Start-up Funding | |
Start-up Expenses to Fund | $4,900 |
Start-up Assets to Fund | $1,515,100 |
Total Funding Required | $1,520,000 |
Assets | |
Non-cash Assets from Start-up | $0 |
Cash Requirements from Start-up | $1,515,100 |
Additional Cash Raised | $0 |
Cash Balance on Starting Date | $1,515,100 |
Total Assets | $1,515,100 |
Liabilities and Capital | |
Liabilities | |
Current Borrowing | $0 |
Long-term Liabilities | $15,000 |
Accounts Payable (Outstanding Bills) | $5,000 |
Other Current Liabilities (interest-free) | $0 |
Total Liabilities | $20,000 |
Capital | |
Planned Investment | |
Seed Round Pre-Plan | $500,000 |
Series A | $1,000,000 |
Other | $0 |
Additional Investment Requirement | $0 |
Total Planned Investment | $1,500,000 |
Loss at Start-up (Start-up Expenses) | ($4,900) |
Total Capital | $1,495,100 |
Total Capital and Liabilities | $1,515,100 |
Total Funding | $1,520,000 |
AgaMatrix is a privately-held Delaware corporation, subchapter C. It was created in 2001. Sonny Vu and Sridhar Iyengar, the company’s founders, own the majority of equity. Members of the board of directors and advisors also hold minority stock positions. All employees of the company are rewarded with stock compensation packages.
AgaMatrix will develop a set of software products that provides critically needed diagnostic functionality to current and next-generation medical biosensors. Optimized for computational efficiency, they are designed to be easily incorporated into a number of leading biosensor platforms. All products that we develop will be powered by our core DSP algorithms with certain features configured and optimized for the relevant applications. Our algorithms will be delivered in a format that is convenient and useful to our customers; as such, each AgaMatrix Product Suite will consist of a core DSP engine supplemented with integration tools, application-specific expansion modules, and professional services. Since our initial product focus is OEM technology, we will work closely with our customers and partners in the development and deployment of our products. The core DSP algorithms will be encoded as a platform technology in modular components that can be rapidly configured as needed for various customers’ applications.
Initially, we are marketing one product for the glucose biosensor market and one product for the hospital POC market:
Suite Name: AccuMatrix
Suite Name: PosiMatrix
The core DSP algorithm engine contains all the needed functionality. Using a Configuration Tool, we can rapidly integrate the appropriate Data Modules that are appropriate for the target customer. These Modules contain a library of information that is needed to configure and optimize the core algorithms for the chemicals that are relevant to the customer’s device. Once configured, the algorithms will be delivered in the appropriate software or ASIC-design version for the target device and can be deployed with our Integration Tools by our Professional Services Deployment Team or by the customer’s engineering team. The basic components of each AgaMatrix Suite will include the following:
Core Engine Core DSP technology software and firmware code base will consist of a major portion of the algorithms that AgaMatrix develops. These algorithms will be activated as needed for each customer’s requirements by the Configuration Tools.
Data Modules These are libraries that contain empirical data needed to optimize the core DSP engine for the detection of different chemicals in various operating environments. The Configuration Tools will in part use the data from these Data Modules to customize the software for customers’ various products. We will initially offer the following 2 modules:
Configuration Tools Configuration tools are the front-end interface of the software. This set of tools will allow for the rapid optimization and configuration of the core algorithms for various functionalities and chemicals. These tools are used to select which Data Modules and algorithms are needed for the customer’s application and generate the end product, which can be delivered either as software/firmware for the target device or be delivered in the form of an ASIC design.
Code Integration Tools This set of tools facilitates the integration and customization of software and firmware code base into customers’ products. These tools may be used by our Professional Services Deployment Team when integrating the product into the customers’ end-device, or they may be used by the customer’s in-house engineering teams themselves. Initially, we will include:
Technology and Development Tutorials These are in-depth, easy-to-use online tutorials consisting of scientific and engineering guides to help quickly bring a development and integration team up to speed on AgaMatrix’s DSP technology. The tutorials will consist of code examples, customization, and integration tutorials.
Professional Support Services Package A set of professional services, including software/firmware development and QA/QC testing, designed to assist in supporting the use and maintenance of the AgaMatrix Product Suites for customers and partners.
Based on initial discussions with potential customers, we believe that we can deliver our product in a format that will be readily usable by their development and integration teams. We will use established processes analogous to those used in the deployment of enterprise software solutions where a Deployment Team will assist the customer in the integration of our product into their devices, as indicated by the professional services component of our product offering.
Medical diagnostics has the greatest existing opportunity from an industry size perspective as well as the degree of match between existing needs and AgaMatrix’s technology capability. The sub-segments in this market that the AgaMatrix product line is addressing in the short term (within the next two to three years) are the large, high-margin consumer blood glucose monitor market and the now quickly growing hospital point-of-care device market, i.e., customers are makers of these devices. Even by a conservative estimate, the value proposed by AgaMatrix to the glucose market alone would be enough to sustain a viable standalone venture. However, given the minimal incremental effort that would be needed, we will deliver the product to both sub-markets for the benefit of augmenting and diversifying our revenue streams.
The market that we are concerned with consists of advancing medical devices and technologies that allow healthcare professionals and home users to acquire medical diagnostic data such as blood glucose levels (e.g., for diabetics) and various other blood chemistry data (e.g., for emergency care situations) instantly, easily, cheaply, and accurately without having to send blood samples to centralized lab facilities which have longer turnaround times and are more costly. The conclusion that this market should be the company’s initial focus is substantiated by the fact that it has all the relevant characteristics of a market we found to be desirable. These characteristics are discussed below:
In the medium and long term (three to four years from now), AgaMatrix aims to address needs in the emerging electrochemical immunoassay and implantable biosensor markets.
The Home Blood Glucose Monitoring is the largest, immediately addressable market, over $4.1 billion in size today and growing 13% CAGR. Based on preliminary discussions with several potential customers, AgaMatrix believes that a significant portion of this market can eventually be captured. We expect device makers to pass on the modest costs of AgaMatrix’s technology through the high margins currently enjoyed by the consumable reagents (test strips) they sell. While AgaMatrix technology does not directly improve the test strips themselves, potential customers will incorporate the cost of such technology as part of the total solution cost; development costs of their test devices are already paid for in this way. Diabetics generally are not price sensitive to test strips since insurance usually covers the costs of the strips.
Home Blood Glucose Monitors AgaMatrix will initially target home blood glucose monitoring device makers. One primary dimension along which these device makers compete is the reduction of pain and discomfort from testing that involves pricking fingers to extract blood. By improving device sensitivity, AgaMatrix allows blood glucose device OEMs to reduce the required blood sample size enabling the use of less painful blood extraction mechanisms, a major competitive advantage for such devices according to customer surveys. In one foreseeable application, diabetics would be able to painlessly extract a small amount of blood using automated AgaMatrix-enabled microneedles to test blood glucose levels.
Hospital Point-of-Care Blood Analyzers AgaMatrix will also initially target the hospital blood analyzer market ($300 million in 2001, 25% CAGR) by providing increased accuracy and increased types of tests for these devices. Based on a bottom-up analysis of end user (physicians) and device maker surveys, we believe market penetration for these players has been hindered by the relatively low accuracy (when compared to tests done by centralized labs) and by the limited number of available tests. Physicians are thus forced to wait several hours for results from blood sent to centralized labs, and only use portable blood analyzers in acute emergency situations.
AgaMatrix solves the problem of low accuracy for portable hospital blood analyzers, allowing physicians to use portable analyzers in more situations, thus increasing quality of care, increasing patient turnover, and reducing hospital costs. Our technology could also help boost the yield on current cartridge products, eliminate future cartridge production steps, and provide a broader menu of tests on portable devices, delivering a suite of offerings comparable to traditional large and expensive lab equipment analyzers.
With almost all of the major players trying to develop an “artificial pancreas,” commercializing implantable glucose biosensors that can regulate an implanted insulin pump has been the Holy Grail for the industry. The artificial pancreas allows diabetics to lead a near normal lifestyle without the constant pain and inconvenience of finger pricking and insulin injections. One of the key challenges in the development of implantable sensors is eliminating the use of toxic chemicals currently needed to correct for cross-sensitivity effects that reduce the accuracy of the sensor. AgaMatrix’s technology minimizes these effects without having to use toxic chemicals, thus eliminating a key barrier to the development of complete implantable glucose monitoring and insulin pump systems. Such breakthroughs could lead to adoption of implantable devices on the order of today’s cardiac pacemaker. These large players have expressed initial interest in using AgaMatrix’s technology in these next-generation implantable devices.
Electrochemical Immunoassays Immunoassays are tests that measure biological and chemical species associated with the body’s immune system. Currently, the majority of immunoassays are performed via color-changing tests strips (for simple non-critical applications like home pregnancy tests), or via time-consuming laboratory procedures for more critical tests (like cardiac markers). In hospitals and clinical labs alone, millions of these immunoassays are performed daily. These laboratory assays are based on complicated optical and radioactive detection instrumentation. Leaders in the industry are developing electrochemical immunoassays because electrochemical technologies are generally recognized to be more cost effective, robust, and possibly faster than optical methods given the fact that no complicated sample pre-treatment processes are needed. One of the main challenges to commercializing this new technology is achieving the low detection levels needed for such measurements. AgaMatrix’s technology can be eventually embedded in these devices to overcome the sensitivity issues that currently hinder their commercialization.
