The Lean LaunchPad
Lecture 2: Value Proposition
Steve Blank
Jon Feiber
Jon Burke
http://i245.stanford.edu/
Agenda
• Team Bus Model Presentations
• Value Proposition
– Product
– Service
– Ecosystem
VALUE PROPOSITIONS
what are you offering them? what is that getting
done for them? do they care?
images by JAM
Step 1. Spec. the Value Proposition
• Product(s)?
• Service(s)?
• Ecosystem?
• Is it a company or product?
Value Proposition – Common Mistake
•
•
•
•
Is it just a feature of someone else’s product
Is it a “nice to have” product
Is it a “got to have” product
Can it scale to a company?
Value Proposition - Discovery
• Product
–
–
–
–
Long term vision
features
Benefits
Minimum Viable Product spec
• For a web/mobile app
– Low fidelity MVP live and running
• Understand Customer Problem and Solution
• Test Market Type
Product
• Problem Statement: What is the problem?
• Technology / Market Insight: Why is the problem so
hard to solve?
• Market Size: How big is this problem?
• Competition: What do customers do today?
• Product: How do you do it?
Step 2: What’s the Minimum Viable
Product – Physical
• First, test your understanding of the problem
• Next test your understanding of the solution
– Proves that it solves a core problem for customers
– The minimum set of features needed to learn from
earlyvangelists
- Interviews, demos, prototypes, etc
- Lots of eyeball contact
Step 2: What’s the Minimum Viable
Product – Web/Mobile
• NOW “low fidelity” web/app for customer feedback
– First, tests your understanding of the problem
• LATER, “high fidelity” web/app tests your understanding
of the solution
– Proves that it solves a core problem for customers
– The minimum set of features needed to learn from
earlyvangelists
- Avoid building products nobody wants
- Maximize the learning per time spent
Step 2: What’s the Testing the Minimum
Viable Product – Web/Mobile
•
•
•
•
•
•
•
Smoke testing with landing pages using AdWords
In-product split-testing
Prototypes (particularly for hardware)
Removing features
Continued customer discovery and validation
Surveys
Interviews
Step 2: What’s the Testing the MVP–
Web/Mobile - Tactics
• Interview customers
– make sure they have a matching core problem
• Set up web site landing page to test for conversion
– What offers are required to get customers to use the product
(e.g. prizes, payment)
– Use problem definition as described by customers to identify key
word list – plug into Google search traffic estimator - high traffic
means there is problem awareness
• Drive traffic to site using Google search and see how
deep into a registration process customers are willing to
go through
Pivot Example
Robotic Weeding
Talked 75 Customers in 8 Weeks
Our initial plan
20 interviews, 6 site visits…
We got OUR Boots dirty
Weeding
Visited two farms in Salinas Valley to better understand problem
Interviewed:
• Bolthouse Farms, Large Agri-Industry in Bakersfield
• White Farms, Large Peanut farmer in Georgia
• REFCO Farms, large grower in Salinas Valley
• Rincon Farms, large grower in Salinas Valley
• Small Organic Corn/Soy grower in Nebraska
• Heirloom Organics, small owner/operator, Santa Cruz Mts
• Two small organic farmers at farmers market
• Ag Services of Salinas, Fertilizer applicator
Mowing
Interviewed:
• Golf: Stanford Golf course
• Parks: Stanford Grounds Supervisor, head of maintenance
and lead operator (has crew of 6)
• Toro dealer (large mower manufacturer)
• User of back-yard mowing system
• Maintenance Services for City of Los Altos
• Colony Landscaping (Mowing service for stadiums)
Autonomous Vehicles for Mowing & Weeding
- Dealers (Mowing
and Ag)
- Vehicle OEMs
(John Deere, Toro,
Jacobsen, etc)
- Innovation
- Customer
Education
- Dealer training
- Research labs
Engineers on
Autonomous
vehicles, GPS,
path-planning
Dealer discount
COGS seek a 50-60% Gross Margin
Heavy R&D investment
Dealers sell, installs
We reduce operating and supports
customer
cost
- Labor reduction
- Better utilization of Co. trains dealers,
supports dealers
assets (mow or
weed at nights)
- Improved
performance (less
- Mowing Dealers
rework, food safety)
- Ag Dealers
Mowing
- Owners of public
or commercially
used green spaces
(e.g. golf courses)
- Landscaping
service provider
Weeding
- Farmers with
manual weeding
operations
Asset sale
Our revenue stream derives from selling the equipment
Found weeding in organic crops is HUGE
problem; 50 - 75% of costs
Crews of 100s-1000
Back-breaking task
(Ilegal) labor harder to get
1-5 weedings per
year/field
$250-3,500 per acre and
increasing
Food contamination risk
Decision to make – mowing vs weeding
Application
If ROI is < 1 yr
they will buy
Labor costs
significant?
