Japan’s declining birth rate makes global headlines, but most of the developed world will soon be facing the same problem.

The real solution involves a lot of social and economic changes, but as you’ll see, technology has a huge role to play as well.

Today we sit down and talk with Kaz Kishida, CEO of Dioseve, about how their technology promises to transform IVF, the rapid timeline for global rollout, and safety issues and ethnical questions involved.

It’s a great conversation, and I think you’ll enjoy it.

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Show Notes

  • How Dioseve will make IVF far more successful
  • Why over 7% of all babies born in Japan are from IVF
  • Bio tech CEOs don’t need life science degrees
  • Safety concerns
  • Applications to rejuvenation and ani-aging
  • Ethical questions around this kind of reseach
  • Japan’s policies towards stem cell and genetic research
  • Roadmap and go-to-market
  • Why some babies will have three parents, and what that’s good
  • How Dioseve’s ovarian cell technology will change IVF
  • Why Japan’s bio tech ecosystem remains under-developed
  • It’s not harder to build a bio tech startup in Japan, but it is different

Links from our Guest

Transcript

Welcome to Disrupting Japan, Straight Talk from Japan’s most innovative founders and VCs.

I’m Tim Romero and thanks for joining me.

Today we’re going to talk about making babies.

Now, this is not something that startups or startup podcasts normally weighed into, but as you’ll see in this case, it makes a lot of sense.

Today we sit down with Kaz Kishida, co-founder and CEO of Dioseve. And Dioseve has developed a technique for growing mature human eggs from IPS cells. Now, this technology represents a huge step forward for IVF and for human fertility in general.

Some parts of Dioseve’s technology could be in commercial use as soon as next year.

Now, kaz, I dive deep into Dioseve’s technology and the potential good it can do and why some future babies will have three parents. We also cover the tricky ethical and safety issues involved, and we explore exactly why that, in spite of all Japan has going for it. The biotech startup ecosystem here is still facing challenges.

But, you know, Kaz, tells that story much better than I can.

So, let’s get right to the interview.

Interview

Tim: So, we’re sitting here with Kaz Kishida of Dioseve who’s helping to address fertility by using stem cells to create fertilizer eggs. So, thanks for sitting down with us.

Kaz: Thank you very much for having me.

Tim: Now I gave a very high level description of what you do in the intro, but can you explain it a little better than I can?

Kaz: Okay. So, our company has technology to induce IPS cells and to another types of cells, including eggs and ovarian cells. Most of their cells are related to germ cells and reproduction.

Tim: Well, this technique’s not yet used in fertility treatments. But it’s something in the future that holds a lot of potential.

Kaz: Right, right. Currently, like In Vitro fertilization, the success rate is still remarkably low. And sometimes that vitamin journey is tough. But if we can deliver our products, say IPS cell derived ovarian cells, then the IVFs will be more accessible and the success rate will be enhanced so many women and can have their children using our technology.

Tim: So why would the success rate be enhanced from using these eggs produced from stem cells as opposed to eggs harvested from the women directly?

Kaz: So, in the standard protocol of In Vitro fertilization, the first step is to retrieve eggs from women. And then in many cases, those eggs are immature and immature eggs can’t be fertilized with sperm. So, we can mature those immature eggs and we can make mature eggs, which can be used for fertilization. So, it directly enhance their success rate of IVF. Let me clarify that. And we have two technologies. The first one is create egg itself, but the other one is create ovaries, ovarian cells from IPS cells. Of course, if we create eggs, we can use those eggs for fertilization directly. But the other product, IPS cell derived ovarian cells that can support current In vitro fertilization procedure.

Tim: And actually I was surprised at how common IVF is in Japan.

Kaz: Yes, yes.

Tim: 7% of all babies are born from IVF now.

Kaz: Right, right. Over 60 K babies are born by IVF.

Tim: So, what’s driving that trend in Japan?

Kaz: Strong tendency is increased age of married and having the first child. Before time, there are average was 29 years old, but now, and the first baby will be born in later stage of women’s career and life stage. Of course the age is strongly rated to the pregnancy, and it is getting harder to get pregnant when women ages. That is biggest reason.