Market Analysis | |||||||
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |||
Potential Customers | Growth | CAGR | |||||
Home Blood Glucose Monitors | 13% | 4,700 | 5,311 | 6,001 | 6,781 | 7,663 | 13.00% |
Hospital Blood Analyzers | 25% | 375 | 469 | 586 | 733 | 916 | 25.02% |
Implantable & Non-Invasive Glucose Monitors | 25% | 50 | 60 | 80 | 100 | 125 | 25.74% |
Immunoassays | 5% | 500 | 525 | 551 | 579 | 608 | 5.01% |
Total | 13.43% | 5,625 | 6,365 | 7,218 | 8,193 | 9,312 | 13.43% |
The medical diagnostics industry is prone to disruptions because of technological innovations. We have found the following current industry needs are immediately addressable by AgaMatrix’s technology based on a survey of potential customers in the blood glucose and Hospital point-of-care (POC) market:
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Use of blood from less painful areas. | Lack of treatment compliance because diabetic patients are unwilling to use the devices too physically painful to use regularly. | Sample size is a critical dimension device makers compete on. Solution provides a competitive advantage. |
Need for higher accuracy for hospital POC blood chemistry analyzers. | Desire to use point-of-care devices instead of central labs for emergency situations in order to instantly get life-critical diagnostic data. | Device makers increase penetration in existing hospital markets. |
Need for larger test menus offered by POC devices. | Health professionals will often not use point-of-care devices unless all the required tests are available in one device/cartridge solution. | A competitive advantage increasing market share since this is an end-user valued differentiating feature. |
Near future market needs prompted by emerging trends
We have also identified a number of needs for which AgaMatrix is aligned to be a major technology provider. For the sake of conservatism and maintaining a focused company positioning in the healthcare arena, we are not pursuing available applications in environmental monitoring, industrial processing, and military biological/chemical warfare agent detection. Instead, we consider our primary expansion markets to be other segments in the healthcare market including the immunoassay and implantable/minimally invasive biosensor markets, with some initial penetration into the latter in Y2 and Y3.
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Development of minimally-invasive and ultimately of implantable glucose biosensors. | Addresses compliance issues in patients having difficulty using current devices. | Toxic chemicals required to overcome interference issues prevent implantation. |
Conversion of existing immunoassays to electrochemical biosensor-based immunoassays. | Eliminates time/equipment intensive sample pre-treatment steps. | Biological elements are in trace amounts too small to be detected. Devices are not sensitive enough. |
Based on a prior art search and our cross-disciplinary technology expertise, we believe we are the only solution provider of our kind to medical device manufacturers. However, AgaMatrix indirectly competes against other biosensor-enhancing technologies. Rival technologies include advances in physical designs such as improvements in chemical reagents used in these devices and the integration of permselective membranes that are intended to materially filter out interfering chemicals from contacting the sensor. We have identified the research efforts of the following companies as potential competition due to their efforts to solve the same problems, albeit through very different approaches.
AgaMatrix’s strategy will be built upon sustainable advantages from superior software technology, in-house expertise, monopolization of a scientific team, and development lead time over competitors. In addition, the company will deploy a strong intellectual property strategy of defensive and offensive patents to create an IP minefield to make litigation for competitors as costly as possible. Coupled with an aggressive marketing and sales strategy, AgaMatrix is positioned to be the leading provider of technology that enables biosensor devices used in medical and other life science applications.
Advantage #1: Superior and Complementary Software Paradigm Potential indirect competition could lie within R&D departments of medical device OEMs who are striving to create both incrementally higher-performing biosensors for existing products. The R&D teams are also striving to make revolutionary advances which enable implantable biosensors such as blood glucose monitors. However, based on secondary market research and on first-hand conversations with potential customers/partners, the observed historical trend in this industry has been to approach chemical problems with chemical experts. We believe that our multi-disciplinary software approach fills a missing piece in the development of these devices.
From a technological standpoint, our software-based solutions achieve the same goals of interference suppression as rival chemical solutions; however, because we obviate the need for these chemicals, most of which are toxic, products deployed with AgaMatrix technology will be suited for in vivo applications, such as some minimally invasive and implantable glucose monitors. Furthermore, our technology can simultaneously monitor multiple chemicals, both the target analyte and any interfering chemicals, engendering low-cost multi-analyte sensors which are not readily viable with current chemical-based sensor enhancements.
From a marketing standpoint, our products have the advantage of being software-based, engendering many of the potential benefits that other software-based products traditionally enjoy. One of the principle advantages that end users would have is the ability to upgrade the software as new, better algorithms are developed, a benefit that cannot be as easily realized with other physical and chemical technological advances. From a cost-saving standpoint, many of the permselective membranes that are currently designed to be used in biosensor devices are too expensive to be used in all applications. As such, our software solutions would provide a cost benefit advantage to our customers.
Regardless of other traditional technology advances in sensor design, our DSP technologies will ultimately prove to be complementary. Our noise-filtering algorithms will increase the signal-to-noise ratio enabling greater sensitivity and lowering detection limits. In many applications, membrane filters are not fully effective; as such, our interference suppression algorithms can compensate for the limitations of such membranes. Additionally, rival empirical improvements cannot address other limitations of these devices, such as sensor deterioration, where our technology may be applied to auto-correct for such sources of error.
Advantage #2: In-House Expertise As is the case with chemical and life science research, one of the most resource-intensive aspects of the development time lies in optimizing empirical protocols and avoiding unforeseen pitfalls; most of the knowledge comes from “hands-on” experience, not only theoretical background. Furthermore, expertise in multi-disciplinary areas as ours requires specialized knowledge. AgaMatrix’s scientific team has been involved in biosensor research for an aggregate of over 40 years. The foundational research for our current technology was initiated seven years ago, and our scientists have developed and optimized many of the techniques that are vital to the continuing development and validation of AgaMatrix’s products. To date, we have developed the groundbreaking technology approach, the experimental protocols, the validation mechanisms, and the core algorithms. Our extensive in-house expertise in working on bridging biosensor systems and DSP technologies represents a significant barrier to any potential competitor.
Advantage #3: Monopolization of Scientific Team The technology that AgaMatrix is built upon has been inspired by research performed throughout the past decade at the University of Cambridge. The original scientific team that achieved these breakthroughs boasts inimitable credentials and has remained intact to form the current AgaMatrix R&D team. In the ensuing years, AgaMatrix has developed new technologies and is moving towards its commercialization. We believe that our virtual monopoly on the intellectual resources that have been responsible for the technological advances that AgaMatrix owns represents a significant competitive advantage over potential competitors. As is the case with any empirical endeavor, much of the in-house expertise comes in the form of a close working knowledge of the practical aspects of technology development. With the current R&D team already experienced in the relevant technologies, and having worked together in the past, much of this knowledge has already been acquired.
Advantage #4: Development Lead Time Over Potential Competition In sharp contrast to the typical chemistry-based approach, AgaMatrix’s technology is based upon a multi-disciplinary core competency. Our competitive capabilities are derived from a unique confluence of electrical engineering and life science disciplines, a roadblock for potential competitors entrenched in traditional “wet chemistry” research paradigms.
Presenting compelling value through superior technology Because of AgaMatrix’s revolutionary, proprietary technology, we are positioned to be the market leader in biosensor enhancing solutions. AgaMatrix offers a novel approach that clearly provides significant value to our customer and ultimately the end user. The AgaMatrix solution delivers value in two ways: by improving the performance of their product against competing products and by increasing customers’ market share and revenue. Communicating this value to the device manufacturers, as well as branding our technology to defend market share, is the fundamental philosophy behind our marketing strategy.
Becoming a competitive standard The core AgaMatrix technology is a unique approach to improving biosensors systems in a way that substantially increases performance and adds value to the end user. In a competitive marketplace, we will present our technology to medical device makers as an industry standard that they must adopt to be able to compete. Examples of this kind of standard-setting technology include the adoption of Windows platforms on PCs and auto-focus and red-eye reduction capabilities on cameras. Specific selling points include elimination of cross-interference, improvement in accuracy, improvement in signal to noise ratio, improvement in device robustness, reduction in sample requirements, and increase in market acceptance of product. The value proposition will differ depending on the needs of each customer.
Marketing to end users by marketing the end product AgaMatrix will market to end users through partnership with the device makers; to add value, our technology must increase their bottom line profit. AgaMatrix can do this if end users appreciate the advantages AgaMatrix enhancements bring and if they require our products for a healthcare “standard of care.” The desire for end users, such as doctors and patients, to use the best and most effective technology for diagnosis and treatment of health problems will drive demand for AgaMatrix-enabled devices. Therefore, AgaMatrix will develop a marketing plan with our partners to increase the awareness of the clinical advantages of our devices. The AgaMatrix-enabled label will become a moral imperative to clinicians in the same way that advanced digital imaging technology is used by radiologists and cardiovascular specialists.
In summary, AgaMatrix will market both to the device makers we sell to and end customers, who will drive demand. Because device makers are concerned about increasing their bottom line through value-add to their products as well as through production cost reductions, AgaMatrix will sell to them on the basis of value rather than on any other consumer-based premise. End users, such as healthcare professionals and customers, demand standard of care. Therefore, AgaMatrix will co-market its brand as a necessary technology for healthcare diagnostics.
Phase 1: Sales to medical device manufacturer partners In the first stage of bringing AgaMatrix technology to market, the company will approach and partner with medical device manufacturers. Such partnerships have the added advantages of product development that is supported by the partner’s engineering, finance, marketing, and management.
Phase 2: Becoming the “competitive standard” With a base of customers who can vouch for the product value, AgaMatrix aims to become the competitive standard that all players must adopt. Specific marketing tactics in this stage include: increasing market awareness through trade shows (e.g., Medical Device Expo, SensorExpo) and technical conferences, advertising in trade journals and publications (e.g., Sensor Magazine, Medical Device and Diagnostics Magazine), and retaining “Thought Leaders” from industry and academia who will corroborate our claims.
Phase 3: Branding for mind share and market domination AgaMatrix will brand its proprietary DSP technology to associate enhanced solutions with our identity. A consistent, strong, and clearly defined brand will add yet another barrier to entry and market penetration. Increased awareness of the advantages we deliver will give rise to increased demand for the end product.
The sales forecast is based on a royalties pricing model. However, a revenue model based on licensing fees is also described and provided for comparison purposes, below.
Charging on a royalty-based per-use fee, AgaMatrix will initially sell OEM technology solutions to manufacturers of biosensor-based medical devices that will enhance their products’ performance. Because AgaMatrix technology is software-based and is optimized for minimal hardware requirements, it can be easily integrated into existing sensor devices, boosting functionality on a cost-effective basis. By embedding our technology within their devices, OEMs will realize substantial gains (20% to over 100%) in performance dimensions such as accuracy, sensitivity, and robustness. Technology OEM royalty-based business models are not new in this business. Our ability to quickly provide performance upgrades in the form of easy-to-integrate software/firmware updates provides a number of technical and sales advantages over the existing development paradigm, which relies on “wet” chemistry approaches.
