Week 7 Presentation & Updated Canvas

Here’s the presentation we’ll be giving this week

Week7Slides

And here’s our updated business model canvas:

DentalOpticsCanvasV6

Sales Pitch #3: MV Dentist

Another interesting pitch with useful feedback:

  • Agreed with general pitch premises: checking for gum disease thoroughly is supposed to be part of the standard of care, but is not good now
  • Value #1: Something more accurate — yes! Can miss pockets with current manual procedure
  • Value #2: Patient education & information: explaining what’s happening and keeping them engaged with their health is a key part of building a practice
  • If they can get more information about the periodontum that is, in and of itself, interesting
  • Time savings would be very good: This dentist however would use it for added education, or perhaps more cleaning
  • Probably more accurate for insurance
  • Lot of wires already in the office. More devices add more complications. Something wireless and compact would be very desirable

Price-points, monetary value:

  • Disposable: ideally $2/ patient (unless you can pass it on to insurance)
  • Didn’t think it would be a big moneymaker
  • $10K – wouldn’t be completely prohibitive, but would have to plan for the purchase (say no right now)
  • $750 – I’d write the check right now (!)

This was a price-dependent yes to getting the product. The real value add was in patient communication and in getting more time with the patient. Accuracy too got positive feedback. More procedures, not so much.

Sales Pitch #2: MV Dentist

Our second pitch was with a dentist in Mountain View today. We went in with a fairly sales & product-oriented focus and asserted that we anticipated a product would be ready in 18 months (pending trials etc.) to gauge dentist response.

Our interviewee was an associate dentist (3 years out of dental school) at a somewhat large practice that seemed technologically savvy and interested:

  • Definitely cared about software integration (Eaglesoft by Patterson, for example)
  • Asks about functionality: “pockets don’t go all the way to the bone, can you distinguish that?” — distinguish soft vs. hard tissue and pockets is important.
  • Got quite interested in the product! “Are you interested in doing trials here?” (!)
  • Gave us a lot of feedback on what’s wrong with perio-probes right now: tartar/calculus under the gum distorts the readings (perioprobe sticks to tartar); accurate readings are hard
  • Dentists often don’t push hard enough with the probe to get a very accurate reading (pushing hard enough causes patient discomfort)
  • Definitely not happy with the current inaccuracy in the system: some dentists might increase number past insurance threshold to justify deep cleaning (require 4 readings of 5mm or deeper to justify deep cleaning in a quadrant)
  • Patients are often sensitive to probing
  • Patients appreciate objective measurement tools (example he gave: Diaganodent that says whether you have a cavity or not)

On our value proposition hypotheses of increasing procedures and reducing time:

  • Did see that this might reduce time, but could not see this increasing procedures: perio procedure decisions are often decided by other means (x-rays) and then justified with the probe. However, having a reliable, easy way to make this justification for insurance would be good
  • Patients will usually say OK to procedures if covered by insurance. If not, harder proposition..

The dentist really responded to the patient-centered aspects of our value propositions. If this would reduce patient discomfort and increase patient engagement that was a big deal. Also, he really responded to diagnostic accuracy. He was already very convinced that current probing techniques are inaccurate and prone to mismeasurement.

Sale? Alas, he does make purchasing decisions at this office, but brought up the idea of doing trials at his office on his own. He was optimistic (“our senior dentist loves new technology and gadgets”) that they could be early adopters and thought $2000 was a reasonable  price (comparing it to similar products like diaganodent and intra-oral cameras). Likely one unit for the whole office, and ideally powered and connected by USB cord to computer.

Sales Pitch #1: PA Dentist & Hygienist

We began the first of our ‘sales pitches’ this Friday with a local dentist and their hygienist (as we learnt, hygienists are an important part of the periodontal probing process). Our goal was to approach this meeting as an actual sale, and drive to see what it would take to convince them to order our hypothetical product.

Here were some of our key learnings:

  • Liked the idea of imaging the periodontum (the gums, soft tissue and bones that support teeth)
  • Strong prefer integration with Patterson or Henry Schein’s (Dentrix) software system
  • Easy to transfer images to computer, maintain records
  • Concern about infection control: autoclavable or sleeve essential
  • Patients love graphical information
  • Patients like ‘numbers’: analogy to golf, give patient a ‘golf score’ of their gum health
  • Value in a periodontal diagnostic tool: ACCURACY & PICTORIAL representation
  • Bleeding while using the probe is itself a diagnostic indicator

Digging into price points and closing a sale: Ideally $2K, no more than $5K. (Comparable products: intra-oral digital cameras — high-res up to $7500.. useful for insurance!)

