Weekly Topics
» 5/12 – What to Expect» 5/19 – First Pitches» 5/26 – Experiment Day» 6/2 –Value Propositions» 6/9 – Customers, Users, Payers» 6/16 – Distribution Channels (Justin)» 6/23 – Customer Relationships » 6/30 – Revenue Models» 7/7 – Partners» 7/14 – Key Resources & Costs» 7/21 – Lessons Learned Presentations
Presentations
» What were your hypotheses about users and customers? Did you learn anything different?
» Did anything change about Value Proposition? » What do customers say their problems are? How do
they solve this problem(s) today? Does your value proposition solve it? How?
» What was it about your product that made customers interested? excited?
» If B-B, who’s: decision maker, size of budget, what are they spending it on today, how will this buying decision be made?
Two Critical Channel Questions
How do you want to sell your product?
Is subtle, but more important than the first: How does your customer want to buy your product?
12
Yourself
Someone else
Retail
Wholesale
Bundled with other goods or services
How Do You Want Your Product To Get To Your Customer?
13
How Does Your Customer Want to Buy Your Product From Your Channel?
Same Day
Delivered and installed
Downloaded
Bundled with other products
As a service
…14
» Some products are embedded in others (OEM)
» Some products are resold by others (VARs)
» Some products are distributed by others» Who’s the customer?
The Channel as a Customer
18
Distribution ComplexityM
ark
eti
ng
Co
mp
lexi
ty
Solution Complexity
Evangelists
Higher
Volu
me
Higher V
alue A
dded
ServiceTechnicians
Global SystemsSystems Integrators
WANsMainframes
TonerWeb, Telesales
Keyboards
Printers
Retail
Desktop PCs
PC Servers
VARs
LANs
Minis
Direct Sales
19
» Money! What makes them the most?» Training» Marketing to the channel» SPIF
How Are Channels Motivated or Incented?
21
Channel Economics: “Direct” Sales
Cost of Goods(Supply Chain)
Profit + SG&A + R&D EU
D
isco
un
ts
En
d C
on
sum
er
RevenueList
Price
Source: Mark Leslie, Stanford GSB
22
Channel Economics: Resellers
EU
D
isco
un
ts
En
d C
on
sum
er
RevenueList
Price
Source: Mark Leslie, Stanford GSB
Cost of Goods(Supply Chain)
Profit + SG&A + R&D Reseller
23
Channel Economics: Distributors/Resellers
EU
D
isco
un
ts
En
d C
on
sum
er
RevenueList
Price
Source: Mark Leslie, Stanford GSB
Cost of Goods(Supply Chain)
Profit + SG&A + R&D
Dis
trib
uto
r Reseller
24
Channel Economics: OEM or IP Licensing
EU
D
isc
ou
nts
Reseller
Dis
trib
uto
r
Mas
ter
Dis
trib
uto
r
Profit + SG&A + R&D
Cost of Goods(Supply Chain)
Your RevenueList
Price
ResellerProfit + SG&A
+ R&D
Cost of Goods
(Supply Chain)
Your Product Becomes Your Customer’s Cost of Goods
Source: Mark Leslie, Stanford GSB
25
Book Publishing
PublisherNational
WholesalerDistributor Retailer Customer
• Percent of Retail 35% 15% 10% 40%
$7.00 $3.00 $2.00 $8.00 $20.00
• You get- 35% of retail- the distributor gets 10%- the wholesaler gets 15% - the retailer gets 40%
- less any discount they offer the customer27
Book Publishing Economics
PublisherNational
DistributorWholesaler Retailer Customer
Allowances
Wholesale costs
Bills
Payment guarantees
Payment guarantees
Return rights
Credits
Payments
Credit guarantees
Markup
28
Book Publishing Delivery
PublisherNational
DistributorPrinter Wholesaler Retailer
Prepare film (content)
Receive Schedules Print
orders Bundle
counts Film
Determine allocations
Merchandise titles
Establish identity
Create demand
Prepare galleys
Print and ship
magazines
Deliver orders
Sell magazines
Acknowledge returns
29
» Access to customers changes dramatically
» Logistics related to product complexity» People as products
Nature of Products Impact Channel:Physical or Virtual?
