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EXECUTIVE SUMMARY
In October 2014, Engine-‐V Consulting was contracted by the founders of Microdermics Inc. to build a business model and help develop a plan to bring their technology to market. The results of this two month engagement are summarized herein. The business model brings clarity to early stage decision-‐making and defines short and long term goals that Microdermics should focus on. The short-‐term strategies recommended will position the company optimally to execute against the most profitable and likely long-‐term exit plan.
About the Cl ient Microdermics is a pre-‐revenue medical device start-‐up based in Vancouver, BC. The company was formed on a foundation of over ten years of research in the high growth Medical Technology sector. Microdermics has developed and prototyped a microneedle attachment for conventional syringes and is currently undergoing trials in the area of pain free, targeted administration of vaccines.
Microneedles are arrays of microscopic protrusions (less than 250μm in length and base diameter) that allow precisely targeted penetration just below the epidermis but above the level of nerve and blood vessels. Microneedle technology began development in the late 1990’s and there are currently over 20 variations of the technology patented. Microdermics owns a patent on a process for manufacturing a superior microneedle product. Unlike competing technologies, Microdermics can produce metal, hollow microneedles. The manufacturing process is cutting edge and can be scaled up to produce a high quality product for around $0.60 per unit.
Decision Making It is clear that Microdermics’ technology has significant potential, but bringing it to market will require a focused strategy. Engine-‐V identified multiple critical decision points that are required to bring clarity to the direction of the company at this early stage:
1. What application best fits Microdermics’ unique value propositions? 2. What is the most valuable and realistic long-‐term exit goal for Microdermics? 3. What short-‐term strategies will best position the company to execute its long-‐term goal?
Application Microneedles have generated a lot of excitement since they were first developed over 15 years ago. Based on input from the clients and a review of literature, the highest potential applications of the technology were identified and studied. 1) Drug Delivery 2) Allergy Testing 3) Bio-‐sensing 4) Blood Extraction and 5) Vaccine delivery.
All of these applications would complement Microdermics’ pain-‐free value proposition and each showed interesting opportunities for development and growth, but one stood out. Among all the applications, microneedle administration of vaccines has the largest body of scientific research backing it up. This research also supports what is perhaps Microdermics most exciting value proposition: a lower dose requirement for vaccines administered to the dermis. A higher concentration of specialized “dendritic” immune cells in the dermis stimulate a much better immune response than vaccines delivered through the conventional intramuscular route. Lowering the required dose of vaccine could not only dramatically reduce costs per injection; it could free up supply-‐constrained vaccines and generate additional revenue while saving lives.
In addition, the vaccine market provides a wide range of treatments that Microdermics could be used for. With a rich pipeline of new vaccines in development and a projected 12.0% compound annual growth rate in the next 5 years, the vaccine market will provide Microdermics with a wealth of opportunity.
In the US market there are approved vaccines for 23 different target pathogens. Of all of these vaccines the most lucrative is the influenza vaccine. We recommend that Microdermics focus their efforts on the flu vaccine because it is a very high volume, multi-‐channel market with recurring customers. In North America alone over 150 million flu vaccinations are delivered each year. Additionally, recent regulatory approvals of new vaccine delivery technologies provide a framework for Microdermics to follow.
Long-‐Term Strategy Engine-‐V is very excited and optimistic about the long-‐term exit opportunities that may be available to Microdermics. Influenza vaccines are marketed globally by several large pharmaceutical companies competing with fairly undifferentiated products. Recent regulatory approvals have allowed some companies to differentiate their vaccines based on the method of delivery. These companies create regulatory precedents and market validation that lay the groundwork for Microdermics’ success.
Long-‐term, we recommend that Microdermics seek out licensing or acquisition by one of the three large vaccine manufacturers who do not have an alternative delivery product on the market. Based on recent acquisitions in the Med Tech sector, we believe that Microdermics could be valued at more than $50 million upon exit. While highly uncertain, an exit of this size could be feasible within 5-‐8 years by executing a well-‐articulated short-‐term business strategy.
Short-‐Term Strategy The long-‐term potential of Microdermics is exciting but it hinges on several hypotheses about the product and how it will be received on the market. These hypotheses must be tested by bringing a minimal viable product to market as early as possible. Even if all of these hypotheses are proven, generating early revenue is essential for attracting A-‐round financing and presenting as a viable acquisition target. Our short-‐term strategy is based on the Lean Start-‐up model but is affected significantly by the regulatory uncertainty in this industry.
