magnamosis inc final presentation 12 10
TRANSCRIPT
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FINAL PRESENTATION
Vision: A new way to create a magnetic compression anastomosis with improved outcomes.
Interviews completed: 90
DEV. 2:
Michael Harrison
Michael Danty
Dillon Kwiat
Elisabeth Leeflang
Matt Clark
December 10, 2013
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MAGNAMOSIS, Inc.
• Michael Harrison, MD
– Pediatric Surgeon
• Michael Danty, MS
– Business Development
• Dillon Kwiat, BS
– Medical Device Engineer
• Elisabeth Leeflang, MD
– General Surgery Resident
• Matt Clark, BS
– Business Development
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THE TEAM
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MAGNAMOSIS, Inc.
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INITIAL IDEA
We could make a device that is:
– Better, Faster, Cheaper
Hand Sewn Anastomosis:
• Variable Strength
• Time Consuming
Stapled Anastomosis:
• Expensive
• Limited Indications
Anastomosis: A surgical connection between two tubular structures (like bowel).
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MAGNAMOSIS, Inc.
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PROJECT PROGRESS
Magnamosis: A device to create a magnetic compression anastomosis.
Milestones Achieved:
• >60 Pigs implanted with 0 complications
• FDA class 2 device (with human data)
• FDA approved Investigational Device Exemption
• UCSF CHR application for human trial pending (Mt. Zion)
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MAGNAMOSIS, Inc.
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WEEK 1
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MAGNAMOSIS, Inc.
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WHO WE TALKED TO
Surgeons
Lee Swanstom, MD Minimally Invasive Surgery, Oregon Clinic
John Cello, MD Gastroenterology, UCSF
Stanley Rogers, MD GI Surgery, UCSF
Madhulika Varma, MD Colorectal Surgery, UCSF
John Stamos, MD Colorectal Surgery, UC Irvine
Sonia Ramamoorthy, MD Colorectal Surgery, UC San Diego
Laurence Yee, MD Colorectal Surgery, Sutter Health
Jenny Yu, MD Colorectal Surgery, Private Practice
Robert Khoo, MD Colorectal Surgery, Private Practice
Hospital Administrators
Svend Ryge, VP, Sutter Health
Greg Eveland, Buyer, Sutter Health
Alice Beltran, RN, Implant Coordinator, UCSF
William Finley, MD, OR Director, St. Josephs
Business
Thomas Fogarty, MD, Fogarty Institute for Innovation
Bob Brownell, Emergent Medical Partners
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MAGNAMOSIS, Inc.
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Initial Conception:
Making an anastomosis that’s better, faster and cheaper will have
surgeons fighting to the death to get ahold of our device
Customers: Surgeons
Value Proposition: Better, faster and cheaper than sutures and staplers
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MAGNAMOSIS, Inc.
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CUSTOMERS
Surgeons PatientsHospital Buyers
Use the device
Have the device
implanted
Pay for the device
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VALUE PROPOSITIONS
Surgeons
Patients
Hospital Buyers
• Leak means
another operation
• Increased
morbidity
• Dementia
• Leak means
increased cost
• Longer
hospitalization
• Leak means poorer outcomes
REDUCE LEAK
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VALUE PROPOSITIONS
$93,110
$51,413
$0
$20,000
$40,000
$60,000
$80,000
$100,000
Cost
Leak
No Leak
1.78
0.74
0
0.5
1
1.5
2
Mortality
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MAGNAMOSIS, Inc.
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VALUE PROPOSITIONS
Value Proposition:
Reduce leak rate by 50% compared to sutures and staples
Procedure Leak Rate
Acute sigmoid volvulus 16%
Low Anterior Resection 12-14%
Inflammatory Bowel Disease 7-9%
Tumor Based Luminal Obstruction 7.5-8.1%
Emergency Procedures50% sutures
27% staples
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Where that got us…
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CHANNELS
Initial Conception:
If the device is FDA approved and the surgeon wants to use it, they use it.
Channel: Sales directly to the surgeon
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MAGNAMOSIS, Inc.
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Magnamosis, Inc.