30
Product and Channel Are Bits
Channel
PhysicalWeb
Bits
Physical
Product
Rapid Agile and Customer Development
Fastest to acquire early customers and scale
32
Web 2.0 – Product/Channel Are Bits
Channel
PhysicalWeb
Bits
Physical
Product
Google Twitter Facebook Zynga Cloud Services
33
Product Is Bits, but Channel Is People
Channel
PhysicalWeb
Bits
Physical
Product
Rapid Agile and Customer Development
Fastest to acquire early customers and scale
Rapid Agile and Customer development
Traditional sales channel May require installation
34
Traditional Enterprise Software
Channel
PhysicalWeb
Bits
Physical
Product
Google Twitter Facebook Zynga Cloud Services
Microsoft SAP Oracle
35
Physical Products Sold Over the Web
Channel
PhysicalWeb
Rapid Agile and Customer development
Traditional sales channel
May require installation
Rapid Agile and Customer development
Fastest to acquire early customers and scale
Rapid Customer development
Logistics, shipping and manufacturing critical
Customer service
Bits
Physical
Product
36
Killing Traditional Storefronts
Channel
PhysicalWeb
Bits
Physical
Product
Google Twitter Facebook Zynga Cloud Services
Microsoft SAP Oracle
ZapposAmazonCafepressNetflixConsumer electronics 37
The Factories May Be in China
Channel
PhysicalWeb
Rapid Agile and Customer development
Traditional sales channel May require installation
Rapid Agile and Customer development
Fastest to acquire early customers and scale
Rapid Customer development
Logistics, shipping and manufacturing critical
Customer service
Bits
Physical
Product Longer customer
feedback cycle May require large capital
requirements for scale
38
We Still Make Things that Need Salespeople
Channel
PhysicalWeb
Bits
Physical
Product
Google Twitter Facebook Zynga Cloud Services
Microsoft SAP Oracle
ZapposAmazonCafepressNetflixConsumer electronics
Cars Solar panels Wind turbines Bookstores Consumer electronics
39
Homework
» Talk to 10-15 potential channel partners + (Salesmen, OEM’s distributors, etc.)
» What were your hypotheses about who/what your channel would be? Did you learn anything different?
» Did anything change about Value Proposition? » Update your Google Group with Business Model Canvas» Draw your channel diagram
» Summarized in a 5 Minute Presentation
» Read» Startup Owner’s Manual pages :227-256, 332-342
40
implantable drug infusion pumpswith remote physician control
for chronic pain patients at home
“the right dose at the right time and place”
Christian Gutierrez (EL), Ellis Meng (PI), Carol Christopher (IM), Tuan Hoang (FE)
42
KOLs
Foundations
Chronic Pain v3 FS Team
Advocacy Groups
OEMs
Wireless Developers
Trade showsFormulary Acceptance
FDA
IP
Proprietary knowledge
Human Resources
Product Dev Costs
Manufacturing Costs
Marketing Costs FDA/Clinical Trials
Faster relief
Efficient patient management and Dosing flexibility
Access to high-value therapies and pharmacoeconomics
Reduce length of hospital stays andpharmacoeconomics
Training
Clinical data
Support
Hospitals
Pain clinics
Unit sales
Support Services
Patients
Clinicians
Institutions
Payors
43
KOLs
Foundations
FS Team
Advocacy Groups
OEMs
Wireless Developers
Trade shows
Formulary Acceptance
FDA
IP
Proprietary knowledge
Human Resources
Product Dev Costs
Manufacturing Costs
Marketing Costs FDA/Clinical Trials
Faster relief
Efficient patient management and Dosing flexibility
Access to high-value therapies and pharmacoeconomics
pharmacoeconomics
Training
Clinical data
Support
Hospitals
Pain clinics
Unit sales
Support Services
Patients
Clinicians
Institutions
Payors
Electronic health record providers
CMS (Medicare)
Bundled kits Electronic records
Chronic Pain v4
44
Getting Out
Clinicians
Institutions/patients
Regulatory
Entrepreneurs/Industry
» Dr. Stan Louie, Drug Formulation Expert (USC Pharmacy)» Dr. Giovanni Cucchiaro, Anesthesiologist (CHLA)
» Dr. Diana Hull, Physician (Group Health in Washington state, formerly at Kaiser California)
» Thomas Hsu, Insurance Specialist (Network Medical Management; a California ICA)
» Two chronic pain patients ˃ Pump user and creator of support forum˃ User of oral narcotics and patches
» Dr. Frances Richmond (Director Regulatory Science Program, USC)
» Richard Hull (formerly at company selling Lapband)
45
Product Flow/Channel
Electronic Health
Records
.