Autonomous
would solve
problem?
TAM
Mowing of
large fields
Yes.
Professionally
run organizations
Yes
Yes
Adjusted up to
xxx
Weeding in
Agriculture
Agri Industry:
YES!
YES! for
organic
crops
Large Growers:
Yes
Small Growers:
No
They are
spending
$500/ac!
Not necessarily
Key need is weed
vs. crop
differentiation
TAM increased
to $2.6 B (Total
organic)
Target Market
(organic
specialty)
162 M/yr
18%/yr growth
Autonomous vehicles WEEDING
- Ag Dealers
- Ag Service
providers
- Innovation
- Customer
Education
- Dealer training
- Research labs
Engineers on
Machine Vision
Two problems:
- Identification
- Elimination
Dealer discount
COGS seek a 50-60% Gross Margin
Heavy R&D investment
We reduce
operating cost
- Labor reduction
(100 to 1)
- Reduced risk of
contamination
- Mitigate labor
availability
concerns
Dealers sell,
installs and
supports
customer
Co. trains
dealers, supports
dealers
- Ag Dealers
- Ag Service
providers
- Low density
vegetable
growers
- High density
vegetable
growers
- Thinning
operations
- Conventional
vegetables
Asset sale
Our revenue stream derives from selling the
equipment
1 Week – 1 CarrotBot
Confidential
CarrotBot
• Machine Vision data
collection platform
– Monochrome & Color
Cameras
– Laser-line sweep (depth
measurement)
– Encoders
(position/velocity)
– Onboard data
acquisition & power
CarrotBot 1.0
The Canvas Updated
•Research Labs
•Equipment
Manufacturers
•Distribution
Network
•Service
Providers
•Technology
Design
•Marketing
•Demo and
customer
feedback
•IP – Patents
•Video Classifier
Files
•Robust
Technology
Value-Driven
•Cost Reduction
•Remove labor
force pains
•Eliminate biowaste hazards
•Farming
conventions.
•Demo, demo,
and demo!!
•Proximity is
paramount
•Organic Farmers
•Weeding Service
Providers
•Conventional
Farmers
•Dealers
•Direct Service
•Indirect Service
• … then Dealers
•Asset Sale
•Direct Service with
equipment rental
•… then Asset Sale
Visit Highlights
Above: Organic Carrots, 7wks.
Top right: Conventional carrots
Bottom Right: Very weedy. Will require
multiple passes of hand weeding
Visit Highlights
Carrot vs. Weeds
Due to small root systems, carrots have no chance against weeds
Visit Highlights
Organic Broccoli, closely cultivated. Weeds
close to plants are hand-picked
Visit Highlights
State of the Art in Weeding Technology for Organic Crops
Customer Hypothesis
Pre-Test
Large
Growers
Us
Dealer
Industrial
Growers
Industrial
Growers
Post-Test
Us
Large
Growers
Dealer
Hypothesis Confirmed
• Growers interested in own
equipment
• Industrial (10,000s of acres)
• Large (1,000s of acres)
• Willing to pay $100k for one
unit
Service
Providers
• Smaller growers (100s of acres)
usually subcontract the labor services
or rent equipment
Equipment
Rental
• All purchases through local dealers
• Customer service is essential
Customer Map #1 – Industrial Growers
Example: Bolthouse Farms – Large Industrial Carrot Producer
– 8K acres/yr
• Equipment Operator
End User
Influencer
• Local Farm Mgr
• Cliff Kirkpatrick, visited
Recommender • Director, Ag
Technology
Equipment Operator
• Justin Grove, interviewed
Decision
Maker
• VP, Growing
Operations
Approver
• CFO, CEO (Jeff
Dunn)
Cliff, Farm Mgr
Customer Map #2 – Service Providers
Example: Ag Services – Service Provider, Salinas Valley
End User
• Equipment Operator
Influencer
• Grower
Recommender
• Service Mgr
Me (left), Marty (middle, Service Mgr), Doug
(right, Grower)
Decision Maker • ?? (service mgr’s
& Approver
boss)
The Business Plan Canvas Updated
•Research Labs
•Equipment
Manufacturers
•Distribution
Network
•Service
Providers
•Technology
Design
•Marketing
•Demo and
customer
feedback
•IP – Patents
•Video Classifier
Files
•Robust
Technology
Value-Driven
•Cost Reduction
•Remove labor
force pains
•Eliminate biowaste hazards
•Farming
conventions.