Sales Forecast | |||
Year 1 | Year 2 | Year 3 | |
Sales | |||
Test Strip Royalties (000) | $256,000 | $9,954,000 | $44,816,000 |
Other | $0 | $0 | $0 |
Total Sales | $256,000 | $9,954,000 | $44,816,000 |
Direct Cost of Sales | Year 1 | Year 2 | Year 3 |
Test Strip Royalties (000) | $37,500 | $1,500,000 | $6,270,000 |
Other | $0 | $0 | $0 |
Subtotal Direct Cost of Sales | $37,500 | $1,500,000 | $6,270,000 |
The primary value proposition that AgaMatrix presents to medical device manufacturers is increased revenues through increased market share from product advantages over other competing devices and from premium pricing for increased functionality and performance of their products. Because the new product offering from the manufacturer contains “best of” technology and is in the healthcare space, they can charge a premium for their product, which will translate into revenues to AgaMatrix. Another value proposition which a potential customer (i-STAT) actually brought to our attention is that our technology could very likely reduce production costs for them by allowing them to eliminate the need to use costly membranes in their products.
The pricing for our product can be either “value-added” pricing on the price of the medical device or based on device usage, depending on the revenue model used by our customers. In the case of the blood glucose market, revenues are driven not by the device, but rather by recurring revenues from consumable test strips. For example, the test strips that LifeScan sells retail for approximately $0.70 each. These test strips are supposed to be used three to four times a day, although the pain associated with testing has reduced compliance to about 1.5 tests per day per patient. AgaMatrix will share in the revenues this model generates. For example, every time a test strip is analyzed by the device that LifeScan sells, AgaMatrix technology will be utilized to provide a more accurate reading. Therefore, AgaMatrix will enter into a royalty-based fee agreement with device manufacturers, such as those in glucose monitoring, where consumables generate revenue. Preliminary conversations with Hypoguard indicate a general willingness to this type of pricing model.
Another example of how our royalty will work could be through the partnership with Company X. Company X manufactures and sells a point-of-care device for approximately $5,000. Test cartridges are priced at around $3.40 each and can perform 5-6 different tests once. For Company X, our product would solve an existing problem with the performance and reliability of their cartridges. Cartridges would be priced approximately $4.00 – $5.00. Company X manufactures these cartridges for $0.12-$0.16 each and should be amenable to sharing the increased margins. For cases in which consumables are not used, premium pricing of about +20% will be used depending on the added value that can be delivered to the end user. The following table summarizes a conservative revenue forecast based on royalties.
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Blood Glucose | $256,432 | $9,954,009 | $44,816,452 | $94,571,316 |
Implantable | – | $1,317,544 | $2,879,816 | $6,283,236 |
Hospital POC | – | $1,013,627 | $7,066,014 | $11,367,777 |
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An alternative pricing model would be to charge an annual licensing fee for each device enabling AgaMatrix technology. The value proposition to customers is the same: devices enabled with AgaMatrix technology will be more accurate and therefore require smaller blood samples and result in less pain, which will increase device and test strip sales. Pricing structures and terms of the company’s software modules and services will ultimately be determined by negotiations with customers. The most likely scenario will be a hybrid pricing model of flat licensing fees on devices and royalties on test strip sales. The following table summarizes a conservative revenue forecast based on a licensing structure.
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Blood Glucose | $100,879 | $3,894,857 | $18,693,271 | $41,016,225 |
Implantable | – | $1,317,544 | $2,879,816 | $6,283,236 |
Hospital POC | – | $278,540 | $3,035,925 | $6,223,663 |
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With a fully developed IP strategy consisting of core utility patents (currently filed as provisional applications) and defensive utility patents to be filed imminently, and based on our technological leadership, we believe that it would be far more beneficial for potential customers to purchase our technology than to develop it in-house.
The following tables summarize the company’s developmental goals (month-to-month for Y1). Product Milestones are listed separately, below.
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1-3 | Secure 1st beta letter of intent with one small blood glucose monitor company | Set up HR and Finances Systems; set up lab |
4 | Secure final beta agreement and terms | |
5 | Determine short term partner targets |
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6 | Marketing face overhauled | Move to larger office |
7 | Determine future product requirements | 2nd Research Scientist hired |
8 | Utility patent #1 filed; 2 more Engineers hired | |
9 | Soft launch; secure 2nd beta agreement |
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10 | CEO and VP hired | |
11 | Secure institutional funding commitment for Year 2 and 3 | |
12 | Secure 2nd beta terms | Utility patent #2 filed |
13 | Secure first (small) paying glucose customer terms |
Year 3 Milestones
The following table summarizes the product development vision. Future products will all contain updated core DSP algorithm software, associated tools, and documentation of performance results, ensuring that we maximally leverage our existing technology base as productization evolves.
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Y2; Q1 | Customize AccuMatrix v1.0 for continued deployment onto other glucose biosensor devices Customize PosiMatrix v1.0 for continued deployment onto other point-of-care devices Begin development of VivoMatrix v1.0 for implantable glucose biosensor makers Improve algorithm functionality to address robustness & fouling issues |
Y2; Q2 | Begin development of AccuMatrix v2.0 Improve algorithms to increase signal-to-noise ratio for higher sensitivity Begin development of PosiMatrix v2.0 Incorporate adaptive interference cancellation algorithms to auto-correct for unknown interferences |
Y2; Q4 | Deliver AccuMatrix v2.0, PosiMatrix v2.0 |
Y3; Q1 | Begin development of PosiMatrix v3.0, AccuMatrix v3.0 |
Y3; Q4 | Deliver VivoMatrix v1.0, PosiMatrix v3.0, AccuMatrix v3.0 |
Y4; Q4 | Deliver AccuMatrix v2.0, PosiMatrix v2.0, VivoMatrix v2.0 |
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Company A | AccuMatrix interference suppression | |
Company B | Implantable biosensor anti-fouling | |
Company C | Alerting of bad readings | |
Company D | Not yet determined | They have requested the blood data. |
Company E | Monitoring of multiple analytes |
AgaMatrix’s website will be a dynamic marketing tool for the company that serves the needs of business development, sales, and recruiting. The company site will provide information about AgaMatrix’s products and services for target customers and potential business partners, such as marketing collateral, technical white papers, and new product updates. As the company grows, its recruiting needs can be addressed by posting career opportunities and FAQs about the company. AgaMatrix.com will also communicate company news to create and maintain positive public relations with the community and investors. The goal will be to implement a functional and professionally designed website that can be adapted to meet the company’s growing needs.
Creation of future versions of the AgaMatrix website will continue to be outsourced to Nathan Bailey, a professional graphics designer with over 15 years of experience. The contractor will work with the marketing department to conceptualize the company’s logo and overall design. It will be maintained in-house and major site redesigning will be made through a contractor.
The following are the current members of the AgaMatrix Team. Once a permanent CEO is on board, Sonny will transfer to a Director of Product Management role.
Sonny Vu, Chief Executive Officer and Founder Sonny brings management and entrepreneurial experience from having worked in several of Microsoft’s product groups and having launched and built FireSpout, an enterprise software company. At Microsoft, he worked in a number of product development groups, including the natural language group responsible for shipping linguistic technologies to over 16 applications in 22 languages. While at FireSpout, Sonny created the original technology vision, recruited the technical teams, developed and managed the technology development and various operational processes, and developed the intellectual property strategy. Originally a mathematician by training, Sonny was a Ph.D. candidate at MIT prior to working in the software industry.
Dr. Sridhar Iyengar, Chief Technology Officer and Founder With 10 years of research and engineering experience in DSP and mathematical modeling of chemical systems, Sridhar drives and directs the implementation of AgaMatrix’s technology vision. He is the leading expert in the core DSP/electrochemistry interdisciplinary approach used by AgaMatrix. Combining his background in electrical engineering and biological sciences, Sridhar conceived and pioneered the concept of using a DSP approach to enhance biosensor performance. His work in the years following his breakthrough Ph.D. research is the cornerstone for AgaMatrix’s intellectual property with two key patents filed under his name and another three defensive patents to be filed during the summer of 2002. Sridhar obtained his Ph.D. from the University of Cambridge as a Marshall Scholar.
Craig Bolon, Vice President of Engineering With more than 35 years of management and technical experience in software and hardware engineering, Craig is responsible for executing AgaMatrix’s product development initiatives. He brings his leadership experiences from being a hands-on development engineer, team leader, general manager, engineering director, and entrepreneur. Craig has a proven track record of delivering on-time, on-budget projects while working on commercial product development in software and instrumentation for organizations such as Schlumberger, Polaroid, Betagen, Exxon, and MIT. His commercial product development work has spanned the fields of molecular biology, chemical analysis, electronic imaging, speech recognition, and mechanical design software. Craig has invented key technologies and holds a number of software and hardware patents. He holds a degree in particle physics from MIT.
Dr. Paul J. Kelly, Advisor Paul is the founder and former CEO of Gemini Genomics plc, until its merger in 2001. A physician who specialized in endocrinology, he has more than 25 years of experience in medicine, and research in clinical and commercial settings. He has published extensively in over 90 publications, has an issued patent, and has held faculty appointments at the University of New South Wales and St. Vincent’s Hospital in Sydney, Australia. After launching Gemini Genomics in Cambridge, England, Paul went on to list the company on NASDAQ, in the most successful IPO of 2000 in the UK. He has served on national governmental advisory bodies, as well as on the boards of public and private companies, and non-profit institutions. Paul graduated in Medicine from the University of New South Wales, Sydney, and received his Doctor of Medicine degree for his thesis in the genetics of osteoporosis also from the University of New South Wales. He is a Fellow of the Australasian College of Physicians.
The personnel table assumes steady growth in employees over the next year. We expect head count to reach 14 employees by end of year one. We are in the process of implementing a strong benefits policy (with fully-paid medical, dental, and life insurance, plus a profit sharing and 401K plan). Employees generally earn competitive salaries and receive generous equity packages.