Our short-‐term recommendations can be executed over a 3-‐4 year timeline and require 10-‐20% equity for seed financing (based on a $5 million pre-‐revenue valuation). The potentially huge costs of regulatory approval are the most significant risk to the short-‐term recommendations. To mitigate these risks early, we recommend that Microdermics immediately hire or contract personnel with experience in medical device approvals. In less than two years pre-‐market device approval is expected from the FDA and Health Canada. Work on bioequivalence trials for the influenza should be undertaken immediately. Early stage trials and safety studies are intended to be proof points for health care providers who have discretion to employ alternative administration methods. These trials will have relatively low sample sizes and may be funded, in part, through government grants. Later stage trials for combination product approval (with n=2000-‐3000) are very expensive and will need to be undertaken by, or in collaboration with a large pharmaceutical company as part of the long-‐term strategy.
Within 2 years Microdermics should start building a sales force and attract a medical professional who will advocate for the technology. The sales force will focus on walk-‐in clinics and family doctors who run profit-‐motivated clinics across BC. The sales force will secure orders for Microdermics syringe adapter to be used for administering flu-‐vaccinations. Doctors and nurses will be presented with research that validates our two value propositions:
1) Pain Free flu shots for needle-‐phobic patients who would otherwise fore-‐go protection against the seasonal flu
2) Ten times lower dosage requirements that will generate more revenue for the clinic by increasing margins on every flu vaccination.
Assuming adoption across 100 clinics and a conversion rate of 1 in 4 flu shots, we estimate Microdermics will generate $285,000 in revenues in its first year on the market. After 3 to 4 years of growing revenues, Microdermics will become an attractive acquisition target for a major pharmaceutical company.
Client Background: • Microdermics Inc. was incorporated in June of 2014. • Microdermics owns Intellectual Property rights for a manufacturing process to fabricate micro-‐needles; the
technology validaBon has been pursued through research grants in the labs of Dr. Hafeli & Dr. Stoeber at UBC.
The Microdermics Team: 1) Boris Stoeber:
• Ph.D. Mechanical Engineering, Berkeley, USA • Associate Professor at UBC -‐ Mechanical & Electrical Engineering
2) Urs Hafeli • Associate Professor at UBC -‐ PharmaceuBcal Sciences, • Received the Innovator Award of the Cleveland Clinic FoundaBon, Cleveland, Ohio, U.S.A.
3) Iman Mansoor • Mechatronics Engineering – Hands-‐on experience with Micro/ Nano fabricaBon processes • Solid publicaBon record on MEMS process development and device characterizaBon
4) Sahan Ranamukhaarachchi • Ph.D. of Philosophy & background in research and applied sciences • Member of the Electrical Engineering Graduate Student AssociaBon at UBC
The Business Challenge: Microdermics is seeking to uBlize the technology they developed and build a strategy to get into market, and is looking to determine a business direcBon for launching its product. Key consideraBons are:
• Is it beYer to get fabricate micro-‐needles in-‐house or manufactured? • What would be the best Business Model for the different applicaBons? • What would be the best go-‐to-‐market strategy? Including the best sequence of acBviBes?
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Technology Overview: Microdermics has developed a manufacturing technology to develop Micro-‐needles, which represent an alternaBve injecBon method. The characterisBcs of Micro-‐needles are:
• Microneedles consist of very small metallic and hollow pillars in an array of 50 to 100, that reach the outermost layer of the epidermis.
• The length of each pillar is around 450 µm (less than half of a millimeter), so the enBre array is not clearly visible to the human eye.
• This array of microneedles do not touch any sensiBve nerves, hence the delivery of is pain-‐free.
• A lower drug dosage is required through microneedles to be as effecBve as Intramuscular (IM) delivery because the drug is able to diffuse directly into the blood stream.
• The specific process developed by the Microdermics team has its patent pending. This protected manufacturing process guarantees obtaining a quality and unique final product.
• The advantage provided by adopBng microneedles is both pain-‐free and cost effecBve.