•Demo, demo,
and demo!!
•Proximity is
paramount
•Direct Service
•Indirect Service
• … then Dealers
•Mid/Large
Organic Farmers
•Agricultural
corporations
•Weeding Service
Providers
•Mid/Large
Conventional
Farmers
•Direct Service with
equipment rental
•($1,500/d; 120d/yr )
•Low density: $1,500/d
•High density: $6,000/d
World Ag Expo interviews:
the need is real and wide spread
• 10+ interviews at show
– Everyone confirmed the need
– Robocrop, UK based, crude
competitor sells for $171 K
• Revenue Stream
– Mid to small growers prefer a
service
– Large growers prefer to buy,
but OK with service until
technology is proven
– Charging for labor cost saved
is OK, as we provide other
benefits (food safety, labor
availability)
The Business Canvas Updated
•Research Labs
•Equipment
Manufacturer
•Distribution
Network
•Service
Providers
• 2 or 3 Key
Farms
•Technology
Design
•Marketing
•Demo and
customer
feedback
•IP – Patents
•Video
Classifier Files
•Robust
Technology
Value-Driven
• R&D
• Bill of Materials
• Training & Service
• Sales
•Cost
Reduction
•Remove labor
force pains
•Eliminate biowaste hazards
•Farming
conventions.
•Demo, demo,
and demo!!
•Proximity is
paramount
•Direct Service
•Indirect Service
• … then Dealers
•Mid/Large
Organic Farmers
•Agricultural
corporations
•Weeding Service
Providers
•Mid/Large
Conventional
Farmers
•Direct Service with
equipment rental
•Low density: $1,500/d
•High density: $6,000/d
Autonomous weeding - Final
- Ag Service
providers
- Innovation
- Customer
Education
- Dealer training
- Research
Institutes (eg UC
Davis, Laser
Zentrum
Hannover)
- 3-4 key farms
Engineers on
Machine Vision
Two problems:
- Identification
- Elimination
Costs for service provision
COGS seek a 50-60% Gross Margin
Heavy R&D investment
We reduce
operating cost
- Labor reduction
(100 to 1)
- Reduced risk of
contamination
- Mitigate labor
availability
concerns
Direct
- Provide high
quality service at
competitive price
- Low density
vegetable growers
- High density
vegetable growers
- Thinning
operations
- Conventional
vegetables
Direct
- Alliance with
service providers
- Eventually sell
through dealers
Service provision
- Charge by the acre with modifier according to weed
density
- Eventually move to asset sale
Market Type
Definitions: Four Types of Markets
Clone Market
Existing Market
Resegmented
Market
New Market
• Clone Market
– Copy of a U.S. business model
• Existing Market
– Faster/Better = High end
• Resegmented Market
– Niche = marketing/branding driven
– Cheaper = low end
• New Market
– Cheaper/good enough, creates a new class of product/customer
– Innovative/never existed before
Market Type
Existing
Resegmented
New
Customers
Known
Possibly Known
Unknown
Customer
Needs
Performance
Better fit
Transformational
improvement
Competitor
s
Many
Many if wrong,
few if right
None
Risk
Lack of branding,
sales and distribution
ecosystem
Market and
product redefinition
Evangelism and
education cycle
Examples
Google
Southwest
Groupon
Market Type determines:
 Rate of customer adoption
 Sales and Marketing strategies
 Cash requirements
Market Type - Existing
• Incumbents exist, customers can name the mkt
• Customers want/need better performance
• Usually technology driven
• Positioning driven by product and how much value
customers place on its features
• Risks:
– Incumbents will defend their turf
– Network effects of incumbent
– Continuing innovation
Market Type – Resementing Existing
• Low cost provider (Southwest)
• Unique niche via positioning (Whole Foods)
• What factors can:
–
–
–
–
you eliminate that your industry has long competed on?
