Sweet Sensors

Yu Xiang and Yi Lu, Nature Chem. 3, 697-703 (2011).

Small form factor diagnostic devices that can detect a variety of biological markers.

• Inexpensive• Quantitative • Adaptable to many

kinds of tests (targets)

Types of targets

• Recreational drugs• Heavy metals• Toxins• Bacteria• Viruses• Pharmaceuticals• Environmental hazards• Food safety targets

Meetings/Conversations From the Past Week

• A CEO of company (familiar with diagnostics)

• Attorney to pharmaceutical companies

• Consultant for in vitro diagnostics

• Rich Ganz, medical device executive

• Richard Smith, expert in drug discovery, clinical trials

• Donna Rosenbaum, expert in food safety

• Conference call with a major pharmaceutical company

Upcoming Conversations

• Sword Diagnostics

• Abbott Labs

• Blue Cross Blue Shield innovation team

• Retired Hospital executive

• Biotech entrepreneur

• Michael Rosen, life sciences entrepreneur and executive

• Other VCs

Summary of Key Findings (cumulative)

• HbA1c is not a good target.• The best tests are those which require immediate

results.• Saliva is preferred over blood. • Our key value driver is cost.• The breadth of the platform is an asset to be leveraged.

In most cases when money is no object, there’s probably a more sensitive test available.

• POC is not recommended for patients at home. Compliance is very low. We can’t find many examples of successful products, even those that are very simple.

Key findings:

partners and customers

• Diagnostic companies can be our partners; dominated by five

companies

• Glucometer manufacturers as partners

– Mentioning glucometer can be confusing

• Contract research organizations

• Pharma will be interested if …for clinical trials

– It reduces cost

– Reduces the passage of time

– Helps get more accurate results

– Helps them avoid going down the wrong path

• Possible site visit by a major pharmaceutical company in

December

• Saliva is the best testing medium

– Provide a list of targets in terms of testing medium

• POC diagnostic device not recommend for patient at home;

focus on cheaper and faster POC device for clinic

• Many home test devices didn’t sell well. Why?

– No benefit to the caregiver? Remote data analysis?

• Food safety?

– Bacteria: rapid test available, but they want them faster

– Spores: not available not…we may have something

– Virus: no advanced test existed

• Personalized medicine?

• Drug analyzer?

Key findings:

other customer segments, technical

Sweet SensorsYi Lu, Tian Lan, Brian Wong

Neil Kane

Chris Sorensen

Business Model Canvas #6 (last week)

One to one

Conferences

R&D

QC

IP

Personnel

Pharmaceutical

companies

R&D

Licensing

Convenient monitoring

and safer dosage

Immediacy

11-01-2011

Pharmaceutical Cos

Sales (to pharmaceutical companies)

Pharmaceutical Cos

Long termGlucometer/strip

manufacturer

ExclusiveDiagnostic

company

Contract research

organization

Pharmaceutical

companies

Glucometer/strip

manufacturer

Diagnostic

company

Contract research

organization

Sweet SensorsYi Lu, Tian Lan, Brian Wong

Neil Kane

Chris Sorensen

Business Model Canvas # 7 w/changes

One to one Direct

Conferences

R&D

QC

IP

Personnel

Pharmaceutical

companies

R&D

Licensing

Convenient monitoring

and safer dosage

Immediacy Immediate

results

11-08-2011

Pharmaceutical Cos

Product Sales (to pharmaceutical companies)

Pharmaceutical Cos

Long termGlucometer/strip

manufacturer

ExclusiveDiagnostics

companies

Contract research

organizations

Pharmaceutical

companies

Glucometer/strip

manufacturer

Diagnostic

companies

Contract research

organizations

Investors

Publicity

Inexpensive

Simple

Insurance Reimbursement

Robust/extensible

Licensing?

Glucometer mfr

Strip mfr

Sweet SensorsYi Lu, Tian Lan, Brian Wong

Neil Kane

Chris Sorensen

Business Model Canvas # 7

Direct

Conferences

R&D

IP

Personnel

Pharmaceutical

companies

R&D

Licensing

Convenient monitoring

and safer dosage

Immediate results

11-08-2011

Pharmaceutical Cos

Product Sales

Long termDiagnostics

companies

Contract research

organizations

Pharmaceutical

companies

Diagnostic

companies

Contract research

organizations

Investors

Publicity

Inexpensive

Simple

Insurance Reimbursement

Robust/extensible

Licensing?

Glucometer mfr

Strip mfr

Revenue Model

Missing:Lifetime value of customer and amortization of acquisition costs over lifetime

Sweet Sensor Revenue Model

Factors

COPD MARKET All Segments

Market Size 16,000,000

Market Share Target 10%

Channel Capacity 100%

Customer Activations 1,600,000

Attrition 10%

Net Customers 1,440,000

Revenue Model

Usage per Year 52

Number of Uses per Year 74,880,000

Revenue per Use $4 $4

Total revenue $299,520,000

EXPENSES

Cost Per Customer Acquisition $25 $25

Cust. Acquisiiton Expense $40,000,000

Channel Split 30% 30%

Cost of Channel Sales $89,856,000

COGS $0.25 $18,720,000

Net Operating Income $150,944,000

Operating Margin 50%

Operating Expenses

GSA $5,000,000

EBIDTA $145,944,000

Net Margin 49%

Service Channel Distribution Model

InsuranceCompany

Doctor

Service Provider“Healthways”

Patient

SweetSensors

Medical Services

DataService

In House CareServices

Payment

Payment

Payment

Action plan

• Put together a compelling presentation and go pitch pharmaceutical companies and diagnostic companies. We’re getting inconclusive results talking to KOLs and consultants.