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The State of Industry – Micro-‐needles: The size of the demand for needles in the market is difficult to determine because of overlap between the various sub emerging segments (e.g. safety syringes, transdermal drug delivery). It is similar to comparing apples and oranges with commodiBzed needles and combined products. Recently there has been an emergence of alternaBve drug delivery mechanisms (drugs that had previously only been delivered with IM injecBons or orally). AlternaJve drug delivery mechanisms include: -‐ Nasal, -‐ Oral, -‐ Jet, -‐ Topical, -‐ Microneedle, -‐ Prefilled syringes.
Birth control is an excellent case study in alternaBve drug delivery technology. Experienced rapid development in late 1990s Factors driving change in drug delivery are:
• Needle safety: 385,000 needle-‐sBck injuries occur in US every year. These accidents expose health care workers to infecBon.
• Prefilled syringes: Aids in easier drug administraBon, increased dose accuracy, reduced transportaBon costs, and eliminaBon of waste from vial overfill
• Pain free: Demand from consumers for pain free drug delivery in the form of Microneedles, Jet injecBon
• BeYer Delivery Pathways: Transdermal vaccine delivery provides a much beYer immune response than tradiBonal IM injecBon which helps to dissipate the drug faster in lower quanBBes.
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Bringing Clarity to the Business Model: In the beginning of the project, we faced mulBple quesBons and concerns that required soluBons. We targeted each concern with an outlined direcBon. On more than one occasion we found ourselves facing road blocks at key points, where we figured out an alternate direcBon. The below stages helped us to come up with our final strategy: • Which ApplicaJon to pursue – Should microneedles be used for vaccine delivery,
cosmeBcs, or bio sensing. • Which drug to target – There are numerous drugs available in the market. • How to enter into the supply chain – Determine a direcBon to make the product
available in the market • What type of clinics – Determine the types of clinics that would be willing to use
our product • Long term Strategy – IdenBfy opBons for this product in the long run • Short Term Strategy -‐ IdenBfy opBons for this product in the short run
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Decision-‐Point 1 – ApplicaJon?
• The first decision that needs to be made in bringing Microdermics to market is determining the applicaBon that we will target.
• This choice helps bring clarity to the rest of the business plan, and has huge impact on markeBng, product development and profitability.
• We considered several potenBal applicaBons for microneedle technology that were menBoned by our clients and also discussed in media literature.
OpJons for ApplicaJons:
• Allergy tesJng: Microneedles have been considered a good technology for developing allergy test patches, despite being a niche market and requiring high capital costs
• Drug delivery: Pain free drug delivery is a good applicaBon for microneedles • Bio-‐Sensing : Use microneedles for bio sensing purposes. • Blood ExtracJon: BeYer alternaBve for extracBng blood samples than big hypodermic needles.
Decision: Choosing vaccine delivery as the applicaBon for Microdermics technology will allow us to build on a large body of research already completed on the subject. Most importantly, this research supports a lower dose requirement for vaccine delivery. This addiBonal value proposiBon will save customers significant cost. Furthermore, the vaccine industry is undergoing rapid growth and technological disrupBon.
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The Vaccine Market
• Vaccines account for 3% of global pharmaceuBcal market revenue, which was 27.3 billion dollars in 2013.
• 80% of the vaccine market is controlled by 6 major organizaBons. • It is esBmated that the vaccine market will conBnue to grow at a rate of 12% CAGR for the next 5
years. • There has been significant consolidaBon in the vaccine industry in the last 5 years. • In the US, health insurers must now provide ACIP recommended vaccines at no out-‐of pocket
expense to policy holders (Affordable Healthcare Act -‐ insurers cannot charge premiums for vaccines)
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Decision-‐Point 2 – Vaccines? Determine which vaccine to deliver:
• There are 23 pathogens with licenced vaccines in the US. • High cost vaccines -‐ e.g. Travel vaccines • Low cost high volume vaccines – e.g. Flu vaccines • Each vaccine would need to be tested using microneedles for safe and effecBve delivery
OpJons for ApplicaJons:
• Pediatric Vaccines: These vaccines are administered to virtually all children in the developed world by health authoriBes.
• Blockbusters: These recently developed vaccines are sBll covered under patent protecBon and very expensive and profitable.
• Humanitarian: A large part of the vaccine market is serviced by NGOs in the developing world. These aid programs purchase high volumes of vaccines at drasBcally reduced unit prices.
• Travel Vaccines: There are a range of vaccinaBons required for travel in various parts of the world. Customers in the developed world spend upwards of $500 per person to prepare for travels abroad.
