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- 1. Neural Brain-Computer Interfaces Taylor Combs-Maddy Hay-Taylor Studer Engineering Management 2210 April 27, 2016 Braingate.com
- 2. Technology Overview • Translates neurological signals into tangible movements • Computer cursors • Wheelchairs • Robotic arms • Prosthetics • Stimulates damaged brain tissue • Helps restore lost motor function braingate.com
- 3. How it Works • Implanted brain chip reads neurological signals • Computer processing system analyzes and translates them • Output devices operate according to the user’s thoughts braingate.com
- 4. Host Company: • Founded in 2008 • Privately held company specializing in tools for the neural engineering and neuroprosthetics research and clinical communities • Focus on implantable microsystems • Supports research projects of other companies • long-standing partnerships with industry leaders and top research universities • Aware of cutting-edge technologies from the start
- 5. Market brainfacts.org U.S. Department of Veterans Affairs
- 6. Business Opportunity Factor Map: Neural BCIs vs. Deep Brain Stimulation Devices
- 7. Key Challenges • Technological Development • Component improvements • Integration • Overall capabilities • FDA and Insurance approval • FDA approval essential to obtain before marketing • Without Insurance coverage, patients won’t want Neural BCIs • Market dynamics • Critical to be first to market • Market size is small, so reputation and brand recognition are important technologyreview.com
- 8. Technology Strategy • Product Development • Heavy and immediate R&D investment • Obtain licensed technologies from other companies • Prosthetics • Robotic arms • FDA/Insurance Approval • Hire an experienced legal team to address potential problems before they arise • Apply for patents to protect the technology while going through the lengthy processes • Market • License out microchip and analysis system to researchers to bring in revenue for continued development • Enter the market before competitors • First mover advantage • Dominant design advantage
- 9. Technology Intelligence • B.S., M.S. Biomedical Engineering; Ph.D. Mechanical Engineering • Assistant professor of Mechanical Engineering and Physical Medicine & Rehabilitation at Vanderbilt University. • Biocompatibility and long term viability could be an issue • It is possible to regrow and retrain neural circuits, so the stimulation aspect could be helpful Dr. Karl Zelik • B.E., M.S., Ph.D. Chemical Engineering • Adjunct professor of Biomedical Engineering at Vanderbilt University Dr. Valerie Guenst • Deep Brain Stimulation devices are generally covered by insurance, so it’s possible for Neural BCIs • The lack of understanding about the brain is a major setback for advancement
- 11. Financial Outlook 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2025 2026 2027 2028 2029 2030 2031 2032 Projected Market Share vs. Incumbent, Key Competitors Incumbent Blackrock G.tec Ripple Other 0% 10% 20% 30% 40% 50% 60% 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 Profitability Return on Sales (%) Gross Margin (%)
- 12. Financial Outlook ($50,000,000) $0 $50,000,000 $100,000,000 $150,000,000 $200,000,000 $250,000,000 $300,000,000 $350,000,000 0 1 2 3 4 5 6 7 8 9 Cumulative Net Cash Flow Cumulative Discounted Net Cash Flow Payback Analysis on Net Cash Flow and Discounted Net Cash Flow Year CumulativeCashFlow
- 13. Financial Outlook Year of Launch 2025 Total Market 5 million Initial Served Market 10% Served Market in 2035 36% Unit Sales Price $20,000 Cost of Materials $8000 Value Added $5000 Service Life 25 Years General Inflation Rate 1.68% Risk-Free Rate of Return 2.25% Weighted Average Cost of Capital 14% Net Present Value $162,607
- 14. Conclusion • Valuable opportunity for paralyzed patients to regain neuromuscular abilities or the ability to communicate • Investment and support from major research foundations, companies, and the U.S. government • Small initial market, but potential to alter the technology for expansion into noninvasive applications • Blackrock already has its BCIs in clinical trials, years ahead of most competitors braingate2.org
- 15. References (2016). Retrieved from OneSource: https://www.google.com/url?q=https://app-avention- com.proxy.library.vanderbilt.edu/industry/76dcf4ca-32ea-3497-8374- b262586d6109%23report/industry_peer_analysis&sa=D&ust=1455026446358000&usg=AFQjCNEDKjyR4h_wtjjvh_jirFjzZyFkbw Austin, T. B.