The bacteria in our gut affect our lives and our health in ways we are just starting to fully realize, and mapping this biome is expected to advance medical science and pharmacology as mapping the human genome.

However, our gut biota is not a mappable sequence, but a complex ecosystem, and one that may be unique to each individual.

In our conversation, Shinji Fukuda, founder of Metabologenomic (aka Metagen), explains how the science is advancing, what kinds of consumer devices we are likely to see first, the importance of global expansion, and the challenges of being a deep-tech startup in Japan.

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

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Show Notes

  • What Metagen is really trying to do
  • Fecal transplants in Japan
  • Japan’s Gut design project – a database of poop
  • The biggest business model challenge for Japan’s deep-tech startuups
  • Smart toilets and other consumer products
  • Why Metagen has been turning down VC money
  • Why global expansion is critical for both business and scientific reasons
  • Some advice for Japanese deep-tech startups
  • Why academics need startup founders
  • Why Japanese startups need to stop playing defense

Links from the Founder

Transcript

Welcome to Disrupting Japan, straight talk from Japan’s most successful entrepreneurs.

I’m Tim Romero and thanks for joining me.

Today, we’re going to talk about the future of poop, and I promise you that it is both a lot more interesting and also a lot less, well, strange than you might think. 

Shinji Fukuda is the founder and CEO of Metabologenomics, a startup which is usually, and thankfully, referred to as Metagen. Shinji and Metagen are mapping out the complex biome of the human digestive tract. 

Our gut biome is an incredibly complex ecosystem that exists within all of us, and it is an ecosystem. These bacteria don’t share our DNA and they’re not simply along for the ride. We couldn’t function without them, and there’s a lot of variation between cultures and between individuals. 

Metagen is now working with some of Japan’s largest healthcare, pharmaceutical, and chemical companies to commercialize this research. Of course, Metagen is not the only startup in this space, and Shinji and I talk a lot about when and how this tech is going to roll out to consumers, some of the scam startups that are already trying to get into this bandwagon, and we dive deep into one of the biggest problems facing deep tech startups in Japan. 

But you know, Shinji tells that story much better than I can, so let’s get right to the interview.

Interview

Tim: So, I’m sitting here with Shinji Fukuda of Metabologenomic who’s researching and monetizing the gut biota, so thanks for sitting down with us.

Shinji: Hi.

Tim: And by the way, is it okay if we call the company Metagen the way people tend to do in Japanese?

Shinji: Yeah, Metagen.

Tim: Okay, good. So, listen, I think you can explain this much better than I can, so what exactly does Metagen do?

Shinji: Our goal is to create the digital society, so we have a huge number of microbes in the gut and the gut microbiota has a lot of function, and maybe you know it’s very important that the imbalance in the gut microbiota are related to some disorders like colon cancer, inflammatory bio-disorders, and also, the microbiota induce some systemic disorders like metabolic disorders and also meta-disease. That’s why gut microbiota is really important to keep our health.

Tim: It’s amazing the amount of research that’s being done on this right now and it’s still a relatively new field. So, for Metagen, what is the main goal of the company? Are you trying to develop more targeted medicine? Is it better food? Is it a healthier population? What is it that the company is focused on?

Shinji: Here, actually, everything, but we have a priority. Our goal is healthcare, to develop the technology to keep our health, healthcare, and also, last year, we established our company Metagen Therapeutics which focuses on the cure for patients with IBD, so the company is now trying to prepare that fecal microbiome juice. Do you know the fecal microbiota transplantation?

Tim: Yeah, yeah, the fecal transplants.

Shinji: Because our feces contain a huge number of microbes, so they can improve that sickness.

Tim: I didn’t even know our fecal transplants are that common in Japan, I didn’t even know if that is legal and approved yet.

Shinji: Not so common but in clinical trials, researchers proved the effect of the FMT in IBD patients.

Tim: So, it’s still, all of this technology, these treatments are sort of in the clinical trial phase?

Shinji: Yeah. Not only in Japan, also in the US. 

Tim: I want to get back into the research and business model in a minute. So, tell me about your customers, so how are they using your services?

Shinji: Metagen is now providing R&D support service, and the main target is the food and supplement companies. Actually, our goal is to control the gut microbiota using some food or supplements because our gut microbiota is affected by our long-term food habit, but we don’t know yet how we regulate the gut microbiota.

Tim: So, I noticed you’ve put together the gut design project. It looks like about 40 very large Japanese companies in a variety of industries. What is that about?

Shinji: Actually, we have to develop the gut microbiome database, we are now collaborating with many companies.