Decision: The influenza vaccine provides a high volume, mulB channel market for Microdermics to target. The unit revenue per shot is low but paBents return every year for a shot. Most importantly there have been a number of combined products approved in the influenza vaccine market. These new products validate the desire for vaccine manufacturers to differenBate from each other by bringing innovaBve delivery methods to market.
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The CompeJJve Landscape: Two Main types of compeJtors in vaccine delivery:
1. Other manufacturers producing hollow /solid micro-‐needles 2. Other transdermal drug delivery technology
Background of AlternaJve vaccine delivery:
• Currently there are no commercially viable compeBtors in the market • Early in 2000’s, a lot of research was underway to bring the next best alternaBve for drug delivery • Currently there are several companies siqng on patents
• Large companies – development and sale of micro-‐needles is not a priority for larger companies
• Small companies -‐ e.g. Nanopass (has received FDA medical device Pre-‐market approval and has conducted pilot stage clinical trials on reduced dosage flu vaccine)
Other transdermal vaccine delivery technologies have been approved: • Intanza -‐ in 2001 by Sanofi, a large PharmaceuBcal company • PharmaJet -‐ Joint Venture between PharmaJet and CSL
Opportunity for Micro-‐needles: • Accuracy -‐ More accurate in injecBon depth and locaBon • Safety -‐ Simpler design means less chance of misuse & easy to dispose • Cheaper -‐ Simpler design, precedent for drasBcally reduced dose requirement
Microdermics is in an exciBng posiBon to take advantage of unprecedented changes by execuBng a well arBculated market entry and business plan.
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Decision-‐Point 4 – Short-‐term / Long-‐term? Long-‐term: It would be best to get licensed or acquired by a major pharmaceuBcal company.
• There are two companies who already have pain free flu vaccines on the market • Let us focus on the other ones (ie. GlaxoSmithKline, AbboY, NovarBs) • This will allow them to compete with Sanofi who were the first movers of transdermal injecBon flu
vaccine, Intanza. • If they license from us or acquire us, they will be able to compete in the pain-‐free flu vaccine market • We also want to benefit from their resources that we don’t have the capability ourselves. They are
strong in MarkeBng, Manufacturing, ConducBng clinical trials, and distribuBon Short-‐term: Now that we know where we want to be long-‐term. How do we get there.
• We need to prove ourselves in the short-‐term. • Since there is lots of uncertainty in the market, we need to use the lean start-‐up model • This will allow us to assess the market, pivot quickly, be flexible, & response to the market • We need to find an entry point into the market • We can test the market; Prove there is a demand / adopBon for the microneedle with flu vaccines • Gain tracBon by growing revenue • Get noBced by a major pharmaceuBcal company • Lastly, increase the company valuaBon so we can sell the company for a significant amount.
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Target Channels: IdenJficaJon of Channels: 6 channels to target customer segment including: -‐ Group Purchasing OrganizaBons, -‐ Manufacturers, -‐ Health AdministraBons, -‐ Wholesalers, -‐ End Users, & -‐ Clinics. Channel Market Impediments: The health care industry is a complicated sector to penetrate with a new product, despite having lots of potenBal to make revenues. We discovered that there was a slow adopBon rate to new medical devices due to the healthcare regulaBons. This is one of the main reasons why our compeBtors are not already in the market. These high barriers to enter the market eliminated targeBng channels such as Group purchasing organizaBons, Health authoriBes, Manufacturers, Wholesalers, End users.
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Decision Point 4 – Supply Chain Customer segments to target
• Individuals who suffer from Trypanophobia • Children of all ages • Price insensiBve consumers
Long Term Strategy:
• Outsource/sell to a MEMS manufacturer. • Our value proposiBon to manufacturers would be high profit margins. • ProducBon of the adaptor would be in batches to reduce the manufacturing costs. • The technology that has been filed to be patented, has a unique advantage to compeBtors that are
researching similar pain free drug delivery systems, has a flexible fabricaBon process which allows us to modify our product according to the requirements.
Short Term Strategy • Target private clinics to enter the health care market with relaBve ease by providing the clinics
incenBve based on profit margins along with an opportunity to differenBate them from other clinics. • Using micro needles would reduce the amount of vaccine administered per individual which would
in effect reduce costs for the clinics. • By placing posters and brochures of micro needle technology, provide an opportunity to create
market awareness of the benefits of this product.