Personnel Plan | |||
Year 1 | Year 2 | Year 3 | |
Combined Payroll | $780,750 | $4,181,056 | $6,013,186 |
Other | $0 | $0 | $0 |
Total People | 0 | 0 | 0 |
Total Payroll | $780,750 | $4,181,056 | $6,013,186 |
The following subtopics highlight the financial plan for AgaMatrix.
The break-even analysis demonstrates that AgaMatrix will have a sales level running comfortably above break-even starting in year two. Depending on which pricing model is used – either royalties, licensing, or both – average revenue could vary significantly, but the table shows a fair estimate given our revenue projections.
The business will have very few fixed costs – most laboratory equipment can be leased, as will the real estate for our offices. All costs are expected to be variable for modeling purposes, giving the company flexibility to adapt as needs and environmental conditions may change. Because AgaMatrix technology is software-based and is optimized for minimal hardware requirements, it can be easily distributed and integrated into biosensor devices with advantages of economies of scale. As volume increases, average variable costs will significantly decrease.
Break-even Analysis | |
Monthly Revenue Break-even | $583,407 |
Assumptions: | |
Average Percent Variable Cost | 15% |
Estimated Monthly Fixed Cost | $497,947 |
The financial plan depends on important assumptions, most of which are shown in the following table. The key underlying assumptions are:
Financial projections are predicated upon targeting the life sciences vertical exclusively. Within the life sciences market, blood glucose will drive the majority of revenue. However, the point-of-care testing market will contribute modest revenue in the near term, accompanied by a substantial contribution from the implantable market in the medium and long term.
General Assumptions | |||
Year 1 | Year 2 | Year 3 | |
Plan Month | 1 | 2 | 3 |
Current Interest Rate | 8.00% | 8.00% | 8.00% |
Long-term Interest Rate | 10.00% | 10.00% | 10.00% |
Tax Rate | 30.00% | 30.00% | 30.00% |
Other | 0 | 0 | 0 |
Gross and operating margins
Gross margins will be approximately 85% on the core product offering, which will be delivered in the form of software. Such margins are typical in the software industry; we have not modeled in support revenue streams for our products, assuming this will be handled entirely by our OEM customers. In year one, we expect a loss, as we grow the business from a small base by conserving cash. Beginning in year two (post-institutional funding), as we ramp up the business more aggressively, operating expenses as a percent of revenue will fall as we hire a critical mass of personnel for marketing, sales, and research and development. By the end of the forecast horizon, operating margins will once again exceed 30%.
Profit potential and durability
AgaMatrix is expected to be net income positive beginning in its second full year of operations. Profitability is expected to grow rapidly following year two, once the business is able to leverage the investment from the year two ramp-up. AgaMatrix has the potential to be an enduring standalone business, supported by a diversified revenue stream within the life sciences vertical (blood glucose, point-of-care testing and minimally invasive/implantable devices), with the opportunity to expand into other sub-segments in the healthcare sector and new verticals for long-term growth.
Pro Forma Profit and Loss | |||
Year 1 | Year 2 | Year 3 | |
Sales | $256,000 | $9,954,000 | $44,816,000 |
Direct Cost of Sales | $37,500 | $1,500,000 | $6,270,000 |
Other Production Expenses | $0 | $0 | $0 |
Total Cost of Sales | $37,500 | $1,500,000 | $6,270,000 |
Gross Margin | $218,500 | $8,454,000 | $38,546,000 |
Gross Margin % | 85.35% | 84.93% | 86.01% |
Expenses | |||
Payroll | $780,750 | $4,181,056 | $6,013,186 |
Sales and Marketing and Other Expenses | $4,915,400 | $245,000 | $450,000 |
Depreciation | $0 | $0 | $0 |
Leased Equipment | $0 | $0 | $0 |
Utilities | $3,400 | $6,300 | $8,000 |
Insurance | $44,000 | $65,000 | $80,000 |
Rent | $114,700 | $120,000 | $120,000 |
Payroll Taxes | $117,113 | $627,158 | $901,978 |
Other | $0 | $0 | $0 |
Total Operating Expenses | $5,975,363 | $5,244,514 | $7,573,164 |
Profit Before Interest and Taxes | ($5,756,863) | $3,209,486 | $30,972,836 |
EBITDA | ($5,756,863) | $3,209,486 | $30,972,836 |
Interest Expense | $1,419 | $1,250 | $1,025 |
Taxes Incurred | $0 | $962,471 | $9,291,543 |
Net Profit | ($5,758,281) | $2,245,765 | $21,680,268 |
Net Profit/Sales | -2249.33% | 22.56% | 48.38% |
The financial outlook is positive as the company rolls out and meets its milestones. After financing, cash flow will be negative for year one. By year two, AgaMatrix expects to be cash flow positive.
Pro Forma Cash Flow | |||
Year 1 | Year 2 | Year 3 | |
Cash Received | |||
Cash from Operations | |||
Cash Sales | $256,000 | $9,954,000 | $44,816,000 |
Subtotal Cash from Operations | $256,000 | $9,954,000 | $44,816,000 |
Additional Cash Received | |||
Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 |
New Current Borrowing | $0 | $0 | $0 |
New Other Liabilities (interest-free) | $0 | $0 | $0 |
New Long-term Liabilities | $0 | $0 | $0 |
Sales of Other Current Assets | $0 | $0 | $0 |
Sales of Long-term Assets | $0 | $0 | $0 |
New Investment Received | $4,075,000 | $0 | $0 |
Subtotal Cash Received | $4,331,000 | $9,954,000 | $44,816,000 |
Expenditures | Year 1 | Year 2 | Year 3 |
Expenditures from Operations | |||
Cash Spending | $780,750 | $4,181,056 | $6,013,186 |
Bill Payments | $4,812,657 | $3,663,149 | $16,005,119 |
Subtotal Spent on Operations | $5,593,407 | $7,844,205 | $22,018,305 |
Additional Cash Spent | |||
Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
Principal Repayment of Current Borrowing | $0 | $0 | $0 |
Other Liabilities Principal Repayment | $0 | $0 | $0 |
Long-term Liabilities Principal Repayment | $1,500 | $2,000 | $2,500 |
Purchase Other Current Assets | $0 | $0 | $0 |
Purchase Long-term Assets | $0 | $0 | $0 |
Dividends | $0 | $0 | $0 |
Subtotal Cash Spent | $5,594,907 | $7,846,205 | $22,020,805 |
Net Cash Flow | ($1,263,907) | $2,107,795 | $22,795,195 |
Cash Balance | $251,193 | $2,358,989 | $25,154,184 |
Our projected balance sheet shows an increase in net worth. The monthly projections for the first year are in the appendix. Net worth is negative initially because the company does not expect to secure its first paying customer until end of year one.
Pro Forma Balance Sheet | |||
Year 1 | Year 2 | Year 3 | |
Assets | |||
Current Assets | |||
Cash | $251,193 | $2,358,989 | $25,154,184 |
Other Current Assets | $0 | $0 | $0 |
Total Current Assets | $251,193 | $2,358,989 | $25,154,184 |
Long-term Assets | |||
Long-term Assets | $0 | $0 | $0 |
Accumulated Depreciation | $0 | $0 | $0 |
Total Long-term Assets | $0 | $0 | $0 |
Total Assets | $251,193 | $2,358,989 | $25,154,184 |
Liabilities and Capital | Year 1 | Year 2 | Year 3 |
Current Liabilities | |||
Accounts Payable | $425,875 | $289,905 | $1,407,333 |
Current Borrowing | $0 | $0 | $0 |
Other Current Liabilities | $0 | $0 | $0 |
Subtotal Current Liabilities | $425,875 | $289,905 | $1,407,333 |
Long-term Liabilities | $13,500 | $11,500 | $9,000 |
Total Liabilities | $439,375 | $301,405 | $1,416,333 |
Paid-in Capital | $5,575,000 | $5,575,000 | $5,575,000 |
Retained Earnings | ($4,900) | ($5,763,181) | ($3,517,416) |
Earnings | ($5,758,281) | $2,245,765 | $21,680,268 |
Total Capital | ($188,181) | $2,057,584 | $23,737,851 |
Total Liabilities and Capital | $251,193 | $2,358,989 | $25,154,184 |
Net Worth | ($188,181) | $2,057,584 | $23,737,851 |
We have identified several critical risks and assumptions that must be addressed to ensure AgaMatrix’s success.
Market Risks
Risk #1: Corporate R&D labs of our customers/partners may develop competing DSP-based technologies to enhance their own electrochemical sensors based products.
See section 4 for a detailed discussion of competition and AgaMatrix’s sustainable competitive advantages.
Risk #2: Other technologies may be developed to improve sensor performance.
Other technology solutions designed to improve sensor performance have been generally hardware-based introducing additional costs and at times toxic chemicals. For example, MEMS-based infrared sensors, being developed as an alternative to electrochemical sensors, are expected to be much more costly despite increased performance. Similarly, mediators such as ferrocene are used to deliver accurate readings, but are toxic and less effective than AgaMatrix’s solution. AgaMatrix software-based solution improves performance while being cost effective and safe.
Risk #3: As a pioneer in electrochemical applications for DSP algorithms, AgaMatrix may not be able to convince customers to adopt such a revolutionary solution.
Developers of blood glucose monitors and portable blood analyzers have never considered using a software-based approach to solving their accuracy and cross-interference problems. There is thus a psychological barrier that we believe can be overcome through a simple, concrete demonstration of low-cost performance gains which we can provide.
Risk #4: There may not be enough computing power and memory on blood glucose monitoring devices and portable blood analyzers to support AgaMatrix’s software.
The algorithms have been optimized for computational speed and are designed for use on devices with very little CPU resources. Initial customer feed back shows that AgaMatrix’s algorithms can be incorporated in next-generation ASICS designs for blood glucose monitoring devices, as well as into current microprocessor-powered portable blood analyzers.
Risk #5: Implantable blood glucose sensors may be prolonged from the marketplace indefinitely.
