manas kanungo - lunch & learn august 4th, 2017

UC Irvine Applied Innovation Center

Lunch-n-Learn Presentation @ The COVE Friday August 4, 2017

“Defining a Commercially Viable Product”

A Case Study: Phase – 0 to Phase 2

Manas Kanungo Int’l Medical Marketing (IMM) USA, LLC

I love a challenging role – where I can learn and create innovative, sustainable global solutions that enhance health outcomes.

Manas Kanungo Confidential 1

Career Summary Define, Plan, Execute Innovative Solutions - Enter & Grow Int’l Markets


15+ Yrs in Hospital, Lab, POL, POC Medical Device, Diagnostic industry

Small - Large companies: Start-ups, BioTek, Quidel, Roche, Bayer, Abbott

Built, coached, supervised, led direct, in-direct, matrixed teams

Define, Develop, Execute market entries, growth, product & brand launches, exits

Multi-country, multi-segment VOC qual/quant market, ethnography research

Unique ability to cross boundaries between diseases, therapies, technologies, providers, payers, patients for impactful, competitively sustainable solutions

Lived, worked out of 3, traveled in 50+ countries US citizen with work visas for Brazil and India Native English w/business fluency in Portuguese, Hindi, Oriya; basic Spanish

Int’l Sales, Distribution, Product, Marketing, JV, Commercial Leadership Roles

Strong Strategic Upstream Planning, Downstream Execution – Products, Markets

Academic Achievements Degrees

HealthCare Executive MBA: UC Irvine

MS Bioengineering & MS Electrical Engineering: West Virginia University

BS Electrical Engineering: National Institute of Technology, India

Continuing Education

Omics, Bioscience, BioPharma, Life Science Trends & Strategies: UC Berkeley

Cloud Computing: Stanford University

Mobile Medical: UC Santa Clara

High Impact Leadership: UC Berkeley

Global Leadership: Thunderbird

Recognitions, Publications, Patent

Honorary Diploma, Association of Hospital Engineers, Spain

SBIR Grants, MS Thesis, VT State Award, ISO/ASTM for Ventilator Tester

Published in Electrophysiology area; White Papers; Patent applied for.


New Product Development & Commercialization Process

Phase - 0 Phase - 1A Phase – 1A Phase – 1B


Phase - 2 Phase - 3 Phase - 4 Phase - 5

Idea – Hypothesis - Proposal Prelim. Interests, Potential

Qualitative – Assessment Observe, Probe, Analyze, SWOT Market, Competition, Customer

Qualitative - Proposal Build, Test Mock Demos Unspoken, Unmet Needs

Quantitative Definition Build, Test Working Prototype Product, Workflow, Targets Road-map, Business Proposal

Product, Market Development Mfg Eng., Build, Validate, Costs Marketing, Sales, Target Plans

Pre-Launch, Market Access Clinicals -> FDA/CE -> Reimb. Buildup Forecasts, 7Ps, Teams

Launch Product, Services Staged Roll-out, Alliances Media, Marcom, Partnerships

Post-Launch Monitor, Lifecycle, Exit Portfolio Extensions, NextGen

7P’s: Product, Price, Placement, Promotion, People, Process, Physical Evidence

Phase – 0: Idea, Hypothesis, Proposal


Big Gap b/w high-end ‘connected’ monitoring systems & low-end BGM meters

• Suitable for high-end networked hospitals

• Facilitates accreditation and QC related needs

• Cost to use is relatively higher than SMBG meters

• Currently many hospitals use only a few functions

that are being offered in this category

• Does not require IT infrastructure in the hospitals

• Manual methods for accreditation and QC needs

• Offers very limited functionality

• Ease of use and low cost are primary drivers

10:23pm 08/03/2011

Test Menu

Control Test

Patient Test

Main Menu

XP Hospital

• A middle level meter that does not require

elaborate IT infrastructure and resources

• Helps meet accreditation and QC needs

• Easy to use functions for multi-patient, multi-

user, small-mid sized hospital environment

• Broad range of functions with ability to

customize for local needs

Co

st

& I

T s

op

his

ticati

on

level

High

Low

ABT-PxP Roche-Inform Nova-Stat Strip

Industry Trends, External Forces

• Push to Implement New Point-of-Care Standards

– With better performance: + 10-15% accuracy with no interference from drugs or other health conditions

– Prevent cross-contamination: multi-patient / user

• More hospitals world-wide wanting to adopt ISO, POC Standards for Accreditation

– To be equal to their peers, be a global player

– Command higher reimbursement, fees

• New Entrants Challenging BGM Market Leaders MK 2014 Manas Kanungo Confidential 7

• To develop a cost-effective, multi-patient, multi-user,

“middle meter” w/new technology platform in development.

