IonExpressInstrumentation and consumables

for better, faster, cheaper ion channel screening> 50 contacts

Team• Shiva Portonovo: Entrepreneurial Lead– PhD candidate developing parallel,

automated ion channel screening platform

• Jason Poulos, PhD: Mentor– CEO of Librede, a startup company

commercializing artificial membrane technologies

• Jacob Schmidt, PhD: PI– UCLA Bioengineering research specializes

in cell-free approaches to ion channel measurement

IonExpressNext Generation Ion Channel Screening

• Ion channels are critically important drug discovery targets

• EVERY drug needs cardiac ion channel safety screening

• They are difficult to measure: existing tech is expensive, slow, and hard to use

• IonExpress’ cell-free technology is faster, better, cheaper

Market Size

Ion Express$110M

Ion Channel Screening$375M

Drug Screening $40-60B

Automated Patch Clamp

$245M

• Customers from Pharma, CROs, Govt/academic labs

• Ion Channel Screening TAM $375M– Strongly limited by

current tech• IonExpress– 30% of TAM:

$110MDrug Discovery Technologies: A Global Strategic Business Report" Global Industry Analysts, Inc. Top 10 Drug Discovery Technologies Market – Strategic Analysis and Global Forecasts (2010 to 2015)Ion Channel Trends 2011, HTS Tec, Ltd.

Pharma Cos.

Govt. ctrs.

Univ. labs

One TimeInst.

Recurring Consum.

Direct, partner

Direct

Distributors

Fast

Low cost

Instrument Injection molding

IP, cells

Inst mfrs

Inj. molders

ReproducibilityAssay devel.

CROs

Install/demo

Easy to use

New targets

Low run cost

Low cost

Beta Feedback

Winning KOLs

Cells

Assembly One Timewarranty

Recurring Maint

Recurring Train.

Recurring Software

Initial Business Model Canvas

Getting out of the building: Customers and Value Proposition

• Academic and Government Labs– Stanford, UCLA, UCI, Burnham, NIH, U Pitt, BYU, USC

• With $0.2-$0.4/dp, we would become the preferred IC screening platform at UCLA’s IC Screening center

• Large Pharma– Icagen, GSK, J&J, Novartis

• Medium/Small Pharma– Amgen, Ophidion Biosciences

• CROs– ChanTest, Aurora Biomed, GE Health Care, Kanalis

• “If you have the capabilities that you’re telling me, you have the holy grail and should price it as high as possible”– Julie Hilton, GE HealthCare

Different market segments have different primary pain points

• CRO/L. Pharma– Need ease of use, throughput, and low running cost– Indifferent to instrument cost

• Govt/Acad Lab– Need low instrument cost and ease of use– Throughput and low running cost not as important

• Big surprises– Everyone was open to our technology with cost &

performance– Even a medium throughput solution is viable

Key Insight Our value prop changes

with customers’ screen size • L. Pharma, CRO– Screens are bigger; high

throughput and cost are most important

• Acad, S/M Pharma, CRO– Screens are smaller but

more numerous; ease of use is most important

Setup Time

Screening Time

Setup Time

Screening Time

Total Screen time

Total Screen time

Key Insight Path to adoption and Minimum Viable Product

is different for each market segment• Academic users

– Happy with 8 channel system (several labs willing to beta test)– Not a big market

• M/S Pharma/CROs– A medium throughput solution is needed (1000-2000 dp/day)– Several interested in beta testing

• L Pharma– Want fully validated and accepted system, high performance

• M/S Pharma market is similar in size to L Pharma• Our MVP is a 32 channel system (~5000 dp/day) compatible

with standard 96 well plates

Govt. ctrs.

Univ. labs

One TimeInst.

Recurring Consum.

Direct, partner

Direct

Distributors

Fast

Low cost

Instrument Injection molding

IP, cells

Inst mfrs

Inj. molders

ReproducibilityAssay devel.

CROs

Install/demo

Easy to use

New targets

Low run cost

Low cost

Beta Feedback

Winning KOLs

Cells

Assembly One Timewarranty

Recurring Maint

Recurring Train.