Tim: It seems like Japan is really number one in the percentage of IVF births. But is the average age that women have their first children significantly higher in Japan than other nations?

Kaz: Comparing to the US, yes. Their first child comes in the later stage for women.

Tim: Oh, okay. Well, before we get deep into the technology and your go-to market plans, I want to take a step back and talk about you. So, you graduated from Waseda back in 2020, you went into investment banking. And so what led you from investment banking into Dioseve?

Kaz: The fact is I already decided to start my own company when I was in my high school. And when I was in my university, I experienced some internships in some startups. And after that I noticed that their main job of CEO in a startup is to raise money.

Tim: That’s an important one. Yeah.

Kaz: Yes. And I thought, okay, what is the best way to learn finance? I thought, okay, investment banking. That’s why I decided to go investment bank.

Tim: But that didn’t last very long.

Kaz: Yeah, I’m sorry for the company, but I learned finance, and I exited. Like I resigned. But I already declared that I will have my own company in the near future when I got an interview. And the company said, okay. Yes. So yeah, I joined them.

Tim: So they probably just didn’t think it was going to be in like two years.

Kaz: Yeah.

Tim: So, how did you come together with Dioseve? Why this area?

Kaz: Okay. As I said I decided to start up my company when I was in my high school and I was diagnosed with Hepatitis C, and there is a kind of potential liver cancer. And my parent had that disease, and back then there was no treatment. But the doctor said, in three years, the new drug will come to Japan. And I waited for three years, and the doctor said, yes, now we have the treatment. And surprisingly, the drug has super good effect on hepatitis C. Actually, I, my parent and my grandparent all totally cured. So, I was amazed and I felt, okay, my life was saved by biotechnology. So, it’s turn for me to save others by starting new biotech company.

Tim: What did you study medicine or biology at university?

Kaz: No. I studied geology.

Tim: Geology.

Kaz: Yeah. Totally different.

Tim: Alright. So, how did you meet your founding team members?

Kaz: VC called ANRI introduced me to Dr. Hamazaki, and we got along together and I said, okay, how about establishing our company? And he said, yes, let’s do that.

Tim: So, of the founding team, are you the only one without a medical background?

Kaz: Right.

Tim: It’s just you.

Kaz: Yeah. But as you can imagine, the finance is super important for startup.

Tim: Well, no, I think that’s a really important step. In fact, over the last 10 years in particular one of the most important things I’ve seen for Japan’s deep tech startups is that, I mean, 10 years ago, it was just kind of assumed that the professor would be the CEO.

Kaz: Yes. Yes.

Tim: And that’s changing, and that’s a terrible model because academics tend to be horrible CEOs. That seems to be changing recently.

Kaz: Yes. I think so.

Tim: Let’s talk a little more about the technology and the positioning in the market. Women in developed nations around the world are having children later in life. This is such an important social problem everywhere. And IVF was first introduced in the 1980s, and it’s been hugely successful, but it doesn’t seem like we’ve seen a whole lot of innovation in the last 40 years. Why is that?

Kaz: You’re correct. First of all, the invention of IVF was super innovative. After that, there was not many rooms for improvement because get eggs, fertilize is just super simple. But there was not many things we can do for that process. But the last and biggest room was maturation because eggs can be functional only after getting matured, IPS cell technology enabled to do that.

Tim: So other than that, maturation, everything else about the system is pretty optimal.

Kaz: Every doctor has their own opinion and every doctor thinks their protocol is optimal. But at least like ICSI, ICSI is a second innovation I think regarding IVF. ICSI is a kind of procedure which inserts sperm to eggs directly. Before time we just put sperm and egg to one dish and waiting for the fertilization. But in 1990s they did ICSI and that dramatically enhanced and the fertilization rate.

Tim: So, what are the main sort of safety concerns around this kind of a technology?

Kaz: The biggest one is genetic manipulation from their natural born babies. But fortunately we have technologies to assess the situation of in genetic expression. So, we can precisely evaluate abnormality.

Tim: Okay, creating the mature eggs from stem cells is pretty amazing, and it has obvious applications to fertility treatments. So, I’m just curious, does the technology of other medical applications outside of fertility?