Overall impressions: They were quite positive but not ready to buy. They need to see and understand the technology and its accuracy and believe we can do what we claim we’ll be able to do. They believe imaging the periodontum would be valuable for accuracy and for patient education/ understanding. Reducing time & Getting more procedures did not resonate with them. Patient-centered ideas like comfort, education and engagement however were exciting to them.

Interview: CEO of a competitor probe company

We spoke with the CEO of a company selling a novel technology product in the periodontal diagnostic space.
Their product offers a constant pressure probe (standardizes measurement across users) and automates the data collection into their software. It also audibly reads out the depth and whether the state of disease is moderate/dangerous.
The technology was spun out of UofF into a family owned business 24 years ago. I took note of some insights with respect to selling an advanced probe technology to dentists.

Value Prop

  • Many dentists are not aware of their production (not all are savvy business people, looking to maximize profit)
  • Perio procedures in US are primarily conducted by hygenists (not dentist). Sometimes it requires two people (hygenist plus a staff member). Because hygenist turnover is an issue, dentists don’t always see value in purchasing tools for them (as opposed to for themselves)
  • Dentist often does procedure in countries outside US
  • There is some value in time saving (8 min/patient of man hour if 1 instead of 2 people needed) — Totals thousands in savings
  • Alternatively, billing for perio matenance, follow up visits, cleaning, as a result of better diagnostics and convincing patiences can lead to tens of thousands increases
  • 70-80% of people worldwide suffer from periodontal disease; many undiagnosed leading to tooth loss

Technology (including another tech in the same space):

  • Tech developed at university, developed into dental product
  • Constant pressure probing with automatic data collection
  • USB plug/play integrates with all major software systems (Eaglesoft, etc)
  • Was not convinced by ultrasound technology (don’t think they cleared FDA); were also approached years ago to explore ultrasound/water jet. Felt data  just was not reliable, was noisy, etc.

FDA testing/approval:

  • Was not prohibitively expensive, time consuming as they are Class 1/2
  • Have to get regulatory approval in new countries

Sales/Pricing

  • Sold 10k unites globally (in 37 countries) at a price of $6k/unit

ROI to dentist

  • Demonstrates value to dentist in terms of increased procedures/revenues
  • Equips hygenist with a tool to make their work efficient, consistent, requires less manpower
  • Engaged patient in perio diagnosis (audible readout, or patient input of data) — convinces them to get treatment

Insurance

  • Their software produces charts/data which dentists can use as justification to get reimbursement for specific insurance codes. They need this to ensure reimbursement (insurance in the business of not paying out)

 

 

 

Simulated sale of Perio Probe – 2/23

We tried to do a simulated sale of the device to a dentist in Texas. It was over the phone, so not ideal, but we got some interesting insights. We also got some of his feedback on clinical trials (he formerly consulted for the FDA):

Reactions after I made my pitch ($3000 device cost, $2 consumable cost, 1mm accuracy)

  • $3000 sounds like a lot. Unless I have a high-end practice, I wouldn’t be interested. I pay ~$20 a probe now and the margins are too tight.
  • I’m also skeptical if it can be accurate and detect beyond the calculus
  • I do like that it’s not invasive. The probe can hurt patients.
  • I already do periodontal probe spot checks if I’m rushed for time on patients – takes me no more than 15 seconds. I doubt this could get me additional procedures.
  • I like the technology, but that’s just a lot of money. It’s a good idea, but the price point is just too high. I ran it by a friend of mine, and he thinks at ~$100 you could get traction, but it would be hard beyond that.

Clinical trials info

  • Important thing is to find if you have a predicate device. If there is no predicate device, the trials and process will be MUCH more intense
  • If there IS a predicate device, you’re looking at $100 – 200 k for ~100-250 patients at 4-7 periodontist sites, taking maybe a month. You also need to agree on a margin of error and standard.
  • If there is NOT a predicate device, you’re looking at a lot more. maybe up to a thousand patients ($500-1000 k)

Med Device Entrepreneur (FDA, Clinical Trial insights)

We had an interview with a former Stanford Biodesign fellow who had spent time developing two medical devices (one for dentistry) and saw them through the regulatory, clinical testing, and early manufacturing stages. We collected some great insights on these processes and got initial time/cost estimates as well. Some of the key takeaways are below:

Takeaways:
1. Dentist are business owners
2. Distribution channels are crucial

  • distributors take 30% margin,
  • training has to be super easy
  • disposable product –> instruction manual with 3 large pictures, easy to use, simple design
  • marketing, very data driven, dont say you are doing above/beyond another. run a comparative trial

3. Do a comparative study for approval — “we are just as good as this device”

  • Once you get approval and out there, then you bring on key opinion leaders, top 3 or 4 periodontist – practices that do this day in/day out to vouch for it
  • Will need to do a study between manual probing and our device, manual vs. another device, show better use through data, publish data, use as marketing tool. Let the data speak.