Recurring Software

Canvas 2

S/M Pharma

L Pharma

Univ/Govt/ CROs

Pharma Cos.

Sales and Distribution Channels• IonExpress will make instrumentation and consumables

– Instrumentation is low volume – Customers will want technical support– Consumables are high volume, high margin, and usable only

with our instrument; customers are locked in

We don’t want/need a channel partner

• Competitors’ consumables and instruments are also sold direct– Consumables off of company websites– Instruments through sales reps– They provide tech support and assay development

One TimeInst.

Recurring Consum.

Direct, partner

Direct

Distributors

Fast

Low cost

Instrument Injection molding

IP, cells

Inst mfrs

Inj. molders

ReproducibilityAssay devel.

Install/demo

Easy to use

New targets

Low run cost

Low cost

Beta Feedback

Winning KOLs

Cells

Assembly One Timewarranty

Recurring Maint

Recurring Train.

Recurring Software

Canvas 3

S/M Pharma

L Pharma

Univ/Govt/ CROs

Partners

• Instrument– Our consumables are compatible with off-the-

shelf, standard liquid handling and motion control hardware

• Cells– We use standard commercially available cells

• Consumable plates– Simple inexpensive plastic plates, injection

molded and assembled in house• No need to partner

Partners

• Amplifier manufacturers Tecella and Warner Instruments are interested in partnering with us– But we only need an off-the-shelf amplifier

• We do need SOFTWARE and neither of them have anything good now– Software goes to “easy to use”– highly valued

• Partner/license 3rd party software

Univ/Govt/ CROs

One TimeInst.

Recurring Consum.

Direct

Direct

Fast

Low cost

Instrument Injection molding

IP, cells

Inst mfrs

Inj. molders

ReproducibilityAssay devel.

Install/demo

Easy to use

New targets

Low run cost

Low cost

Beta Feedback

Winning KOLs

Cells

Assembly One Timewarranty

Recurring Maint

Recurring Train.

Recurring Software

Canvas 4

S/M Pharma

L Pharma

Amplifier

Software

Revenue StreamsProduct Offerings

• Instrumentation and consumables grouped by capacity and function (priced for adoption)– 32 channel system (“Best Value”)• Instrument- $200k (Fluxion: $250k) • Plates- $50 (Fluxion: $150)

– 384 channel system (“Highest throughput”)• Instrument- $500k (Barracuda 384: $750k-$1M)• Plates- $200 (Barracuda 384: $250-$300)

• Reagents: Cell aliquots, gel electrodes, lipid mixtures, buffers

Competition Matrix: Key Metrics

Instrument(Manufacturer)

System Cost†

Consumable cost Cost/dp

Simultaneous Recording

SitesDp/day Ease of

Use

IonExpress A32 Low/Mod. Low $.26/dp 32 5000 High

IonExpress A384 Moderate Med $.13/dp 384 60000 High

IonWorks Barracuda

(MDS)High Med -- 384 10000* Low

IonWorks Quattro(MDS)

High Med/High $0.75/dp 48 3000 [2] Med

SyncroPatch(Nanion) High Med -- 96 5000* Med

IonFluxHT (FluxionBiosci) Moderate Med $1-4/dp 64 9000* Med

Q-patchHT(Sophion) High Med/High $3.50/dp 48 2000 [2] Med

[1] Comley, J. Automated Patch Clamping: setting a new standard for early hERG. Drug Discovery World 62-79 (2005)[2] Farre, C. Ion channel screening - automated patch clamp on the rise Drug Discovery Today: Technologies 5 1 e23-e28 (2008)*Fluxionbio.com or Nanion.com or Moleculardevices.com

Competition Matrix: Features

Instrument(Manufacturer)

Yield/Patch Success Rate

Seal Resistance

Solution Perfusion

Suitability of any cell type

IonExpress A32 High > 1GΩ Yes High

IonExpress A384 High > 1GΩ Yes High

IonWorks Barracuda(MDS) Med/High < 1GΩ Yes Med/Low

IonWorks Quattro(MDS) Med/High < 1GΩ No Med/Low

SyncroPatch(Nanion) Med/High > 1GΩ Yes Med/High

IonFluxHT (FluxionBiosci) Med > 1GΩ Yes N/A

Q-patchHT(Sophion) Med/High > 1GΩ No Med

From Ion Channel Trends 2009 and 2011, HTS Tec. Ltd.

