Cardi-Eye Business Plan
‘On the Frontiers of Cardiovascular
Disease Management’
Team Jackson
Nour Abbas, Jimmy Chiou, Warris Choy, Nikita Dewani,
Vidhi Gupta, Jack Said & Hao Xie
Page Count: 32
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Contents 1) EXECUTIVE SUMMARY................................................................................................................ 4
1.1) Company Overview ............................................................................................................... 4
1.2) Mission ...................................................................................................................................... 4
1.3) Vision ........................................................................................................................................ 4
1.4) Market and Opportunity........................................................................................................ 4
1.5) Cardi-TARS .............................................................................................................................. 5
1.6) Competition ............................................................................................................................. 5
1.7) Competitive Advantages ...................................................................................................... 5
1.8) Marketing and distribution .................................................................................................. 6
1.9) Financial Information ............................................................................................................ 6
2) COMPANY BACKGROUND AND OBJECTIVES ..................................................................... 7
2.1) Company Description ........................................................................................................... 7
2.2) Vision ........................................................................................................................................ 7
2.3) Mission ...................................................................................................................................... 7
2.4) Management and Employees .............................................................................................. 7
2.5) Organisational Chart ............................................................................................................. 9
3) THE PROBLEM ............................................................................................................................. 10
3.1) Cardiovascular Allograft Rejection ................................................................................. 10
3.2) Current Diagnosis Methods & their Downfalls ............................................................. 11
4) MARKET ANALYSIS ................................................................................................................... 12
4.1) The Business Opportunity ................................................................................................. 12
4.2) Market Trends Influencing the Business Opportunity ............................................... 13
4.2.1) Increase in chronic illnesses accompanying an ageing population ........................ 13
4.2.2) Increase in heart donors and successfully performed transplants .......................... 14
4.2.3) Moving towards remote diagnosis and monitoring .................................................... 14
4.3) Customer Segments ............................................................................................................ 15
4.3.1) Hospitals and Cardiologists ........................................................................................... 15
4.3.2) Insurance payers ............................................................................................................. 15
4.3.3) Heart Failure Patients ..................................................................................................... 16
4.4) Competition ........................................................................................................................... 16
4.4.1) Direct competitors ........................................................................................................... 16
4.5) Competitive Advantage ...................................................................................................... 17
4.6) Indirect competitors ........................................................................................................ 18
Carmat SA ................................................................................................................................... 18
Syncardia Sytems Inc ................................................................................................................ 18
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BiVACOR ..................................................................................................................................... 18
5) PRODUCT AND TECHNOLOGY ............................................................................................... 19
5.1) Cardi-Telemetric Allograft Rejection Sensor (Cardi-TARS) ...................................... 19
5.2) Product Rationale ................................................................................................................ 19
5.3) Technology Behind the Product ...................................................................................... 21
5.4) Intellectual Property – Protecting Intellectual Assets ................................................ 21
6) BUSINESS MODEL ...................................................................................................................... 22
6.1) Value Proposition ................................................................................................................. 22
6.2) Marketing and distribution strategy ................................................................................ 22
Healthcare provider .................................................................................................................... 23
Publications ................................................................................................................................. 23
Conferences ................................................................................................................................ 23
Insurance payers ........................................................................................................................ 23
Medicare ...................................................................................................................................... 23
Private payers ............................................................................................................................. 23
Distributers .................................................................................................................................. 23
6.3) Pricing strategy .................................................................................................................... 24
7) MAJOR MILESTONES & OBJECTIVES .................................................................................. 25
7.1) Route-to-Market Roadmap ................................................................................................. 25
7.2) Operating strategies for reaching value enhancing milestones ............................. 25
Concept and Proof-of-concept Phase (≈18 months) ............................................................ 25
Clinical Unit Development and IP filing Phase (≈ 9 months) ............................................... 25
Pre-clinical Testing Phase (≈ 9 months) ................................................................................. 26
Clinical Testing Phase (≈ 11 months) ..................................................................................... 26
Exit Strategy (≈ 2 years) ............................................................................................................ 26
8) FUNDING ........................................................................................................................................ 27
8.1) Capital Requirements ......................................................................................................... 27
Concept and Proof-of-Concept Phase .................................................................................... 27
Clinical Unit Development and IP Filing Phase ..................................................................... 27
Pre-clinical Testing Phase ........................................................................................................ 27
Clinical Testing Phase ............................................................................................................... 27
8.2) Fundraising Strategy ........................................................................................................... 28
9) FINANCIAL STATEMENTS ........................................................................................................ 29
9.1) Key Assumptions ..................................................................................................................... 29
9.1.1) Revenue Assumptions ................................................................................................... 29
9.2) Summary P&L Forecast ($000) ......................................................................................... 30
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9.3) Capital Requirement & Use of Proceeds ....................................................................... 31
9.4) Exit Strategy .......................................................................................................................... 32
10) OPPORTUNITIES RISKS AND MITIGATION ....................................................................... 32
10.1) Market risk ........................................................................................................................... 32
10.2) Competitive risk ................................................................................................................. 33
10.3) R&D risk ............................................................................................................................... 33
10.3) Legal risk .............................................................................................................................. 34
10.4) Operating risk ..................................................................................................................... 35
11) REFERENCES ............................................................................................................................ 36
12) APPENDIX ................................................................................................................................... 40
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1) EXECUTIVE SUMMARY
1.1) Company Overview
At Cardi-Eye, we design and develop our post heart transplant Cardiac Allograft
Vasculopathy (CAV) monitoring solution Cardi-TARS (Telemetric Allograft Rejection Sensor)
for the $5 billion US heart transplant market. Our Cardi-TARS heart transplant rejection
monitoring system represents the next generation in post-transplant care, designed to improve
outcomes and lower costs for the ~3000 heart-transplant patients in the US each year. Our
proprietary technology, based on advanced antibody coupled graphene biosensors, is able to
monitor CAV continuously in real-time, providing a more accurate and less invasive solution
than any existing technology. Our team consists of experienced personnel in biotechnology,
biochemistry, marketing, quality assurance and regulations, with an ambition for innovation
and commercial success.
1.2) Mission
Our mission is to offer cardiac allograft patients a real-time, less invasive and more
affordable CAV monitoring solution via break-through telemetric sensor technology.
1.3) Vision
Breaking into the US medical device market within the next 10 years, by partnering
with established market leaders in the cardiovascular medical device sector.
1.4) Market and Opportunity
Our primary target is monitoring the development of Cardiac Allograft Vasculopathy
(CAV): an autoimmune cardiovascular disease currently affecting over 2700 Americans
annually. At present, $5 billion per annum is spent on heart-transplantation in the US, with
16% of the cost spent on post-transplant care. Improvements in monitoring capabilities are
estimated to reduce this expenditure by ≈33%.
Existing techniques for diagnosing and monitoring CAV are invasive, inefficient and
expensive. In contrast our product Cardi-TARS can provide:
• A real-time, accurate, and quantitative functional assessment;
• A safer, easier, faster, and more economical monitoring solution than competing
procedures. Thereby improving patient outcomes;
• A better patient quality of life, with fewer visits to the hospital, improving hospital
efficiency;
• And offer psychological security to patients with real-time monitoring.
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Furthermore, Cardi-TARS can directly integrate into current heart-transplant surgery protocols
with minimal adaptation, thus is more likely to be adopted by Cardiologists. We therefore
believe that our product Cardi-TARS will become an indispensable tool in the heart-transplant
process. The revenue potential for Cardi-TARS, assuming 25% market penetration is
approximately $30 million per annum; a number which is projected to grow faster than the
heart transplant market which has a compound annual growth rate of 9.1%.
1.5) Cardi-TARS
A post heart-transplant cardiac allograft vasculopathy (CAV) monitoring device
capable of continuous monitoring of CAV biomarkers, thereby providing real-time monitoring
of CAV development. The biomarker signals are telemetrically linked to the patient’s
smartphone or computer, giving a dashboard readout of the patient’s current condition at all
times. Thus, relieving the need for multiple invasive biopsy operations, which are time-
inefficient, expensive and invasive.
