ENCUENTRO - INVERSIÓNDR. MICHAEL TADROS

Understand where you are and where you want to go…

If you do not know where you are going, you will probably end up somewhere else…Yoggi Berra

Market Introduction

FDA Approval

Patent grant

First in Man

Animal testing

Patent disclosure

Prototype/Reduction to Practice

Idea

TimeCritical Milestones

Val

ue

Perception of Value

Va

lue

TimeMilestones

Acquisition/IPO Exit

Published clinical results

Market Introduction

Salesforce hired

Europe & Japan distribution

FDA Approval

Manufacturing ramp

Human pivotal study

Corporate partnership

First Hiccup & Momentum Loss

Management team hired

Pilot manufacturing

Patent grant

First FDA meeting

Regulatory opinions

CEO hired

Animal testing

Clinician feedback

Patent disclosure

Prototype/Reduction to Practice

Market Analysis

Idea

Set objectives, plan in reverse & team build …

Realistic investment…

Venture Lifecycle …

Val

ue

TimeCritical Milestones

Acquisition/IPO ExitReimbursement

Published clinical resultsMarket Introduction

Salesforce hiredEurope & Japan distribution

FDA Approval

Manufacturing rampHuman pivotal study

Corporate partnershipFirst human data

First Hiccup & Danger of Momentum LossManagement team hired

Pilot manufacturing Patent grant

First FDA meetingRegulatory opinions

CEO hiredAnimal testing

Clinician feedback Patent disclosure

Prototype/Reduction to PracticeMarket Analysis

Idea

Value achieved Far Past Invention …

Essential to Anticipate Potential ExitsEven if critical milestones are met,

always have the next investor/client in sight:-Shareholder agreement-Dilutions-Options- votes&vetos-Success fees-Prime rates, etc… ALL NEED CAREFUL CONSIDERATION

Key aspect raised here: developmentfueled by funds, funds governed byinvestments … do you know what yourworth, how to valuate yourself, whywould others invest in you, your potentialROI (rather than other investments),when and for how long, under whatconditions, etc…

Derisk…assess!

Market• Threat of new entry

• Pressure from substitute products

• Dependency on customers

• Dependency on suppliers

• Current&Future market potential

• Customers

• Political/legal dependency

• Cost/Sale estimation

• Market opportunities, driving trends

– Existing solutions & problems

– Physician and patient critical needs

– Initial sub-segments to drive adoption

– Map competitors & potential exits

– Critical development & distribution partners

• Maximum clinical impact & use scenarios

– Clinical frustrations with std of care

– Faster/Better/Cheaper metrics

– Segmentation of undertreated/Inability to treat

– Source clinical advisors & indep. champions

– Sales model and doctor/patient targets

– Clinical trials endpoints to drive adoption

– Patient recruitment issues

• Initial Regulatory Path

– Existing safety & efficacy data

– Clinical endpoints, clear & quick, for downstream claims and sales support

– Clear predicates

– FDA feedback & path to human clinical data

Patents, Reduction to Practice, Science & Technology

• Possibility of Patent protection

• Product unique selling proposition (USP)

• Alliance/Partnerships

• Future discovery management

• Time to market

• Whole solution mapping

– Tools, implants, techniques, materials

– Critical 3rd parties & existing products

– Blank sheet design inputs

– Essential new IP, in-licensing

– Platform & franchise value of this idea

• Prototypes for quick feedback & testing

– Existing primary human & animal data

– Predictive & accepted animal models

– Existing papers identifying design requirements

• File & Source Intellectual Property

– Sophisticated mapping & filing of IP

– Prior art and FTO search

– Plug holes

• Design for manufacturing & scale issues

Management• Completeness of skills

• Track Record & Experience

• Motivation & Incentive Structure

• Organization

• Emotional Intelligence & Social Competence

• Composition of Board and Involvement

Identification, assessment, and valuation is crucial!

Evaluate Clinical Opportunity• Clinical Merit & Adoption

– Current therapies

– Untreatable problems & populations, sub-segments

– Prevalence vs. incidence & other objective metrics of clinical need

– Independent clinical champions

• Stage of Development

– Reduced to practice

– Prototypes, animal data

– Human data

– Manufacturing feasibility and economics

• Commercial Potential

– Defined product, market size, procedures

– Time to market, regulatory pathway, reimbursement

– Interim milestones and risks

• Protection & Competition

– Patent & prior art search

– Public disclosure, scope of protection, FTO, ITP, Advanced Searches…

– Natural product line extensions

What is your product?