Kaz: Yes. We have. So one example possibly of topic, but we can use this for rejuvenation. So, we can reverse on the age of cells by using our eggs. So, this is very conceptual stage, so I can’t say, yes, we can do that. But the possibility exists here because egg has their ability to cure damage of cell DNA. So, when an egg and sperm are fertilized, their gene has their information of age, we don’t know the reason, but the baby is their age. Eggs have function to reverse the genetic expression status to the first stage.

Tim: Wow. That’s really amazing. Yeah. Holy Cow.

Kaz: Yeah. So currently, especially in the US and West coast, many startup companies are working on rejuvenation. And the main method is inducing genes into cells by using virus. But of course it is virus difficult to control. But if we can rejuvenate cells by using like real kit made from our onsite eggs, then it’s very easy to use.

Tim: Another thing I’m curious about, before you were talking about germ cells. So does that mean the same technology could be used to create sperm cells as well as eggs?

Kaz: Yes, that exists, but in human, not yet. But the fact is there is no technology that will be used in clinical situation in the near future.

Tim: It’s interesting, but not medically useful yet.

Kaz: Not yet, yeah.

Tim: In interviews that you and some of the team have given in the past, you talk frequently about ethical concerns. So, what exactly are the ethical concerns that are involved with this kind of research and these kind of treatments?

Kaz: As for egg creation, the biggest one is safety. The criteria, if we apply this technology to clinic concentration or not, is the balance of benefit and risk. And if the risk is too high, then we can’t use it. And it’s not easy to assure the gene expression is totally the same with a natural egg. So, it is very provocative topic.

Tim: But is that a matter of just efficacy or is that an actual ethical question?

Kaz: Ethics is very close to safety because the problem is if a baby was born, possibly the baby will have disorder, and who is responsible for that disorder? Possibly the baby. Possibly the parent. But the person who will suffer is the baby. So, problem is safety. Safety comes first. After that, possibly people will say, okay, if we can create eggs, women can have their baby regardless of their age, possibly women in their sixties, but is it okay. So, that kind of ethical issues will be raised, but I think the most important point is the safety of the baby.

Tim: Now, I know that, well, there’s certainly no international consensus on it. In the US over the years, there’s been a lot of people who are concerned about any research that involves stem cells. There’s been recent international condemnation of some of the research in China that’s been done on genetic manipulation. What’s the general attitude in Japan towards genetic research and stem cell research in general?

Kaz: I have to say we’re conservative, but fortunately these days the regulation is relaxed. So before time, we were not allowed to fertilize IPS cell derived germ cells like egg or sperm. But now the government about to admit that kind of research just for research use.

Tim: And was that just because they weren’t sure that it could develop safely? What was the ethical concern?

Kaz: The ethical concern is that the embryo, the fertilized eggs is the potential baby. And can we create potential baby artificially? There is a concept of the ethical problem, and the point is, okay, we create artificial embryo and we will use this for research. And in 14 days, we needed to destroy that embryo because that embryo can’t be a child. So, we need to destroy. So, is it okay to do this just for research? So, the government these days started to say, if we can get insight from that research, yeah, that’s beneficial. And we can admit to create artificial embryo from IPS cell derived germ cells. So, there is progress in terms of ethics.

Tim: Looking forward, not only from a research point of view, but from a corporate go-to market point of view. So, this is a long road to walk here. So, what do you see as the main steps you need to take to bring this to market?

Kaz: The market we are aiming to launch our technology is UK.

Tim: Why UK?

Kaz: Historically, UK has led reproductive treatment industry. The first IVF was conducted in the US and after that, in 2015, they conducted mitochondrial replacement therapy. So, if woman has mitochondrial disease, the eggs also have not ideal mitochondria in their eggs and mitochondrial disease will be inherited to their baby. But we can replace the mitochondria with other normal healthy mitochondria, then the baby won’t have mitochondrial disease. But the problem is, that means the baby have three parents. One father and one mother and one mitochondrial donor mother. So, it is ethically problematic. And the many people said it’s not acceptable, but the UK government said, okay, people did that in mice and monkeys and no disorders. Okay, there are many people suffer from mitochondrial disease. Why not we use this for human. And the government officially admitted mitochondrial replacement therapy MRT as a law. So, their progress is huge. So yeah, historically the UK has led their industry. So, I think UK is the best place to realize our technology.