4. FDA approval –> know which bucket you fall into:
4.a PMA – pre market approval

  • more costly to apply for FDA approval, app fee is higher ($ 55k for small business)
  • FDA will require larger number of patient size
  • trial takes longer and more costly

4.b. 5-10(k) – to be considered, need to show device is predicated on other preapproved device
Show devices/combo that were approved by 5-10k

  • If you know name of device, you can search FDA to determine which approval they went through
  • Cheaper than PMA, sometimes don’t need patient data
  • App fee $3k
  • Could show previous device predicate, we are just slightly differentiated, we are using X, used in other parts for Y,Z, etc, minimal risk.

Once you know which bucket the study needed  depends on risk in terms of what FDA wants
–> # of teeth, or patients, or animals, etc

5. The Study

  • Go to center/practice that does lots of these because you don’t want patient enrollment, go through high throughput practice – how many do FDA need? at what stage do you know? good idea by identify predicates – have initial conversation before app, 3-6 month turnaround, they will sometimes help clarify what is required
  • Better to go to regulatory consulting firm (Howard/Holstein bay area), better sense of experience and how many patients
  • When you submit formally, they could say 50 patients at first, and then 100 –> unpredictable in last 2 years, decrease in # of med device as result
  • Call up competitors, talk to VP of regulation, what did it take to get through the process

6. Early Manufacturing (costs, timeline, design); early manufacturing versions of device

  • Quality Control is big, depending on how complicated it is. Could get a consulting firm to put QC ($5k – $15k)
  • Find a OEM, identify OEM in med device space, does not have to be dental, tell them design piece
  • Don’t want to design something that you cannot manufacture — have to think about this
  • Approach them and have a BOM and get a quote for X orders (10k)
  • Expertise comes in to help source components, source materials at bulk prices, 10-100k COGS balance,
  • Identify critical components, final form factor, they will tell you final COGS –> for med device, want to hit 70-90% profit margin, know COGS, ASP, Gross Margin (without distribution, etc)

7. Pricing

  • Think about value added, price willingness
  • Develop device that eliminates  adverse event, could price with cost of adverse event, upper bound.
  • How you deliver questions, start with how solution at the end, value at the front
  • If you could do one more procedure every week, how much more value?

8. Insurance

  • Probing is part of standard of care, reimbursement codes for periodontal work
  • What is the pot of money for periodontal work?
  • How much does other product cost, want to understand why dentist are not using them
  • Need to present economic case to insurance, by reimbursing more for device
  • Dentists without device vs. with device, can you do a study to show better off

Secret Formula — clearly measurable endpoints needed. Malpractice reduction/driving more procedures sometimes hard to measure. Endpoints include time savings, new procedures revenue, passes critical threshold for dentist (min new procedures).

Week 6 Slides & Canvas

Here’s our presentation for today:

Week6Slides

And here’s our updated business model canvas:

DentalOpticsCanvasV5

Interview with swanky PA dentist

Easily the nicest dental offices we’ve seen so far — 10+ operatories, hardwood floors and the latest equipment. They are clearly doing well!

  • Very very positive feedback on periodontal imaging/ automated diagnosis. Even though they’re very advanced in other dental technologies they only use the standard steel probe and did not know of other options!
  • Use intra-oral cameras with 6 bright-LEDs on it extensively — especially to show patients things like cracks or other visible defects. Key part of everyday procedures– convince/educate the patient!
  •  Mentioned new ultrasound devices to gauge health of teeth
  • Interested in depth and length of cracks, maintaining records: very interested in automatically taking a picture of tooth from multiple angles + transilluminated
  • $7-10 limit on consumable per device
  • Thinks that remote surgery (laproscopic type) is inevitable in dentistry (screen + camera)

Interview with Milpitas Dentist

We interviewed a dentist in Milpitas regarding both our transillumination ideas and our recent push in the periodontal space:

  • Federal paperless records mandate – 2014-2016? Office going all digital soon (screens at every operatory)
  • Diagnosing gum disease is a pain and antiquated! “If you could image this that’d be a game changer”
  • Key points: Where’s the bone? Measure it directly to computer.
  • Hygienists can then see more patients, become less expensive.
  • Also, easier more accurate
  • Liability! Periodontal disease diagnosis is a big (the biggest?) source of malpractice
  • Periodontal disease, it turns out, does not progress steadily — instead sharp drops and deteriorations occur over time
  • Dentist bought Diaganodent (laser to detect caries/ de-mineralization) to find more work
  • Transillumination also cool — posterior teeth especially! Image it and we can have it in records — also great for litigation
  • Unit costs need to be a max of $2000 (psychologically — not a BIG purchase then)
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