Be reduced well below the industry’s standard?
should be raised well above the industry’s standard?
be created that the industry has never offered? (blue ocean)
Market Type – New
•
•
•
•
Customers don’t exist today
How will they find out about you?
How will they become aware of their need?
How do you know the market size is compelling?
• Which factors should be created that the industry has
never offered? (blue ocean)
For Tomorrow’s Presentation
• What were your value proposition hypotheses?
• What did potential customers think about your
value proposition hypotheses?
– Get out of the building and begin to talk to customers
for Oct 12th
– Talk to 10-15 customers more by Oct 18th
– Follow-up with Survey Monkey (or similar service) to
get more data
• Submit interview notes, present results in class.
• Update your blog/wiki/journal with progress
customers and value prop
Examples
Group Privacy: Nan, Jim, Sundaresan
• Protect privacy for users of location-based services (LBS)
The Business Model Canvas: ver 0.0
Privacy
advocacy
groups
LBS App
Providers
Creating
awareness
Increased
privacy
educational
trust
Building trust
Technology
Own website
Bundling with
LBS apps
Developing
costs
Marketing
costs
App revenue (direct or shared)
Privacyconcerned
customers
who use LBS
The Business Model Canvas: ver 0.1
Privacy
advocacy
groups
LBS App
Providers
Creating
awareness
Building trust
Increased
privacy
educational
trust
No loss of
service
quality
Privacyconcerned
customers
who use LBS
Smart phone
users uneasy
about privacy
Technology
Own website
Bundling with
LBS apps
Developing
costs
App revenue (direct or shared)
Marketing
costs
Subscription
How to Test
 Large number of privacyconcerned LBS users
 Willing to pay for protecting
locations
 Directly or indirectly
 Able to reach them with low cost
 Able to ease their concerns
through
 education
 endorsement by privacy watchdog
groups
 LBS app developers are willing to
partner
 Privacy groups are willing to
endorse
Existing market research
Talk to customers
Bid on Google AdWords for location privacy
(now no ads)
Talk to customers
Talk to privacy advocacy groups (e.g.,
25,000 adults stalked by GPS)
Talk to LBS app developers
Talk to privacy advocacy groups
Methodologies
•
•
•
•
•
User interviews at Tresidder and I-Corps (11)
LBS Domain Expert Interviews (1)
Google AdWords (up and running)
Online Survey (32 responses)
Privacy Group Interviews (pending)
Hypothesis 1:
Large number of privacy-concerned LBS users
Most had low concern about location privacy
• User Interviews - Reasons
for lack of concern
– Trust the provider
– Don’t believe that data can
be used against them
– Never crossed their mind
– Don’t use LBS
– Don’t have smartphone
– Data already available to
carriers & government
• Survey: 66% not concerned
• User Interviews – Reasons
for concern
– Uncertainty how data
used/misused
– General unease
• Survey: 34% concerned
– 37% chose not to use a LBS
because of privacy concerns
Hypothesis 2:
Willing to pay for protecting locations
Even some unconcerned customers are willing to pay!