Insurance
Provider
Hospital
Purchasing/Billing Surgeon
Patient
ProductMoneyPatient
CHANNELS
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CHANNELS
Two different systems:
1. Academic Hospital (i.e. UCSF)
2. Large Hospital System (i.e. Kaiser or Sutter Health)
• Adoption of new devices can be driven by a single surgeon
• New devices must have support from multiple hospital groups
• Must have large sales/support force
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CHANNELS
Early stage roll out:
Focus on surgeons at academic institutions
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REVENUE MODEL
Initial Conception:
Better, faster, cheaper
• Cost based pricing – $250 for one size
• Low cost for hospital and patient
• Distribute to KOL’s for free
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Revenue Experiments – cost vs. value
REVENUE MODEL
1. Thomas Fogarty, MD – Fogarty Institute for Innovation
• Look for value based price of device in all markets (CE mark), collect supporting data
2. Douglas Crawford – Mission Bay Capitol
• $250 too low, need to start much higher and base sales on new market dynamic
3. Bob Brownell – Emergent Medical Partners
• Cost based on success
4. Jay Watkins – LLP
• Start price high, will only decrease with time
• Other compression devices may not have failed due to price alone
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MAGNAMOSIS, Inc.
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PAYMENT FLOWS
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MAGNAMOSIS, Inc.
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REVENUE MODEL
What We Learned:
• Separate pricing for sizes
• Value pricing – $1,200 for 23 mm size
– Takes complications into account
• Leaks, procedures, readmissions, morbidity / mortality
– Specific to patient set & procedure
Value based, variable pricing for different sizes
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FINAL CANVAS
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WHAT’S NEXT?
This is more than just a research project, there’s a potential business here!
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MAGNAMOSIS, Inc.
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INVESTMENT READINESS LEVEL
Reimbursement / other revenue
Effective team?
Attractive solution & ID of MVP
Unit economics validated
Cash to 1st inflection point
Plausible exit
Compelling clinical need + large market
IP freedom to operate & ability to block
Regulatory path certainty & difficulty
IRL 6
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Thank You!
Special thanks to:
Jay Watkins
Allan May
George Taylor
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MAGNAMOSIS, Inc.
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Year 2014 2015 2016 2017 2018 2019
REVENUE ($k) Number of Magnamosis devices sold
(/1000) 0 0 0.20 0.72 3.26 8.28
Number of delivery devices sold
(/1000) 0 0 0.02 0.02 0.08 0.12
Gross Sales for Delivery Device 0 0 26 26 104 156
Gross Sales for Magnaosis 0 0 240 864 3,917 9,938
Total Gross Sales 0 0 266 890 4,021 10,094
Less: Sales Returns/Allowance (5%) 0 0 13 45 201 505
NET SALES ($k) 0 0 253 846 3,820 9,589
COST OF GOODS
SOLD ($k)
Parts 0 0 8 29 131 331
Manufacturing 0 0 5 18 82 207
Delivery Device Costs 0 0 15 52 117 193
Testing 0 75 50 50 50 50
Delivery Charges 0.00 0.60 2.08 4.66 7.73
Total COGS 20 75 79 151 383 789
GROSS SALES PROFIT (LOSS) (20) (150) 96 544 3,053 8,011
GENERAL AND
ADMINISTRATIVE ($k) Costs of procedures (trials) 200 600 0 0 0 0
Project Managers 80 504 70 140 180 250
Marketing 30 30 80 120 150 240
Liability Insurance 26 40 26 40 80 100
Professional Education 0 0 20 20 80 120
Quality System 13 45 30 200 400 600
VPs 0 0 60 120 240 620
Executive Team (CEO, COO, CFO) 0 0 120 240 700 1,200
IP 7 7 7 14 30 45
Sales Costs 0 0 145 325 622 1,199
CE Mark costs 93 0 0 0 0 0
Total Expenses 449 1,226 558 1,219 2,482 4,374
-- Net Operating Income (469) (1,376) (463) (675) 571 3,637
Taxes 0 0 (62) (90) 77 487
NET ANNUAL
INCOME (LOSS) ($k) (489) (1,376) (401) (584) 494 3,149
INCOME STATEMENT
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APPENDIX
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WEEK 1
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WEEK 2
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WEEK 3
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WEEK 4
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WEEK 5
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WEEK 6
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WEEK 7
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WEEK 8
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FINAL