Tim: So, before, you were kind of jokingly referring to this as a poop database, but well, I mean, it kind of is.

Shinji: Yeah, actually, in the Japanese company, they have this yogurt supplement but yogurt cannot improve the – everyone has microbiota, we don’t know yet what kind of products are good for the person, so we need a database, so that’s why we collaborate with many companies to perform the clinical trial, which kinds of products are good for you?

Tim: It’s a range of food companies and insurance companies, and chemical companies, are they all doing research and contributing to this database, or are they customers or sponsors of the research that’s being done?

Shinji: Less than half of companies develop the database but the other is running about the gut microbiota. Actually, I have been working on the gut microbiota for other 20 years, and now, many people are publishing regarding gut microbiota, and the importance, so that’s why they are to join our gut design project, yeah.

Tim: Those sort of open corporate collaborations are funny things. They’re useful but it very rarely develops into sort of a center of revenue, so how do you imagine this consortium in five or 10 years? Is it something that you think will help map out and fill put out this database, and then sort of drift apart? Do you think it’s going to form the core of the technology you’re bringing to market? What role do you see it playing?

Shinji: The gut microbiota is really important to keep our health, so do you know your gut microbiome profile?

Tim: Not a clue.

Shinji: Yeah.

Tim: I don’t. It’s something I probably should know.

Shinji: Yeah, but actually, gut microbiota is tightly affecting our health condition, so that’s why our first goal is to develop a new society which everyone knows their own gut microbiome profile.

Tim: One of the things I find fascinating about what you guys are doing, not just the research itself which I think is fascinating, but Metagen is an example of one of these deep tech startups that are happening in Japan. I think there is so much incredible research being done that is just now starting to get commercialized.

So, you were founded about five years ago, 2015 or so, right? 

Shinji: Yeah.

Tim: It was a joint collaboration of Keio and Tokyo Institute of Technology?

Shinji: Yeah.

Tim: From a research point of view, it’s clear why this is an incredibly important topic, but let’s talk about the business side, let’s talk about your business model. So, how do you make money?

Shinji: Yeah, so at this time, we collaborate with big companies to perform the clinical trials like a CRO because we have the service to analyze the gut microbiome, but in the future, we develop B2C service to analyze your gut microbiome and we recommend some solution to improve your gut microbiome.

Tim: Oh, I definitely want to talk about that in a minute, but right now, I want to back up and talk about your current model. Are you strictly doing a services model where the various companies contract the research to you or are they kind of a joint development project where you would get royalties on treatments that you jointly discover?

Shinji: Both sides are there, but now, we get some money from the company to perform the clinical trial and also other R&D support services, and also, we now try to prepare the fecal microbiome juice.

Tim: Selling to academics and research support, I imagine that market is fairly limited size, so you were talking about direct to consumer products or B2B2C products. What does that commercialization look like?

Shinji: We developed a new kit to collect a fecal sample and actually, we had a patent, stabilization of the feces under room temperature because feces contain many bacteria and if they are room temperature, the gut microbiome will change and also metabolites are altered.

Tim: That’s not really a consumer product per se, that might be something hospitals will use to send out to collect samples before a physical or something like that?

Shinji: Yeah, yeah, yeah.

Tim: Okay. Actually, I think maybe it was in an interview that you did a while ago, but you were talking about making a toilet that analyzed the feces. What happened with that?

Shinji: Yeah. In the future, we will develop the smart toilet to detect health conditions. You rinse your poop, but we don’t know yet what kind of index should be required to develop the smart toilet.

Tim: So, those kind of like smart toilets are almost in that category of like, flying cars. Do you know what I mean?

Shinji: Really?

Tim: Yeah, yeah, I mean, people have been talking about this for, like, 30 or 40 years, and it seems like such a good idea but it never seems to happen. Why is it so hard to build this?

Shinji: If we sell the smart toilet, will you buy our product?

Tim: Yeah, I mean, if it worked, I probably would, it sounds like a really good idea.

Shinji: Really?

Tim: Yeah, I mean, what makes it hard? Is it that the samples have to be collected in a particular way or the processing power, what’s the hard part about doing this?

Shinji: We don’t have a good idea but we are now performing some research, the AI technology is very good for the smart toilet because if we check the color and structure of the feces by using a camera, the AI detects if this poop is good or bad.

Tim: I would totally buy that. I mean, I guess people might be nervous about the whole camera thing.

Shinji: Yeah, I understand, so that’s why, yeah, yeah.

Tim: Privacy invasion and things, but I don’t know, Japanese toilets are already pretty smart, I think it would be…

Shinji: Yeah.