-R. (2015). Entering the Smart-Machine Age. Gartner, Inc. Retrieved January 23, 2016, from <http://www.gartner.com/document/3154517?ref=solrAll&refval=161797381&qid=ff70953fa3b239c5536ef302a18e5e8f> Davies, S. a. (2014). Business Moment: Wearable Technology Predicts and Prevents a Diabetic Crisis. Gartner Inc. Retrieved January 23, 2016, from <http://www.gartner.com/document/2841417?ref=solrAll&refval=161797820&qid=f90b8359ba37eb2b111051d73bfbc0dc> Fisher, A. (2013, December 15). Don't ask why. ask where. New York Times Magazine, pp. 42-47. Intendix. (2014). Retrieved from Intendix.com. Pandarinath, C. (2016, January 21). Advancing Brain-Machine Interfaces Towards Clinical Viability. Pandarinath, D. C. (2016, January 21). Advancing Brain-Machine Interfaces Towards Clinical Viability. ReNaChip. (2016). Retrieved January 28, 2016, from G.tec Medical Engineering: https://www.google.com/url?q=http://www.gtec.at/Research/Projects/ReNaChip&sa=D&ust=1455026446351000&usg=AFQjCNG EFsUHMv4iE0S3NutOmUqlPXj8BA Shih, J. J., Krusienski, D. J., & Wolpaw, J. R. (2012, March). Brain-Computer Interfaces in Medicine. doi:10.1016/j.mayocp.2011.12.008 Wadsworth Center. (2015). Retrieved from Wadsworth.org: http://www.wadsworth.org/bci/faq.html Wood, L. (2014, April 4). Deep Brain Stimulation Devices Market for Parkinson's Disease - Global Industry Analysis, Size, Share, Growth, Trends and Forecast, 2013 - 2019. PR Newswire. Retrieved January 30, 2016, from http://www.researchandmarkets.com/reports/2782471/deep_brain_stimulation_devices_market_for.htm
Editor's Notes
- Neural Brain-Computer Interfaces are a revolutionary technology which allows patients who are paralyzed due to injury or neuromuscular disorders to interact with the world more fully by allowing them to operate an external machine or device with their thoughts, letting them better communicate and increasing their independence. Depending on the individual’s needs, the BCI can be linked with various output devices. These include: computer monitors, wheelchairs, prosthetics, and robotic arms. The BCIs are also capable of stimulating damaged brain tissue, aiding in the regeneration of neural pathways and, depending on each user’s situation, possibly allowing the restoration of lost muscular and motor functions.
- The BCI consists of three main components. The first part is a microchip, which is implanted on the surface of a user’s brain and serves to read neurological signals, which change based on what the patient is thinking. It also stimulates damaged areas of the brain to aid in healing. The second component is a computer processing system, which is capable of both analyzing these signals to provide medical feedback, and of translating them into actions expressed by the output device. These output devices, which are the third part of the BCI, operate according to the user’s thoughts and require no external operator. As mentioned previously, the form of output product depends on the needs of the individual and what remaining neuromuscular ability they have.
- We chose Blackrock Microsystems as our host company because it is a corporation that, while new to the Neural BCI field, is experienced with neurological implants and neural-analysis computer systems. It is a privately held company that was founded in 2008, and has a strong focus on implantable microsystems, which is the first part of a Brain-Computer Interface. This gives it a strong base understanding of some of the most essential BCI components, as well as an already formidable market presence among potential future BCI consumers. Along with its emphasis on sales, Blackrock also supports neurological research endeavors outside of its own domain. It has long-standing partnerships with industry leaders and top research universities such as Stanford, Brown, and Johns Hopkins, enabling it to be aware of new, cutting-edge, and potentially competing technologies from the start.
- The ultimate consumers of Neural BCIs will be those who have some form of paralysis, the causes of which are shown in the graph on the left. Neural BCIs can be beneficial for patients of most of the listed causes; however, the technological implications of such varied degrees of brain function are yet to be completely addressed. Still, approximately 5.6 million Americans are paralyzed, not including those suffering from ALS to whom this technology could also apply. Most of them would be willing to undergo the procedure necessary to install a Neural BCI, as displayed in the graph on the left. This factor is essential to the technology’s market success, since if no one is willing to use it, the device will not sell. It is important to note that the consumers will not be reached directly by Blackrock. Instead, the technology will be marketed to hospitals, primarily research-focused ones at first. By making hospitals the target market rather than suppliers who would then distribute the BCIs, to hospitals themselves, Blackrock enables the price to be kept as low as possible. The number of hospitals in North America in total is currently 31,565 (onesource), but our main focus would be those of larger size (500+ employees) because they will be more likely to initially invest in BCIs and implement them to due increased funds and resources. This lowers the market size to 2,041 hospitals, representing 6.4% of the total market. These large hospitals are projected to increase in presence and additionally arise as expansions to current, smaller hospitals are completed, presenting the possibility for a growing market and increased BCI success.
