ink space berkeley 2015

MentorsMar Hershenson - Managing Partner, Pejman Mar Ventures

Jim Patterson - Chief Product Officer, BandPageSupporting Officer Kevin Wang, Ph.D. candidate, MSE

InkSpaceBringing comfort and a kind touch to MR imaging

Total Number of People Interviewed: 138 (+34 calls)

Priyanka PotdarUG Econ/Bio

Joseph CoreaEECS Ph.D

Adrian GomezHaas MBA

Balthazar LecheneEECS Postdoc

Onur ErgenPhysics Ph.D

*Let’s make sure that we can scan kids as well as scan adults*

Team Background

Team Members Department Expertise Role

Joe Corea

PhD Candidate,Electrical Engineering

Prototyping, engineering development

Developer of CoilDomain Expert

Onur Ergen

PhD Candidate, PhysicsMS, Electrical Engineering

Energy harvesting and conversion, nanoelectronics, Condensed matter physics

Specs for coil manufacture

Adrian Gomez

MBA, Marketing & Entrepreneurship

Energy Consulting, Transportation VC

Sales, Business Development

Balthazar Lechêne

Post-doc, Electrical Engineering

Solar Cell Manufacturing Coil ManufactureDomain Expert

Priyanka Potdar

BS, Applied Econ & Math BS, Computational Biology

Neurotechnology, software, AI

Research Medical Companies

MentorsJim Patterson - Chief Product Officer, BandPageMar Hershenson - Managing Partner, Pejman Mar VenturesSupporting Officer: Kevin Wang, Ph.D. candidate, MSE

Started with TrucksTeam Name: Sunny Drive Original Idea:“Use solar panels to power auxiliary powered refrigeration units, reduce fuel consumption, save planet”

“If you can make a truck that never breaks, but runs on $10 fuel I would buy that in a heartbeat”

-Owner Operator

Got out of the building:21 interviews later


Predictive Maintenance (A Truck that Never Breaks)

Got out of the building:31 interviews later + (30 phone calls)


Got out of the building:51 interviews later + (30 phone calls)

“We love the idea of predictive maintenance so much we have been doing it for 8 years now.”

-UPS Fleet manager

Startup Reboot: Week 5“Go with what you (think you) know”

5th year Ph.D. & 2nd year PostdocWorking on MRI Coils

Photograph of coil from Ph.D. work

Realization: We haven’t gone out of the building! We really only have hypothesis!

Receive Coils MRI Scanner

Receive coils are resonant loops of wire

Hypothesized Problem: Current receive coils are bulky, heavy, expensive, prone to failure, and do not fit certain patients well.

Original Hypotheses

Pictures from Corea et al. “Screen Printed Flexible MRI Receive Coil” Nature Communications (Submitted)

Hypothesized Solution: Use electronic printing technologies to drastically reduce cost, create an extremely flexible device to best fit pediatric patients

Original Hypotheses

Pictures from Corea et al. “Screen Printed Flexible MRI Receive Coil” Nature Communications (Submitted)

Size of MRI market in the US

Size of Pediatric MRI procedures in the

US

Size of Pediatric MRI procedures in

California

• $4.76bn• 30 million scans in US• 25% Spine, 22% Brain, 13%

Lower extremities, 40% Other

• 10% of MRI market → 3 million pediatric scans per year in US

• Approx 200k pediatric scans

InkSpace - Our market

Key Hypothesis: Radiologists at hospitals will buy our coils

InkSpace

Formed Business Model CanvasWeek 5Reboot

Week 62 Radiologist 1 neurologist1 Technician

Shreyas Vasanawala MD/PhDLPCH Pediatric Radiologist

- Key source of flexible coil idea

Key Interview

How hospitals buy equipment

How hospitals buy equipment

Doctor wants new equipment

Capital CommitteeInfluencers

TechniciansOther HospitalsSalespeopleConferences

Doctor gets new equipment

Fast

Week 6

Slow

Operational Budget

How hospitals buy equipmentWeek 7

Low Cost Disposable Coil





Fast

Slow

Operational Budget


Low Cost Disposable Coil

+7 Radiologist+2 Medical Reimbursement experts+3 Non-Coil Medical Manufacturer (endoscope)

Hospitals don’t replace a non-disposable items with a disposable ones.

“We would never pay for something ‘per scan’ that we don’t have to”-UCSF Radiologist





Fast

Slow

Operational Budget


Team spent a day watching all pediatric MRI scans at Lucile Packard Children’s Hospital





Fast

Slow

Operational Budget

+4 Technicians/Center Directors+1 Anesthesiologist+2 Radiology Fellows+1 Radiologist+1 Nurse

“Talk to the sales people to know how things really are”-Allan May (Life Science Angels)

How hospitals buy equipmentWeek 8-10

Need to justify how this is going to make the hospital money

1. Selling Directly to a hospital is very hard, uncommon, and prohibitively slow.

2. A hospital is a business too!

+4 Technicians/Center Directors+1 Anesthesiologist+7 radiologists+2 Nurse





Fast

Slow

Operational Budget

+1 Life Science Entrepreneur/Angel+2 Medical Reimbursement experts+3 GE Salespeople+3 GE Researchers+1 3rd Party Coil Builder

Avg. 3 years

So, how are coils bought?Week 6

Radiologists at hospitals will buy our coils

InkSpace

Reminder: Hypothesis at restart

So, how are coils bought?Week 7-10

Radiologists at hospitals will buy our coils

InkSpace

Reminder: Hypothesis at restart

It is extremely rare for hospitals to buy from small vendors. 95% of coil purchases are made bundled with scanner. Doctors rarely have the budget after initial purchase to get additional coils.