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Decision-‐Point 5 – Clinics? To capture the price to set for the Microdermics product, we thought it would be best to uBlize the value-‐pricing thermometer, with 3 criBcal inputs to our decision: 1) The true economic value ‘TEV’: the value that a fully informed buyer should ascribe to the product
• Due to the fact that there would be great cost savings for customers, we have calculated the product’s TEV at $6.10.
2) The perceived value ‘PV’; the PV of the product in the mind of the buyer.
• Microdermics has the potenBal to largely influence the perceived value through markeBng efforts. • Our calculaBons have shown that we could push the micro-‐needle’s PV from $5.1 to $5.60.
3) The cost of goods sold ‘COGS’: the lower bound we are willing to set / product. • Under the assumpBon that Microdermics would produce large quanBBes through a contracted
manufacturer, the CODS / micro-‐needle is expected not to exceed $0.07. To put the pieces all together, and having measured the three inputs to the value-‐pricing approach, the feasible space for seqng a price for the product is bounded at the upper end by the PV with markeBng efforts ($5.60), and at the lower end by the CODS ($0.07). Consequently, and as shown in the resulJng value-‐pricing thermometer, the market price / micro-‐needle should best set at $2.835 (refer to Appendix 6 – Pricing Strategy)
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Decision-‐Point 5 – Clinics? Our research of potenBal markets have shown that we have 3 alternaBves for a best first entry to the market:
a) Travel Clinics: • The easiest market to penetrate due to the decision-‐making process • Vaccines available are with higher prices and lower volumes; highest volume is Hep-‐A • There is no enough volume generated by this niche market for the use of a micro-‐needle; (approx.
total # of shots administered in BC is 9000 shot / year)
b) Pharmacies: • For this market our vaccine would be the Flu, due to high volumes of shots administered / year
(approx. # of shots administered in BC is 300,000 shot / year). • However, the decision-‐making process in pharmacies is more complicated than it is with clinics • In addiBon, Pharmacies in total represents 20% share of the Flu vaccine coverage in BC • So what about the other 80% of the Flu vaccine market.
c) Walk-‐in Clinics & Family Doctors: • 80% market share of the Flu vaccine coverage in BC (approx. # of shots administered in BC is
1,200,000 shot / year). • Also, in terms of the complexity of the decision-‐making process, it is far less complex than having to
deal with pharmacies.
One more consideraBon, the conversion rate for alternaBve products in pharmacies is about 10%. However, with our value proposiJon, we believe it is possible to bring conversion rates as high as 25%, driven by the company’s markeBng, adverBsing, and awareness efforts. Therefore, the potenBal revenues within the first year of operaBon are: (refer to appendix 5 – decision-‐point 5)
a) Travel Clinics 3.75K b) Pharmacies: 113K c) Walk-‐in Clinics & Family Doctors: 284K.
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Proof Points: We can incenBvize with increased margins, but we know doctors are ethical health care professional and aren’t moBvated by profits (well, most of them). So how do we get clinic owners / doctors to adopt this new technology? We need Evidence-‐based Proof Points to change their way of administering Flu Vaccines.
• How do you convince doctors that micro-‐needles are just beYer, than hypodermic needles? • Health Care providers have to consider 3 things when evaluaBon a new product
1. Bioequivalence; does the lower dose sBmulate the same # of anBbody immune response? Will this injecBon have the same effect as intramuscular injecBon? Does it work equally as effecBve as current vaccines?
• Microdermics will need to conduct trials that flu vaccines using microneedles will offer the same protecBon to paBent as tradiBonal vaccines at full IM doses.
2. Health Authority Approval; Is there strong evidence. I.e. Large scale randomized control trials? Is it approved by Health Canada and the US Federal Drug AdministraBon?
• Microdermics will need to get Healthcare Canada’s approval for microneedles as a medical device • In the long-‐term, there will need to be a larger scale clinical trial proving bioequivalence
3. Safety; Is it safe for paBents? Are there any side effects to the micro-‐needle? Is it safe for health care providers to handle? Is there risk of needle sBck injury?