Although most blood glucose monitoring device companies are trying to develop implantable sensors, other technical and marketing issues may prevent the eventual adoption of the artificial pancreas. AgaMatrix’s technology will accelerate the development of the artificial pancreas by not requiring toxic mediators. However, AgaMatrix cannot solely depend on this market’s development, and has thus chosen to focus on existing markets to drive short to medium term revenue.
Risk #6: AgaMatrix must prove out the technology on blood samples.
Despite a high confidence in the technology, we must still create experimental data sets created from tests using actual blood samples. These data sets will be shown to customers as proof of the technology’s effectiveness. AgaMatrix is confident that after initial funding, lab space and equipment can be quickly secured to produce these data sets.
Risk #7: AgaMatrix may face regulatory delays from FDA approval.
We will work with our customers to ensure that the technologies that are deployed into their devices will incur minimal regulatory risks thereby complying with the FDA’s less onerous regulations for a “derivative device” (compared to the approval process for a completely new device).
Risk #8: AgaMatrix needs to determine customer willingness to pay and secure concrete deals with customers.
Several conversations with potential customers have already reached the level of discussing potential pricing structures so we believe there is some genuine interest.
Risk #9: Each OEM customer will require a custom-built version of the AgaMatrix software.
The software suite will be designed to be a modular and scalable platform technology. We will construct a set of configuration and integration tools designed to translate our core technology into suitable deployment formats.
Risk #10: University of Cambridge may have claims to AgaMatrix’s technologies.
The technology is based on 3rd generation algorithms that AgaMatrix alone has been developing for two years. 1st and 2nd generation technologies were developed at the University of Cambridge and validated the proof of concept of using a DSP approach to solving many of the outstanding problems in biosensors. Our 3rd generation technology is fundamentally different from the earlier technologies and has overcome a number of critical limitations, on both the theoretical and empirical sides, that prevent commercialization. AgaMatrix owns all rights to these 3rd generation technologies. The 1st and 2nd generation technologies, while illustrative of the concept, do not pose any commercial threat due to fundamental technological limitations
Financial Risks
Risk #1: Working Capital Management – We expect to be running a significant working capital deficit because of the time it will take to establish payment schedules (e.g. quarterly royalties from partners) and receive payments from large OEM vendors while, as an early-stage company, we will simultaneously have to make payments on our supplies on a short-term basis. Managing the cash conversion cycle will be critical to ensuring liquidity and solvency.
Risk #2: Seasonal, Cyclical, or Highly Volatile Cash Flows – at this time, we expect there to be volatility in our cash flows based primarily on the new product introduction cycles of major medical devices manufacturers. Therefore our revenue and cash flow streams will not be smooth throughout the year, but will be stronger during times of new product introduction. By targeting three different market segments early on (blood glucose, point-of-care, and implantable devices) we aim to mitigate this risk.
Risk #3: Concentration of Customers – The blood glucose market and portable blood analyzer markets are dominated by an oligopoly of a handful of companies. It may be difficult to diversify our customer base sufficiently to prevent large swings in our revenue and cash flow based upon the actions of a small number of customers. To diminish this risk, we will initially target smaller players who will move more quickly and provide us with greater leverage when we go to negotiate with larger customers.
Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 7373 or NAICS code 541512, Computer Systems Design Services, are shown for comparison.
Ratio Analysis | ||||
Year 1 | Year 2 | Year 3 | Industry Profile | |
Sales Growth | 0.00% | 3788.28% | 350.23% | 16.45% |
Percent of Total Assets | ||||
Other Current Assets | 0.00% | 0.00% | 0.00% | 63.87% |
Total Current Assets | 100.00% | 100.00% | 100.00% | 94.15% |
Long-term Assets | 0.00% | 0.00% | 0.00% | 5.85% |
Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
Current Liabilities | 169.54% | 12.29% | 5.59% | 33.55% |
Long-term Liabilities | 5.37% | 0.49% | 0.04% | 21.29% |
Total Liabilities | 174.91% | 12.78% | 5.63% | 54.84% |
Net Worth | -74.91% | 87.22% | 94.37% | 45.16% |
Percent of Sales | ||||
Sales | 100.00% | 100.00% | 100.00% | 100.00% |
Gross Margin | 85.35% | 84.93% | 86.01% | 100.00% |
Selling, General & Administrative Expenses | 1351.46% | 57.96% | 36.23% | 77.82% |
Advertising Expenses | 8.98% | 0.60% | 0.27% | 1.65% |
Profit Before Interest and Taxes | -2248.77% | 32.24% | 69.11% | 0.36% |
Main Ratios | ||||
Current | 0.59 | 8.14 | 17.87 | 1.97 |
Quick | 0.59 | 8.14 | 17.87 | 1.57 |
Total Debt to Total Assets | 174.91% | 12.78% | 5.63% | 65.50% |
Pre-tax Return on Net Worth | 3059.97% | 155.92% | 130.47% | 0.53% |
Pre-tax Return on Assets | -2292.37% | 136.00% | 123.13% | 1.52% |
Additional Ratios | Year 1 | Year 2 | Year 3 | |
Net Profit Margin | -2249.33% | 22.56% | 48.38% | n.a |
Return on Equity | 0.00% | 109.15% | 91.33% | n.a |
Activity Ratios | ||||
Accounts Payable Turnover | 12.29 | 12.17 | 12.17 | n.a |
Payment Days | 27 | 37 | 18 | n.a |
Total Asset Turnover | 1.02 | 4.22 | 1.78 | n.a |
Debt Ratios | ||||
Debt to Net Worth | 0.00 | 0.15 | 0.06 | n.a |
Current Liab. to Liab. | 0.97 | 0.96 | 0.99 | n.a |
Liquidity Ratios | ||||
Net Working Capital | ($174,681) | $2,069,084 | $23,746,851 | n.a |
Interest Coverage | -4,057.70 | 2,567.59 | 30,217.40 | n.a |
Additional Ratios | ||||
Assets to Sales | 0.98 | 0.24 | 0.56 | n.a |
Current Debt/Total Assets | 170% | 12% | 6% | n.a |
Acid Test | 0.59 | 8.14 | 17.87 | n.a |
Sales/Net Worth | 0.00 | 4.84 | 1.89 | n.a |
Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |
Sales Forecast | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Sales | |||||||||||||
Test Strip Royalties (000) | 0% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $256,000 |
Other | 0% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Total Sales | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $256,000 | |
Direct Cost of Sales | Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | |
Test Strip Royalties (000) | $5,000 | $1,500 | $1,500 | $1,500 | $1,500 | $9,500 | $1,500 | $1,500 | $1,500 | $9,500 | $1,500 | $1,500 | |
Other | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Subtotal Direct Cost of Sales | $5,000 | $1,500 | $1,500 | $1,500 | $1,500 | $9,500 | $1,500 | $1,500 | $1,500 | $9,500 | $1,500 | $1,500 |
Personnel Plan | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Combined Payroll | 0% | $36,583 | $43,250 | $47,000 | $47,000 | $54,500 | $57,417 | $76,250 | $76,250 | $76,250 | $88,750 | $88,750 | $88,750 |
Other | 0% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Total People | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
Total Payroll | $36,583 | $43,250 | $47,000 | $47,000 | $54,500 | $57,417 | $76,250 | $76,250 | $76,250 | $88,750 | $88,750 | $88,750 |
General Assumptions | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Plan Month | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | |
Current Interest Rate | 8.00% | 8.00% | 8.00% | 8.00% | 8.00% | 8.00% | 8.00% | 8.00% | 8.00% | 8.00% | 8.00% | 8.00% | |
Long-term Interest Rate | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | |
Tax Rate | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | |
Other | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Pro Forma Profit and Loss | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Sales | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $256,000 | |
Direct Cost of Sales | $5,000 | $1,500 | $1,500 | $1,500 | $1,500 | $9,500 | $1,500 | $1,500 | $1,500 | $9,500 | $1,500 | $1,500 | |
Other Production Expenses | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Total Cost of Sales | $5,000 | $1,500 | $1,500 | $1,500 | $1,500 | $9,500 | $1,500 | $1,500 | $1,500 | $9,500 | $1,500 | $1,500 | |
Gross Margin | ($5,000) | ($1,500) | ($1,500) | ($1,500) | ($1,500) | ($9,500) | ($1,500) | ($1,500) | ($1,500) | ($9,500) | ($1,500) | $254,500 | |
Gross Margin % | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 99.41% | |
Expenses | |||||||||||||
Payroll | $36,583 | $43,250 | $47,000 | $47,000 | $54,500 | $57,417 | $76,250 | $76,250 | $76,250 | $88,750 | $88,750 | $88,750 | |
Sales and Marketing and Other Expenses | $407,150 | $406,150 | $406,150 | $406,150 | $406,150 | $415,150 | $406,650 | $408,650 | $408,650 | $424,150 | $410,200 | $410,200 | |
Depreciation | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Leased Equipment | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Utilities | $220 | $240 | $260 | $260 | $260 | $260 | $260 | $320 | $320 | $320 | $340 | $340 | |
Insurance | $2,400 | $2,800 | $3,200 | $3,200 | $3,200 | $3,200 | $3,200 | $4,400 | $4,400 | $4,400 | $4,800 | $4,800 | |
Rent | $8,535 | $8,545 | $8,555 | $8,555 | $8,555 | $10,255 | $10,255 | $10,285 | $10,285 | $10,285 | $10,295 | $10,295 | |
Payroll Taxes | 15% | $5,487 | $6,488 | $7,050 | $7,050 | $8,175 | $8,613 | $11,438 | $11,438 | $11,438 | $13,313 | $13,313 | $13,313 |
Other | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Total Operating Expenses | $460,375 | $467,473 | $472,215 | $472,215 | $480,840 | $494,895 | $508,053 | $511,343 | $511,343 | $541,218 | $527,698 | $527,698 | |
Profit Before Interest and Taxes | ($465,375) | ($468,973) | ($473,715) | ($473,715) | ($482,340) | ($504,395) | ($509,553) | ($512,843) | ($512,843) | ($550,718) | ($529,198) | ($273,198) | |
EBITDA | ($465,375) | ($468,973) | ($473,715) | ($473,715) | ($482,340) | ($504,395) | ($509,553) | ($512,843) | ($512,843) | ($550,718) | ($529,198) | ($273,198) | |
Interest Expense | $124 | $123 | $122 | $121 | $120 | $119 | $118 | $117 | $116 | $115 | $114 | $113 | |
Taxes Incurred | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Net Profit | ($465,499) | ($469,095) | ($473,837) | ($473,836) | ($482,460) | ($504,513) | ($509,670) | ($512,959) | ($512,958) | ($550,832) | ($529,311) | ($273,310) | |
Net Profit/Sales | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | -106.76% |