• User Interviews – Unwilling to
pay
– Not interested in even a free
service
– Not concerned enough to pay
– Not enough value add
• Survey: 28% would not use it
even if it is free, 54% would
not pay
• User Interviews – Willing to
pay:
– $15/month for total privacy
protection, only a “few
bucks/month” for location
privacy
– $1/week
– $5 one time payment
• Survey: 46% willing to pay
–
–
–
–
9%: $1
19%: $10
9%: $1/month
9%: $5/month
Hypothesis 3:
Able to reach them with low cost
• Yes – at least at first
• Google Ad Words:
– Should be cheap at first - We are the only advertiser for
“location privacy” (and related)
– Location privacy is a popular search term
Hypothesis 4:
Able to raise awareness through education
• Yes
• User Interviews – education may prove effective to
some, as many did not think about or understand
that LBS providers would get their location data, and
indicated more concern
Hypothesis 5:
Able to ease concerns through endorsement
• Yes
• User interviews – endorsement from “famous
people” and “serious organizations” would help ease
concerns on the effectiveness of privacy protection.
Hypothesis 6:
LBS app developers are willing to partner
• No – so far
• Domain expert interview:
– LBS app developers will hate our service
– Increase LBS app’s operational cost
• User interviews
– Overwhelming issue – not lack of privacy protection
• But lack of perceived LBS value
– Secondary: LBS reputation and trust
Hypothesis 7:
Privacy groups are willing to endorse
• Unknown
Market Size Estimation
Number of Users
Pricing
 Entire market
 > 100m unique Google
Maps mobile
visitors/month
 Served available market
• Originally considered 1x
payment
• But customers naturally
assumed subscription
service
• Possible to charge more?
 55% users concerned
about sharing location
information [Nielsen 2011]
 Target market
 Open Question, but rapidly
growing market
– Reduced price --/-->
willingness to use
Pivot Point?
• Not yet, but if user interview data trends against our
hypotheses…
• Two new models to consider
– Licensing
– Location based monitoring
• Privacy scorecard
• Hyperlocal news
ARKA Lights
High Performance Heat Dissipation Technology for LED Lighting
 Hypotheses:
• Improved novel (integrated) thermal dissipation
technology can significantly improve LED lighting
performance and reduce cost
• Our technology allows direct replacement of commercial
high lumen but low efficiency incandescent bulbs with
LEDs without light quality/output compromises
• This can deliver a scalable business model
CANVAS FOR ARKA – Version 1
LED manufacturers
System integration
Government
Agencies (DOE)
Suppliers
Environmental
conscious Groups
Luminaire
Manufacturers
ASME,
Professional
Groups
Component
supplier costs
Developments
Costs
Cost of Sales
Awareness
Building
Certifications
Experienced
manufacture
r as a
partner
IP
Systems
Design
Higher
lumens in the
same form
factor
Reduced
number of
LEDs
Increased
reliability
Requires no
infrastructure
changes
Trade Presence,
publications,
shows
Web based
demos,
education
Direct Sales
to
Institutions
Luminaires
Manufacturers
OEMS
Sale of
Products
Commerci
al
Customer
- Indoor
s
Applications
-Replacement
Lamps
GETTING OUT OF THE BUILDING
• We’re talking to (some combination of):
– OEMS
– Architects (Rita Koltai – Koltai Lighting Design)
– Technical Experts/Consultants (Stanford
University), Prof. Robert Davis, (CMU)
– Lighting designers and manufacturers (Greenray
Lighting)
– Lighting Distributors (Stanford Lighting)
– Facility Managers (Sheraton Hotel)
– Retail Outlets (Pottery Barn)
CUSTOMER FEEDBACK
1)
Prof. Robert Davis, Founder of CREE – a leading LED
company
- Heat transfer is a major issue. Not sure whether the internal
phonon reflectance may in fact be the leading thermal limit.
2) Prof. James Harris, EE Department, Stanford University
- Heat transfer issue – The phonon reflection increases
significantly with the doping of new materials. This reduces
thermal conductivity of the LED. Eventually it becomes the
limiting factor. Need to include reduction in the thermal
conductivity in the heat transfer modeling.
- Bought six PAR38 lights for his family room last week. Wants
them to last 20-30 years as changing them with a ladder was
a major hassle.
- Light intensity was lower than incandescent bulbs it
replaced. Not happy about that.
CUSTOMER FEEDBACK
3) Mr. Mo, Co-owner of Greenway Lighting, Santa Rosa, California
- T8 lighting (tube light replacement) is their main product. PAR38
replacement is needed, but not available today. They recommend
PAR30, a much lower intensity product. The available PAR38 do
not meet the lighting intensity and light quality demands for
replacing the current incandescent lights.