• There will need to be safety studies to prove that there are no adverse effects from the metals • There will need to be specific instrucBons on how to dispose safely
How will this message be delivered to clinic owners, physicians, and nurses? • Delivered by a respected colleague; will need a medical physician to use in pracBce, endorse and
promote the product to colleagues. • Repeated mulBple Bmes from different mediums (conferences, convenBons, mail-‐outs, sales force) • Focus on: the soluBon for needle-‐phobic paBents, the evidence, & on increasing margins last.
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Short-‐term implementaJon Plan: From 0-‐6 months:
• Financing: Microdermics needs to get some financing outside the funds available from research. • Sell a porBon of the firm’s equity for a specified amount of cash to fund operaBonal requirements. • Increase the company’s valuaBon: work on product development / enhancement, as well as
prototyping to further push the company’s value.
From 6-‐12 months: • Regulatory: due to the complexity of regulatory requirements associated with new products in the
Healthcare industry in Canada, it is best to outsource the know-‐hows and hire / contract an individual / company to take care of all the regulatory requirements for markeBng the micro-‐needle.
From 12-‐18 months: • FDA Approvals: FDA approvals are essenBal to launching and markeBng the product. Hence,
Microdermics must ensure obtaining the required approvals for micro-‐needles. • Bioequivalence: bioequivalence of the micro-‐needle due to using lower dosages of vaccine, must
also be proven through clinical trials.
From 18-‐24 months: • Sales Force: upon obtaining FDA approvals as well as proving bioequivalence , it is Bme to hire some
effecBve sales force test the market. • Run the business: It is also as important to make sure to Be all the loose ends of the business
cohesively and run the business smoothly. A driven MBA graduate is your best bet!
24+ months: • The Champion Doctor: Once the business kicks-‐off, an effecBve promoBon strategy would be to
contract a doctor to adverBse the product and its value proposiBon to increase customer awareness.
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Financial ProjecJons: Based on projecBons of number of clinics targeted, we have esBmated that the demand to be approximately 100,000 units (chips) in the first year.
• In-‐house producBon is recommended only for internal purposes, such as small trials or tests to get user’s feedback, where it is not important to meet client’s demand and deadlines.
• The team would also be able to make the necessary adjustments in-‐house unBl the final version is ready to be produced in a mass scale.
• However, we recognize that Microdermics does not have the necessary resources to produce high volumes. Dealing with suppliers / controlling quality can also be handled by a manufacturer.
• Thus, In order to meet this high volume of demand, we recommend to outsource the producBon of microneedles: the cost of producing in-‐house will be ten Bmes that of outsourced producBon.
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Risk IdenJficaJon: We acknowledge that every new project involves risks, we have idenBfied the likelihood and impact of the various risks: The risks having high Impact and medium likelihood are:
• Unable to overcome medical regulaBons – These include unable to showcase effecBveness drug delivery, or potenBal reacBons or side effects when administering the vaccine.
• Threat of CompeBtors – Other compeBtors that are providing the same value proposiBon may enter the market first
• Low adopBon rate for micro needles – Product may not resonate with populaBon or targeted segment.
• Unable to secure finance – Require financial aid through investors to generate the capital to launch the company
• NegaBve results of few VaccinaBon tests – Evidence of vaccinaBon trial may not be significant to validate that the micro needle is an effecBve vaccine delivery mechanism
Other Risks that have been rated as medium or low are: • Unable to incenBvize clinics or manufacturers -‐ Without the clinic or manufacturers, there is high
barriers to entry in the market. • Patent Acceptance / RejecBon – If the manufacturing process is not found to be unique, there is a
chance for dismissal of the patent.
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Risk miJgaJon: In order to miBgate the idenBfied risks, we have idenBfied key acBons that need to be taken to lower the likelihood of the occurrence of the risks.
• IdenJfy key regulatory requirements -‐ There are mulBple medical requirements that need to be addressed before it can be market. Hire a consultant or full Bme employee for research.
• Patent Pending -‐ The patent for the manufacturing process has been filed. ConBnue to monitor the progress of patent.
• Clinics first -‐ It is easier to bring the product to market by focusing on medical clinics. • NegaJve vaccinaJon results -‐ In case vaccinaBon results are negaBve, sell the technology. • Unable to secure investment -‐ In case Microdermics is unable to obtain financial support, sell the
technology. • Research and Development -‐ ConBnue to perform trials to provide evidence of effecBveness of
vaccine delivery. • Patent rejecJon -‐ Understand how similar compeBtors that were able to obtain patent and follow
suit.