Tim: But it seems like a challenging problem because like in the US, Ubiome, also analyzing poop, and they were just shut down in a massive fraud and I’m wondering, what about this problem is so difficult?

Shinji: gut microbiota produces many types of metabolites, more than 1000 compounds, that technology is really difficult to manage, but we have, and in the global, they only perform the Metagenomic analysis, I mean, sequencing of the bacterial genome. That is only now, which kind of bacteria are there, but they don’t know the function to gut microbiota, but metabolites are key molecules that affect the human body, and we now get the microbiome data and metabolic data, we combine this into a database.

Tim: Wow. So, in a very real way, the problem is not so much on the technology and engineering side, the problem is just, this is still new science.

Shinji: Yeah, exactly.

Tim: It’s a very complex ecosystem that we don’t fully understand yet.

Shinji: Yeah, we don’t know yet everything in the gut microbiome.

Tim: Which is actually kind of exciting, but it makes it hard to make predictions, so I’m curious, usually, we have engineering trying to catch up with science, but it sounds like now, this is sort of science trying to catch up with the engineering. Long term, what do you think this is going to look like for consumers? How will this come to market? Will we see supplements? I mean, not like scammy supplements but I mean like real useful supplements. Are we going to see home test kits? I mean, how is this going to come to consumers?

Shinji: Yeah, our idea is, do you eat yogurt?

Tim: I do, I eat yogurt. My wife feeds it for me regularly.

Shinji: So, do you know the effect of yogurt, I mean, do you feel the effect of yogurt?

Tim: Yeah, actually, I…

Shinji: Really?

Tim: Yeah, I do. It’s good stuff, it helps, it gets things moving, but it’s not like a scientific sort of thing. It’s more of a gut feel, if you will.

Shinji: Most eat yogurt but they don’t feel the effect of yogurt, less than 10%, meaning that the gut microbiota profile is totally different per individual. This gut microbiota profile is different, so that’s why there are responsders and non-responders.

Tim: But do you think we’ll get to a point where people will be able to test their biome at home?

Shinji: Yeah.

Tim: As a consumer product, like testing poop is really a tough sell.

Shinji: Yeah. The price is high.

Tim: Well, and it’s also kind of ick.

Shinji: Ick, sorry?

Tim: Oh, it’s also like people don’t want to do it.

Shinji: Oh, I see. Oh, yeah, yeah, I understand, but that is a very big wall but we have to break through there, but if the patient wants to improve their condition, maybe they check their gut microbiome using our kit, and if we provide very accurate solutions, that’s very valuable for them.

Tim: So, how much do the kits cost if you were selling them direct to consumer, like about how much would they cost?

Shinji: Yeah, actually, at this moment, we don’t sell the kits for the consumer, but another Japanese company provides the service, that is 20,000 Yen, pocket.

Tim: Okay, so $200 or so, that’s reasonable for a consumer, a consumer product.

Shinji: Really?

Tim: Yeah, I mean, it’s expensive, but if someone’s really concerned about it, I mean, people pay more than that for gym memberships and all kinds of supplements, and I mean, people pay crazy amounts of money.

Shinji: Yeah, I understand. I know.

Tim: So, yeah, it’s on the high side of consumer, but yeah, it’s doable. So, yeah, maybe we will see this coming into the consumer market sooner than we were expecting.

Shinji: Yeah.

Tim: Hey, let me ask you also, one thing that was interesting, you guys decided not to go the regular VC funding route, you turned down VC money, it was mostly you and your co-founder’s capital and some bank loans, and why did you decide to go that route?

Shinji: If we get money from venture capital, they set the goal, IPO or MNA, or exit, but our goal is to create this disease-zero society. That is a very far goal, so that’s why we have to develop new services, products, or drugs, many, many things. We firstly developed new services and we sell them to get money, and we also developed a new service or product using that money.

Tim: I mean, that makes sense. I think a lot of people raise money too early. When you raise venture capital, you’re signing up for a very specific business model, but let’s say you figure out how to make that smart toilet. Would that be a time you’d go out and say, okay, now, we’re raising funds to commercialize this? Is that the plans for the future?

Shinji: Yeah, actually, in Metagen Therapeutics, that is their funding model because big money should be required to prepare the fecal juice of the patient/

Tim: Awesome. Yeah, and before, we were talking about your new subsidiary in Singapore. Why expand into Singapore?

Shinji: Yeah, actually, our support service is very viable for developing new products like yogurt, supplement, so that’s why expanded our service to global, the first products in Asia.