+11 Technicians/Center Directors+7 radiologists+3 GE Salespeople+3 GE Researchers

Got out of the building

“My budgets for hardware this year is $0” – Radiologist“We don’t buy from small vendors because the majority of them go out of business and we can’t get support” -Lead Technician

So, how are coils bought?Week 7-10

It is extremely rare for hospitals to buy from small vendors. 95% of coil purchases are made bundled with scanner. Doctors rarely have the budget after initial purchase to get additional coils.

OEM manufacturers are not gatekeepers nor distributors… they are our customers.

+11 Technicians/Center Directors+7 radiologists+3 GE Salespeople+3 GE Researchers

We need to focus on their pains and gains.

Week 6

What creates value?

Regulatory Approval Intellectual Property

What we knew about Regulatory Approval and Intellectual Property Before:

“These things are probably important”(we didn’t know what we didn’t know)

Week 7-10

What creates value?

Regulatory Approval

Intellectual Property

“These are nice people, but they play hard. Protect your IP as soon as you can.”

-Allan May Life Sciences Entrepreneur“University has to make money on filing. Has to be economically viable”

-Marc Oettinger UCB Tech Office

“[A small coil manufacture] sued GE for patent infringement. GE bleed them of money until they lost. ….You have about 3-5 years before someone finds their way around you”

-Ken Bradshaw Coil Designer

IP is important, but don’t always count on it to save you.

Critical to survival, need to go faster route

Get on as many existing Codes/Approvals as you can- 510k vs. clinical trials for FDA Approval- Get on an existing CPT code

+1 Life Science Entrepreneur/Angle+2 Medical Reimbursement people+1 3rd Party Coil Builder+2 UCB Professors who have done 510k

Lessons Learned

A tangible MVP was way more effective than pictures

Lessons Learned

After a semester, interview totals:

• Sunny drive: 53 interviews in person or video (and 26 phone calls)

• InkSpace: 71 interviews in person or video:+ 17 doctors of various specialties (pediatrics,

anesthesiologists,..)+ 7 radiologists+ 11 MR technologists and nurses+ 4 hospital managers+ 4 hospital senior managers+ 5 VC / Angels+ 4 lawyers / patent experts+ 13 healthcare business experts+ 6 MR OEM business persons+ 10 MR engineering expertsand 9 phone calls (consultants, VC, …)

Lessons Learned

● Figure out what you don’t know

● If you are going to fail, fail fast and cheap.

● Data rules and you need to be ‘deadly objective’

Start a company?

More interviews are needed to figure out if we can be successful selling to an OEM.

If we can sell to or through them: Yes

If we can’t: No

If we can find something else in our interviews that people are willing to pay for: Of course!

APPENDIX

How hospitals buy equipmentDoctor wants new equipment

Large costs go toCapital Committee

Small costs go to operational budget

Comprised of hospital VP,CFO, random doctors, and advocate for new equipment

Hospital pays for it out of annual budgetAnnual budget determined by patients/insurance money

Smaller team of doctors, local financial people

Advocate arguesSafety, quality, obsolescence, other hospitals, or if it enables a new service

Technicians Salespeople

ConferencesOther hospitals


FasterWeek 6

Slower

Key Market PlayersImaging Market Key

Influencers (specialists)

MR OEM’s

MR Service Providers

MR Coil Manufacturers

• 27,570 radiologists in US (Physician Specialty Data Book)

• 229,300 MRI technologists in US• Locations (establishments v.

population): California, Florida, New York, Texas

• OEM’s: Siemens Healthcare (24% of mkt share), GE Healthcare (19%), Philips Healthcare (13%), Toshiba Medical Systems (12%)

• Profit Margins (Annual Results 2014): Siemens (16.9% of revenue), GE (16.7%), Philips (14.8%), Toshiba (11%)

• Main MR Service Suppliers: ScanMed, InVivo, Bayer (MEDRAD), etc.

• Profit Margins: Bayer (9.44%), ScanMed (Unable to find), InVivo (Unable to find)

• Main Coil Manufacturers: ScanMed, MEDRAD, Advanced Imaging Research Inc. (Sree Medical Systems), etc.

- Business model canvas : Week 11

Main updates:validated the core hypothesis about the Value Proposition to hospitalsThe identities of the different customers come in focusvalidated hypothesis across the other boxes.

Key Updates:1. No more single-use disposable coils. New hypothesis: Hybrid system (re-usable with many spares?)2. Value proposition for OEM has changed (cost reduction / competitive advantage)3. Value proposition for Radiologist has been nuanced (SNR / New features)\4. Left side considerably modified5. Not ready to eliminate MRI technicians as influencers6. Hospitals are used to paying $30-120 per MRI scan on consumables7. Healthcare is very different in each state. Selling directly to hospitals will be incredibly hard (will most likely

need OEM’s as a channel or customer)

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