Market ReadinessTechnology ReadinessCommercial ReadinessManagement Readiness

Practical Case …genetic markers identified in cancer samples …

a) Identification of potential drug target(s)b) Diagnostic tool for early detection (IVDs)c) Diagnostic toold) Prognosis tool of cancer onset (benign vs. metastatic)e) Predicting therapeutic secondary effect (pharmacogenetics - personalized

medicine)f) Predicting therapy efficacy (pharmacogenetics - personalized medicine)g) Monitoring therapy efficacy.h) Selecting therapy (pharmacogenetics - personalized medicine)i) Guiding patients to clinical studies (personalized medicine)j) All of the above???k) I dont know?

Your results support product definition to what degree/extent?

A PRODUCT: something produced; especially : COMMODITY : something (as a service) that is marketed or sold as a commodity

Merriam-Webster Dictionary

What is the market size, growth, access, trends?

Market ReadinessTechnology ReadinessCommercial ReadinessManagement Readiness

Practical Case …genetic markers identified in cancer samples …

Ex.: Selecting therapy (pharmacogenetics - personalized medicine)

- How many people are affected by this cancer

- Where are they located geographically

- What is social & economic impact of the disease

- What are diagnostic and therapy protocols in these regions

- How is therapy selected and based on what indicators.

- What are existing therapies (approved & in clinical phase), who covers costs?

- What is statistical outcome & survival trends

- Define real market needs (is it aligned with your product? Does your product fulfill a real unmetclinical need).

- Which patient population subset will directly benefit from your product.

- Discuss inssurance policies, medicare, and social security, pharmacoeconomics aspects for reimbursement (this is crucial market information)

WHO IS GOING TO PURCHASE YOUR PRODUCT AND WHERE? IDENTIFY YOUR CLIENTS AND KEY INFLUENCERS

What advantages/benefits does the technology add to your product?

Market ReadinessTechnology ReadinessCommercial ReadinessManagement Readiness

Practical Case …genetic markers identified in cancer samples …

Ex.: Selecting therapy (pharmacogenetics - personalized medicine)

- Patients carrying these markers demonstrated 100% correlation with positive therapeutic effect of drug A.

- % Patients carrying these markers have improved survival after therapy with drug A

- % Patients not carrying these markers do not benefit from drug A.

- Drugs B & C in patients carrying these markers did not have positive/desiredtherapeutic effect.

- Non-invasive (or minimal invasive) sample collection required (blood, urine, swab, etc…)

- Markers can be identified using novel, cost/time- efficient, sensitive, non-sophisticated, techniques.

WHAT IS YOUR VALUE PROPOSITION?: A business or marketing statement that summarizeswhy a consumer should buy a product or use a service. This statement should convince apotential consumer that one particular product or service will add more value or better solvea problem than other similar offerings. WHY WOULD THEY PURCHASE YOUR PRODUCT?

Competition?

Market ReadinessTechnology ReadinessCommercial ReadinessManagement Readiness

Practical Case …genetic markers identified in cancer samples …

- What are current competitive products?- What are products under development that will compete with

your product? (ex.: individualized personalized medicine services)- What are the advantages and disadvantages of these products?- What benefits/advantages does your product offer in light of

competition?- Can your product evolve and improve over time to keep a

competitive edge?- Is competition present in all identified geographical markets?

WHO IS (AND WILL BE) COMPETING WITH YOUR PRODUCT? BENCHMARK YOUR PRODUCT!

Is manufacturing feasible?

Market ReadinessTechnology ReadinessCommercial ReadinessManagement Readiness

Practical Case …genetic markers identified in cancer samples …

- All product development & manufacturing requires technical expertise

- Get technical expertise on board to draft development plan and overseetechnical development

- Ensure detailed development, manufacturing, and contingency plans welldesigned from the onset!

- Realistic Timing? Costs?

- Does product require manufacturing quality assurance & regulatory approval, does this vary according to foreseen market region?

- Does product manufacturing and development require third party licenses?

- What dependencies do you foresee in manufacturing capabilities (thinkproviders)?

- Can manufacturing costs be lowered?

HOW AND WHAT DO YOU NEED TO BUILD THE PRODUCT?

Is your technology state of the art?