Tim: Is Singapore a hub of this kind of research or is it just sort of a convenient Southeast Asian headquarters.

Shinji: Alright, Tatsu, could you explain?

Tatsu: Is it alright for me to interrupt this conversation?

Tim: Yeah, yeah, yeah, sure, no, I’d love to hear it. It’s interesting.

Tatsu: Alright, I’ll help you. So, the main thing in Singapore is the headquarter for all business in Asia and what we are trying to do is not only for selling, we also try to find out the company or the researcher who have the synergy for our vision to collaborate, and especially in Asia, there are so many kinds of herbs and spices, and they have very unique materials there, which have a very huge potential for actually affecting the gut environment, so the model aim is to find out these super-substance from Asia to make the people’s gut environments better more effectively.

Tim: So, for example, in some parts of India or China where there’s particularly spicy food?

Tatsu: Yeah, there we go.

Tim: You’d expect to find really unique or special.

Tatsu: Exactly, so for example, in Japan, many Japanese people have this specific bacteria which is able to decrease the substance included in seaweed because they eat seaweed every day, and that’s why we have developed the bacteria which is able to use the seaweed substance, so we should be able to find unique bacteria or unique substances in each country to make people in other countries more healthy. For example, in Papua New Guinea, there are people able to metabolize the potato into amino acids, making the body very muscular, so if we can find bacteria like that, maybe we can make supplements to make people thinner, muscular, and more healthy until old age without losing any muscle or something like that.

Tim: Alright, so this is just the next step in creating a truly global database?

Tatsu: Yes, of course, for expanding our business, we also have to marketing to the company in Singapore but we also try to accelerate our R&D and try to make our region much faster.

Tim: Alright, awesome. Let give the mic back to Shinji, but thanks, that’s really helpful.

So, Shinji, I want to ask you, let’s talk a bit about Japan. One of the things I think is fascinating, we talked about this before, the importance of Japan’s deep tech and spin-outs from university. I’m curious, what do you think is the best way for Japanese universities to more successfully commercialize this deep tech?

Shinji: Difficult question. I think the the ecosystem should be required because in Boston, there’s Harvard, MIT, we have the same kinds of students there and they established startups and venture capital is funding them, and also, the big pharma are there, so that’s why the ecosystem is already established, but in Japan, no entrepreneur, no good VC, no…

Tim: But this is a thing, like, on paper, it looks like we have this, especially around like Todai and Keio, there’s lots of industry support, Japanese pharma companies are involved, both Todai and Keio have VC funds, but something seems to be missing.

Shinji: I think the entrepreneurs, the number of them is very low, not enough because good science is there and big companies are there but the gap is the startups.

Tim: At Metagen, you, the CTO, the board members are all academics.

Shinji: Yeah.

Tim: You’re all from university. So, have you thought about bringing someone with more of the business experience, the more startup experience on board to help grow and run the company?

Shinji: Yeah, I’m responsible for this point, so that’s why we started out startup, because in Japan, most of the time, they don’t develop the startups because they only focus on the science, but for me, I got a PhD in Agriculture, so I think good science is good for people,. Application science is easier than pure science to develop some startups.

Tim: Yeah, it’s a very different skill though. I’ve noticed, I mean, some people are good at multiple things but in general, some people are really good at the pure research and pure science, you get some people who are really good at developing the applications, the more engineering aspect of it, and you get some people who are really good at the business side. It’s really hard to find someone good at more than one of those, but it’s almost impossible to find someone good at all three.

Shinji: Yeah, I think that is based on the research field because the gut microbiota is a very lucky area, good science is there and also, we need the technology to cure disorders. This field is very suitable for basic science and application.

Tim: Well, yeah, and I guess what we were saying before, the engineering challenges aren’t that big here, it’s mostly the science catching up to our engineering ability.

Shinji: Yeah.

Tim: Well, listen, Shinji, before we wrap up, 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.

Shinji: I see.

Tim: Yeah, you could change the education system, you could say the way people think about risk, the way people view science education in general – anything at all to make it better for startups and innovation in Japan, what would you change?

Shinji: If I use a magic hand?

Tatsu: Magic wand.

Shinji: Magic wand, I can change the Japanese mind.

Tim: How would you change it?

Shinji: Actually, our own Japanese people are defensive, but if I used a magic wand and change the mind, maybe, I guess, relation would change and they’re more happy.

Tim: So, you mentioned defensive which is a really interesting word. Do you mean more conservative?

Shinji: Yeah, conservative, yeah, conservative.

