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How transformative can it be when you teach a computer to read images? Well, we’re getting an early glimpse of that this morning with the release of a JAMA paper by a team of Google researchers who trained a deep convolutional neural network to read photomicroscopic images of the backs of human eyes.

Varun Gulshan, Lily Peng, and colleagues used a deep learning algorithm to study 128,175 retinal images drawn from patients in the U.S. and India that were later reviewed for diabetic retinopathy (DR) by a group of 54 U.S.-licensed ophthalmologists. DR is a condition in which the tiny blood vessels in the light-sensitive tissue that lines the back of the eye (the retina) deteriorate. Chronic high blood sugar can damage the vessels, causing them to bleed or leak fluid, which distorts vision and can lead to blindness—a risk of profound concern to 415 million people with diabetes around the world.

“The nearly 130,000 images in this development set were graded by at least three ophthalmologists—sometimes up to seven if it was a tricky case—and then we trained an algorithm based upon those grades and those images,” says Google’s Lily Peng, a physician scientist trained at UCSF, who is the corresponding author on the JAMA paper. Then the team tested the model’s ability to identity and properly grade DR on two “clinical validation sets” of retinal scans (11,711 images in all) that had already been expertly characterized by eye specialists.

Overall, the Google algorithm detected DR on the test images with both high sensitivity and specificity. “We basically showed that we are on par with U.S. board-certified ophthalmologists who had graded the validation sets,” says Peng.

Why is this important? Diabetic retinopathy can be prevented if caught early—but relatively few people around the world have access to expert screening. That’s where Google’s algorithm comes in. It can conceivably be put to use anywhere—or anywhere a smartphone or tablet can work.

“While it may take acres of computer farms to actually train the model,” says Peng, “the model itself—once trained—is actually not that big, and can fit on even a mobile device.” That, in fact, is one of the things the Google team is now working on—in concert with some of hospitals in India.

Who knows? Maybe in the next generation of smartphones, diabetics will be able to scan their own eyes for an early warning sign.

More of today’s big stories below.

Clifton Leaf

@CliftonLeaf

clifton.leaf@fortune.com

DIGITAL HEALTH

IBM showcases Watson's AI capabilities to the Radiological Society of North America. A number of massive tech firms have been presenting at the Radiological Society of North America's (RSNA) annual meeting, which focuses on the latest advancements in reading x-rays, MRIs, and other diagnostic scans. And IBM Watson Health, with its enormous analytics ambitions in the sphere, is no exception. The Watson Health Imaging unit on Tuesday showed off some of supercomputer's potential in the radiology field alongside IBM subsidiary Merge Healthcare. The firm contends that Watson's machine learning and artificial intelligence capabilities make it a ripe resource for assisting doctors buried under mountains of medical imaging data, which IBM estimates encompasses at least 90% of all medical data. So what are some of the real-world situations where a tool like Watson can help these physicians? For one, IBM will demonstrating a "cognitive peer review" function that can help draw medical conclusions from analyzing differences between a patient's new clinical medical evidence and past electronic health records. Other tools, like a "brain bleed app," can assist emergency room docs diagnose a potential stroke or brain bleed by sifting through patient records.

Theranos hit with a class action investor suit. The woes of once-vaunted blood testing startup Theranos continued to mount on Monday with a new lawsuit alleging that Elizabeth Holmes' embattled firm misled investors about its proprietary finger-prick blood test technology. (Theranos is already facing a breach of contract lawsuit by former partner Walgreens.) The latest legal skirmish was launched by two private investors: Robert Colman, co-founder of investment firm Robertson Stephens, and another share purchaser named Hilary Taubman-Dye. The plaintiffs believe that other investors who purchased Theranos shares through third party exchanges and were unable to cancel their transactions once the company's various controversies came to light are likely to join the suit, making it a class action. (Fortune)

This company may soon sell an over-the-counter nerve stimulating device to treat chronic pain. Medical device firm Neurometrix has cleared a key regulatory hurdle for its novel device to treat chronic pain that brings it one step closer to being able to sell the product over-the-counter and via prescription in Europe. Neurometrix claims that its Quell device can help chronic pain patients with conditions like sciatica and osteoarthritis by stimulating nerves near the upper calf; this nerve stimulation in turn carries signals up to the brain that can help block pain receptors, according to the firm. The chronic pain sector has seen a flurry of interest in recent years given the ongoing epidemic of opioid and heroin abuse in America and abroad. At Fortune's inaugural Brainstorm Health conference earlier this month, ENSO CEO Shaun Rahimi showcased his own company's electrical stimulation patch for treating pain. (FiercePharma)