Practical Case …genetic markers identified in cancer samples …

- Your technology must:

- Be the innovative element of your product

- Add competitive edge to your product

- Be a barrier to competing products

- Add real advantages (speed, costs, efficiency, clinical novelty, etc…)

- Is it state of the art?

- In this specific case, only novel genetic marker will add REAL edge (new type of genetic characteristic which conveys advantage, due to improved sensitivity, population representation, clinical/therapeutic relevance).

Market ReadinessTechnology ReadinessCommercial ReadinessManagement Readiness

Practical Case …genetic markers identified in cancer samples …

Market ReadinessTechnology ReadinessCommercial ReadinessManagement Readiness

Technical development feasibility? (technology facet of the product)

Need technical development details and map:

1) where are you?

2) where do you need to end up? Well defined end-point

3) what do you need to do to get there?

- What are current and foresee technical development challenges?

- Can they be circumvented, what are contingency plans?

In this specific case…

- Will need development and approval of rigorous multiplex assay and oligo design.

- Will need to demonstrate efficient data collection from commonly collected tumor sample.

- Need strong preclinical data package (mouse model and patient samples, in addition to preclinical efficacy, safety, and toxicology.

- Also need strong knowledge of genetic pathway and mechanism of action.

- Third party laboratory to validate genetic markers in increased patients sample size, under regulatory and quality assurance conditions and protocols using clinical data.

Practical Case …genetic markers identified in cancer samples …

Market ReadinessTechnology ReadinessCommercial ReadinessManagement Readiness

Is the technology a new & non-obvious invention – patent protection, IP free, dominating patents?

Patent protection secures commercial activity of your innovative product for limited time.

In order for a patent protection, your technological product must:

- NOVELTY – it was not available to the public in any way before patent filing date.

- OBVIOUSNESS – even if novel, may be unpatentable since may be considered obvious to person skilled in the art.

- INDUSTRIAL APPLICATION

- You can google to search whether existing technologies or knowledge affects your patent protection (articles & patent libraries).

- If you need to acquire rights for use of dominating patents, will need to consider how to acquire license for use of third party patents.

- Best bet is to consult a professional.

Practical Case …genetic markers identified in cancer samples …

Market ReadinessTechnology ReadinessCommercial ReadinessManagement Readiness

How will it be commercialized?

• Do you intend to develop a product and license out? To develop a product and sellit? To develop a service and offer it? To outsource a service and market it? Whichmodel is most suitable and why?

• Have you identified your clients, potential licensees, service providers?

• If objective is to develop a genetic-based product to select amongst drugs, who are current drug providers, would they be interested in co-developing your product, why, and for what cost?

• Who are the contacts within these companies?

• What is your business model and does it yield positive ROI?

• What are expected licensing revenues and NPV?

• Have you identified potential gvmt gap funds and VCs?

A business model describes the rationale of how an organization creates, delivers, andcaptures value, in economic, social, cultural or other contexts. The process of businessmodel construction is part of business strategy.

A. Osterwalder et. al 2010.

Customer Relationships:

Some hospital contacts – relevant experts

Channels

University collaborations

Start-Up

Organization Business Model Development

Key Activity:Basic/Fundamental Research

Understanding disease

Key Resources:

Investigators

Cost Structure:InfrastructureIndirect costsPersonnelEquipment

Value Proposition:

Reoccurrence of genetic biomarker set observed in cancer

Revenue Streams:Public Funds (Overhead)License & services

Customer Relationships:Engage Intl KOLs Hospitals & assoc.Marketing campaign towards regional communities (SS)

Channels-marketing-Collab/codevelopchannels-networking & community-Entrepreneurs

Customer Segment:

Patient

Key Partners:

University

Hospital

Value Proposition:

Ex.: Unique companion diagnosis kit for cancer X leading to new clinical advantage in patients treated with drug Y.

Customer Segment:

Industry (pharma)InvestorsSMEsRegional Communities & SSPhilanthropy

Revenue Streams:Contract research & servicesREAL Licenses, equity, royalty

Key Activity:

DEVELOP & VALIDATE PRODUCT!

Key Resources:

Investigators

Entrepreneurs & Mgmt

CROs

Head of innovation

Key Partners:

Public Administration

Industry (pull)

(early/seed) investors, VCs

Incubators/Accellerators

Patient Associations

Etc…

Cost Structure:InfrastructureIndirect costsPersonnel (legal, mgmt, CEO)EquipmentCROs

Courtesy of Business Model Canvass