- Blackrock is currently the only one of its major competitors (Ripple and G.tec) to have a Neural BCI in clinical trials. This gives it a significant advantage in terms of potential for entering the market first with its technology. However, Blackrock will have to complete with the current incumbent technology, Deep Brain Stimulation, to gain a greater share of the market. While they don’t do exactly the same thing, DBS is gaining popularity among patients who are not totally paralyzed but have a neuromuscular disorder to help them regain some control. Neural BCIs are safe in that their capabilities are far more advanced than DBS, but they still need to become a viable option in the minds of those who could use them, so that they don’t choose DBS over our technology. The two have similar longevities, both being expected to last for the duration of a patient’s lifetime, and Neural BCIs also have the advantage in extensibility since they are largely based on a computer program so their abilities can be improved with relative ease. However, there are some major disadvantages that must be addressed if BCIs are to be successful on the market. Most importantly, the technological maturity and performance need to be improved. (Discussion continued on next slide)
- In order for BCIs to be worth the investment they require, they need to be able to function as seamlessly and ably as a user’s natural muscle impulses. A patient should be able to perform as many tasks as they could with normal muscular function, and the BCI shouldn’t get stuck when complex actions are attempted, so further development is still required in order to close the advantage gap displayed on the previous slide. Other key challenges include the necessity for FDA and insurance approval, and market dynamics. FDA approval is absolutely essential to obtain if Neural BCIs are going to be sold in the United States, especially in hospitals. Similarly, coverage of insurance companies is also very important with regards to patient willingness to use the technology. The significance of being the first to market is especially large in the Neural BCI market because its size is relatively small. This means that reputation and brand recognition will play a pivotal role once competitors begin to introduce their technologies, as it will determine which company more patients will choose and thus who will end with the market majority.
- In terms of product development and being the first to market, the most important action to be taken is to invest heavily in research and development. This is not only for continued improvement of the technology but also to ensure that Blackrock is the first to complete development and that it creates a high quality product. This can be aided by purchasing licensed technologies from other companies, especially for components with which Blackrock is not experienced, such as prosthetics and robotic components. It can always go back later and develop its own, but for now, while the first mover advantage is at stake, Blackrock should save time by obtaining these parts elsewhere and using its resources to improve those components for which it has patents.
- Both Dr. Karl Zelik and Dr. Valeries Guenst are Vanderbilt professors who are knowledgeable about the current noninvasive BCIs and Deep Brain Stimulators currently on the market. Both shared similar views on the feasibility of Neural BCIs. Both believed that they are possible, but that there are many obstacles that need to be overcome before they are ready for mainstream use. Dr. Zelik felt that the compatibility of the microchip and potentially prosthetic portions of the BCI could be an issue. This would be difficult to solve if either part began to degrade while implanted in a patient, since both would require an additional surgery. However, he was optimistic that the neural stimulation capability could be a strong selling point, since it would aid with actual recovery. Dr. Guenst noted that there is still a lot that isn’t understood by scientists and doctors about the brain, even those that deal with DBS. In order for BCIs to be successful, there is still much research to be done. Once this happens, though, she felt that insurance coverage would be a likely possibility since DBS is covered and BCIs are a similar technology.
- This process was generally discussed during the technology strategy plan, but here is a visual representation of what needs to happen across Blackrock’s infrastructure in order to get Neural BCIs to market in the target launch year of 2025. Under technology, we see improved microchips, signal processing units, and mechanical extensions. They all will be improved to give the BCI capabilities such as precise neural signal recognition and processing, as well as realistic mechanical movements. These will all be integrated into their individual components which will then be combined into the final Neural BCI. This will be sold to hospitals in order to ultimately reach the patients who need them, and certain portions of the technology will be licensed along the way to bring in essential revenue.
- Since some of Blackrock’s competitors are of greater size, Blackrock will start out with a very small portion of the market. However, its first mover advantage and establishment of a dominant design will help it to slowly gain a greater market share as time goes on, especially as new generations of the technology are introduced. Neural BCIs have a fairly high profit margin, which is essential since they are difficult to mass-produce. Over time, as production capabilities improve, the gross margin will increase since costs are expected to go down, eventually allowing Blackrock to obtain a roughly 30% return on sales.
- As can be seen in the graph above, it will take roughly 3 to 4 years for Neural BCIs to generate a positive return on investment. However, once the technology starts becoming profitable, profits will increase at a significant rate. In order to improve overall performance, BrainGate should follow high scale economics and initially invest in manufacturing resources that will reduce the cost of production. By reducing the cost of production for each unit, the payback period will decrease and the cumulative net flow will increase dramatically.
- Here is a summary of the financial outlook for Neural BCIs. A few important values to note are the year of launch, total market, and the net present value. The high positive net present value indicates that the technology is a favorable investment despite its high materials cost and unit sales price.
- In summary, Neural BCIs are a revolutionary technology that are capable of offering a life back to paralyzed patients that no other product can. The ability to communicate or become partially mobile again is invaluable, and the BCIs will likely be received very favorably once introduced. The BrainGate project under Blackrock Microsystems is already supported financially by many major research foundations, industry leaders, and departments of the U.S. government, so its exciting progress can be expected to continue, especially once additional investments are made. Although the initial market is small, Blackrock’s resources offer the potential for expansion into noninvasive applications of its highly advanced Neural BCI. Since the company already has them in clinical trials, we can expect to see Neural BCIs on the market within the next decade, years ahead of Blackrock’s competitors.