On the Internet, people talk about everything, even their illnesses. Now, Wall Street is listening.

In the data age, a handful of companies are packaging conversations on Facebook, Twitter and online patient forums to sell to drugmakers, insurers and hospitals eager to understand how people manage their health in the real world.

One of them has started putting its data-excavating skills to use beyond the health-care industry and selling it to financial companies looking to gain an investment edge. Treato, based near Tel Aviv, sends fund managers weekly or monthly reports with analysis of online chatter that may yield early signals about a drug’s side effects or prescription patterns.

“If it’s proven you can actually make better investment decisions by using this, investors will flock to it,” said Les Funtleyder, portfolio manager for Esquared Asset Management. Funtleyder isn’t a client of Treato and he’s cautious about using such data for investing.

While others such as Saama Technologies Inc. and Signals Intelligence Group ply their trade of “social listening” to the health-care industry, closely held Treato is one of the few also putting its algorithms to work for the investment community, according to Brigham Hyde, vice president of data science at consulting firm Decision Resources Group.

The Web, which on Facebook and in chat rooms can convey a sense of seclusion, is emerging as a gold mine of personal data that aggregators can scoop up to find out anything ranging from shoe-shopping preferences to medical history -- and sell to marketers. The harvesting is raising privacy concerns.

‘Not Beyonce’

“Everyone knows what they put on the Internet is open, but most people think, ‘Nobody really cares about me, I’m not Beyonce,’” said Deborah Peel, founder of non-profit organization Patient Privacy Rights. “They don’t realize this is the biggest business in the digital world.”

When Ed Sikov was diagnosed with Parkinson’s disease, he joined PatientsLikeMe, an online discussion platform where people can track their conditions and share their experiences. It has more than 250,000 members and its forums cover 2,000 conditions. PatientsLikeMe sells the data it gathers to drugmakers listed on its website, including Abbott Laboratories and Bristol-Myers Squibb Co., making it a rival to Treato. Founder Ben Heywood didn’t rule out selling information to health investors in the future.

Using Treato

“I’m not comfortable with investors making bets on what people are experiencing, without the people themselves knowing they’re being monitored,” said Sikov, a writer in New York. Even if patients’ names are not shared, “that seems a little intrusive.”

Sikov, 57, said he knows about PatientLikeMe’s customers and is okay with his data going to drugmakers. The company’s privacy policy says it can share patients’ information with third parties though names, e-mails and dates of birth aren’t distributed.

Ofir Levi, head of life science research at the Israeli hedge fund Adamas Healthcare, says he’s used Treato’s data to support an investment idea.

Levi turned to Treato to find out whether prostate cancer patients might be prescribed a drug called Xtandi before they had received chemotherapy. The medicine, developed by Medivation Inc., is only approved in the U.S. for patients who have already had chemotherapy.

Levi suspected physicians might be prescribing Xtandi off- label. “By looking at patient discussions, we figured that pre- chemo patients were also getting this drug,” he said.

Patient Population

Realizing that the market was probably larger than the approved patient population, Levi bet on higher sales in the first quarter this year. Sure enough, on May 8, the drugmaker reported better than expected sales of Xtandi and raised its guidance for full-year sales of the drug. Medivation shares gained as much as 8 percent in late trading after the company’s report.

Levi says that while Treato’s data shouldn’t be used alone in investment decisions, it serves a useful purpose in supporting investor hunches like the Xtandi one.

Treato’s software reviews “tens of thousands” of patient forums and informal discussions daily, according to Chief Executive Officer Ido Hadari. The information is aggregated and analyzed, then sent to clients. Individuals aren’t identified; instead, the company seeks to find trends on how drugs are used and what problems consumers are experiencing.

Medical Research

“For the first time, investors don’t have to listen to the CFO” to find out how a drug is doing, Hadari said in an interview at Bloomberg News headquarters in New York.

This isn’t the first time Wall Street has tried to get insight on the industry’s medical research and usage. Since the early 2000s, expert network firms like Gerson Lehrman Group Inc. and MEDACorp, owned by investment bank Leerink Partners LLC, have gained momentum by putting investors in touch with health professionals such as doctors and researchers.

The patient conversations Treato monitors range from broad to granular.

“I recently stopped using singular as I had a severe episode of depression,” a patient wrote on Medication.com, a thread Treato found despite the misspelling of Merck & Co.’s asthma drug Singulair. Among the more than 40,000 discussions about Pfizer Inc.’s cholesterol drug Lipitor, there’s a thread on Bodybuilding.com about cholesterol content in protein shakes, and whether they’re okay for someone on Lipitor.

Pharma First

Representatives for Pfizer and Merck declined to comment on the conversations Treato had gathered on their drugs.

Aggregating such data for trend analysis is an intriguing idea, said John Schroer, sector head of U.S. healthcare at New York-based Allianz Global Investors. For its part, Allianz listens in “the old fashioned way,” he said, observing patient blog posts or talking to disease-based organizations to hear about the patient experience.

Saama Technologies, another health-data gatherer, harvests data on patient conversations for healthcare organizations such as hospitals. The Campbell, California-based company isn’t marketing its findings to the financial sector, Scott Clark, vice president of life sciences and healthcare, said in an a telephone interview.

Hyde, of Decision Resources, like Funtleyder, has no first- hand experience with Treato and is yet to be convinced about big data tools for health investing.

Data Future

“Data hasn’t proven yet that signals lead to distinctive change in outcomes,” Hyde said. He gave the example of patients discussing side effects, which would only affect a drugmaker’s stock if it escalated its way to the U.S. Food and Drug Administration and led to restrictions in a drug’s use.

Treato’s main line of business remains big pharma. Hadari says nine major drugmakers have signed on. He declined to name them, saying he has signed confidentiality contracts. Treato is still working out pricing for a range of services, Hadari said.

One of the drugmakers, which began using Treato in January, aims to understand patients’ concerns as they move from diagnosis to treatment, according to the company’s director of analytics, who asked not to be identified for competitive reasons.

The company is considering whether to update its patient education materials after determining that people’s questions and focus evolve over time, the director said in a telephone interview. Treato’s appeal is that it helps track how people use medications, and might be used to answer questions such as why patients switch from one drug to another, the director said.

For all his doubts, Funtleyder says some form of data mining is the way forward for investors.

“That’s where I see the world going as far as investing is concerned,” he said. Investors will step beyond the “traditional factors we’d used on Wall Street before.”