1.6) Competition
Direct competition: CareDx (an American company) and Lausanne EPFL (a Swiss
University) have developed products that may be used to monitor CAV. However, CareDx’s
Allomap is a blood based test kit which does not offer real-time continuous monitoring and is
also comparatively expensive as compared to Cardi-TARS. Lausanne EPFL’s implanted lab-
on-chip device is present at prototype stage and can detect CAV using blood based small
molecule markers. However, Cardi-TARS detects CAV causative protein based biomarkers
and therefore provides a more accurate assessment of CAV development, leading to lower
false-positives as compared to Lausanne EPFL’s technology.
Indirect competition: There are several companies developing artificial hearts. However,
such the technology for artificial hearts are currently immature and such solutions are
extremely cost prohibitive and unreliable; and can only provide a temporary solution to heart-
transplants, which remain the gold-standard.
1.7) Competitive Advantages
Our product Cardi-TARS offer competitive advantages including:
• A real-time, accurate, and quantitative functional assessment;
• A safer, easier, faster, and more economical monitoring solution than competing
procedures.
• Better patient quality of life, with fewer visits to the hospital, improving hospital
efficiency;
• Offering psychological security to patients with real-time monitoring.
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• Usage requires minimal changes to existing heart transplant protocols.
• Detection method rely on blood based causative protein biomarkers, and therefore
gives fewer false-positives.
1.8) Marketing and distribution
We plan to enlist leading cardiologists as product endorsers, and further target
Cardiologists running heart transplant programs in the US via publications in peer-review
journals and attending various conferences, conventions and symposia. In parallel, we plan
to establish manufacturing and distribution channels via partnerships with leading distributers
such as BG Medical, Medtronic, or Abbott.
1.9) Financial Information
We expect to reach profitability in 2025 with following strong revenue growth. Our
summary projected net income, in thousands is as follows:
We have sufficient funds to perform concept research and development stages using
accepted grant funding through 2020. We are currently seeking $10 million in series A funding
to finance further clinical unit development stages in compliance with FDA regulatory steps for
a Class III medical device.
-20000
-15000
-10000
-5000
0
5000
10000
15000
20000
25000
30000
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Projected Net Income ($000)
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2) COMPANY BACKGROUND AND OBJECTIVES
2.1) Company Description
Cardi-Eye is a medical device company specialising in the commercialisation of the post heart
transplant Cardiac Allograft Vasculopathy (CAV) monitoring solution Cardi-TARS (Telemetric Allograft
Rejection Sensor) for the $5 billion US heart transplant market. Based in the US, our team consists of
experienced personnel in biotechnology, biochemistry, marketing, quality assurance and regulations.
We currently employ 7 full-time employees, and enlist the consultation services of NAMSA, a medical
research organisation throughout the commercialisation of Cardi-TARS.
2.2) Vision
Breaking into the U.S.A medical device market within the next 10 years, by partnering with
established market leaders in the cardiovascular medical device sector.
2.3) Mission
To offer cardiac allograft patients, a real-time, less invasive and more affordable CAV
monitoring solution using telemetric biosensor technology,
2.4) Management and Employees
The Cardi-Eye venture was founded in 2017 by a team of seven postgraduate University of
Manchester students, whose passion for biotechnology alongside their interests in healthcare
entrepreneurialism delivers innovative disease management solutions. The founder’s diverse
educational backgrounds help equip a wide range of technical, scientific and leadership qualities to
Cardi-Eye’s foundations.
Jack Said, BSc, MSc CEO
Company CEO and inventor of Cardi-TARS, Mr. Said gained both his bachelor’s and master’s
degrees from the University of Manchester, in Biotechnology with Industrial Experience and
Biotechnology and Enterprise respectively. Mr. Said has a wealth of experience operating in the medical
device industry, having worked as a quality assurance and regulatory officer for Crawford Healthcare
U.K., during which he was responsible for setting up various in-house product pipelines for medical
device brands such as the SilDerm® line. Mr. Said has also worked as a medical device product analyst
for the Jordanian pharma company Beit Jala Pharmaceutical Co. Both his education and his career
track record have equipt him with extensive industry knowledge and leadership qualities needed to
successfully run a medical device startup venture.
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Man Choy, BSc, MSc CFO
Mr. Choy completed his bachelors degree in biochemistry from the University of York before
acquiring his masters degree in biotechnology and enterprise from the University of Manchester, before
finally securing a PhD position at the Medical Research Council, University of Cambridge. His critical
analysis skills have allowed him to excel not only in science research, but also in business having
previously successfully launched a watch-selling venture, Beverly Watches, prior to joining Cardi-Eye.
Hao Xie, BSc, MSc Scientific Director
Mr. Xie acquired his BSc (Hons) from of Zhejiang Sci-tech University, China, in biotechnology
and has also earned an MSc in biotechnology and enterprise from the University of Manchester. To
date, Mr. Xie has published various papers in high-influence peer-review lifescience journals.
Additionally, he has also worked for R&D teams at both the National University of Singapore and the
Zhejiang Academy of Agricultural Sciences.
Nour Abbas, BSc, MSc HR Director
Miss Abbas is gained her master’s degree in Biotechnology and Enterprise from the University
of Manchester. Prior to joining Cardi-Eye, she occupied the position of communication lead at The North
West Biotech Initiative. She has completed work at both GSK Vaccine and GSK Consumer HealthCare,
the latter as an Analytical Scientist. During these internships, she has received extensive training
regarding emotional intelligence and team management.
Nikita Dewani, BSc, MSc Operations Officer
Miss. Dewani obtained her bachelor’s in Biotechnology from Manipal Univeristy. Before joining
Cardi-Eye she was director of Global Outgoing exchanges at AIESEC, Dubai. She also led a team
responsible for organising the “Current trends in Biotechnology” conference in Dubai, for 2 years in a
row.
Jimmy Chiou, BSc, MSc Product Scientist
Mr. Chiou gained his bachelor’s degree in Biomedical Science and Environmental Biology from
the Kaohsiung Medical University and his master’s degree in Biotechnology and Enterprise from the
University of Manchester. Prior to joining Cardi-eye, Mr.Chou worked as a research assistant at the
National Tsing Hua University Department of Biomedical Engineering and Environmental Science,
during which he acquired extensive knowledge and practical skills in biomedical research.
Vidhi Gupta, BSc, MSc Product Scientists
Miss. Gupta completed her bachelor’s in Biotechnology in the University of Pune, India. Miss.
Gupta has worked in medical diagnostic centers where she worked with biological samples and
analyzed patient reports. She also has experience with different laboratory machinery and operating
systems. She has outstanding research skills with a comprehensive knowledge of all medical device
regulatory standards and regulations alongside operational dexterity in a fast-paced laboratory
environment with a problem-solving approach
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2.5) Organisational Chart
Cardi-Eye’s organizational structure throughout the first quarter of the 2018 financial year is
as follows. As the company matures, we will open up and shift roles as necessary in order to ensure
the success of the company.
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3) THE PROBLEM
3.1) Cardiovascular Allograft Rejection
Cardiac allograft transplantation is currently the main clinical procedure carried out in order to
treat patients with fatal heart diseases. Unfortunately, in some cases, the recipient’s body may reject
the transplant. Transplant rejection can either occur at an acute rate (up to 2 years post-transplant) or
chronic rate (2+ years post transplantation), jeopardising both short-term and long-term survival of
patients (Keogh et al., 2004). Transplant rejection often manifests at a physiological level as the
autoimmune disease Cardiovascular Allograft Vasculopathy (CAV). In clinical terms, CAV may be
defined as an accelerated form of coronary artery disease (Ramzy et al., 2005). CAV causes the diffuse,
progressive intimal inflammation of the coronary arteries (Figure.1), leading to ischemia development
(Gohra et al., 1995). Ischemia prevents the heart from circulating sufficient amounts of blood necessary
to sustain a healthy transplant, in turn resulting in a myocardial infarction (heart attack) and in serve
cases death (Ramzy et al., 2005).