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Summary of “Short-‐term recommendaJon to Microdermics” 1. The applicaJon for Microdermics should be vaccines.
• Microdermics is currently pursuing studies based on the rabies vaccine. A lot of promising results point to effecBveness in Vaccine Bioequivalence.
2. The Vaccine to focus on is Influenza. • We need to follow the money. • Based on volume, High seasonal churn rates, Influenza allow us the best chance to grow quickly.
3. Long-‐term Strategy -‐ The best way to compete is by licensing / gepng acquired by a vaccine manufacturer. • ParBcularly, work with a pharmaceuBcal manufacturer that is currently in the vaccine market and
does not have a pain-‐free alternaBve. • Allow them to compete with Intanza and Flumist, and enter this market of pain-‐free vaccinaBons. • These ones in Canada include GlaxoSmithKline, NovarBs, and AbboY.
4. Recommend entering the supply chain through Clinics / Manufacturers. • Clinics allow us direct access to people using the product, and allow them to influence paBents. • Manufacturers allow us the greatest reach and mulBplier distribuBon.
5. Recommend focusing on Medical Clinics. • Medical clinics have higher volume for flu vaccines • Physicians are in beYer posiBon than pharmacist to administer vaccines at lower doses.
6. The Short-‐term entry point will be focused on Clinics first. • Using the lean start-‐up model, Microdermics will be able to test the uncertain market, pivot
quickly, and address challenges. • We recommend focusing on Profit-‐Driven Medical Clinics. • IniBal market research shows that travel clinic do not have high enough volume to meet our costs, • Pharmacies do not have authority in off-‐label decision making.
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Long-‐term “Blue Sky” Vision Once we can get our long-‐term strategy of being licensed or acquired by a manufacturer, we can look long-‐term into the distant future and dream about our Blue Sky vision. There are many possibiliBes that microneedles can change the world in a posiBve way. 1. Do bioequivalence studies for more vaccines
• A manufacturer who currently provides different types of vaccines can do bioequivalent studies and apply microneedles to the rest of their vaccine portolio
• This would result in approval of the use of microneedles in any other vaccines. 2. Self-‐administraJon of vaccines
• Imagine one day paBents can pick up vaccines from the pharmacy, get shipped to their home, and self-‐administer their yearly flu vaccine, their HPV vaccine, their HeptaBBs vaccine on their own.
3. Reduced Health Care Spending • If paBents could self-‐administer vaccines, this would have a large impact on public health care costs
by reducing physician, pharmacist, and nurse labour costs. 4. Universal Accessibility for all vaccines
• If health care training is no longer required to administer vaccines, this will increase access of care in developing countries
• Developed countries would be able to ship vaccines to developing countries who need the vaccines. • Without needing nurses, minimally training personnel could administer vaccines and eradicate
diseases such as Measles, Mumps, Tetanus from developing countries.
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Appendix 1 – Business Model Canvas – EdiJon 1 The business canvas model helped provide a framework for a strategy to bring microneedles to the market.
• Customer Segments: IdenBfied customer segments that can be possibly targeted • Value ProposiJon: Determined how the product would resonate with the targeted customer
segment. Required further informaBon to determine the cost • Channels: Microdermics does not have any channels available • Key AcJviJes: Few of the key acBviBes were idenBfied for mass producBon of the microneedles.
Limited knowledge of clinical trials • Key Resources: All of the resources required to make the product a success were idenBfied • Key Partners: Currently Microdermics does not have any partners. • Cost Structure: Required more informaBon regarding the manufacturing costs • Revenue Streams: Were unable to idenBfy any streams of revenues.
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Appendix 2 – Business Model Canvas – EdiJon 2 Second iteraBon of the business canvas model helped us to complete the framework for a strategy to bring microneedles to the market. Key acJvates idenJfied:
• We were able to connect the value proposiBon with the customer segments and customer relaBonships.
• Key acBviBes were idenBfied for the short term and long term strategy which includes manufacturing and markeBng undertakings.
• Key channels for both short term and long term strategy were idenBfied • Prospects for key partners were idenBfied in the form of manufacturers, wholesalers and healthcare
professionals.
