KNOX has developed an innovative medical device that provides users with objective measurements regarding their asthma severity, thereby allowing for an early intervention prior to a full blown exacerbation, which in some cases prevents death.
Our team consists of myself, a biomedical engineer, along with two PhD candidates at UCSF and two business developers from industry. Our mentors include Alex Dinello, the CEO of a medical device company Relievant, and Allan May, the chairman of the life science angels.
We began this journey thinking that our home-health monitoring device would benefit kids with severe-persistent asthma and that physicians would love to see in-patient tools available to parents at home.
We hypothesized that parents would be the key customers.
And so, we got out of the building and spoke to as many patients, parents and clinicians as we could. We discovered that patients who had their asthma under control would not benefit from our device and that monitoring would be helpful for physicians and severe asthmatics to track progress over time.
However, payment is unlikely to come out of the patient’s pockets. Therefore, we decided to explore
long-term healthcare providers and closed system hospitals who would benefit from the reduction of asthma-related hospitalizations and ER visits.
By week 7, we have reached out to patient outreach groups and asthma clinics in DC and SF, as well as having spoken to insurance companies and reimbursement specialists. A disproportionate driver of clinic visits are due to inner city, low-income kids.
In this iteration, we learned that asthmatics were further subdivided into affluent and lower socioeconomic brackets.
A majority of the funding to support the treatment of the affected population comes from federal, county and city grants.
Therefore, we learned that those who need the most help are those that can’t afford it, and that less than 10% of the affected population can pay into the system.
From the time we started to where we are now, the target market has largely decreased. We thought we were targeting a $1.8B market of pediatric asthmatics, but after interviewing physicians, we learned that our target is a smaller subpopulation consisting of severe asthmatics, and after speaking to insurance companies, we learned that only a small subset of healthcare providers would be interested in serving our target population, so it limited our options to long-term healthcare providers like Kaiser and closed-system hospitals like the Cleveland Clinic.
Some of the comments we heard from insurance companies include an outright no from Sutter who won’t even share their numbers since it requires time to dig through and it’s proprietary information. A cost savings of $10M isn’t even worth a meeting with Blue Cross, and we also received a likely no from a small Wisconsin based insurance company, unless we went door-to-door for each small insurance company, in which the served population is in the order of hundreds, so even a small cost savings would matter.
One of the major lessons learned throughout the course is who truly is the customer, which in this case, is the insurance company. We also learned that pulmonologists and allergists are very different in their patient focus, and that allergists are more receptive to our device as opposed to our initiate target of predominantly pulmonologists. Due to a much smaller market than previously anticipated, KNOX could potentially survive as a small business.
Therefore, there are several pathways we can choose in moving forward. The first is to license out the technology to a larger company that has some gaps in their existing portfolio, as we’ve already been approached by some European companies for this matter, such as Linde Healthcare. The second option is the expand to a larger respiratory health market with our device that captures information regarding lung function and inflammation, such as in high risk environmental situations like areas of hazardous chemical exposure or air pollution. Having a market to which we can expand would allow us to have a scalable business rather than just a product.
In terms of investment readiness, we are fairly certain that we have a strong and capable team. We also believe that there is a compelling clinical need here, and if we are able to expand into the larger respiratory health market including monitoring in polluted areas or capturing adult asthma and COPD segments, we would also have a large enough market to sustain a company.
1. Remote monitoring device to prevent
severe flares in pediatric asthmatics
Total interviews: 117
December 10, 2013
2. Our Solution
3. $10 Million saved?
Lessons Learned: Revenue Stream
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