Up to 4 years’ post-transplantation, whenever a patient experience discomfort, the most
common cause is the onset of CAV (Cai et al., 2011). In the USA, CAV is the main cause of deaths in
the first 3 years’ post- transplantation and has been reported to affect 75% of patients (Eisen et al.,
2018). CAV caused by acute rejection accounts for ≈18% of patient deaths, whereas CAV caused by
chronic rejection accounts for ≈40% of deaths (Eisen et al., 2018).
The current conventional clinical treatments for CAV include immunosuppressant prescription,
percutaneous coronary intervention (PCI), and in worst-case scenarios a new heart transplant (Cai et
al., 2011). The need for a second heart transplants decreases patients’ survival likelihood drastically,
as the percentage likelihood of a compatible heart being located for a second transplant is very low
(Lund et al., 2017).
Figure.1: The physiological
difference between a
healthy and an inflamed
cardiac artery. Intimal
thickening narrows the inner
volume of the artery,
restricting blood flow.
Daigram adapted from: (Lyon,
2011).
Adventitia Media Intima Inflamed intima
HEALTHY ARTERY INFLAMED ARTERY (CAV)
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3.2) Current Diagnosis Methods & their Downfalls
Various different clinical procedures are currently employed in order to help diagnose both
acute and chronic CAV development (Table.1). In hospitals across the U.S.A., the initial methods used
in order to diagnose and monitor CAV are non-invasive, these include: electrocardiogram and
echocardiogram (Skorić et al., 2014). Unfortunately, such methods do not give direct insight as to
whether rejection is occurring, as they only investigate vital signs prominent in various heart conditions
(Zakliczyński et al., 2009). Therefore, in order to gain a more accurate prognosis, doctors perform
invasive testing such as coronary angiography, intravascular ultrasound (IVUS) and biopsies (Yamani
et al., 2002).
Coronary angiography is a
medical technique which relies on
radiography in order to visualise
abnormalities in the arteries, blood
vessels and the heart chambers.
During this procedure a contrast dye or
radiopaque substance is injected into
the blood stream and is used in order
to stain blood vessels for later
detection (Costanzo et al., 1998).
Despite this method allowing
cardiologists to visualize target areas,
angiographs cannot differentiate
between allograft vasculopathy and
healthy vessels (Cai et al., 2011). In addition, the radiation emitted from the contrast dye is harmful to
patient’s health (Mintz et al., 2001). The diagnostic limitations associated with angiography, bring on
the need for further testing via intravascular ultrasound (IVUS) and biopsies.
During IVUS, a catheter camera is used to obtain a 360o angle view of arteries, in order to
detect intimal inflammation (Kobashigawa, 2000). The IVUS procedure has various limitations: the
digital image processing capacity of the catheter camera is slow and can only scan one artery at-a-
time, therefore rendering the procedure as time inefficient (McKay and Shavelle, 2006). IVUS is also
not an accurate method of detecting CAV, with a low positive predictive value for CAV detection (Cai et
al., 2011). Furthermore, IVUS procedures are also relatively expensive:
Endomyocardial Biopsy (EMB) sampling is the most conclusive clinical (gold standard) test for
determining the onset of both acute and chronic CAV (Mengel et al., 2010). Biopsies analyse the cardiac
tissue for the formation of cellular aggregates along with myocardial damage, such as cell necrosis, to
determine the degree of rejection post-heart transplant (Mengel et al., 2010). However, biopsies, similar
to previously discussed monitoring methods, have various downfalls. The procedure is invasive as it
relies on cardiac tissue extraction via catheters, which may lead arterial injury, internal bleeding, blood
clots (Synder et al., 2011) and infection (specially Methicillin-resistant Staphylococcus aureus (MRSA)
Figure illustrating different methods of CAV detection
ranging from least invasive to most invasive. The more
invasive the method the more accurate the diagnosis.
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infections, common in hospitals) (Lubin, 2009). MRSA infections arising as a result of catheter-based
heart monitoring methods account for 22% of patient deaths post-transplant (Eisen, 2018). Additionally,
the results from biopsies require at least 48 hours to process, which could be extremely detrimental to
patients experiencing serve rejection reaction shortly after surgery; as a full rejection event can lead to
death within 24 hours (Eisen, 2018). Despite these downfalls however, biopsies remain the most widely
used technique diagnose rejection and monitor its progression. Hence, there is a need for non-invasive
diagnostic monitoring methods which could lower the incidence of infections and other physiological
compilations associated with biopsies.
DIAGNOSTIC
METHODS DIAGNOSTIC
PROCESS
STAGE OF REJECTION MONITORED
LIMITATIONS
NON-INVASIVE
Electrocardiogram Monitors heart
rhythm Acute and Chronic
- Unreliable methods for
detecting rejection.
- Lack sensitivity towards early
rejection.
Echocardiogram Evaluates
cardiac function Acute and Chronic
INVASIVE
Coronary angiography
Visualises blood vessels
Chronic - Highly invasive. - Takes up to 5 days to obtain
test results Needs to be performed repeatedly.
Intravascular ultrasound
Visualises blood vessels
Chronic
Endomyocardial biopsy
Cardiac tissue is extracted from the body and
investigated for abnormalities
Acute and Chronic
4) MARKET ANALYSIS
4.1) The Business Opportunity
The international organ transplant market is currently estimated at $23.5billion and is
forecasted to grow at a compound annual growth rate (CAGR) of 9.1%, reaching $47bn by 2030 (Grand
View Research Inc US, 2017). The US holds the largest share of the market and is worth ≈$17bn and
thus is our initial target market (Grand View Research Inc US, 2017). Over the past 5 years the number
of annual organ transplants has increased by 20%, reaching 33,600 organs transplanted per annum
(U.N.O.S, 2018) with >2700 heart transplants being successfully performed last year alone (Donate
Life America, 2017).
Table.1: The different types of invasive and non-invasive methods used in order to monitor cardiac
allograft rejection post-transplantation. The diagnostic process refers to the means by which each
method monitors the heart condition post-transplantation. The limitations and the of each method are
described in the table. However, these methods don’t always provide an accurate result for allograft
rejection. Information derived from: (Daly et al., 2013).
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In terms of healthcare
spending on transplants, the
annual spending on heart
transplants and post-transplant
care is higher than any other
type of organ transplant in the
US. And this is also forecasted
to continue rising in the next 15
years (Figure.2) (Bentley et al.,
2017). The driving forces
expected to continue fueling
the increase in heart
transplants include: an increase
in chronic illnesses, an increase
in successfully performed heart
transplants and registered
organ donors, and a movement
towards contactless healthcare
(vide infra).
Routine CAV monitoring post-transplant is expensive, doctors usually recommend it be carried
out at regular intervals, with every session costing approximately $4000 depending on the hospital it is
performed at (Eisen, 2018). Approximately $222,000 is spend per patient throughout post-transplant
care in the first year, and then approximately on average $1,000 every month for the next 3-4 years,
improved monitoring capabilities are estimated to reduce this expenditure by ≈33% (Bentley et al.,
2017). The lifestyle of patients is also disrupted by regular visits to the hospitals: every week for the 1st
four weeks’ post-transplant, and then less frequently after. After 6 months the patient must visit once
every 3 months. In total, the patient must visit 13 within the first-year alone (Stanford Helthcare, 2018).
In summary, the routine CAV monitoring process is expensive for patients, time inefficient (slow result
processing) and several invasive catheter-based clinical procedures are needed in order to diagnose
and monitor the illness, increasing the likelihood of hospital infections. Therefore, there is a clear
demand/opportunity for an accurate, non-invasive, cost-effective and time-efficient monitoring
technology which can help enhance patients’ quality of life post-transplant.