Patients
Electronic Records
Fluid Synchrony
Support Services
Pump + Controller
Hospitals(AnesthesiologistsNeurosurgeons)
Pain Clinic(AnesthesiologistsNeurosurgeons)
Bundled Kits
Partners/OEMS
46
Channels (Direct)
Hospitals
Pain Clinics
• Direct to institutions• Some formularies involved in purchase decisions• Some doctors make purchase decision directly
• Device company/Doctor relationship is key • Heavily influenced by :
• Clinical study results • Regulatory approval• Reimbursement
47
Patient Care Flow (Now)
Fluid Synchrony
Bundled Kits
Partners/OEMS
Support Services
Pump + Controller
Hospitals(AnesthesiologistsNeurosurgeons)
Pain Clinic(AnesthesiologistsNeurosurgeons)
Surgery/Rx/reprogramming
Scheduled follow-up
Patient Discharged
Trial period/ Home setting
Weeks/months Key factors: Reimbursement , state regulations
48
Patient Care Flow (Proposed)
Electronic Health
Records
.
Patient Discharged
Trial period/ Home setting
Weeks/monthsDays
Actionable feedbackto doctors/institutions
E-prescription / closing loop
Scheduled follow-up
Surgery/Rx/reprogramming
Electronic Records
Fluid Synchrony
Support Services
Pump + Controller
Hospitals(AnesthesiologistsNeurosurgeons)
Pain Clinic(AnesthesiologistsNeurosurgeons)
Key factors: Reimbursement , state regulations
Bundled Kits
Partners/OEMS
49
Regulatory Considerations
PMA 510K
Trial size 100’s of patients 20-100
Costs Up to $100,000 per patient
$10-50 MM $1-10 MM
Time ~ 3-4 yrs + post approval follow-on
~ 2-3 yrs
• PMA approval with grouping of FDA approved drugs.• Clinical trials results used to obtain CMS (Medicare) approval• 510K restricts technology to predicate devices
• Can be more difficult to market against incumbents• European CE mark is easier to attain (safety and performance only)
50
Take-Aways• Channel is direct in this existing market
• Channel for e-health is more complex and evolving• State-to-state regulations can impact incentives
• Can pose problems as electronic records systems vary across the country
Next Steps• Understand costs associated with reaching
doctors/institutions directly• Understand structure of e-health channel• Develop regulatory pathway (timelines and cost profile)
51
Advanced Chemistry for Pharmaceutical Progress
Team: Kiel Neumann (EL)
Stephen DiMagno (PI)
Allan Green (Mentor)52
PET is a non-invasive medical diagnostic technique for cardiac, brain, and tumor imaging
GFP technology makes new (unknown) and known (but clinically inaccessible) [18F]-labeled radiotracers readily available
Fast, multiplatform, high efficiency synthesis of these fleeting, precious agents.
Initial target indications: pediatric neuroblastoma, Parkinson’s disease.
53
The Business Model Canvas
cGMP manufacturerRadiopharmaciesNuclear Medicine and Radiology departments
Pharmaceutical development companies
Contract cGMP precursor manufactureSalary, RentsClinical trials
Sales of intermediates
Technology license
Product license (royalty)
SOPs for precursors and drugsRecruit clinical sitesIn vivo animal studiesDevelop regulatory plan for pre IND meetingID cGMP CROFund-raising
IPPoP data
IPPoP dataRegulatory planUnderstanding of the regulatory process
Accessibility (RCY)PuritySpeedPET/SPECTMultiplatformSensitivity (nca)Specific compounds
General methodology for
adding fluorine to lead compounds of
interest
Technical Assistance (Image Atlas)FDA regulatory support
Technical assistance
Direct sales of precursor
R&D and clinical studies presented in journals and meetingsSales of precursor through global finished pharmaceutical distributor
Radiopharmacies
Equipment producers
Prescribing physicians
Radiologist who perform studies
Drug developers
Radiologists
54
Getting out of the building
1) Radiologists and Nuclear Medicine Physicians2) Radiopharmacy companies (Cardinal Health, Siemens, GE Healthcare, IBA,
AAA)3) Equipment manufacturers (GE, Philips, IBA, Advion)4) cGMP manufacturers
1) Pharmaceutical companies2) Radiologists and Nuclear Medicine Physicians
55
- Face to face with attending Radiologist at Stanford University
- Face to face with radiopharmacist at UCSF- Conference call with Nuclear Radiologist at
Memorial Sloan Kettering - Conference call with president of medium size drug
company with PET product at the FDA- Telephone conference with cGMP facility 56
- Immediate need for our product- Currently used SPECT product for neuroblastoma is limited by
absence of correlative CT data- Our lead PET agent would provide more information on existing
imaging equipment base- Two customers offered to participate in clinical trials- Potential for further development of other tracers identified in
interviews- Actual need for the general procedure- Allow access to previously unknown tracers
57