Pro Forma Cash Flow | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Cash Received | |||||||||||||
Cash from Operations | |||||||||||||
Cash Sales | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $256,000 | |
Subtotal Cash from Operations | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $256,000 | |
Additional Cash Received | |||||||||||||
Sales Tax, VAT, HST/GST Received | 0.00% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
New Current Borrowing | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
New Other Liabilities (interest-free) | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
New Long-term Liabilities | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Sales of Other Current Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Sales of Long-term Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
New Investment Received | $4,000,000 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $75,000 | $0 | |
Subtotal Cash Received | $4,000,000 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $75,000 | $256,000 | |
Expenditures | Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | |
Expenditures from Operations | |||||||||||||
Cash Spending | $36,583 | $43,250 | $47,000 | $47,000 | $54,500 | $57,417 | $76,250 | $76,250 | $76,250 | $88,750 | $88,750 | $88,750 | |
Bill Payments | $19,297 | $428,814 | $425,878 | $426,837 | $426,873 | $428,598 | $446,640 | $433,530 | $436,709 | $437,554 | $461,365 | $440,561 | |
Subtotal Spent on Operations | $55,880 | $472,064 | $472,878 | $473,837 | $481,373 | $486,015 | $522,890 | $509,780 | $512,959 | $526,304 | $550,115 | $529,311 | |
Additional Cash Spent | |||||||||||||
Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Principal Repayment of Current Borrowing | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Other Liabilities Principal Repayment | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Long-term Liabilities Principal Repayment | $125 | $125 | $125 | $125 | $125 | $125 | $125 | $125 | $125 | $125 | $125 | $125 | |
Purchase Other Current Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Purchase Long-term Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Dividends | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Subtotal Cash Spent | $56,005 | $472,189 | $473,003 | $473,962 | $481,498 | $486,140 | $523,015 | $509,905 | $513,084 | $526,429 | $550,240 | $529,436 | |
Net Cash Flow | $3,943,995 | ($472,189) | ($473,003) | ($473,962) | ($481,498) | ($486,140) | ($523,015) | ($509,905) | ($513,084) | ($526,429) | ($475,240) | ($273,436) | |
Cash Balance | $5,459,095 | $4,986,906 | $4,513,902 | $4,039,940 | $3,558,442 | $3,072,302 | $2,549,287 | $2,039,382 | $1,526,298 | $999,869 | $524,629 | $251,193 |
Pro Forma Balance Sheet | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Assets | Starting Balances | ||||||||||||
Current Assets | |||||||||||||
Cash | $1,515,100 | $5,459,095 | $4,986,906 | $4,513,902 | $4,039,940 | $3,558,442 | $3,072,302 | $2,549,287 | $2,039,382 | $1,526,298 | $999,869 | $524,629 | $251,193 |
Other Current Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Total Current Assets | $1,515,100 | $5,459,095 | $4,986,906 | $4,513,902 | $4,039,940 | $3,558,442 | $3,072,302 | $2,549,287 | $2,039,382 | $1,526,298 | $999,869 | $524,629 | $251,193 |
Long-term Assets | |||||||||||||
Long-term Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Accumulated Depreciation | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Total Long-term Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Total Assets | $1,515,100 | $5,459,095 | $4,986,906 | $4,513,902 | $4,039,940 | $3,558,442 | $3,072,302 | $2,549,287 | $2,039,382 | $1,526,298 | $999,869 | $524,629 | $251,193 |
Liabilities and Capital | Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | |
Current Liabilities | |||||||||||||
Accounts Payable | $5,000 | $414,619 | $411,651 | $412,609 | $412,608 | $413,694 | $432,193 | $418,973 | $422,152 | $422,151 | $446,679 | $425,876 | $425,875 |
Current Borrowing | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Other Current Liabilities | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Subtotal Current Liabilities | $5,000 | $414,619 | $411,651 | $412,609 | $412,608 | $413,694 | $432,193 | $418,973 | $422,152 | $422,151 | $446,679 | $425,876 | $425,875 |
Long-term Liabilities | $15,000 | $14,875 | $14,750 | $14,625 | $14,500 | $14,375 | $14,250 | $14,125 | $14,000 | $13,875 | $13,750 | $13,625 | $13,500 |
Total Liabilities | $20,000 | $429,494 | $426,401 | $427,234 | $427,108 | $428,069 | $446,443 | $433,098 | $436,152 | $436,026 | $460,429 | $439,501 | $439,375 |
Paid-in Capital | $1,500,000 | $5,500,000 | $5,500,000 | $5,500,000 | $5,500,000 | $5,500,000 | $5,500,000 | $5,500,000 | $5,500,000 | $5,500,000 | $5,500,000 | $5,575,000 | $5,575,000 |
Retained Earnings | ($4,900) | ($4,900) | ($4,900) | ($4,900) | ($4,900) | ($4,900) | ($4,900) | ($4,900) | ($4,900) | ($4,900) | ($4,900) | ($4,900) | ($4,900) |
Earnings | $0 | ($465,499) | ($934,595) | ($1,408,432) | ($1,882,268) | ($2,364,727) | ($2,869,241) | ($3,378,911) | ($3,891,870) | ($4,404,828) | ($4,955,660) | ($5,484,971) | ($5,758,281) |
Total Capital | $1,495,100 | $5,029,601 | $4,560,505 | $4,086,668 | $3,612,832 | $3,130,373 | $2,625,859 | $2,116,189 | $1,603,230 | $1,090,272 | $539,440 | $85,129 | ($188,181) |
Total Liabilities and Capital | $1,515,100 | $5,459,095 | $4,986,906 | $4,513,902 | $4,039,940 | $3,558,442 | $3,072,302 | $2,549,287 | $2,039,382 | $1,526,298 | $999,869 | $524,629 | $251,193 |
Net Worth | $1,495,100 | $5,029,601 | $4,560,505 | $4,086,668 | $3,612,832 | $3,130,373 | $2,625,859 | $2,116,189 | $1,603,230 | $1,090,272 | $539,440 | $85,129 | ($188,181) |
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Diagnostics don’t have the sex appeal of a blockbuster drug, but they hold immense power to improve healthcare delivery. How to attract VC capital.
Venture capital has tended to shy away from diagnostics companies, whose products are not predicated on the blockbuster model of pharmaceuticals. But several new diagnostics companies are developing products that hold immense potential to improve healthcare delivery. Here’s why venture investors should take another look at the diagnostics area.
Medicine is changing. As a physician and long-time biotechnology entrepreneur, I see firsthand the newly emerging but growing impact of the “omics” (genomics, pro-teomics, cytomics, metabolomics) revolution. Developments in these areas are changing the way we understand and treat disease, as well as how we discover and develop drugs. This dynamic transformation is accelerating, as new biomedical technologies and tools become easier to use and less expensive. The effects of this revolution are already evident in day-to-day medical care in the field of in vitro diagnostics (IVD).
Advances in biomedicine are combining to link genetics, gene expression, and disease diagnosis and treatment in a way that was never before possible. We now are able to begin to determine the best treatment approach for some cancers, based on the genetics of the tumor or the genetic makeup of the patient. The shift from a one-size-fits-all approach to treatment regimens that are tailored to individual patients’ needs — the promise of pharmacogenomics or personalized medicine — has begun and is expected to gain greater momentum in coming years.
As a result of these advances, new diagnostic technologies are providing us with wholly new capabilities. We are entering an era where we will have the ability to predict disease susceptibility, detect disease with greater accuracy and at an earlier stage, and predetermine an individual’s response to drugs. Diagnostics — including the fields of molecular diagnostics, molecular imaging, and biomarkers — are at the center of this change.
At BioAdvance, The Biotechnology Greenhouse of Southeastern Pennsylvania, we are using our $33 million in tobacco-settlement funds to invest in new life sciences enterprises. In just a little more than two years, we have helped to promote 29 startup companies and academic projects. The following diagnostics ventures are among those in the BioAdvance portfolio:
Our experience at BioAdvance has provided valuable lessons about what does and does not work for companies that are vying for early-stage funding. Despite our enthusiasm for diagnostics, diagnostic startups generally have had trouble obtaining venture financing. I believe that several fundamental factors underlie this situation. The most important is that, often, the diagnostics business model is neither understood nor appreciated by venture capitalists — and, too often, for good reason. The good news, though, is that solutions exist, and several new diagnostics companies have the elements that are essential to securing equity financing and building a sustainable and successful business.
A variety of factors make diagnostics a field whose time has come. Although diagnostic expenditures represent less than 5 percent of total national healthcare expenditures, correct diagnosis and treatment of disease greatly affects the other 95 or so percent of our nation’s $1.7 trillion healthcare bill. With an aging population and the availability of new, expensive medical technologies driving up total costs, the need to allocate resources more cost-effectively is the biggest factor supporting wider use of predictive diagnostic tests. Diagnostics can do more than help save money; there is technology available that can make existing drug therapies safer and more efficacious.
Consumer involvement in healthcare decision making also is accelerating the pace of change. These trends are supported by a new emphasis on translational research to apply advances in knowledge and technology to medical care. The diagnostics field represents an outstanding example of how new knowledge can be applied swiftly to the delivery of health care.
Gary Kurtzman MD
Much of the focus in this field now is on molecular diagnostics, which I define as including all tests and methods to identify a disease, determine its course, evaluate response to therapy, or identify one’s predisposition to a disease by analyzing one’s DNA, RNA, or proteins.
Molecular diagnostics encompasses those tests that are based on a fundamental understanding of normal biological processes and how they are involved in the pathogenesis of disease.
This area represents a small proportion of all diagnostics expenditures today, but Leomics Associates, a New Jersey-based molecular diagnostics consulting firm, estimates that it will increase from the current level of $2 billion in U.S. revenues to around $8 billion by 2010.