• To fill an important gap in the portfolio, by meeting the

needs of hospitals motivated for QA or Accreditation, but

w/o budget or infrastructure for IT or high-end systems.

Opportunity

• A meter positioned towards ‘aspiring’ hospitals in emerging

economies with a broad range of relevant features and

offered at a price point close to existing SMBGs commonly

used in hospitals by leveraging the new platform.

• Additional potential for US, CND, EU

Strategic

Intent

• Hospitals that need compliance with QA, QC, audit,

Accreditation and Regulatory requirements for multi-

patient, multi-user POC blood glucose testing without

additional investment in IT infrastructure and resources

Target

Market

PROJECT OVERVIEW – Initial Proposal

Phase – 1A: Qualitative Assessment

Observe, Probe, Analyze, SWOT

Market, Competition, Customer


Amongst Top BGM Manufacturers, LifeScan [ J&J ] was the only known competitor developing a “middle meter” for emerging hospital markets.

OneTouch Verio PRO; 1st Generation meter (H1:12 Asia Pac)

• Uses OneTouch Verio test strip (0.4 µL, 5 sec), no-coding, POC hospital accuracy

• Verio test strip is NOT approved for neonatal use at this time; venous, capillary, and arterial testing only

• Expected 1st gen meter features:

•Test Strip ejector

• Color Screen, use in low light

• New industrial design, created specifically for the hospital segment (can withstand rigorous cleaning/ disinfection, durable, etc.)

• NO Connectivity, NO Ketones

2nd Generation Verio PRO (currently in

early development stage, est 2013 - 2014 )

• Same meter chassis and test strip

• Enhanced software functionality:

• Connectivity, data transfer

• Multi-patient capability with ability to

validate results recorded

• QA/QC

While Roche and Bayer did not appear to have internal

“middle-meter” hospital products in development,

select Asia Pacific based secondary players (Sanwa,

Arkray, Terumo) have shown hospital focused meters

for Japan with strip ejectors.

Developing economies present a significant opportunity ….

LA $98

EMEA

$197

APAC

$187

2010 2017

LA $98

EMEA

$211

APAC

$213

< 100

OUS Market Size - $ 535 M

Expected growth in market size by region1

Per capita expenditure on health by country2

1 Based on BBC WWB Data 2010; 2. Based on WHO estimates

Market Drivers:

• 7% growth expected over next 5

years among inpatient hospital

strip business in developing

economies – BBC report

• China likely to add at least 300

county-level hospitals and

1,000 town-level health centers

– Ministry of Health of China

• High growth expected in hospital

beds fueled by strong demand

from medical tourism in India,

Thailand, Taiwan and Malaysia

• Increase in number of beds in

Singapore due to ageing

population – Frost and Sullivan

• Moderate growth expected in

Australia with nearly 50% of

patients treated by private

hospitals in the future (presently

40%) - Australian Institute of

Health & Welfare >4k Per capita expenditure on health ($)

<0%

> 30%

Gro

wth

(05

-10)

India

Thailand

UK

Argentina

Australia

Brazil Chile

China

France

Germany

Italy Malaysia

Mexico

Singapore


8 Countries: USA, CND, Brz, UK, Fr, Ger, Chn, Jap


22 Hospitals; 500+ HCPs

Phase – 1A: Qualitative Proposal

Build, Test Mock Demos – Alpha Units

Validate Unspoken, Unmet Needs


Insights gained from research feeds concept development

MK 2014 Manas Kanungo Confidential 22

Phase – 1B: Quantitative Definition

Fine-tune Product – Beta Units

Define Workflow, Target Market/s

Strategic Road-map, Business Proposal


Market Research: Phase 0 - 1B: 8 Countries, 44 Hospitals, 500+ HCPs

COUNTRIES Phase-0 Qualitative 7 Countries, 24 Hospitals, 126 HCPs

Phase-1A Qualitative 4 Countries, 20 Hospitals, 64 HCPs

Phase-1A Quantitative 227 Online Participants:

Decision Makers & Influencers

Phase-1B: 82 HCPs Sept GUI: 3 Countries

Sept Feedbacks: 5 Countries UK: Nov GUI, Dec Formative

In Field: 13 mths May – July ‘2010 Nov ’10 – Jan ‘11 May – June ‘11 Sept– Dec ‘11

UK • Frimley Hospital • Barnet Hospital • Kings Cross College

• Royal Free Hosp * Chlesea/ Westmr • North Middlesex * Kings College • Royal London Hosp * Homerton NHS

126 Admins, Purchasers; Nurses, POCCs, Lab,

Endos, Diabetologists

• Feedbacks: Sept 19 – 20 (3 POCCs) • GUI & Formative: 12 + 12 HCPs Nov 1-3; Dec 13-15

Germany • Charite Berlin * Martin-Luther • Vivantes * Diab Clinic Berlin

France • CHU Nantes • La Pitie Salpetriere • Ambroise Pare

• Le Havre Hospital • Reims Hospital • Bichat Hospital

• Feedbacks: Sept 22 – 23 (7HCPs)

China • Peking University Hospital • Shanghai Huashan • Shanghai No. 6 Hospital

• Feedbacks & GUI: Sept 26 – 30 (17 HCPs)

Japan • Japanese Red Cross Medical Center • Eiju General Hospital • Fukushima Medical University Hosp

• Feedbacks: Oct 4-6 (12 HCPs)

Brazil

• Santa Casa de Misericordia • Hospital Nipo Brasileiro • Hospital Clinicas • Hospital Alemao Oswaldo Cruz • Albert Einstein Hospital • Hospital Beneficia Portuguesa

• Darcy Vargas * Hospital Pasteur • Lefort • Sabara • Santa Paula • Pro-Cardiaco • HCN - Niteroi

101 Admins, Purchasers; Nurses, POCCs, Lab,

Endos, Diabetologists

• Feedbacks & GUI: Sept 26 – 30 (16 HCPs)

Canada • St. Mary’s Hospital Centre Montreal • Verdun Hospital Centre Montreal

• San Francisco: Dry Run Sept 1 (3 HCPs)

USA • RUSH Hospital Chicago • Montefiore, Bronx NY • MUSC, Charleston, SC • VA Hospital, Madison

Regulatory Compliance: (Internal or External) QA Enforcement or Accreditation

Motivation

Hospital Budget & Infrastructure – IT and POCC (Automation, EMR, LIS, HIS, Wireless)

Low

XP-H Pegasus

P2-H

Enabled by New Precision Hospital Strip

“Aspiring” Middle Market “Networked” Market

“Status-Quo” Market

High

Low High

“Low Compliance” Market

or

XP-H will fill an important gap, by meeting the needs of “Aspiring” Hospitals motivated for QA or Accreditation, but without budget or infrastructure

Hospital Portfolio Map

There are more # of “Aspiring” middle-

market hospitals than large hospitals.

“Networked” “Aspiring” “Status-Quo”

Meter System that meets needs PXPw + PWeb XP-H P2-H

Hospital

Hospitals with sufficient budget and infrastructure for IT and POCCs

Hospitals with less budget and no infrastructure for IT or POCCs

Any Hospital

Lab Role, and status of Enforcement of QA/QC Procedures

High degree of lab control of quality and training.

QA/QC SOPs for POC glucose testing throughout hospital are highly coordinated.

Emerging lab control for quality and training.

Emerging coordination & SOPs for hospital wide QA/QC of POC glucose monitoring systems

Little or no lab control of quality and training.

Little or no QA/QC SOPs for hospital wide POC glucose monitoring systems

Meter role in certification

Hospital certification relies heavily on automated meter features & software to integrate with networks, processes, and procedures

Hospital certification is a combination of policies, procedures, and manual processes, aided by meter features

Hospital certification depends on manual process to meet minimal requirements

Purchase Decision Making Process

Hospital-wide meter selection process.

Individuals external to the point of use have primary influence (purchasing, lab, hospital administrator)

Moving towards hospital-wide selection process, may have some departments coordinated.

Endos, nurses, and some times labs have influence on meter decision making.

Purchase Decisions made by point-of-use department or ward.