4.2) Market Trends Influencing the Business Opportunity
4.2.1) Increase in chronic illnesses accompanying an ageing population
The average life expectancy in the U.S.A. has been rising over the past decade and is
forecasted to continue increasing from 2017 onwards 2030 (males: 77 in 2017 to 80 in 2030, females:
80 in 2017 to 83 in 2030) (Kontis, 2017). As average life expectancy increases, the incidence of chronic
illnesses such as diabetes (Mayer-Davis et al., 2017) and heart disease (Siegel et al., 2018) are in turn
also expected to increase. Healthcare statistics from the American Heart Association’s Heart Disease
Figure.2: Average amount of money spent on heart transplants
and post-transplant care per annum, in comparison to other
transplanted organs in the U.S.A from 2013-2017. Post-transplant
care expenses encompass money spent 30 days-pre-transplant, organ
procurement, surgeon bills, check-up (monitoring) appointments (180
days post-transplant), however does not take into account cost of
immunosuppressants.
Information derived from: (Bentley et al., 2017).
14
Report 2017, estimate that heart disease incidence is will rise by 46% from 2017-2030, affecting over
8 million U.S citizens over the age of 65 (which are covered by Medicare) (Benjamin et al., 2017).
Chronic illnesses such as heart disease emerge due to lifestyle trends such as excessive drinking,
smoking, unhealthy diets and a lack of exercise, which have all risen in the US over the past decade
are expected to continue rising (Benjamin et al., 2017).
4.2.2) Increase in heart donors and successfully performed transplants
Demographic trends
illustrate an 8% increase in the
number of both active (living)
and inactive (deceased) heart
donors in the U.S.A. from 2005-
2016. The amount of U.S
healthcare institutions adopting
heart transplant programs has
also increased as a result
increased expertise in the field,
alongside Medicare
reimbursement schemes
covering surgical
cardiovascular medical device
costs in the U.S.A (Benjamin et al., 2017). The combination of these market trends has ultimately results
in the steady increase in successful heart transplants from over the past 5 years as shown in Figure.3
(Bentley et al., 2017). The number of successful heart transplants performed per year is expected to
increase to approximately 7500 a year in 2030, taking into consideration that the number of donors
continues to rise (Benjamin et al., 2017); thus, increasing the number of patients who are likely to
experience CAV post-transplant.
4.2.3) Moving towards remote diagnosis and monitoring
With the advent of advanced smartphone applications over the past decade, remote healthcare
technology has starting to become more widely adopted by both patients and doctors as it has the
potential for improving patient expenditure, comfort, quality of life, patient turnover and reduce hospital
admission (Hui and Kan, 2017). In developed countries such as the U.S.A, remote healthcare diagnosis
and monitoring can help reduce the amount of time spent in hospitals visiting doctors and re-
admissions, in turn lowering post-transplant care spending (Vishwanath et al., 2017). Furthermore,
mobile diagnosis and monitoring bridge the deficit of available healthcare personnel, especially in
remote and rural regions (Vishwanath et al., 2017). The US are leaders in mobile health adoption,
primarily due to ubiquitous smartphone ownership, and the rollout of 4G networks which have allowed
patients to use their mobile devices and telecommunication services in order to support healthcare
applications (Vishwanath et al., 2017).
Figure.3: Number of successfully performed heart transplants per
annum in the U.S.A, from 2013-17. On average, the number of
successfully performed heart transplants has increased as a CAGR of
8%. Information derived from: (Bentley et al., 2017).
2,0252,163
2,445
2,523
2,725
1500
1700
1900
2100
2300
2500
2700
2900
2013 2014 2015 2016 2017
15
4.3) Customer Segments
Our product customers will ultimately be segmented into 3 different categories, each category
possess different pains and needs which will be fulfilled by Cardi-TARS.
4.3.1) Hospitals and Cardiologists
Hospitals and cardiologists alike are looking for a product which will improve patients’ quality
of life post-surgery, help expedite patient-turnover and also improve survival outcomes post-surgery
(Aiken et al., 2017). Such customers are reimbursed by part A and B of the Medicare program (see
business model section). Cardi-TARS will be able to increase patient turnover due to the fact that it
offers remote monitoring (allows them to track the condition of their transplant from their phone or
computer), thus lowering the amount of time they need to spend being monitored in hospitals post-
surgery. Moreover, mobile monitoring will allow quick/ immediate intervention in the case of severe
rejection episodes, lowering the amount of patient fatalities. Constant monitoring will also allow
cardiologists to better determine whether their immunosuppressant prescription cycle is indeed fit and
alter it in order to manage CAV more effectively.
Our primary market data suggests that cardiologists increase patients quality of life (refer to
Appendix Figure.2) and one of the ways to do this is to reduce the incidence of hospital infections
during monitoring procedures. Cardi-TARS can lower the incidence of such infections, which account
for 22% of patient deaths per annum (Eisen et al., 2018), as it offers a means of non-invasive
monitoring, thus making it likely that cardiologist will be eager to adopt our product.
4.3.2) Insurance payers
Both public (Medicare) and private insurance services covering patients heart surgery and post-
transplant care costs ultimately aim to reduce the amount of capital spent such healthcare expenses
(Sahni et al., 2015). The unit cost for Cardi-TARS significantly undercuts the cost of routine biopsy
operations within the first year only (see value proposition section). Furthermore, the need for a second
heart transplant can cost insurance firms ≈$1million (Bentley et al., 2017). Timely heart-rejection
intervention can significantly reduce this risk.
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4.3.3) Heart Failure Patients
4.4) Competition
4.4.1) Direct competitors
CareDx
CareDx is a transplant diagnostics company founded in
1998 currently based in California, USA (Bloomerg LP, 2018). In
2008, CareDx has launched Allomap: a blood test for detecting
heart rejection (CardeDx, 2018a).
Allomap is used by 90% of heart transplant centres, in the U.S.A (CareDx, 2018). Allomap was
granted FDA approval in 2008 and is registered as a Class II “Cardiac allograft gene expression profiling
test system”, under the “clinical chemistry and clinical toxicology devices” category (FDA, 2017).
Allomap is a home test kit, however samples will need to be sent and processed in the one of CareDx’s
laboratories.
Similar to biopsies, the test is performed at least two months after the heart transplant. Six to eight
tests are required the first year post-surgery and two to four tests per year the following years. Medicare
is estimated to reimburse about $3,240 per test, corresponding to at least $19,440 per patient the first
year of using Allomap (CareDx, 2018b). Allomap therefore does not offer continuous real-time
monitoring.
Lausanne EPFL
Lausanne EPFL (École Polytechnique Fédérale de Lausanne), based in Switzerland, has developed
a subcutaneous lab-on-a-chip prototype device which aims to provide continuous real-time monitoring
for heart-transplant patients using nanobiosensor technology (Figure.4) (De Micheli, 2013). The product
is not currently commercialized; however, it is currently undergoing pre-clinical trials and the toxicity
Pains: ➢ Invasive post-transplant
monitoring ➢ Physiological fear of
Rejection ➢ Risk of needing a
second transplant ➢ Lifestyle changes
Needs: ➢ Insurance coverage ➢ Early diagnosis of
potential rejection ➢ At home/constant
monitoring ➢ More cost efficient
monitoring
Pain Reliever
Gains
Services
The Cardi-TARS Experience: ✓ Non-invasive, constant
monitoring at home ✓ Early diagnosis of rejection
taking place, thus early treatments
✓ Covered by Medicare (Insured)
✓ Money saved, long term
A schematic showing the various pains and needs faced by a heart-transplant patient (red boxes),
along with how our product Cardi-TARS can relieve those pains and offer value (green).
17
trials carried out in mice models are positive, showing low-toxicity levels (De Micheli, 2013). This product
detects blood metabolite markers correlated with CAV, instead of CAV causative protein biomarkers as
used in Cardi-TARS; and therefore is less specific to CAV monitoring.