Drivers underlying the expected rapid adoption of these new diagnostics include the growing cost of drug therapy, rapid increases in the costs of drug development (including clinical trials), and — most importantly — our increasing ability to target therapies to patients on the basis of their genetics or the genetics of their disease. This ability will enable drug developers and prescribers to conserve resources by reserving therapies for patients in whom they will be safe and effective.
Recent successes with targeted therapies, including trastuzumab (Herceptin) for breast cancer, gefitinib (Iressa) for lung cancer, and isosorbide (BilDil) for African Americans with congestive heart failure (in this case, using ethnicity as a surrogate marker for genetic differences in drug response) have highlighted the tremendous potential of pharmacogenomics.
Currently, more than 100 clinical trials of targeted new therapies are under way for cancer indications alone. The FDA supports this trend, encouraging drug developers to include pharmacogenomic studies as part of the drug discovery and development process. Because targeted therapies typically require an accompanying diagnostic test to identify candidates for the therapy, the launch of these new drugs should increase the value of companies marketing molecular diagnostics.
Despite the clinical and commercial promise of molecular diagnostics and the great advances in technology that make routine use of this approach feasible, venture capital (VC) investment in diagnostics companies has remained minimal; according to BioCentury , only about 3 percent of all healthcare VC dollars were allocated to diagnostics companies in 2004.
Why are venture investors hesitant, despite an opportunity to invest in a field seemingly poised for major commercial growth?
Certainly, skepticism is to be expected, given the promise of large and rapidly rising revenues by a multitude of genomic enterprises launched in the boom years of 1999 to 2001 that failed to materialize for investors. After that experience, venture investors understandably come to meetings carrying a resolute “show me” attitude.
Diagnostics startups also are hampered by the fact that they generally serve smaller markets than pharmaceuticals, with little promise of the blockbuster phenomenon that fuels investor enthusiasm. Compounding the situation is fear of the lower margins that traditionally have characterized much of the diagnostics industry. Fierce competition and commoditization of routine services has driven down prices and margins in the large service sector that dominates the field.
Another major deterrent to venture investment is third-party payment. The many uncertainties about who will pay for the new generation “prognostic” assays, as well as the extent to which third-party payers will adequately cover the costs of new tests, exacerbate concerns about price-and-margin restrictions. Despite the promise of far greater efficiency and effectiveness from pharmacogenomic-guided therapies, insurers may be reluctant to pay in the absence of guarantees of near-term, tangible financial benefits. Payers may not be won over easily by studies that show benefits to patients but limited cost savings, and they may balk at paying for disease-susceptibility testing — where the payoff from lifestyle changes, prophylactic measures, and early diagnosis may be far in the future.
Regulatory issues can be just as confounding for investors. While pharma companies confront the reality of a shift from the blockbuster model of drug development to new models focused on targeted or personalized therapies, there are few role models, nor is there a clear regulatory path for the codevelopment of diagnostic and therapeutic tools.
Two reasons investment in diagnostics is attractive today: Technological advances are facilitating the discovery of better biomarkers, and earlier revenues are possible than with therapeutics.
These environmental factors are not the only hurdles to greater VC investment in diagnostics. Compounding the problem further is the fact that venture investors do not fully understand the IVD company model — a situation that is made worse by the fact that too few of the new diagnostic ventures have articulated a compelling business model.
In assessing potential diagnostics investments, venture investors bring along their preferences for candidates with strong potential return on investment (ROI), near-term revenues, a predictable regulatory environment, a generous (or at least manageable) reimbursement climate, and tangible ways to manage risk. Based on the factors described above, VCs do not see how most diagnostics ventures can score well using these criteria.
So, as an institutional investor in diagnostics, why am I bullish? I believe that future leaders in the new diagnostics space have the potential to return handsomely on the ROI criterion. In some ways, they mimic the specialty pharmaceuticals model that has been a favorite of life sciences VCs for the past few years.
Optimally focused diagnostics ventures require much lower up-front investments than do traditional biotech enterprises to reach revenue generation, thus reducing the amount of investment required to achieve an exit for investors. Although the most likely exits will be through acquisition, I believe the possibility exists for at least a few of the significant players to integrate revenues from research and development and from service, and to build significant diagnostic franchises.
In all this, technology is a key enabler. High-throughput, multiparametric analysis of nucleic acids and proteins in normal and diseased tissue is facilitating the discovery of more informative biomarkers. The establishment of highly annotated biobanks of tissue, DNA, and other biological samples is facilitating rapid validation of those markers. The development of platforms, particularly those based on micro- and nanotechnology, ultimately will enable the translation of these new biomarkers into useful assays in the clinical testing lab.
Another enabler is a regulatory process that can be simpler and more straightforward than that for drugs. Importantly, products can be brought to the point of revenue generation without extensive FDA oversight as “in-house developed” or “home brew” tests in a CLIA-certified reference laboratory to perform tests of “high complexity.” As a result, revenue can be generated by running these tests while additional clinical data are being collected. Depending on the particular test, full FDA review then can proceed under the less rigorous 510(k) process or through a more extensive premarket approval application.
In the diagnostics space, a company with a compelling platform capable of yielding a pipeline of diagnostics can move rapidly through the research and development process to commercial launch, and do this in an iterative way. Revenues can be generated early by performing tests in the reference lab while the decision is being made whether to commercialize and market the tests oneself, develop a partnership with exiting IVD manufacturers, or out-license.
Another possible new business approach is a mixed product-and-service model, whereby companies can reap the financial rewards of their unique diagnostic assays while participating in the margins from the service element of the business.
In this model, discovery and development of new markers is layered on an existing menu of tests performed in a reference lab. The value here is the potential to move diagnostics and platforms rapidly from discovery phase through validation, using an established infrastructure that includes operational, regulatory and reimbursement expertise.
We already have examples of new IVD companies that have attracted significant investment from VC and other sources of capital. The following represent three of these examples:
ViroLogic (see box below) is leveraging its diversified product base in HIV, immunologic, and cancer testing to build a sustainable, high-growth business that seems well positioned to prosper as phar-macogenomics and molecular testing become more widely used. A pioneer in developing genomic assays to help physicians monitor and tailor therapy for HIV patients, ViroLogic has an established reference lab to assay patient samples and a service business to support biopharmaceutical companies developing treatments for HIV and cancer.
In its mission statement, ViroLogic defines itself as “committed to advancing individualized medicine by discovering, developing, and marketing innovative products to guide and improve treatment of serious viral, immunologic, and oncologic diseases.”
A public company, ViroLogic generated revenues of more than $36 million in 2004, and has a market capitalization of more than $300 million.
XDx , another top-tier, venture-backed molecular diagnostics company, is applying microarray, real-time polymerase chain reaction (or PCR, a technique for amplifying a selected region of a DNA molecule) and other bioinformatics technologies to develop new ways to monitor the immune system.
The success of the XDx AlloMap molecular expression profile test (see box , above) recently led venture backers to reward XDx with $20 million Series D financing.
AlloMap, launched in April, targets the postcardiac transplant market. AlloMap is performed in XDx’s reference lab and is priced at $2,950, which is seemingly high until one realizes that it replaces an invasive biopsy costing upward of $5,000.
Yet another pioneer illustrating the potential of this new business model is Genomic Health , which has top-tier VC financing (including the firm that first funded Gen-entech), and it has begun commercializing its first product as a home brew.
Data generated in its clinical studies, recently reported in the New England Journal of Medicine , support its Oncotype DX test measuring the expression of a number of selected genes in breast cancer as being more predictive of patient outcome than standard pathology testing. The new test is intended to help physicians and patients make rational decisions about the management of newly diagnosed breast cancer.
The features listed in the box at the top of this page make Genomic Health a good model for future VC-backed ventures. Consistent with its first-mover status, Genomic Health recently announced the filing of an S-1 registration with the U.S. Securities and Exchange Commission for its initial public offering.
As BioAdvance considers investing in these new-era molecular diagnostic firms, what lessons have we learned from our examination of the field?
I believe that the positive changes in medicine from the “omics” revolution largely will be driven in the coming years by new, more predictive diagnostic tests. Commercialization of these tests will provide significant rewards for patients who will receive improved medical care, as well as for the investors who will obtain attractive investment returns.
Yet there is a potential monkey wrench in this otherwise promising picture — the issue of third-party payment. Without fair and consistent policies governing payment for this new generation of diagnostic tests, the commercial and clinical potential of these powerful new tools could remain largely unrealized. This necessitates a major policy change that will not take place unless the value of these new diagnostics in the delivery of medical care is better quantified and documented.
Such a change also will necessitate proactive efforts by many participants. We therefore look to life sciences researchers, medical providers, diagnostic companies, forward-looking biotech and drug companies, trade organizations, and advocacy groups to contribute to the process needed to bring about this shift.
At BioAdvance, we believe that the new era of molecular diagnostics is an idea whose time has come. We intend to continue to work with the rich life sciences resources available in our region to support the development and venture funding of new enterprises that will help drive the coming revolution in targeted and personalized healthcare, with all the benefits to individuals, the healthcare system, and society that these innovations make possible.
Roche Diagnostics develops and produces medical tests and digital tools that provide information to help healthcare professionals find the right treatment for patients and deliver the best patient care to improve, prolong and save lives. Currently, Roche Diagnostics leads the industry in developing diagnostic products for cancer, cardiac health, infectious diseases, women’s health and diabetes management.
Our North American headquarters for Roche Diagnostics Corporation is located in Indianapolis, IN. We have been part of the Indianapolis community since 1964 when Bio-Dynamics was founded. Boehringer Mannheim Corporation acquired Bio-Dynamics in 1974. Roche acquired Boehringer in 1998 and, within three years, became a world leader in diagnostics.
Today, we have sites across the U.S., focusing on different areas like research and development, laboratory, manufacturing, distribution, information technology and administrative operations.
The world needs better methods to diagnose, prevent and treat diseases. As demands on healthcare systems are changing more than ever, healthcare must be delivered efficiently.
As the world leader in healthcare research and development, we strive to bring cutting-edge diagnostic solutions to patients across the United States. Our approach is to support patients and providers with diagnostics solutions, decision support and disease management.