Tim: In terms of identifying a market. That makes total sense. It might be the only market ready for it now, but Dioseve as a company, what are the steps you have to go through before you can bring this to market?

Kaz: We can’t directly dive into the egg creation market. We need to take steps. And the first step is to create ovarian cells and deliver healthy children. And after earning credit from doctors all over the world, we have right to work on egg creation. At that time, we will be prepared for many data about safety.

Tim: The ovarian cell creation, would that be in support of traditional IVF treatments?

Kaz: Yes, yes, yes. It’s even supporting cell, but not just support, but alternate all the IVF procedure, because current IVF entails very tough treatment journey, injecting hormone every day for 10 days and more than six times, and they need to go to hospital. But we can and deliver our artificial ovarian cells, the patients don’t need to use their ovaries. They can use our created ovaries to mature eggs, so they don’t need to get hormone injection. We can reduce more than 80% of hormone injection.

Tim: So, how many years out is that?

Kaz: Yeah, we are aiming to commercialize this next year.

Tim: Next year?

Kaz: Yes.

Tim: That would be amazing. I mean, but don’t you have to go through several stages of clinical trials and things?

Kaz: No, no. Not in Japan. We already consulted with PMDA and they said our product is not the medicine, but medium.

Tim: Alright. It’s all outside the body. Right. Oh, right, of course.

Kaz: Yes, yes, yes. But of course, we have to assure safety by ourselves. So, we are planning many experiments and we will conduct this by step by step.

Tim: Oh, fantastic. So, the plan is to build up both reputation and income through the ovarian sales market, and that’ll give you the time and the credibility to build up the newer more challenging and experimental.

Kaz: Right, right. Egg maturation industry and market is huge. We can alternate all IVF procedure. Especially for a developed countries in global, there are 3 million IVF cycles annually, and we can alternate all the IVF procedure. So, the market data is huge.

Tim: That’s fantastic. Are there other startups either here in Japan or overseas working on the same technology or very similar approaches?

Kaz: In Japan, no. We are only company that is working on it. Globally there are a few, but our uniqueness is we already demonstrated much higher efficacy of egg maturation in mice study. So we have a huge potential.

Tim: You know, biotech life sciences in general, the startup ecosystem is far, far more developed in the US than Japan. So, in Japan, there’s less money available on the other hand interesting Biotech startups really stand out. So, is it harder to build a startup like this in Japan than it would be in the US or Europe?

Kaz: I don’t think so. In Japan, there are many opportunities to raise money. In the US there are so many biotech startups, and the competition is very harsh. But in Japan, if we have strong science and strong plan, good for over go to market, VCs have money. So, I think in Japan, we have enough opportunities to raise a good amount of money.

Tim: Okay. That’s great to hear. But I’ve got to push back then. So Japan, for biotech companies, the capital’s available. Japan’s got, I mean, world-class life science research going on at its universities, it’s got some of the strongest pharmaceutical companies in the world. Why is the biotech startup ecosystem so underdeveloped here then?

Kaz: The biggest reason is there was not many big exit, as you said. There are many big pharma in Japan, but not big acquisition.

Tim: That makes sense. So, it limits it to companies like yours that have kind of a step-by-step intermediate revenue generation plan rather than a lot of the drug discovery medical startups in the US, which they’ll raise a hundred million dollars today with the hope of exiting at a billion in 10 years.

Kaz: Yes. Yes.

Tim: And they can’t do that yet in Japan.

Kaz: Right. Let me provide one example. In Boston there was many shared laboratories, and the sponsors are a big pharma, and they are approaching promising biotech startups in super early stage. And after getting data, the pharma approach them again and they start discussion about M&A. But in Japan, no such an event. We need to approach their pharma, but there is not many cases they acquire a biotech company in a good amount of money. So, main strategy should be IPO. But as you know, the market in biotech’s industry is not ideal. And it’s not easy to raise money public offering,

Tim: But also even only having IPO as a target still limits so many. It keeps the ecosystem small.