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Appendix 3 – Decision-‐Point 1: For the decision point number one we took into consideraBon 5 key criteria to come up with our final decision. These 5 elements were:
-‐ Revenue potenBal: how much profit can we obtain by choosing this opBon? -‐ Growth potenBal: Is this segment expected to grow in the future? -‐ R&D required: How much R&D is needed to develop the final product? -‐ Proven applicaBon: Are there any studies that back up this applicaBon? -‐ Regulatory Barriers: How easy/difficult would be to enter into the market taking into account the
medical and clinical requirements? The grades showed in green are posiBve outcomes while the red ones have a negaBve impact.
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Appendix 4 – Decision Point 2: The Decision criteria table helps to idenBfy the various vaccines that can be delivered using microneedles. These include the following vaccines:
• Pediatric Vaccines: vaccines used to treat individuals below the age of 18 years. • Blockbusters Vaccines: New vaccines that sBll have patents and are expensive • Humanitarian Vaccines: Those vaccines that are required in emergency situaBons • Travel Vaccines : Vaccines required when travelling across countries • Flu Vaccines: Most common vaccine required to baYle the flu.
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Appendix 5 – Decision-‐Point 5 a) Travel Clinics:
• Approx. total # of shots administered in BC is 9000 shot / year
b) Pharmacies: • Approx. # of shots administered in BC is 300,000 shot / year
c) Walk-‐in Clinics & Family Doctors: • Approx. # of shots administered in BC is 1,200,000 shot / year.
PotenBal revenues within the first year of operaBon are:
a) Travel Clinics 3.75K b) Pharmacies: 113K c) Walk-‐in Clinics & Family Doctors: 284K.
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Appendix 6 – Decision-‐Point 5 1) The true economic value ‘TEV’:
• Due to the fact that there would be great cost savings for customers, we have calculated the product’s TEV at $6.10.
2) The perceived value ‘PV’:
• Our calculaBons have shown that we could push the micro-‐needle’s PV from $5.1 to $5.60.
3) The cost of goods sold ‘COGS’: • The COGS / micro-‐needle is expected not to exceed $0.07.
Consequently, the market price / micro-‐needle should best set at $2.835
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Appendix 7 – IncenJves for medical clinics
• In order to moBvate medical clinics to use Microdermics needles, we can present a suggested pricing strategy
• Currently with hypodermic needles, Clinics pricing breakdown is: • $20 paBent price (for paBents with no exisBng medical condiBons, between age of 7-‐64) • $10 cost of vaccine • 10 cents per needle • $9.90 gross profit
• With Microdermics needs • $25 paBent price (based on paBent willingness to pay for pain-‐free microneedle) • $1 cost of vaccine • $2.84 for microneedle • $21.16 gross profit.
• Therefore, in addiBon to pain-‐free value proposiBon to paBents, medical clinics owners will be moBvated to promote microneedle to more than double their gross profit.
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Appendix 8 – Costs Breakdown Investment required to run the proposed short-‐term strategy: • It is important to highlight that this projecBon only includes all the expenses related to go-‐to-‐market. It does
not take into account any expenses related with medical trials and FDA approvals.
• The table presents the necessary capital required to run the strategy in a scenario of 3 years.
• It implies that the Microdermics team will need to increase by three more members: an MBA student whose full-‐Bme job will be to implement the strategy; a sales representaBve that will be the connecBon with the clinics and a Medical spokesperson (part-‐Bme job) that will bring credibility and more value to the firm.
• Also, Microdermics will have to implement other key acBviBes, such as creaBng online presence through a webpage as well as physical presence in conferences and expos.
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Appendix 9 – ValuaJon
• The Scorecard valuaBon method is used for esBmaBng the valuaBon of pre-‐revenue start-‐ups. Value is added to a baseline valuaBon based on scores across seven company characterisBcs.
• The baseline valuaBon was taken from the average of Medical startups listed on Angel List (angel.co)
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Appendix 10 – Risk Factors • The Risk Factor SummaBon valuaBon method uses qualitaBve scoring of 12 criBcal business risk factors to
approximate a pre-‐revenue valuaBon for startup seeking seed financing. The baseline valuaBon ($4,300,000) come from the average of all medical startups listed on Angel List (angel.co). Risk rankings range from +2 (Very Favourable) to -‐2 (High Risk).
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Appendix 11 – ValuaJon Examples
• A table of recent medical device companies who have executed an exit within 4 years of startup. • Products range from arterial stents to minimally invasive surgical devices. • All acquisiBons were worth over $50 million.
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