson

Xconomy San Francisco — 

Nina Kjellson has been a biotech investor for 15 years, having spent the last 13 at InterWest Partners in Menlo Park, CA. Now she’s moving across the street to Canaan Partners.

Her new office is literally right across Sand Hill Road, a Silicon Valley thoroughfare synonymous with venture capital, and her new job isn’t far removed from her old one in its scope or goals. Kjellson, pronounced “Shellson,” will continue to invest in both therapeutics and digital health, a dual portfolio that only a small subset of life science VCs take on. The boom in health-related digital investments has been led by investors from the tech side.

Canaan also has an office in Westport, CT, and it raised one of venture’s largest funds last year. Kjellson says she is moving because she needs a “front row seat” to what’s new in healthcare and information technology. She wouldn’t have that at InterWest because, after 35 years housing both sides under one roof, the firm has decided to split its team and create two specialist funds.

It’s not an uncommon occurrence these days. Atlas Venture notably made the split last year, prompting questions whether life science specialists were indeed better suited to make good investments in this age of ever-increasing complexity.

“Fundamentally, I’m choosing Canaan because its strategy is aligned with what I’ve been doing,” says Kjellson, whose investments at InterWest include the antibiotic developer Cidara Therapeutics (NASDAQ: CDTX); Labrys Biologics, which spun out a migraine drug from Pfizer and sold it to Teva Pharmaceuticals two years later; and the health-information app maker Welltok.

The fact that Kjellson is a woman in this business is, unfortunately, quite notable. Unfortunately, because venture capital across the board is a man’s world, and it’s only gotten more male since Kjellson joined around the turn of the millennium, according to a report last year from Babson College. The gender gap prompted Kjellson’s new colleague, Canaan general partner Wende Hutton, to call her business “a bastion of male clubbiness” in a public talk earlier this year.

There appears to be “vicious cycle” in venture capital, Kjellson says: “The fewer women there are, the fewer opportunities there are.” But Kjellson’s arrival gives Canaan three women as general partners, plus three more in other investment positions.

Xconomy spoke to Kjellson about gender issues, digital health, drug pricing, and why she’s happy to let Google know where she is at all times. What follows is an edited and condensed version of our conversation.

Xconomy: What will change when you move to Canaan?

Nina Kjellson: What appeals to me is that it’s more the same than different. In the spring, InterWest decided not to invest in IT and healthcare from the same fund. Fundamentally I’m choosing Canaan because its strategy is aligned with what I’ve been doing.

It’s intellectually stimulating to have a front row seat to both IT and healthcare. Even if you’re investing in traditional biotech, it’s important to think about how to engage the consumer. As more financial and decision responsibility is shifting to patients and consumers under new high deductible health plans as well as the insurance mandate, I believe we have to increase information transfer and have more empathy when designing drugs and drug regimens, to ensure they adhere [to their regimens] and experience value for their copays.

X: Will you approach digital health differently?

NK: I was more focused on business applications, software solutions for payers and large healthcare systems to improve efficiency. Things like population health management, patient targeting and engagement, predictive analytics, machine learning and personalization for large enterprises.

But at Canaan, with portfolio companies like Glooko, Chrono [Therapeutics] and Truveris, there’s more focus on pharma-centric digital health such as interaction with the patient taking a medication, digital tools for sales and marketing, physician education and targeting, and for exploring the role of genomic and outcome data in drug development and prescribing.

All in all, my themes and Canaan’s are aligned and complementary.

X: A lot of digital health companies will ultimately require large investments, because you can’t get around proving health benefits to patients. Is that going to scare off certain investors?

NK: There has to be proof, yes. The measure of value won’t be net-promoter scores or downloads of an app, but whether you are bending the curve in costs and enhancing quality of life and expectancy. The complexity of these problems are enormous. The factors driving better outcomes are many. We’ll be partnering with startups to define those metrics of value.

X: I thought you were about to say “we’ll be partnering with health plans” or “public health experts” or others who understand how to design long-term outcome studies. What do you mean “partnering with startups”?

NK: I believe in the disruptive entrepreneur. We’re trying to transform industries and create dramatic change. It’ll come from bringing insights from other industries, areas of consumer experience, et cetera.

Some metrics will be obvious, and a health plan will be able to tell you. But we need short-term predictors of longer-term outcomes. We need to be looking at data in new ways. We need to be constructing new consumer habits to … Next Page »

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