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Diagnostics Cohort Week 1

UCSF Lean LaunchPad For Life SciencesOctober 1, 2013

Todd Morrill

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Cohort D-1: LLP-LSdx

• What are we talking about?

• What are we doing here?

• Who are we?

• Why bother?

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What is a diagnostic?

What we used to think:

Product which attempts to classify of an individual's condition into separate and distinct categories that allow medical decisions about treatment and prognosis to be made.

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What is a diagnostic?

What we used to think:

Product which attempts to classify of an individual's condition into separate and distinct categories that allow medical decisions about treatment and prognosis to be made.

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What is a diagnostic?

What we now think:

Product which attempts to classify of an individual's condition into separate and distinct categories that allow medical decisions about treatment and prognosis to be made.

Product, service, process, data setIndividual, group, population…Medical, nutritional, genetic, social…Decisions, information…Treatment, status, history, future, behavior…Prognosis, history, potential…

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What changed?

• Biology (knowledge and understanding of human and other bio/medical systems)

• Technology (PCR, mass spec, TEM, antibodies, PET)

• Population – Aging, richer

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What changed?

• Biology (knowledge and understanding of human and other bio/medical systems)

• Technology (PCR, mass spec, TEM, antibodies, PET)

• Population – Aging, richer, risk averse, and less pizza, dude

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What changed?

• Biology (knowledge and understanding of human and other bio/medical systems)

• Technology (PCR, mass spec, TEM, antibodies, PET)

• Population – Aging, richer, risk averse, and less pizza, dude

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And the industry is changing too

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So what…?So: Value Propositions are Complex

• Testing is more varied, complex and generally available than 20 years ago, for example:– Detection / Change (progression) / Stratification / Prediction /

Predilection– Lab, home brew, RUO, POC, consumer, pet, vet, food etc.– Sensitivity can exceed understanding of meaning– Odd value propositions in some markets: “Diagnosis” vs

“cleanliness” uses

• Medical, industrial, consumer, behavioral etc.• Tests vs Dx: stratification, status, content, etc.• In vivo vs. in vitro testing• Companion diagnostics, biomarker sets, genetic profiling

and unicorns

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So what…? So: Business Models are changing

• Roche• Siemens• Danaher• Abbott• ThermoFisher• Becton Dickinson• Johnson & Johnson• Alere• Sysmex• bioMerieux• Bio-Rad

• Idexx• Digene/Qiagen• Genomic Health• OraSure• Myriad Genetics• GE• Hologic• Complete Genomics• Illumina• Asuragen• Sequenom

Largest Dx Companies Smaller Dx Companies

PLATFORM EXECUTORS TECHNOLOGY INNOVATORS

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Executors

Large marketsRoutine analysesInternational scopeLarge distribution networksManufacturing excellenceEstablished platforms

Niche marketsComplex analysesFocused salesTechnology superiorityNovel platforms

?

EntrepreneurialAgileNicheInnovative……beyond technology

Technologists Innovators

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Who is Todd and why is he here?NSF National Program Faculty

• In vitro diagnostic tests (Bio-Rad Labs $1.3B Dx development, manufacturing, vendor)– Human, animal, food

• In vivo diagnostic discovery (Oxford GlycoSciences)• Biopharma discovery (Trellis, Lilly, Baxter, Pfizer)• Research tools (Novex, Bio-Rad, IO Informatics)• What’s fun?

– New technology discovery and development– Entrepreneurship: 3 startups

• NSF I-CorpsTM National Faculty. Instructor at Berkeley and UCSF .

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Steve mentioned this…

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Do Diagnostics fit into the BMC?(or how don’t they fit?)

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REGULATION

CLINICAL TRIALS

IP

REIMBURSEMENT

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REGULATION

CLINICAL TRIALS

IP

REIMBURSEMENT

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How we will fit DX into the BMC

REGULATION

CLINICAL TRIALS

IPREIMBURSEMENT

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How we will fit DX into the BMC

REGULATION

CLINICAL TRIALS

IPREIMBURSEMENT

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TAM / SAM / SOM

• Established tests – Use the current market size• Novel tests – Use current estimated need

• Population is IMPORTANT but money (revenue) is CRITICAL– Always state your markets in dollars– Use current markets, population, etc.– OK to note market growth if it is exceptional

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The importance of timing

“Ahead of his time”

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What we wish about healthcare

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What we have in healthcare: multisided markets

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What we have in healthcare: complex processes

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What we have in healthcare: regional differences

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Multisided markets pose special challenges…

• Hypothesize about your ecosystem• Hints to solving the ecosystem puzzle: where is the test is performed?

• Think reimbursement• Know your regulators

Value Propositions: One per Customer/ecosystem Segment• Who wants it. Who doesn’t want it?• Clinical Value vs Insurance Value vs Testing Lab Value vs…

Diagnostics and Value Propositions

Comes from Technical Insight Comes from Market Insight

More sensitive

More Efficient

Faster Simpler

Lower cost

Better Bundling

Better Branding

Better Distribution

New test

New user

Examples of Market Insight

Masses of people are more likely to micro-blog than blog

The non-symmetric relationships will allow companies and individuals to self-promote and will impact distribution

European car sharing sensibilities could be adopted in North America

People, particularly in urban environments, no longer wanted to own cars but wanted to have flexibility.

Examples of Market Insight

Need vs Want

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Why the BMC matters …

1. Value proposition2. Customer segment3. Practice of medicine4. Reimbursement5. Regulatory clearance6. Clinical testing7. OUS markets

(Sure, it does what you want, but not how you wanted it to!)

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So for next week…

• Customer segments

Which includes (for us)

Reimbursement Regulation

Hypotheses, experiments, results

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For next week

CLINICAL TRIALS

IP

REIM

BURS

EME

NT

ECOSYSTEM?

REGULA

TIO

N