Tim: Okay. I’ve noticed, there’s this image of Japanese people not liking change, but in terms of things like regulations very slow to change, but there’s also Japanese consumers are incredibly novelty-seeking, always looking for something new, something trendy, something different. Consumer behavior and fashions change really fast in Japan.

Shinji: I guess most of them are still tight. If the maker airs some commercials, most of them buy that product.

Tim: Ah, okay, I see, so it’s still kind of conservative.

Shinji: Yeah, but if the literacy of the consumer is higher, I guess only good service, only good product, they buy, so that’s why I think that the motivation is not so conservative. In Japan, the culture is maybe changed.

Tim: The way you’re describing it, maybe it’s not so much less conservative, it may be even more like thinking deeply about is this change good or bad, rather than just quickly rejecting. So, the same thing you were saying about regulations, with Japanese medical regulation which is very strict, which is good, and very slow, which is not, the fact that gut biome research is so new, does that make it even slower or more difficult, or does that not matter as much?

Shinji: Actually, we got the feces through non-invasive, that’s why I think it’s easier, but the gut microbiome is tightly related to some disorders. We analyzed the gut microbiome and we know the risk of the disorder, but people, it’s not disease, before disease, it’s a condition

Tim: So, the fact that you’re not diagnosing a specific disease or a specific condition, that makes it more difficult?

Shinji: Yeah, because that is the criteria.

Tim: I got it, I see. Your vision, what you want to achieve here, that seems to be a pretty significant problem, the fact that you’re not diagnosing a specific disease or condition.

Shinji: Actually, gut microbiome is affected by the food habit. My idea is to know what kind of food is moderate there in that microbiome? So, first of all, we developed the new database and we recommend good food for you to keep the consumer healthy, and also, we developed new drugs using microbiome SF or the metabolites from the gut microbiota, and also, I think that education should be really important because most people don’t know the details about the gut microbiome, but gut microbiome is really important to our health.

Tim: So, I mean, it sounds like there’s a lot more work on the social understanding and the pure science to be done, as well as the real startup-y commercialization point too.

Well, listen, Shinji, thank you so much for sitting down with me, I really appreciate it.

Shinji: Thank you very much.

Outro

Tim: And we’re back.

It occurred to me after the interview but one interesting thing that Shinji’s research demonstrates is that we’ll never see a real Jurassic Park. Think about it: all animals including us and dinosaurs, and wooly mammoths and whatever are not simply machines built from blueprints defined in our DNA.

No, We’re actually complex ecosystems that include thousands of different species of bacteria in our guts and throughout our bodies. In fact, only 43% of the cells in our bodies have human DNA at all, the rest are part of this complex and unique bacterial ecosystem, and that ecosystem is not really defined anywhere. It’s passed from mother to child, and to a lesser degree, among members of a community. No animal can live without it. In fact, in a real way, they don’t even exist without it, and once that complex ecosystem is gone, it’s gone forever.

Okay, but let’s put aside the “life, uhh, finds a way” discussion and get back to the startup at hand and their business model.

In many ways, Metagen perfectly represents the challenges facing Japan’s best deep tech startups. Metagen is in an amazing early position: they’re leaders in a brand new segment that could potentially transform healthcare. Mapping the human biome could well have a more direct medical impact than mapping the human genome. They already have access to venture capital and the discipline not to take it until they really need it. Metagen is in a good place.

However, the challenge for almost all Japanese deep tech startups is that at some point, they need to take the focus off the research and move it into commercialization, and that is something that is exceptionally difficult for talented researchers to do. There are always more research questions that need to be answered. Most Japanese deep tech startups never make this transition and that’s a big part of why so many fail, but to be fair to Shinji, he knows this transition needs to happen and it looks like he’s set some internal targets for when and how it’s going to happen.

Metagen might prove to be the exception, but with Metagen’s board and C-suite dominated by academics, it might be harder for Shinji than for most deep tech founders. But frankly, either way is a good result for Metagen. If they don’t make the transition, they will probably end up at the center of an active and well-funded research consortium with some interesting incremental innovations being developed by the enterprise partners, but if they do make that transition, if they really do get behind what they determine to be their most promising applications, they could utterly transform healthcare and pharmaceuticals.

It’s a win either way but I’m kind of hoping they change the world.

 

 

If you want to talk more about deep tech in Japan or about poop, Shinji and I would love to hear from you, so come by www.DisruptingJapan.com/show179, and let’s talk about it. If you leave a comment, I guarantee Shinji or I, or maybe both will respond, and hey, if you get the chance, please leave a review on iTunes or your podcast platform of choice, or you know, if you like the show, just tell someone about it.

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

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