Dentaloptics E245 final presentation

dentalOptics

Amit Desai, Aaswath Raman, Ashwin Madgavkar, Alok Vasudev

Interviewed: 72 people

Final Presentation

Revolutionizing dental diagnostics through non-invasive imaging

dentalOptics

The A-Team

Ashwin Madgavkar

MBA/M.S.

BCG, UT Austin

Amit Desai

Ph.D., Mat. Sci

Cambridge, NC State

Aaswath Raman

Ph.D., App. Physics

Microsoft, Harvard

Alok Vasudev

Ph.D., EE

UT Austin

Mentor: Ethan Bloch

dentalOptics

Dental lighting is ripe for innovation

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Original Idea : Inside-Out Dental Lighting

Bring the light-source inside the mouth

Provide better, more consistent illumination

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Overview

I. Understanding our Customers

II. Finding Customer & Value Proposition Fit

III. Building the Business: Channels, Partners & Regulators

IV. Introducing.. periOptics

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Version 0 The A-Team

• Dentists• Hygienist

s• Specialist

s

• Chains• Dental

schools• Hospitals

• Improved diagnostics

• Better customization

• Superior patient experience

• Lower price

• Personal service

• Training & demos

• Direct sales

• Trade shows

• Dental schools

• Product sales• Licensing (physical &

IP)• Accessory sales

• Manufacturers

• Resellers

• Distributors

• Marketers

• Trade organizations

• Prototyping• Design• Manufacturin

g• Marketing• Sales• Service

• Stanford• IP• Human• Our

network

• Human resources• Manufacturing• Marketing• Sales

• Compliance• Warranties

& support• Legal

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Getting out of the building

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Three major dentist archetypes

Care providers

“Bentley” dentists

“Chain” dentists

Most typical dentist• Primarily concerned with patient care• Worried about costs• Optimizes lifestyle and income

Uses technology to up-sell additional procedures• Typically in high-income areas• State-of-the-art facilities and technologies• Early adopter of dental devices

Equipment handled by purchasing department• Uses financial metrics to make decisions• Technologies standardized across all offices

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Caregiver

Business Owner

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s• Specialist

s






• Lower price



• Direct sales

• Trade shows

• Dental schools



• Manufacturers

• Resellers

• Distributors

• Marketers





network



& support• Legal

Hypotheses Tested:

• Intra-oral lighting provides value for all dental professionals

• Channels

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Immediate changes• Current lighting was satisfactory for most uses

• However dentists expressed interest in better lighting for particular sets of procedures

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Immediate changes• Current lighting was satisfactory for most uses

• However dentists expressed interest in better lighting for particular sets of procedures

• Redid customer segmentation:

Segment by Procedure Length

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s• Specialist

s






• Lower price



• Direct sales

• Trade shows

• Dental schools



• Manufacturers

• Resellers

• Distributors

• Marketers





network



& support• Legal

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Version 0+ The A-Team




• Lower price

• Reduced time

• Product sales• Licensing (physical & IP)• Accessory sales

• Manufacturers

• Resellers

• Distributors

• Marketers


• Prototyping• Design• Manufacturing• Marketing• Sales• Service

• Stanford• IP• Human• Our network


• Compliance• Warranties &

support• Legal

• Procedure length

- Short- Medium- Long

• Direct sales

• Trade shows

• Distributor



• Continuing education

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• Lower price

• Reduced time



• Manufacturers

• Resellers

• Distributors

• Marketers





network



& support• Legal



• Direct sales

• Trade shows

• Distributor




dentalOptics





• Lower price

• Reduced time



• Manufacturers

• Resellers

• Distributors

• Marketers





network



& support• Legal



• Direct sales

• Trade shows

• Distributor




Hypothesis Tested:

• Lighting needs differ based on procedure length

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Procedure length learnings

Procedure length

Long (> 2 hrs)

Moderate (1-2 hrs)

Short (< 1 hr)

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Procedure length

Long (> 2 hrs)

Moderate (1-2 hrs)

Short (< 1 hr)

Anesthesia

Patient comfort / movement no longer an

issue

Surgical microscope Loupe light Clamps

Existing lighting solutions

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Procedure length

Long (> 2 hrs)