4.5) Competitive Advantage
Ultimately, Cardi-TARS is the only telemetric and non-invasive option using rejection causative
biomarkers in real time to continuously monitor and update both patients and health professionals about
the condition of the cardiac allograft. Neither the patient or doctors need to worry about unforeseen
rejection events occurring when a quick look at their mobile device can reassure them. Hence, Cardi-
Figure.4: Lausanne EPFL’s subcutaneous lab-on-chip prototype schematic. The implanted (A) is
powered by an inductive coil and contains five biosensors placed on a silicon support, coated with
enzymes sensitive to specific metabolites, pH and temperature. The cylinder is connected a patch located
on the skin (B), to which it communicates the collected raw data. Once the patch (B) receives the data, it
uses Bluetooth connection to send the information to portable devices (smartphones, tablets, etc.) (De
Micheli, 2013). Diagrams adapted from: (De Micheli, 2013).
A table highlighting the competitive advantages Cardi-TARS possesses as compared to our
direct competitors.
18
TARS provides a dramatic increase in the quality of life of heart recipients as well as their families and
friends.
4.6) Indirect competitors
All our indirect competitors are aiming to heart commercialise artificial hearts. It is important to note
that this technology is currently immature and such solutions are extremely cost prohibitive, and
unreliable in comparison to heart transplants; and can only provide a temporary solution. Therefore,
heart transplants are likely to remain to gold standard treatment for late stage heart disease for the next
several decades.
Carmat SA
Carmat SA is a French company, founded in 2008 and
are currently developing artificial hearts. To date however their
products have only permitted transplant patients to live up to an
average of 5 years post-transplant, unlike artificial hearts which
allow patients to live for an average of 11 years (ISHLT, 2017). Said trials have been conducted in the
U.S.A, France, Kazakhstan and Czech Republic (Carmat, 2018).
Syncardia Sytems Inc
Syncardia Systems Inc is an Arizona-based
company founded in 2001. In 2004, their first implantable,
temporary TAH (Total Artificial Heart) was granted FDA
approval. Two sizes are available to suit the receiver’s
morphology, which mainly depends on their gender and age. Their hearts are only a temporary solution
for desperate patients on waiting lists until a compatible heart is consolidated. Their product is currently
commercialized in the U.S.A., European Union, and Canada. (Syncardia 2018).
BiVACOR
BiVACOR is a Texas-based company founded
in 2008. Their implantable artificial heart device is based
on is a system with no pulsatile rhythm as it runs as a
continuous flow system (Bivacor, 2018). In April 2017,
their device was a successful trailed in cows, however it
has yet to be trailed in humans (Cohn et al., 2017)
19
5) PRODUCT AND TECHNOLOGY
5.1) Cardi-Telemetric Allograft Rejection Sensor (Cardi-TARS)
Cardi-TARS is a biosensor that can monitor cardiac allograft vasculopathy (CAV) post-
transplantation. We use the biomarkers vascular endothelial growth factor C (VEGF-C), vascular
endothelial growth factor A (VEGF-A), and platelet factor 4 (PF-4) to detect rejection of the transplanted
heart. VEGF-A will be the control protein as high levels of VEGF-A is indicative of acute and chronic
allograft rejection (Daly et al., 2013), but is also present at low levels in non-pathological conditions.
The combination of VEGF-C, PF-4 and VEGF-A used in our biosensor allows more accurate transplant
rejection detection compared to other methods (Daly et al., 2013).
5.2) Product Rationale
Cardi-TARS is a minimally-invasive, time-efficient and cost-effective biosensor for heart
transplant patients. Cardi-TARS replace the biopsie operations for monitoring heart-rejection, and
therefore allows for shorter hospital stay, and less frequent re-visits to the hospital; improving patient
quality of life and hospital patient rotation efficiency.
Cardi-TARS is
comprised of 2 major
components: the implanted
micro-sensor and an
external microchip placed
on the skin (Figure. 5). The
implanted micro-sensor
detects serum biomarker
levels (Figure. 7), whilst the
external chip acts as a
power-source and a signal
relay/ amplifier (Figure 6, 8).
Cardi-Eye provides real-time
monitoring 24 hours a day of
the patient’s heart and is accompanied with a smart-phone application which will provide a dashboard
notification of the patient’s current condition and give alerts during emergencies.
In the event of severe acute heart-rejection, Cardi-TARS will provide a signal to the patient’s
registered healthcare institution and signpost emergency services to the patient’s location. In chronic-
rejection cases, Cardi-TARS will provide a notification to alert the patient to visit their primary care
provider.
Figure.5: A schematic of Cardi-TARS: the external microchip is placed on the skin (a) and internal implanted microchip is placed on the transplanted heart (b).
(a) (b)
20
Figure.6: The interaction between the external microchip and the internal microchip. (a): The external microchip powers the internal microchip via radio-waves; which are transformed by a transformer within the internal microchip into a current. (b): Data collected by the biosensor is transmitted back to the external microchip and further amplified.
PF-4 antibody
VEGF-A antibody
VEGF-C antibody
Graphene sheet
Rejection proteins
Figure.7: A schematic depicting the antibodies probes on the internal microchip. VEGF-C receptor, VEGF-A receptor and PF-4 receptor are cross-linked antibodies and are attached to a graphene substrate. When these receptors detect the rejection biomarkers (VEGF-A, VEGF-C and PF-4), the degree of rejection can be detected depending on the amount of protein bound to the receptors and this result will be seen on the device connected via Bluetooth.
Figure.8 Another function of the external microchip. It can amplify the signal that receives from internal microchip and transmits to the monitor device by radiowaves, which can clearly diagnosis the rejection is occurred or not.
21
5.3) Technology Behind the Product
Cardi-TARS detects relevant biomarkers in the blood near the transplanted heart. When
rejection occurs, allograft vascular endothelial cells secrete cytokines into the blood to maintain
development of the heart rejection episode. Therefore, the blood biomarker levels, including the
biomarkers detected by Cardi-TARS: VEGF-C, VEGF-A and PF-4, significantly increase throughout the
rejection episode compared to the controls (Table 2).
The combination of the 3 biomarkers provide exceptional specificity for the detection of heart
rejection; as the combination of the 3 gives a combined detection probability (AUC) of close to 100%
for all grades. Cardi-TARS uses specific cross-linked antibody receptors, which can detect the 3 serum
biomarkers. Using an algorithm, the concentration can be calculated and used to monitor heart rejection
development.
Curve Analysis for Biomarkers in Diagnosis of CAV
CAV (all grades)
Biomarker AUC 95%CI p
VEGF-A 0.835 0.700-0.973 <0.001
VEGF-C 0.816 0.665-0.967 0.002
PF-4 0.790 0.632-0.949 0.004
VEGF-A & VEGF-
F 0.938 0.840-0.999 <0.001
All 3 combined 0.982 0.942-1.000 <0.001
5.4) Intellectual Property – Protecting Intellectual Assets
We will file a worldwide patent covering the technology and application of Cardi-
TARS. More specifically we will patent the application and composition of an implantable
antibody coupled graphene biosensor for detection of CAV detection.
In addition to our patents, we will also register various trademarks to protect our brand.
Table. 2 The area-under-curve (AUC)
analysis illustrates the blood levels
of the 3 individual biomarkers and in
combinations during mild CAV
(Grade I) and all patients (all
grades). The combination of
biomarkers can reliably detect the
development of CAV. Information from:
(Daly et al., 2013).
22
6) BUSINESS MODEL
6.1) Value Proposition
Biopsies remain to be the most adopted method to detect Cardiac Allograft Vasculopathy
(CAV), but may cause complications such as heart rhythm abnormalities, infections or valve damage.
Biopsies also deliver inconsistent results which are highly dependent on heart sampling location. The
average time for producing a Biopsy results is 5 days (Conger, 2014) which can be fatal to patients
suffering from acute or chronic rejection. During the first-year post-transplantation 12 biopsies must be
performed costing $3297 each, totalling >$42,000 (Conger, 2014). After the first-year biopsy
procedures are performed as needed, raising the total cost. We will price our product at $25,000
therefore offering a significant saving as compared to the current standard.