INDICATIONS

Elizabeth Warren slams pharma-backed 21st Century Cures bill. 21st Century Cures has a powerful coalition of biopharmaceutical and advocate interests backing it. A new draft of the bill, which aims to speed drug approvals and provide funding to the National Institutes of Health (NIH), among other measures, is set to receive a vote in the House of Representatives this week. But it won't reach President Obama's desk without a fight, if Senator Elizabeth Warren's barn burner of a speech Monday slamming the new draft is any indication. Warren decried the latest version of the bill as one that had been "hijacked" by big pharma interests and that would loosen regulatory requirements on disclosing financial stakes. She also noted that the provisions of the bill appropriating funds for fighting the opioid epidemic and funding the NIH would come at the cost of key Obamacare programs. "I cannot vote for this bill. I will fight it because I know the difference between compromise and extortion," said Warren. The Senate is expected to begin consideration of the bill next week, after the House votes on Wednesday. (Fortune)

Pfizer and Merck KGaA look set to finish 4th in next-gen cancer immunotherapy race. One of the hottest new spaces in cancer immunotherapy since 2014 has been the so-called "checkpoint inhibitor" field which harnesses the human immune system to block off certain cellular pathways that can help cancers spread. Some of the world's biggest pharma companies have been jockeying to enter the multi-billion dollar field with their own flagship products, with Merck being first to the finish line with its star therapy Keytruda and Bristol-Myers coming in second with Opdivo. Earlier this year, Roche also entered the market with Tecentriq. Now, it appears that Pfizer and its German partner Merck KGaA (not to be confused with the American Merck) could be fourth on the scene with the experimental avelumab, with the Food and Drug Administration accepting the firms' application for the product. The review process should only take six months since avelumab's won an FDA priority review tag. So who's left at the rear of the pack? AstraZeneca, which has its own offering called durvalumab. (Endpoints)

Merck's Keytruda wins an FDA priority review in yet another type of cancer. Speaking of checkpoint inhibitors: Merck's Keytruda has already been cleared to treat a variety of major cancers, including melanoma, non-small cell lung cancer (NSCLC), and head and neck cancer. (The lung cancer indication is particularly significant for Merck since it's cleared as a go-top, first-in-line option for advanced patients.) Now, the company may be on track to nab another indication in a very different type of cancer—advanced microsatellite instability-high (MSI-H) cancer. This is a type of cancer that's characterized by a cell's inability to repair certain DNA sequencing errors. And Merck thinks that these cancers can be susceptible to its therapy. "We believe that patients whose tumors harbor DNA repair defects may be especially responsive to Keytruda, and we look forward to working with the FDA to bring this important new therapy to these very challenging treatment situations," said Dr. Roger M. Perlmutter, president of Merck Research Laboratories, in a statement.

THE BIG PICTURE

Donald Trump taps Tom Price as HHS chief. President-elect Trump has made his pick for what is certain to be one of the most important positions in his prospective cabinet: Secretary of the Department of Health and Human Services (HHS). Trump's widely expected pick is Georgia Congressman Tom Price, a former orthopedic surgeon and staunch conservative opponent of the Affordable Care Act, or Obamacare (not to mention an early supporter of Trump). If confirmed, Price will be charged with overseeing major entitlement programs like Medicare and Medicaid (on top of Obamacare), as well as lynch pin scientific and regulatory organizations like the National Institutes of Health (NIH) and the Food and Drug Administration (FDA). The big question right now is what, exactly, Price would do as the administrator in charge of Obamacare, since Trump has signaled that he's actually open to keeping parts of the law in place. But Price will face plenty of other tasks, too, including reforming the FDA's drug approval process and grappling with the opioid epidemic afflicting large swaths of America. (Fortune)

Rupert Murdoch may have sunk $100 million into Theranos. A unicorn's troubles tend to ripple far beyond its immediate surroundings. Case in point: media titan Rubert Murdoch reportedly pumped $100 million into the blood testing startup, whose technology and internal processes have come under so much scrutiny that regulators and investors alike have come knocking at the door (and not in a good way). The Wall Street Journal reported Murdoch's stake (an interesting twist seeing as the Journal is a Murdoch-owned operation) and said that other high-profile investors, including Cox Enterprises, have taken significant hits on their Theranos bets. (Fortune)

UnitedHealth's outlook is fine despite Obamacare drag. UnitedHealth was one of the first in a string of major insurers to announce that it would be exiting many of Obamacare's troubled individual insurance markets, citing the high medical costs of patients in those risk pools. It appears that decision may have paid off, at least in part, as the insurance giant previewed an upbeat 2017 earnings outlook on Monday. UnitedHealth raised its revenue forecast for next year from $197 billion to $199 billion. (Wall Street Journal)