Kaz: Yes, yes, yes.

Tim: Only a certain type of company can IPO, but companies are acquired for many, many different reasons and at many, many different stages.

Kaz: As you said in Japan, there are many strong science, but the problem is there are not many clinical development people in startup ecosystem. There are many competitive clinical development talents in Japan, but most of them are in big pharma, and not many of them come to startup industry.

Tim: Yes. This is something I think we’re seeing only the beginning of it now in more traditional industries where you get this cross pollination of people who not only leave big enterprises and go to startups, but then go back. Once you get that full cycle, you can really get some innovation happening.

Kaz: Yeah. Yeah. But the situation is improving now.

Tim: I think so too.

Kaz: Yes. Because we can pay a high salary because available capital from VC has been increasing, so we can pay a salary.

Tim: But actually I’ve noticed this new building. There’s an awful lot of small life sciences, startups and offices here. What is this place? So, is this starting to be a biotech hub in the making or?

Kaz: Oh, good question. Yeah, I hope so. Their owner is Mitsui Fudosan, which is the biggest developer in Japan. Their concept is to make biotech hub in several places in Japan. And Shin-kiba is one with them. As you saw, there are many biotech startups, and this is called LinkLab Two. They’re LinkLab one and three and many others in Tokyo and Osaka, they’re working on creating a new system for biotech.

Tim: Well, hopefully that will for the same kind of innovation we saw in Boston.

Kaz: Yes. Yes.

Tim: Do you think Japan is slower to accept new medical treatments? You mentioned before that it’s very conservative on ethical concerns, but do you think Japan is slower to accept new medical treatments and technology than the US or Europe?

Kaz: I think so.

Tim: Is that a bad thing? Is that a good thing?

Kaz: Economically bad thing. Of course, technology innovation will happen after many trial errors, and we can’t try, of course no innovation will happen. So that is a big dilemma in the US many mistakes, but sometimes they can accept it is that required step for innovation. But in Japan, we call the situation their risk symptom. There is no motivation for ethical committee or like such kind of people and for granting approval for that kind of new and technology. Yeah. If we fail, then their approval will be accused.

Tim: That certainly slows down innovation.

Kaz: Yes.

Tim: But that culture is across so much of Japanese society.

Kaz: I think so.

Tim: Hey, well listen, Kaz, before I let you go, I want to ask you what I call my magic wand question. And that is, if I gave you a magic wand and I told you that you could change one thing about Japan, anything at all, the education system, the way people think about risk, the way new medical technologies are approved, anything at all to make it better for startups and innovation in Japan, what would you change?

Kaz: People think we need to follow others. The culture should be changed.

Tim: Like how do you want to see it changed?

Kaz: Being different from others is the strength and their own perspectives or own dream can be pursued by anyone. Everyone can have their own dream and they have right to do that. But sometimes those people think, oh, if we do this, possibly the other person would think he’s a net or something like that. So, that made them hesitate to do a new thing. But there is their foundation that made lost 30 years in Japan.

Tim: I think so, but also when we look at Japanese innovation, I think if you look at like the most innovative time in Japanese, well modern history, so like the sixties and seventies Japanese industry just revolutionized automobiles and watches and cameras and machine parts and just everything. But the pressure to conform in like the sixties and seventies was much stronger than it is today. So, is it just the ability to be independent or is there something deeper about innovation? Is something else that either can accelerate or hold back innovation in Japan?

Kaz: That’s super interesting question. From my perspective in like 1960 and seventies, the main field is hardware. Yeah of course, in Japanese are good at making something. We have strong workforces, so we have resources to innovate something. But current time, the situation is totally different. Yes, we have expensive labor cost and not many laborers comparing to other countries, we needed to win in software in this generation, but software is not a hard hardware. So, it was difficult for Japanese people to iterate our strengths in that industry.

Tim: Well, and I think also it gets back to a point you made before about the type of innovation we need in software or in medical sciences requires a lot of failure and a lot of rapid iteration and changing, which is different from the type of innovation in hardware. So yeah, maybe that’s tied up with the ability to go do your own thing requires a tolerance and respect for failure as well.