Endos and nurses are primary decision makers for meter selection.

Characteristics of “Aspiring” middle-market Hospitals

Users, Influencers, Decision Makers – “Personas”

Specialties Features Used

Hospital Administration

• Administrators • Department Managers • Audit Managers • Risk Managers

• All consolidated hospital-wide and location reports • Exception reports • Results Traceability – Patients, Hypo/Hyper, QC, • Benchmark performance • Operator Training Compliance • Strip inventory / usage summary stats, trend graph

Physicians • Endos • Diabetologists

• Patient results on meter, reports, with IDs • Hypo/Hyper alerts, readings, guidance for next steps

Laboratory • Lab Managers & Technicians • POCCs

• Meter set up • QC: readings, reminders, lockout, exception reports • Operator Training Compliance • Data export, consolidation, reports

Nurses

• Head Nurse • Floor / Ward Nurse • Diabetes Specialist Nurses (DSN) • Nurse / Health Care Assistants

• Perform patient tests, use results for therapy • Perform QC tests • Patient results w/traceability to record, act on • Operator Training Compliance • Guidance messages for next steps

Meeting Accreditation and Standards Requirements .. 4 Relevant Areas Across 9 US & Int’l Standards

Patient Care Standards How to Meet This Requirement

• Accurately Identify Patients • Match patient with a number, name, and/or birth date

• Record Results for the right Patient • Enter and confirm Patient ID before testing

• Retrieve Patients’ Results • Search and retrieve patient results using IDs

• Define Critical Results & Guidelines, follow Protocols for Clinical Care

• Method to identify and alert out-of-range patient results, and provide guidelines for next steps

• Evaluate Patient data to Improve Care • Consolidate data, generate statistical & trend reports

*Joint Commission Int’l (JCI); Clinical Pathology Accrdn; CPA-POCT Addendum; Canadian Int’l Lab & Blood, Biomedical Lab, POCT; Brazil RDC & ONA; China POCT

No Standard requires a “networked” system ….any device can be used for this process

There are 4 main areas relevant to bedside testing, across 9 Int’l Standards …

…. Where streamlining the process to meet these requirements will make a difference…

Operator Standards How to Meet This Requirement

• Evaluate Operator Performance, Training

• Consolidate data, generate statistical & trend reports

• Identify Operator when test is performed

• Enter Operator ID before a patient or QC test

Quality Control (QC) Standards How to Meet This Requirement

• Regularly test/calibrate devices, reagents

• Perform, record regular QC tests on devices, reagents

• Implement & record corrective actions

• Prevent patient testing if QC fails; record & report data

• Evaluate data, improve quality of process

• Consolidate data, generate statistical & trend reports

Data Management Standards

How to Meet This Requirement

• Data readily available in format to promote monitoring and traceability

• Ability to filter, sort, search, and report data in ways relevant to use areas

• Prevent loss or tampering of data

• Administrative access to, prevent editing of, records

• Implement inventory control system

• Monitor and report strip usage

POC Lab Accuracy

Shazam H

Positioning & Differentiation

XXXXXXXXX

40%37%

30%

20%

+3%

+7%

+10%

Hypo/Hyper Alerts Patient Results Traceability Glucose and Ketone Strip

Testing

Training Compliance

Prioritized Features w/Purchase Intent “TURF” Analysis

Order of Focus for Maximum Reach Cumulative

Reach

48%45%

40%

32%+3%

+5%

+8%

Hypo/Hyper Alerts Training Compliance Glucose and Ketone Strip

Testing

Individually Foil Wrapped

Strips

Training Compliance is interchangeable with:

1..Quality Control 41% 2. Strip Usage: 40% 3. Audit Performance: 39%

"Total Unduplicated Reach and Frequency"

Product Overview – Key Features A cost-effective, easy to use touch screen hospital meter to ensure compliance with Regulatory & Accreditation

requirements; enforce QA Procedures; Audit Performance & Manage Strip Inventory; and to Improve Quality of Care in a

multi-patient testing environment that requires minimal IT investment

Performs Meter QC

Hypo Hyper Alerts

Multi-patient usability

Nurse ID Record

Foil wrapped strips

• Performs Meter QC with options for

Alerts

Lock-outs to ensure QA Compliance

• Hypo / Hyper Alerts with

User customizable messages for next steps

• Multi-patient results tracking to reduce transcription errors with

Customized length of numeric characters (up to 12 digits) to record patient ID

Option to sync with PC app to download patient data on meter

• Ability to record Nurse ID to aid compliance documentation with

Customized reporting for better inventory management &

Enforce QA protocol in the hospital setting

• Foil wrapped Glucose & Ketone strips with

New ISO accuracy &

5-sec test time

Data Review Settings Test Menu

Main Menu

BETA UNITS, MENU OPERATION CLIA Waived, FDA Class-II, POC System for Hospitals, Clinics, POLs