- Replacing light bulbs is a major hassle. Costs $400 to rent a
cherry picker to replace bulbs – makes very expensive. Need to
have longer life.
- Offered a business proposition to do thermal design of his LED
lights on a consultation basis (Not an attractive business model
for us due to very low returns and limited scalability).
CUSTOMER FEEDBACK
4) Prof. George Tayo, ME Center for Design, Stanford
University
- LEDs are evolving very rapidly. Thermal issues are
similar to PCs – cooling will remain major issues as
performance and quality envelope will continue to
expand.
5) Mr. Bruno (maintenance supervisor) – Sheraton
Hotel, Palo Alto
- Use 100’s of PAR38 in this hotel. Replace every 6
months or so. Would be happy with longer life
product
- Current weight of LEDs might prevent them from
being used in establishments with high ceiling.
(Heavy aluminum heat sink adds significantly to
weight).
CUSTOMER FEEDBACK
6.
Pottery Barn Staff – Pottery Barn, Palo Alto


7.
Title 24 has changed the procurement patterns of corporate
headquarters regarding light fixtures – no dimming or two-way
switches (Need to become familiar with local laws)
Use incandescent lights for all general illumination (counted 34
in front foyer alone) without dimming or daylight control.
Extensive use of CFLs in displays (not directional so less
suitable for task lighting).
Paul (salesperson) – Stanford Electricals •
•
•
•
•
Advocate of LEDs; largely ‘self-educated’
Indicated that rising prices (~30% in last 6 mths) of fluorescents
(due to phosphor costs) and falling LED prices will boost LED
sales
Indicated unwillingness of smaller retailers to experiment with
new suppliers products’
Highlighted form factor of LEDs and emphasized that products
need to be used without changing current infrastructure.
Seeing significantly increased adoption of LEDs by customers
(particularly over last 5 mths)
CANVAS FOR LED – Version 2
LED manufacturers
Government
Agencies (DOE)
Suppliers
System integration
Thermal
modeling of LED
cooling Awareness
Building
Certifications
Environmental
conscious Groups
Higher
lumens in the
same form
factor
Lower
purchase
cost
Increased
reliability
Luminaire
Manufacturers
Experienced
manufacture
r as a
partner
IP
ASME,
Professional
Groups
Systems
Design
Requires no
infrastructure
changes
Component
supplier costs
Developments
and Certification
Costs
Cost of Sales
Trade Presence,
publications,
shows
Web based
demos,
education
Direct Sales
to
Institutions
Luminaire
Manufacturers
Reduced
weight
Sale of
Products
Commerci
al
Customer
- Indoor
s
Applications
-Replacement
Lamps
(PAR38)
IMMEDIATE Next steps
• Conduct further interviews to asap validate value
proposition and channel hypotheses
– OEMS and Institutions
– Specifiers and Contractors
• Begin work on key activities including reduction
of technology to practice (prototyping)
Summary
• Contacted 8 diverse feedback nodes (experts,
customers, supply chain)
• Partially validated three components of the initial
canvas.
– Learned more about possible value proposition.
– Modified key activities to include thermal modeling
– Recognized need for engaging with OEMs asap
Disclaimer – The conclusions drawn here are based on a limited
data collected. Further validation will be conducted.
Ground Fluor Pharmaceuticals
Advanced Chemistry for
Pharmaceutical Progress
Team: Kiel Neumann (EL)
Stephen DiMagno (PI)
Allan Green (Mentor)
I-Corps 10/11/2011
 PET is a non-invasive medical diagnostic
technique for cardiac, brain, and tumor imaging
 GFP technology makes new (unknown) and
known (but clinically inaccessible) [18F]-labeled
radiotracers readily available
 Fast, multiplatform, high efficiency synthesis of
these fleeting, precious agents.
 Initial target indications: pediatric neuroblastoma,
Parkinson’s disease.