Patients can undergo undetected rejection episodes which will require a second heart-
transplant. Insurance companies covering such costs >$1 million (Eisen et al, 2018). on the
procurement of a second heart. Cardi-TARS can detect CAV faster than the biopsy method, thus
second-heart transplant are much less likely to be necessary. This reduces the amount of total medical
expenditure cost reimbursed by insurance payers.
Healthcare institutions also benefit from adopting Cardi-TARS by increasing patient outcomes
and decreasing hospital load. On average a cardiologist performs around 5-10 biopsies per day (Chi.
et al, 2012) increases hospital load in out-patient surgery. By adopting Cardi-TARS, cardiologists
reduce their workload increasing hospital efficiency. Therefore, this product provides value to patients,
doctors and insurance companies.
6.2) Marketing and distribution strategy
Our marketing strategy will be focus on targeting healthcare providers, insurance payers, and
distributers. Our revenue model will be based on selling units to distributers and group purchase
organisations which will in turn distribute to hospitals throughout the US. Healthcare providers using
the product will be reimbursed by the existing Insurance payer reimbursement infrastructure.
VALUE PROPOSITION FOR CARDI-TARS
PATIENTS HEALTHCARE INSURANCE COMPANIES
HEALTHCARE INSTITUTIONS
• Reduces risk of infection resultant from biopsy operations.
• Reduces cost of post-transplant CAV monitoring.
• Allows for emergency intervention of acute CAV episodes.
• Increases patient quality of life.
• Real-time continuous monitoring offers psychological security.
• Lower reimbursement costs for patient post-transplantation care.
• Decreased risk of second heart transplants which can cost >$1 million.
• Better patient outcomes lead to longer cash retention periods.
• Single lump-sum reimbursement leads to easier cash-flow organization.
• Improved patient supervision.
• Reduction in the number of biopsies performed hence reduced workload on specialists.
• Better patient outcomes.
• Quicker medical intervention to prevent full-scale rejection.
• Minimal adaptation to existing heart-transplant protocol (easy to use).
23
Healthcare provider
We will directly target key cardiologists operating in heart-transplant programs across hospitals
in the US to act as informal endorsers of our product, to drive further adoption by other cardiologists.
This effort will include promoting the publication of scientific papers on the efficacy of Cardi-TARS in
peer reviewed professional journals as well as during conferences, symposia, and conventions.
Publications
Our target publication journals include: Circulation, Journal of American College of Cardiology,
International Journal of Cardiovascular Interventions, catherization and Cardiovascular Interventions,
Journal of Interventional Cardiology, Journal of Invasive Cardiology, European Heart Journal, New
England Journal of Medicine, and American Journal of Cardiology.
Conferences
We will participate in professional seminars, symposia, conventions, and industry exhibitions
held annually around the world. These include various conferences sponsored by the American Heart
Association, American College of Cardiology, and the European Society of Cardiology.
Insurance payers
Reimbursements by Insurance payers are important to allow healthcare professionals and
patients to adopt our product. Obtaining CPT codes will allow our devices to be reimbursed by public
or private payers.
Medicare
Medicare currently is the largest government sponsored health insurance program in the US,
and all-American tax payers aged 65 and older are automatically eligible (Government Printing Office,
2003). In order for a product to be eligible for Medicare coverage, it must pass the National Coverage
Decision (NCD) examination which follows the Centres for Medicare & Medicaid Services (CMS)
guidelines (Government Printing Office, 2003; Makower, 2010). This requires efficacy data such as
randomised controlled trials, and stresses superiority of product relative to gold standard (Biopsies) and
cost-per quality adjusted life year (Government Printing Office, 2003; Makower, 2010). We will design
clinical trials which can satisfy both FDA approval standards and NCD standards. Our products are also
priced at a lower total cost compared to the gold standard product (Biopsies).
Private payers
Private insurance companies generally reimburse medical devices following the CMS
guidelines (Government Printing Office, 2003; Makower, 2010).
Distributers
We will actively seek strategic partnerships with distributers within the Cardiovascular medical
devices market as well as group purchasing organisations serving hospitals operating heart-transplant
programs. We plan to partner with the medical devices distribution firm BG Medical as they specialise
in distribution of high-margin, break-through technology medical devices and have a presence across
24
46 states in the US (BGMedical, 2018). We can also further enlist the large medical devices distribution
channels of our potential acquistors such as Medtronic or Abbott.
6.3) Pricing strategy
Cardi-Eye employs value-based pricing, rather than cost-plus based pricing. Because we can
have a much higher profit margin using value-based pricing. We chose to charge $25,000 for the Cardi-
TARS system, because it costs significantly less than the necessary biopsy costs within the first-year
post-transplant. Our product pricing offers superlative savings to insurance companies reimbursing the
transplant operation, whilst offering increased quality of life and patient outcomes to our-end users.
Therefore, we believe that the cost of Cardi-TARS at $25,000, offers tremendous value, bolstering our
value-proposition for adoption and therefore market penetration. We will charge $18,000 to our
distributors to allow them a sizeable margin (this will vary depending on the price at which the distributor
sells the item to group purchasing organisations). During the first year of sales (2025) we will charge
distributors $10,000 per unit, to provide greater product carrying incentive to our distributers and
stimulate market penetration.
25
7) MAJOR MILESTONES & OBJECTIVES
7.1) Route-to-Market Roadmap
7.2) Operating strategies for reaching value enhancing milestones
Concept and Proof-of-concept Phase (≈18 months)
Throughout this phase, we will focus on building and validating a functional Cardi-TARS
prototype, which will include concept development, and carrying out feasibility studies. Concept
development will be outsourced to Sterling Medical Devices, which specialize in the design and
development of electronic medical devices, software development, and cyber security systems (Sterling
Medical Devices, 2018). In parallel, whilst we outsource product concept development our R&D
personnel will be in negotiations with potential contract manufacturing partners such as Micro Systems
Technologies. Micro Systems Technologies specialise in the manufacture of precision micro
components for class III biomedical electronic medical device products (Micro Systems technologies,
2018) similar to Cardi-TARS. Our in-house personnel with be partnering with the U.S. medical research
organisation (MRO), NAMSA throughout these negotiations and also throughout the entirety of the
product development and testing phase (up until exit). NAMSA is an integrated laboratory, clinical and
consultancy service, with extensive experience in assisting medical device through FDA regulatory
approval (NAMSA, 2018). Using NAMSA as a consultant partner throughout the commercialisation is
estimated to reduce time-to-market and costs significantly.
Clinical Unit Development and IP filing Phase (≈ 9 months)
This phase encompasses the validation of the selected materials and regulatory process. This
will include developing a clinical plan and preliminary protocol based on our regulatory strategy and
reimbursement strategy. Most likely we will follow the pre-market approval (PMA) route and the Centers
for Medicare & Medicade Services (CMS) guidelines for reimbursement. Additionally, with guidance
from NAMSA, we will design a Failure Modes and Effects Analysis (FMEA) protocol in order to identify
A figure outlining major operational phases and value enhancing milestones for Cardi-TARS,
represented as a roadmap.
26
all potential failures in design, manufacturing and assembly of Cardi-TARS. The results from the FMEA
will then allow us to draft product-related standard operating procedures.
The first step towards securing product-related intellectual property in order to safeguard our
intellectual assets will also take place throughout this phase. We aim to file a utility world patent via
Patent Cooperation Treaty (PCT) route. Once the patent has been filed, we will begin publishing product
related research papers in peer-reviewed journals, in order to validate our product efficacy, whilst also
attract attention to the invention from future potential investors, partners and early adopters.
Pre-clinical Testing Phase (≈ 9 months)
Throughout this phase Cardi-TARS will be tested in the appropriate mammalian models in order
to test for product safety and efficacy before carrying out pivotal clinical testing in humans. Here we will
ultilise NAMSA’s clinical management research service in order expedite pre-clinical studies.