Kaz: I think that’s right. And now the failure can be accepted by others before time it was difficult. But I feel that failure is what an experience.

Tim: Do you feel that also in Japanese society people are being encouraged to kind of follow their dreams more? Or at least being more tolerant of people who are following their dreams more than they used to?

Kaz: I think so. Especially for Gen Z. We have employee, he’s now 68 years old, and he said before time, if the boss said something, it’s mandatory. But for Gen Z, possibly they will say, why? Why I need to do this? So, very opinionated persons will do something different from others.

Tim: Well, that’s good. That’s encouraging.

Kaz: Yes. Yes.

Tim: Hey, well listen, Kaz, thanks so much for sitting there.

Kaz: Thank you very much. It was very enjoyable.

Outtro

And we’re back.

Japan’s biotech startup ecosystem has the potential to be so much bigger. There’s world-class fundamental research being done here, a deep pool of highly specialized talent and VCs who recognize this and are willing to invest.

But as Kaz pointed out, there are two big things holding Japan back right now. First, most of that specialized talent is employed by big pharma, and so far few of them are leaving to start or to join startups. Second, creating world-class biotech startups requires a lot of long-term capital and large amounts of patient capital. Well, that only arrives when there is a real potential for very large exits. And we don’t really have that in Japan today.

The good news, however, is that both of these problems are very solvable.

The first of enterprise talent moving to startups. Well, that’s already happening now. Now, as Kaz mentioned, we don’t see much of it in biotech just yet, but we’re seeing more and more of it across other industries.

The trends started in services and software, but every year, more and more Japanese industries are seeing their top talent jump out of the enterprise and into startups. Now, this trend will eventually become common even in conservative industries like energy and life sciences.

The second thing holding biotech back in Japan, however, the lack of high value exits. Well, that’s not something that will be solved by the ecosystem, but by the biotech founders themselves. Multi-Billion dollar IPOs do happen in Japan, but they tend to be corporate spinouts or large successful private companies rather than startups.

Now, this might change eventually, but not soon. And startups certainly can’t wait for it to happen. But founders can already solve this problem by thinking globally. The global market is much bigger than Japan, and it’s very common for successful non-US startups to IPO in the US. Investors don’t care where the big exits happen, as long as they do in fact happen.

So yeah, Japanese founders need to go global.

And biotech more than most is a global industry. All us humans pretty much have the same parts and work the same way and have the same problems. It’s a perfect go global market.

And you know, the more I talk to the new generation of Japanese founders like Kaz, the more the Japanese startup ecosystem today reminds me of Silicon Valley in the mid 2000s.

After the dotcom crash, things got a lot harder for founders. Naturally, VCs were still investing. There were still plenty of money available, but you had to work for it. Rounds were smaller and investors pushed more aggressively for a clear path to profitability.

Starting a startup was riskier in that era. Both the public and customers were far more skeptical. Back then, startups were still the underdogs. I mean, raising enough capital to outspend enterprise competition was simply not an option.

Also most founders had a personal reason for starting a startup in that environment. I mean, of course everyone wanted to get rich, don’t let anyone tell you otherwise, but they wanted to get rich on their terms and in a way that made things better for everyone.

Sadly, that sentiment’s considered rather naive in Silicon Valley today, today’s San Francisco’s startup culture has become a lot like New York’s financial culture, but with a more casual dress code.

But in Japan, that spirit of innovation as a force for good is still strong. Both founders and VCs want to make a lot of money, of course, but most also genuinely want to make the world at least a little bit better as they do.

 

 

If you want to talk more about how to make babies in a lab or to make money doing so, Kaz and I would love to talk with you. So come by disruptingjapan.com/show240 and let’s talk about it. And if you enjoy disrupting Japan, please share a link online or just, you know, tell people about it. Disrupting Japan is free forever, and letting people know about it is the absolute best way you can support the podcast.

But most of all, thanks for listening. And thank you for letting people interested in Japanese startups and VCs know about the show.

I’m Tim Romero and thanks for listening to Disrupting Japan.