I-Corps 10/11/11
68
The Business Model Canvas
cGMP manufacturer
Radiopharmacies
Nuclear Medicine and
Radiology
departments
Pharmaceutical
development
companies
SOPs for precursors
and drugs
Recruit clinical sites
In vivo animal studies
Develop regulatory
plan for pre IND
meeting
ID cGMP CRO
Fund-raising
IP
PoP data
IP
PoP data
Regulatory plan
Understanding of
the regulatory
process
Contract cGMP precursor manufacture
Salary, Rents
Clinical trials
Accessibility (RCY)
Purity
Speed
PET/SPECT
Multiplatform
Sensitivity (nca)
Specific compounds
General
methodology for
adding fluorine to
lead compounds of
interest
Technical Assistance
(Image Atlas)
FDA regulatory support
Radiopharmacies
Equipment producers
Prescribing physicians
Technical assistance
Radiologist who
perform studies
Direct sales of
precursor
R&D and clinical
studies presented in
journals and meetings
Sales of intermediates
Technology license
Product license (royalty)
Drug developers
Radiologists
Out of the Building
- Face to face with attending Radiologist at
Stanford University
- Face to face with radiopharmacist at UCSF
- Conference call with Nuclear Radiologist at
Memorial Sloan Kettering
- Conference call with president of medium
size drug company with PET product at the
FDA
- Telephone conference with cGMP facility
I-Corps 10/12/11
71
Out of the Building
- Immediate need for our product
-
Currently used SPECT product for neuroblastoma is limited
by absence of correlative CT data
- Our lead PET agent would provide more information
on existing imaging equipment base
- Two customers offered to participate in clinical trials
- Potential for further development of other tracers
identified in interviews
- Actual need for the general procedure
- Allow access to previously unknown tracers
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72
Impact on the Value
Proposition Hypothesis
-Initially seeking to market method technology
-too diffuse, but many opportunities (i.e.
product-driven opportunities more than
general technology-driven)
-Need to identify specific imaging product
opportunities
-Validated hypothesis for immediate need of tracers
-Raised question on identity of lead compound
pipeline for Parkinson’s disease
-Recruited two potential partners for clinical trials
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Approximately 2.2 million procedures in the US.
Drug costs range from $700 (on-patent) to ~$150 (generic FDG)
US sales of radiopharmaceuticals for PET and SPECT $1.2 billion
US sales expected to grow to $6 billion by 2018
Global numbers approximately 2x
Source: Bio-Tech Systems Report #330; data for 2010.
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74
• 2500 installed PET scanners
• PET radiopharmacies cover the entire US market
• Radiopharmacies have an interest in proprietary agents as a
basis of competition in their market.
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I-Corps 10/11/11
Neuroblastoma
Parkinson’s Disease
Prevalence: about 6000 US cases
about 1000 new cases per year
DatSCAN sales in Europe ~$100 M
Subjects receive 3-6 images/year
to follow response to therapeutic
protocols
World market at U.S. x 2 gives potential
of 40,000-70,000 scans/year
The world's highest recorded
prevalence of Parkinson's Disease
of any region is in Nebraska, with
329.3 people per 100,000
population
US – 600,000 patients 1 scan per
year @ $500 = $300 M
Drug costs $500/per gives ~$20 - $35 M
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I-Corps 10/11/11
Target Customer
Fast Market Expansion
Treated
Severe
OSA
686,000
Home Diagnosis Device Market
Growing at CAGR of 7%
8 Million
Untreated
7.4 Million
Frost & Sullivan
Target Customer
Current treatment ineffective
Treated
Severe
OSA
Option #1: CPAP
Continuous Positive
Airway Pressure
686,000
Therapeutic treatment of OSA
growing at CAGR of 17%
8 Million
Untreated
Frost & Sullivan
Option #2: Surgery
7.4 Million
Uvulopalatopharyngoplasty
Maxillomandibular Advancement
Tonsillectomy
Initial Target Customer
Current treatment ineffective
Treated
Severe
OSA
686,000
60%
Treatment
Effective
412,000
40%
8 Million
Untreated
Treatment
Ineffective
274,000
7.4 Million
Initial Target Customer
Current treatment ineffective
Treated
Severe
OSA
686,000
60%
Treatment
Effective
412,000
40%
8 Million
Untreated
Treatment
Ineffective
274,000
7.4 Million
Target
Customer