Clinical Testing Phase (≈ 11 months)
During this phase pivotal clinical studies on humans will take place, in order to truly determine
whether Cardi-TARS is indeed safe for human use. Again, NAMSA will help expedite this process by
not only advising on strategies to ensure time and cost-efficient testing, but also by carry out such tests
in specialist laboratories. Product related IP is also likely be procured during this stage, ultimately
consolidating our intellectual assets.
Exit Strategy (≈ 2 years)
After securing product-related IP and obtaining positive clinical data, we will be able to use
these assets in order to attract a mergers acquisitions deal with a larger, already established
organisation operating the U.S cardiovascular medical device market. Potential acquisitors include:
Medtronics and St. Jude Medical (a subsidiary of Abbott). A mergers acquisition deal will provide us
with access to cheaper manufacturing networks (OEM networks), established relationships with group
purchasing organisations and a means of reimbursing investors (vide infra, section 8). The final stage
of the PMA route, which involves gaining PMA approval will most likely be carried out by acquisitor in
order to reduce regulatory costs. However, we expect PMA approval to be obtained by 2025.
27
8) FUNDING
8.1) Capital Requirements
Concept and Proof-of-Concept Phase
Throughout the concept and proof-of-concept phase we will require an estimated $ 5.4
million, this will mainly be spent on:
➢ Hiring experts from the CRO company Sterling Medical Devices in order for us to outsource
and expedite product concept development.
➢ Hiring medical device consultants from NAMSA in order to provide advice on regulatory
matters significantly lowering the time and cost to market.
Clinical Unit Development and IP Filing Phase
Throughout the concept and proof-of-concept phase we will require an estimated $4.5million,
this will mainly be spent on:
➢ Devising a clinical unit development plan and preliminary protocol in order prior to entering
the PMA route.
➢ Designing an FMEA with the help of NAMSA experts.
➢ Filing for a world patent through the PCT route.
➢ Carry out research needed in order to produce peer review publications (after filing for IP).
Pre-clinical Testing Phase
Throughout the pre-clinical testing phase, we will require an estimated $14.5million,
this will mainly be spent on:
➢ Pre-clincial product testing in order to obtain pre-clinical IDE.
➢ NAMSA’s clinical management research services; will help expedite the process in terms of
time and cost.
Clinical Testing Phase
Throughout the pre-clinical testing phase, we will require an estimated $19.5million, this will
mainly be spent on:
➢ Pivotal clinical product testing.
➢ NAMSA’s clinical management research services.
Note: throughout all the phases mentioned above money will also be spent on overhead costs such
as office rent and employee salaries.
28
8.2) Fundraising Strategy
Operational phase Type of Funding
Funding Source Potential Funders/
Investors
Concept and Proof-of-Concept
Seed funding Grants and financing
programs
- National Institute of Health (NIH)
- National Research Council (NRC)
- National Council of Entrepreneurial Tech
Transfer (NCET2)
Clinical Unit Development and IP
Filing Series A
Angel investors and syndicate networks
- Boston Millennia Partners
- De Novo Ventures - Mohr Davidow
Ventures Pre-clinical Testing Series B
Clinical Testing Series C Venture capitalists and future aquisitioners
- St. Jude Medical - Medtronic
Rounds
A B C Exit
Company Value ($ Mil) 25 60.60606061 115.3846154 150
equity given (%) 40 33 26
Capital Raised ($ Mil) 10 20 30
Cardi-Eye share (%) 60 36.92481203 23.94032701 0
Investor A share (%) 40 30.07518797 23.8691968 0
Investor A equity value ($ Mil) 10 18.22738665 27.54138092 35.8037952
Investor B share (%) 33 26.19047619 0
Investor B equity value ($ Mil) 20 30.21978022 39.28571429
Investor C share (%) 26 0
Investor C equity value ($ Mil) 30 39
Cardi-Eye Exit profit ($ Mil) 35.91049051
At major milestones as outlined in table 3, we will undergo a stage of venture capital financing
(Series A, B, C). Here we project in table 4, that the equity value of our company increases after each
successive venture financing round, allowing our investors whom participated in previous rounds to
have a significant return on investment in a short time frame (1 to 3 years). During the exit step, a
potential acquistor will acquire Cardi-Eye in entirety for the industry standard 30% premium allowing
our previous shareholders to exit.
Table 3: An outline of the potential funding source at each operational phase of the commercialisation
process.
Table 4: A table showing the total company value of Cardi-Eye at each round of equity funding,
along with the percentages of equity given away at each round.
29
9) FINANCIAL STATEMENTS
9.1) Key Assumptions
General Assumptions and notes Financial scope: Our financial projections are essentially based on that of a “pure start-up”, and the company’s financial projections are given as an approximation only.
9.1.1) Revenue Assumptions
Market & Share growth
Our sales volume forecast are as follows:
Product 2025 2026 2027 2026 2028 2029 2030
Cardi-TARS 218 471 763 1099 1484 1923 2423
Here we assume that the number of heart transplant patients increases at a rate of 8% annually up until 2030. And that our market penetration begins at 5% in 2025, increasing 5% annually to 35% in 2030. Pricing: Our anticipated pricing is based on the sale price to our distributor.
Product 2025 2026 2027 2026 2028 2029 2030
Cardi-TARS 10,000 18,000 18,000 18,000 18,000 18,000 18,000
Expense Assumptions Cost of Goods: Unit cost of goods for our product are projected as follows:
Product 2025 2026 2027 2026 2028 2029 2030
Cardi-TARS 3,000 3,000 3,000 3,000 3,000 3,000 3,000
Operating Expenses: Majority of operating expenses are personnel-related, and out-sourcing related. Cardi-Eye does not expect to hire many staff members in early stages as the majority of the research & development, validation, and clinical stages are outsourced. The research & development costs at each stage is estimated based on values obtained from NAMSA (NAMSA, 2017) Our projected average headcount for each year is as follows.
Product 2018-19 2020-21 2022-23 2024-25 2026-27 2028- 29
2030-31
Operations 3 3 3 3 6 6 6
Research & Development
3 3 3 3 3 3 3
Sales and Marketing
0 0 0 5 12 14 16
General & Admin
1 1.5 2 2.5 3 5 5
Total 7 7.5 8 13.5 24 28 30
30
9.2)
Summary
P&L Forecast
($000)
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Revenues
Grant 1 600 600 600 0 0 0 0 0 0 0 0 0 0
Grant 2 800 800 800 0 0 0 0 0 0 0 0 0 0
Grant 3 600 600 600 0 0 0 0 0 0 0 0 0 0
Cardi-TARS 0 0 0 0 0 0 0 2540 9895.072904 16030.0181 23083.22607 31162.3552 40386.41233
Total Revenue 2000 2000 2000 0 0 0 0 2540 9895.072904 16030.0181 23083.22607 31162.3552 40386.41233
Cost of Goods sold 0 0 0 0 0 0 0 762 3297 4452 5769 7269 7851
Gross Margin 0 0 0 0 0 0 0 1778 6598.072904 11578.0181 17314.22607 23893.3552 32535.41233
Operating Expenses
Operations 135 135 135 135 135 135 135 135 270 270 270 270 270
Research & Development 1800 1800 1800 9333 20302 8865 890 509 135 135 135 135 135
Sales & Marketing 0 0 0 0 0 0 0 225 540 540 630 630 720
General & Administrative 45 45 45 90 90 90 90 180 180 180 225 225 225
Office renting 15 15 15 15 15 15 15 40 40 40 40 40 40
Total operating expense 1995 1995 1995 9573 20542 9105 1130 1089 1165 1165 1300 1300 1390
Income before taxes 5 5 5 -9573 -20542 -9105 -1130 689 5433.072904 10413.0181 16014.22607 22593.3552 31145.41233
Tax (21%) 1.05 1.05 1.05 -
2010.33 -4313.82 -
1912.05 -237.3 144.69 1140.94531 2186.733802 3362.987475 4744.604591 6540.53659
Net Income 3.95 3.95 3.95 -
7562.67 -
16228.18 -
7192.95 -892.7 544.31 4292.127594 8226.284303 12651.2386 17848.7506 24604.87574
31
9.3) Capital Requirement & Use of Proceeds
We have applied to 3 research grants in the year of 2017 and have received research grants from
the National Institute of Health (NIH) for $2.4 million over 3 years, National Council of Entrepreneurial Tech
Transfer (NCET2) for $1.8 million over 3 years, and the National Research Council (NRC) for $2.4 million
over 3 years. This is sufficient to meet our operating needs for the concept development stage until 2021.