Current Market Landscape

• All APC instruments are cell-based and the market is fragmented with no real leader

• The instruments made by each of these companies have their own advantages and disadvantages and no platform is universally used for all applications.

From Ion Channel Trends 2008 and 2011, HTS Tec. Ltd.

Estimate of total customer demand

Entities <Sites/ entity>

<Labs/ site> Total labs <Screens/

yr/lab><DP/

screen>Equiv # 32 well

Plates/yr

L Pharma 20 3.5 4 280 6.7 20k 1.2M

M/S Pharma 500 1.25 1.5 938 4.1 10k 1.2M

Govt/ Acad 50 1 1 50 4.0 10k 63k

Projected usage of IonExpress’ Plates by Market Segment

From Ion Channel Trends 2011, HTS Tec. Ltd.

Adoption rate and Sales

Year Users and Instruments # Plates

1 3 3125

2 14 18268

3 27 42011

4 58 89791

5 113 185056

Year % L Pharma % M/S Pharma % Govt/Acad

1 0% 0% 5%

2 0% 1% 10%

3 1% 2% 10%

4 2% 5% 10%

5 5% 10% 10%

Estimated Adoption by Customer Segment

Resultant Sales

COGS and Operating Cost Bottom Up Estimate (conservative)

• Instrumentation - $135k ea– $120k Components/materials– $10k Labor– $5k Operations

• Plate - $5/plate– <$1 materials– $2 Labor (assembly)– $2 Operations

Income StatementYear 1 2 3 4 5

Revenue ($M) 0.7 3.3 4.5 10.7 20.3COGS + Ops. ($M) 0.4 1.7 1.9 4.6 8.4

Profit ($M) 0.3 1.6 2.7 6.1 11.9

• 1st $100k/mo revenue in Year 2

• 1st $1M/mo revenue in Year 5

1 1.5 2 2.5 3 3.5 4 4.5 50

5

10

15

20

25

Revenue ($M)

COGS ($M)

Profits ($M)

Year

$M

Customer Lifetime Value

• Instrument– One time initial purchase ($200k)– To increase capacity/throughput, small number of additional

purchases possible ($200k+)• Consumable– Recurring purchases: ~ 4188 plates/yr for each lab in big

pharma ($209k/yr)• Lifetime revenue value: – Instrument: $200k in Year 1 + $200k in Year 4– Plates: $209k/yr Years 1-3 and $418k/year Years 4-10= ~$3M (discounted at 5%/yr)

Marketing

• Existing market: Adoption may be slow– Customers don’t respond to ads they want a demo– They look to scientific journal publications and

conference presentations• Two phases

1) Getting initial users and KOLs• Publish data and put it on website as application notes

2) Expand user base• Booths at scientific meetings and trade conventions• Formal/established scientific loan program

Univ/Govt/ CROs

One TimeInst.

Recurring Consum.

Direct

Direct

Fast

Low cost

Instrument Injection molding

IP, cells

ReproducibilityAssay devel.

Install/demo

Easy to use

New targets

Low run cost

Low cost

Beta Feedback

Winning KOLs

Assembly One Timewarranty

Recurring Maint

Recurring Train.

Recurring Software

Final Canvas

S/M Pharma

L Pharma

Amplifier

Software

What we’re going to do next

• We have a competitive advantage vs APC in cost, throughput, and ease of use

• If we make a 32 channel system we have identified customers who will write a check on the spot

• We think this is a viable business and we will pursue this after class– Submitted SBIR proposal to mitigate technical risk

and ultimately build MVP prototype