In 2024, Roche Diagnostics was recognized with six IMV ServiceTrak Clinical Laboratory Awards across the categories of Customer Satisfaction, System Performance and Service for Chemistry and Integrated Workstation systems.
We develop diagnostic tests, instruments and digital solutions with the power to transform healthcare for people around the U.S. Learn more about our business partners and patents .
We focus on diseases with high medical needs, such as cardiometabolic, sexual health, respiratory, infectious diseases, oncology and Alzheimer’s disease. We partner with medical laboratories to help physicians more accurately deliver treatments to patients who are likely to benefit.
We’re built on a foundation of integrity, innovation and passion. Our story has taken shape over more than a century; today, we continue in our quest to help patients live longer, healthier lives.
We welcome you to explore our key milestones and learn how we have grown into a healthcare leader.
We are committed to fostering a diverse and inclusive culture in which everyone feels welcome, valued and heard. That's critical to our success. We involve people from wide-ranging backgrounds, experiences and perspectives to be better at equipping innovative for patients.
At our locations, there's a variety of business resource groups that are voluntary, employee-led groups that foster a diverse, inclusive workplace aligned with the organization's mission, values, goals and objectives.
We are consistently open, honest, ethical and genuine.
We are entrepreneurial and thus take risks, reach beyond boundaries and experiment.
We use our drive and commitment to energize, engage and inspire others.
With our commitment to fostering a diverse and inclusive culture, we have business resource groups (BRG). All BRGs are voluntary, employee-led groups that foster a diverse, inclusive workplace aligned with the organization’s mission, values, goals and objectives.
We’re proud of the notable awards we've received, including these:
Our purpose is to do now what patients need next. We’re able to achieve our purpose by creating a holistic approach that integrates three dimensions of sustainability.
We contribute to a better society by enabling the right treatment for the right patient at the right time for the right value. We do this by developing new medicines and ways of diagnosing diseases and insights from data.
Respect for a healthy planet and the environment has always been a priority of our founding families and the company. We are committed to halving the environmental impact of our operations and products from 2019 to 2029.
Related links, u.s. locations.
Ventana Medical Systems
1910 Innovation Park Drive
Tucson, AZ 85755
Open in Google maps
Phone: +1-520-887-2155
Fax: +1-520-229-4207
[email protected]
Roche Sequencing R&D and Informatics
1301 Shoreway Road, Suite 300
Belmont, CA 94002
Phone: +1-800-262-4911
GenMark Diagnostics
5964 La Place Court
Carlsbad, CA 92008
View on Google maps
Phone: +1-760-448-4300
Fax: +1-760-448-4301
U.S.: [email protected]
Outside the U.S.: [email protected]
Roche Molecular Systems and Sequencing
4300 Hacienda Drive
Pleasanton, CA 94588
Phone: +1-925-730-8041
Roche Sequencing R&D
5945 Optical Court
San Jose, CA 95138
Phone: +1-408-577-7073
Roche Diagnostics R&D and Digital Pathology Group
2821 Scott Boulevard
Santa Clara, CA 95050
Phone: +1-408-217-5233
Roche Diagnostics Corporation
(North America Headquarters)
9115 Hague Road
Indianapolis, IN 46250
Phone: +1-317-521-2000
Fax: +1-317-521-2090
Roche Diabetes Care
Phone: +1-800-858-8072
Roche Sequencing and Life Science
200 Ballardvale Street Suite 250
Wilmington, MA 01887
View on google maps
Roche Molecular Systems
1080 US-202 #500
Branchburg, NJ 08876
Phone: +1-908-253-7999
Spark Therapeutics
3737 Market Street
Philadelphia, PA 19104
Phone: +1 215-220-9300
Roche Diagnostics Sequencing
2211 Elliott Avenue #210
Seattle, WA 98121
IMAGES
VIDEO
COMMENTS
A Sample Medical Lab and Diagnostics Business Plan Template. 1. Industry Overview. The diagnostic industry has no companies with a dominant market share value. The industry generated revenue of $18 billion with a negative growth of -0.2 percent within the year 2012 and 2017. While there are about 14,300 diagnostic centers in the united states ...
The Plan. Our medical laboratory business plan is structured to encompass all crucial components necessary for a detailed and strategic approach. It delineates the laboratory's operational procedures, marketing tactics, market landscape, competition, management personnel, and financial projections. Executive Summary: Provides a concise ...
Writing a medical lab business plan is a crucial step toward the success of your business. Here are the key steps to consider when writing a business plan: 1. Executive Summary. An executive summary is the first section planned to offer an overview of the entire business plan. However, it is written after the entire business plan is ready and ...
Traditionally, a marketing plan includes the four P's: Product, Price, Place, and Promotion. For a medical lab business plan, your marketing strategy should include the following: Product: In the product section, you should reiterate the type of medical lab company that you documented in your company overview.
in medical diagnostics. Our core values include integrity, innovation, and a relentless pursuit of quality. ... Medical Lab Business Plan | Business Plan 2023 16/51. LabCorp (Laboratory Corporation of America) LabCorp, founded in 1978, provides both clinical laboratory and end-to-end drug development services. They are known for their ...
Step-by-Step Guide to Starting Your Own Laboratory Business. 1. Research and Create the Business Plan - Medical Laboratory Business. 2. Establish the Business Structure. 3. Fund the Lab. 4. Secure the Lab Facility.
Here is a free business plan sample for a medical analysis laboratory. January 29, 2024. Embarking on the journey to open a medical analysis laboratory can be both exciting and daunting. In the following paragraphs, we will present to you a comprehensive business plan template tailored for a medical analysis laboratory.
Starting a medical analysis laboratory is a great idea because it provides an important service to the medical community by offering accurate and timely diagnostic testing.. It also enables healthcare professionals to make informed decisions based on reliable data. However, prior to that, you must have a business plan.
Get step-by-step guidance with our medical lab business plan template to start and grow your medical lab business successfully. ... MediLab Diagnostics is a pioneering medical lab nestled in the heart of Leominster, MA. As a local entity, we pride ourselves on filling the void left by the absence of high-quality medical labs in the area. ...
The projected P&L statement for a medical laboratory shows how much revenue and profit your business is expected to make in the future. A healthy medical laboratory's P&L statement should show: Sales growing at (minimum) or above (better) inflation. Stable (minimum) or expanding (better) profit margins.
Here is a free business plan sample for a radiology services. January 29, 2024. If you're a radiologist looking to establish your own practice but are unsure about the first steps to take, you've landed on the right page. In the content that follows, we will present you with a comprehensive business plan tailored for a radiology practice.
Profit potential. $78,000 - $156,000 p.a. Industry trend. Growing. Commitment. Full-time. Pay attention to these important factors as you establish your medical lab: Facilities — Set up a suitable facility that meets regulatory requirements and provides a safe, clean, and efficient environment for lab operations.
Scan Lab offers a wide range of radiology-based medical scanning tests. Scan Lab has the latest equipment and the expert medical training to interpret and provide valuable consultations to the physicians who make the patient referrals to Scan Lab. Management. Scan Lab will be lead by Dr. Carolyn Jones. Dr.
When it comes to starting a diagnostic laboratory business, the startup costs vary, and it could range from as low as $350,000 to over $1 million. b. What are the Costs Involved in Starting a Diagnostic Laboratory Business. Business Registration Fees - $750. Legal expenses for obtaining licenses and permits - $6,300.
Here are the 8 Steps to Start a Medical Diagnostic Center. 1. Write a Diagnostic Center Business Plan. Crafting a business plan is a must in starting a diagnostic center business. Do adequate market research and learn more about the demographics of the location, level of competition, and demand. The most important thing is deciding what ...
Business Plan Mechanics for Medical Diagnostic Services Businesses. If you're putting off writing a business plan because you're intimidated by the process, here are the words you've been dying to hear: Business plans for medical diagnostic services businesses don't have to be complicated.
The cost for hiring a business consultant - $2,500. Insurance (general liability, workers' compensation, and property-casualty) coverage at a total premium - $2,400. The cost for payment of rent for 12 months at $1.76 per square foot in the total amount of $75,600.
7.1 Personnel Plan. The personnel table assumes steady growth in employees over the next year. We expect head count to reach 14 employees by end of year one. We are in the process of implementing a strong benefits policy (with fully-paid medical, dental, and life insurance, plus a profit sharing and 401K plan).
Despite our enthusiasm for diagnostics, diagnostic startups generally have had trouble obtaining venture financing. I believe that several fundamental factors underlie this situation. The most important is that, often, the diagnostics business model is neither understood nor appreciated by venture capitalists — and, too often, for good reason.
Adaptive Biotechnologies and Chris Meda, MS, Chief Business Officer, IncellDx, Faz Bashi, MD, Life Science Angels, and Unity Stoakes, Cofounder/President/Managing Partner, StartUp Health, will be invited to teach in and advise the Master Class. DIAGNOSTICS THERAPEUTICS MEDICAL DEVICES DIGITAL HEALTH SECTORS OF FOCUS
Diagnostic imaging technologists at Santa Clara Valley Medical Center work within a fully digital imaging department in one of California's newest clinical facilities. The Diagnostic Imaging Department utilizes an advanced Picture Archiving and Communication System (PACS). PACS is linked to the hospital's information infrastructure and enables ...
Roche Diagnostics develops and produces medical tests and digital tools that provide information to help healthcare professionals find the right treatment for patients and deliver the best patient care to improve, prolong and save lives. Currently, Roche Diagnostics leads the industry in developing diagnostic products for cancer, cardiac health, infectious diseases, women's health and ...
Milton J. Chatton Medical Library at Santa Clara Valley Medical Center offers information services related to the health care, clinical research, and consumer health information for professional, staff, and public. ... Valley Health Center Bascom Diagnostic Imaging (Radiology) Sunday: Closed. Monday: 7:40 am — 7:00 pm. Tuesday: 7:40 am — 7: ...
SEOUL (Reuters) - South Korea's presidential office is open to adjusting the scale of a plan to increase medical school admissions for 2026 by 2,000, the Yonhap news agency reported on Friday ...