In 2021, we project to raise $10 million in Series A funding as we will have a functional prototype
ready for undergoing regulatory approval stages. The proceeds will be used for clinical unit development
and starting pre-clinical trials.
In 2022, we project to raise $20 million in Series B funding as clinical unit development will be
completed, and positive early pre-clinical trial data will be obtained. The proceeds will be used to complete
pre-clinical trials and start pivotal clinical trials.
In 2023, we project to raise $30 million in Series C funding as we will have completed the pivotal
clinical trial and will be ready to PMA approval. We will use the proceeds to obtain PMA approval and further
expansion preparations.
-20000
-15000
-10000
-5000
0
5000
10000
15000
20000
25000
30000
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Projected Net Income ($000)
32
9.4) Exit Strategy
We will pursue the mergers & acquisitions exit strategy. Our potential acquisitors include: Medtronic
and St. Jude Medical (now a subsidiary of Abbott). We project our potential acquisitor will lead the series C
funding rounds and finally acquire our company and allow our shareholders to exit.
10) OPPORTUNITIES RISKS AND MITIGATION
10.1) Market risk
Description Likelihood/ severity
Tactics and mitigating factors
Cardiologists do not adopt our product
Low/ high • Our product provides real-time monitoring which is superior to existing biopsy/ assay methods; both for patient health outcomes and hospital efficiency.
• Physicians are interested in products that improve patient outcomes and reduce the risk of infection – both of which are achieved by our product.
• We will present our product at cardiology conventions to leading cardiologists. We will use our acquisitor company’s outreach and marketing resources.
• Gathered primary data have garnered a positive response: both cardiologists and CAV patients have responded that they are likely to use our product (Refer to Appendix Figures.1 &2).
Market size is smaller than expected
Low/ low • Our market data is obtained by independent sources provided by Grandview research, Milliman, U.N.O.S, among other sources.
Market penetration rate falls short of forecasts
Low/ low • We will introduce our product to leading cardiologists to obtain endorsements; a common tactic to gain market penetration.
• We will publish research in leading medical journals to raise awareness of our product.
• We will take advantage of our acquisitor company’s existing distribution and marketing channels to increase our market reach.
• Cardiologists are persuaded by product efficacy.
33
10.2) Competitive risk
Description Likelihood/ severity
Tactics and mitigating factors
Competitors copy our products
Low/ low • We will have worldwide patents filed covering our core technology and methods.
• We will take advantage of our acquisitor’s established legal team to take legal action against patent infringements.
Competitors improve their products to compete/ make redundant our product
Low/ high • Our product provides the most complete post-transplant rejection monitoring solution.
• Artificial Implantable hearts are cost-prohibitive.
• Our product is easy to use and require little extra training, adaptation to current heart-transplant protocols.
10.3) R&D risk
Description Likelihood/ severity
Tactics and mitigating factors
Product development costs more or takes longer than expected
Low/ high • We will work with our MRO partner NAMSA medical, which will cooperate on the product development stages and clinical trial stages. NAMSA has extensive experience and track record in medical device start-up development support.
Our products do not function as well as expected
Low/ high • Rigorous device validation stages during development, pre-clinical and clinical trials (including FDA approval) will provide important feedback during the development of the product.
34
10.3) Legal risk
Description Likelihood/ severity
Tactics and mitigating factors
Product flaw resulting in product liability lawsuits
Low/ high • Our product will go through the class III medical device regulatory route. The stringency of the regulatory approval process will ensure our products are safe before they are marketed.
• Our products will be produced by an experienced outsourced party with the relevant regulatory licences.
• We will be insured under product-liability insurance.
Intellectual property is not properly assigned to the company
Low/ high • We will specify in our contracts that any IP developed by an outsourced company will be reassigned to Cardi-Eye.
• We will hire patent law attorneys to over-see this process.
Liability lawsuit from mis-handling of private patient data
Low/ high • We outsource our data management to Sterling Medical Devices, which have had extensive experience in cybersecurity and data storage.
35
10.4) Operating risk
Description Likelihood/ severity
Tactics and mitigating factors
Product not adopted by private healthcare insurance or Medicare
Low/ high • Our product provides a cost-saving and operational advantage for insurance companies adopting it.
• Existing infrastructure based around implanted cardiology medical devices (pacemakers, cardioverters etc.) allows a seamless integration into the current reimbursement system.
• Throughout product development and FDA trials we will have all data needed to pass the NCD (National Coverage Decision).
• Medicare already reimburses for functionally similar procedures and products.
Unable to recruit key executives and scientists with appropriate skill sets or experience
Low/ high • We will have established relationships with angel syndicates, venture capital firms and large-cap medical device companies which can assign talent and help us recruit top candidates.
Company management lacks the management experience to execute
Low/ high • Major angel syndicate, venture capital or large-cap medical device company shareholders will occupy board of director seats and choose or hire an experienced management team.
Manufacturing costs are higher than anticipated
Low/ low • All hardware will be manufactured by third-party OEMs under fixed price contracts.
Unable to raise adequate capital
Medium/ High
• Continuous achievement of high-value milestones will bolster our company value.
• Continuous relationship with experienced equity investors in the medical device field will help us lead further funding rounds if necessary.
36
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12) APPENDIX
Appendix Figure. 1: Primary Market survey for CAV patients and processed results. Survery Made
on: www.surveymonkey.com
41
42
8
56
26
10
1-2 weeks 3-4 weeks 1-2 months 3 months orover
%
How long did your CAV diagnosis process last until your diagnosis was
finally validated and finalised?
0 0
18
54
28
1 2 3 4 5 or over
%
How many medical appointments did the diagnosis process include?
0 10 10
54
26
%
How satisfied were you with the amount of time the diagnosis process
took?
0
10
30
40
20
1 2 3 4 5
%
How many of the following diagnostic/ monitoring test(s) did you
undergo before your diagnosis was finalised?
43
28
40
2012
0
Stronglyagree
Agree Neutral(unsure)
Disagree Stronglydisagree
%
After viewing the product description profile of Cardi-TARS, would you be willing to have the device used to
monitor the progession of your CAV if you need another heart transplant?
88%
12%
Overall in your opinion, would you say the diagnosis and monitoring process
is too expensive?
Yes
No
0 6
24
38
32
%How satisfied were you with the
amount of time the diagnosis process took?
30
40
1614
0
Stronglyagree
Agree Neutral(unsure)
Disagree Stronglydisagree
%
Do you agree that this product has the ability to improve transplant
recipients' quality of life post-surgery?
44
Appendix Figure. 1: Primary Market survey for Cardiologists and processed results. Survery Made
on: www.surveymonkey.com
45
0 0
24
60
16
1 2 3 4 5 or over
%
How many medical appointments does the diagnosis process
typically include?
0
28
62
10
1-2 weeks 3-4 weeks 1-2 months 3 months orover
%
How long does it usually take until the a CAV diagnosis validated and
finalised?
46
0 4
30
44
18
4
1 2 3 4 5 6 orover
%How many of the following diagnostic/
monitoring test(s) did you usually perform before the diagnosis was
finalised?
88%
12%
After viewing the product description profile of Cardi-TARS, would you be willing to adopt the device in your practice within the next 10 years?
Yes
No
88%
12%
Overall in your opinion, would you say the diagnosis and monitoring process
is too expensive for patients?
Yes
No
88%
12%
Do you agree that this product has the ability to improve transplant recipients'
quality of life post-surgery?
Yes
No