Work-flow: Patient Testing GUI

Work-flow: QC Testing - GUI

Patient & QC Reports via PC App

PROJECTIONS

Estimated

Launch Countries

Estimated

approval

time

(months) Risks

Chile 0

Launch could be delayed if Chile

regulation changes and decides

to regulate medical devices

Colombia 2

France 1

Germany 1

Hong Kong 0

Regulation expected to change.

Launch could be delayed if Hong

Kong regulation changes by the

launch time

Italy 1

Malasya 0

Regulation expected to change

by Q4/14. If project gets

delayed, this product will require

longer time for approval and

launch

Spain 1

Thailand 1

UK 1

Q1/14 India 7 to 10

Argentina 9 to 13

Mexico 10 to 13

S.Korea 8 to 12

Australia 13

Singapore 13 to 16

Brazil 25 to 30?

Taiwan 16 to 24

Q2/15 China 22

Q4/13

Q2/14

Q3/14

Q1/15

Total

2010 2011 2012 2013 Program

OPS / QA FTE - - - - -

Outside Spend - - 0.1 - 0.1 Capital Equipment Setup

Total OPS / QA - - 0.1 - 0.1

R&D FTE - 0.5 2.6 2.6 5.7 R&D, Ops/QA and NPI Proj Leadership HC

Outside Spend - 0.5 3.2 2.0 5.6 See Detail Below

Total R&D - 1.0 5.8 4.6 11.3

GSM FTE - 0.5 0.5 0.5 1.5

Outside Spend 0.6 0.2 0.3 1.2 2.3 Market Research, Toolkit Development

Total GSM 0.6 0.7 0.8 1.7 3.8

Legal FTE - - 0.1 0.1 0.2

Outside Spend - - 0.3 - 0.3 FTO / Patent Landscape

Total Legal - - 0.4 0.1 0.5

Total FTE - 1.0 3.2 3.2 7.4

Expenses Outside Spend 0.6 0.7 3.9 3.2 8.3

Total P2 Expenses 0.6 1.7 7.1 6.4 15.7

Capital Expense 2010 2011 2012 2013 Total

Product Molds - - 0.5 - 0.5

R&D Detail ($MM) 2012

Software & SWQA $1.5

Design and Testing 1.2

Materials and Parts 0.1

Human Factors 0.1

Clinical Trials (Approval) 0.4

Total R&D Outside Spend $3.2

Costs INCREMENTAL (Fully Burdened) P&L

2012 2013 2014 2015 2016 2017

Sales - 15.6 21.4 39.3 41.4 43.6

COGS - 4.5 5.1 10.1 11.5 11.7

Prod Mgn - 11.1 16.3 29.2 29.8 31.9

% of NS n/a 71% 76% 74% 72% 73%

Distribution Mgn (0.1) 9.5 14.2 25.2 25.7 27.5

% of NS n/a 61% 66% 64% 62% 63%

R&D 5.8 4.6 1.3 2.4 2.5 2.6

% of NS n/a 30% 6% 6% 6% 6%

SG&A 1.2 1.8 7.3 13.5 14.2 15.0

% of NS n/a 12% 34% 34% 34% 34%

Division Margin (7.1) 3.1 5.5 9.3 9.0 9.9

% of NS n/a 20% 26% 24% 22% 23%

CASH FLOW

2012 2013 2014 2015 2016 2017

Net Income After Tax (4.4) 1.9 3.4 5.8 5.6 6.1

Capital Expense (0.5) - - - - -

Working Capital 0.9 (3.1) (0.6) (2.6) (0.5) (0.2)

Net Cash Flow (4.0) (1.2) 2.9 3.2 5.1 5.9

NPV $6.6

IRR 42%

Financials Regulatory Approvals & Launch

STRATEGIC ROAD-MAP