Face to Face meeting with president of small radiopharmaceutical company Face to face with a clinician at Memorial Sloan-Kettering Face to face with Global Production Manager of Molecular imaging for one of
world’s largest radiopharmaceutical companies OncoKinib collaboration between Geurbet, OncoDesign, and Ariana
pharmaceuticals Face to face meeting with head of R & D and International Production
Manager from Linz, Austria Eckert and Zeigler – German PET modular synthesis provider Face to face meeting with Executive Director and CEO of Scott Tech Center in
Omaha, NE Introductory teleconference to CEO of Innovation Accelerator 58
Significant Interest in our technology Radiopharmacies want GMP product
No interest in GMP reagent preparation Third-party manufacturers would use our developed synthetic pathways Internal competition with one world radiopharmaceutical leader
Best to approach one of other two world leaders
Scott Tech Center Willing to offer free advice on startup strategy Provided introduction to Innovation Accelerator Offered introduction to Director of Venture Technology of one of world’s leading
radiopharmaceutical companies 59
The Business Model Canvas
Sales of intermediates
Technology license
Product license (royalty)
Contract cGMP precursor manufactureSalary, RentsClinical trials
Technical Assistance (Image Atlas)FDA regulatory support
Technical assistance
Direct sales of precursor
R&D and clinical studies presented in journals and meetings
Sales of precursor through global finished pharmaceutical distributor
Accessibility (RCY)PuritySpeedPET/SPECTMultiplatformSensitivity (nca)Specific compounds
General methodology for
adding fluorine to lead compounds of
interest
SOPs for precursors and drugsRecruit clinical sitesIn vivo animal studiesDevelop regulatory plan for pre IND meetingID cGMP CROFund-raising
IPPoP data
IPPoP dataRegulatory planUnderstanding of the regulatory process
cGMP manufacturerRadiopharmaciesNuclear Medicine and Radiology departments
Pharmaceutical development companies
Radiopharmacies
Equipment producers
Prescribing physicians
Radiologist who perform studies
Drug developers
Radiologists
60
Reagents
• F-dopa iodonium intermediate• F-dopamine iodonium intermediate
GMP Cassette
or Components
•ABX•Eckert & Ziegler•GE MX module for TracerLab•Siemens Explora
GMP Complia
nt Synthesi
zer
•TracerLab/ GE•Eckert & Ziegler•Siemens Explora•Neoprobe•Synthra
PET Radiopharmacy distribu
tor
•Siemens PETNet•GE Amersham•Cardinal Health•AAA• Iason
We provide accessibility
Could license precursor synthesis for incorporation in modules
Require GMP precursor (or cassette) to develop our product with their synthesizer
Only want GMP precursor in modules without development
61
Conference call with top 40 Fortune 500 chemical distribution company Open to cGMP production of our potentially proprietary precursors Interested in developing a general “plug-and-play” cassette
Would allow implementation of our methodology and precursors for any radiochemistry module
Important for FDA compliant production of any drug used in patient diagnostics Face to face meeting with Director of Business Development of a leading drug
discovery outsourcing company Discussed preclinical studies and contract manufacturing of proprietary
intermediates Face to face with former Director of Chemistry of major pharmaceutical
company Significant interest in general methodology application to proprietary
compound syntheses62
» Initially seeking to market method technology-too diffuse, but many opportunities (i.e. product-driven opportunities more than general technology-driven)
» Need to identify specific imaging product opportunities» Validated hypothesis for immediate need of tracers» Raised question on identity of lead compound pipeline
for Parkinson’s disease» Recruited two potential partners for clinical trials
63
Approximately 2.2 million procedures in the US.
Drug costs range from $700 (on-patent) to ~$150 (generic FDG)
US sales of radiopharmaceuticals for PET and SPECT $1.2 billion
US sales expected to grow to $6 billion by 2018
Global numbers approximately 2x
Source: Bio-Tech Systems Report #330; data for 2010.64
2500 installed PET scannersPET radiopharmacies cover the entire US marketRadiopharmacies have an interest in proprietary agents as a basis of competition in their market.
65
Neuroblastoma
Prevalence: about 6000 US cases about 1000 new cases per year
Subjects receive 3-6 images/yearto follow response to therapeutic protocols
World market at U.S. x 2 gives potential of 40,000-70,000 scans/year
Drug costs $500/per gives ~$20 - $35 M
Parkinson’s Disease
DatSCAN sales in Europe ~$100 M
The world's highest recorded prevalence of Parkinson's Disease of any region is in Nebraska, with 329.3 people per 100,000 population
US – 600,000 patients 1 scan per year @ $500 = $300 M
66