Moderate (1-2 hrs)

Short (< 1 hr) Root canals Crack detection Color matching

Identified key procedures:

Done by all dentists

Lighting critical

Segment by Procedure Type

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• Lower price

• Reduced time



• Manufacturers

• Resellers

• Distributors

• Marketers





network



& support• Legal



• Direct sales

• Trade shows

• Distributor




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• Manufacturers

• Resellers

• Distributors

• Marketers





network



& support• Legal

• Direct sales

• Trade shows

• Distributor






• Reduced procedure time

• Procedure type

- Root canal- Crack detection- Color matching

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$200 MM/yr US market size

• 180,000 dentists • 2300 visits per year

average• Consumable for each

patient• ~$5 cost per consumable• 10% of visits• $0-100 cost per tool• 20% of dentists

$25 B dental equipment industry

Source: US BLS, ADA, dentist interviews, industry research

$200 M serviceablediagnostic tool

market

TAM: $2B

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$200 MM/yr US market size

• 180,000 dentists • 2300 visits per year

average• Consumable for each

patient• ~$5 cost per consumable• 10% of visits• $0-100 cost per tool• 20% of dentists

$25 B dental equipment industry

Source: US BLS, ADA, dentist interviews, industry research

$200 M serviceablediagnostic tool

market

TAM: $2B

Consumables are key

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• Product sales• Licensing (physical & IP)• Accessory sales• Consumable sales

• Manufacturers

• Resellers

• Distributors

• Marketers





network



& support• Legal

• Direct sales

• Trade shows

• Distributor







• Procedure type


Key Learning:

• Consumable component drastically improves revenue potential

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Overview





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• Manufacturers

• Resellers

• Distributors

• Marketers





network



& support• Legal

• Direct sales

• Trade shows

• Distributor







• Procedure type


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• Manufacturers

• Resellers

• Distributors

• Marketers





network



& support• Legal

• Direct sales

• Trade shows

• Distributor







• Procedure type


Hypothesis Tested:

• Lighting needs differ based on procedure type

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Segmenting by Procedure Types

Color matching

Crack detection

Root canal

More natural light

Multiple teeth at once

Increased visibility in tight spaces

Dentists

Reduce procedure time

ProcedureIntra-oral light

benefit

Improve Diagnostic Capability

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Best response: Transillumination

Color matching

Transillumination for Cracks

Root canal

Proactive detection vs. waiting for patient pain

Multiple teeth at once

Track crack/defect progress

Dentists

Reduce procedure time

ProcedureIntra-oral light

+ imaging benefit

Improve Preventative Diagnostic Capability

Drive patient loyalty and return visits

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Prototyping

Transilluminated tooth using fiber or LED source

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Prototypes

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Form & Function

formfunction

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Physical prototypes help!• Handing dentists a crude clay mockup got us better, more

actionable feedback

• A great way of gauging whether new functionality satisfies a need

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Interest, but not excitement

Dentists generally liked the prototype Key Takeaways

1

2

3

4

5

Imaging back teeth is essential

Market would be somewhat limited / niche

Dentist #

Interest in prototype

None Very PositiveNeutral

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• Manufacturers

• Resellers

• Distributors

• Marketers





network



& support• Legal

• Direct sales

• Trade shows

• Distributor







• Procedure type


Hypothesis Tested:

• Lighting needs differ based on procedure type

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• Manufacturers

• Resellers

• Distributors

• Marketers





network



& support• Legal

• Direct sales

• Trade shows

• Distributor




• Crack detection


• Improve preventative diagnostics

• Increase # of procedures

• Provide a patient record

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We were tipped off to a potentially larger diagnostic market:

Keeping our ear to the ground..

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“This would be a game changer!”

“A new standard of care”

Non-invasive gum disease detection

We were tipped off to a potentially larger diagnostic market:

Keeping our ear to the ground..

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This should get poked into your gums 192 times during a dental visit

…there must be a better way

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• Manufacturers

• Resellers

• Distributors

• Marketers





network



& support• Legal

• Direct sales

• Trade shows

• Distributor




• Crack detection





Customer Insight:

• Periodontal imaging could be a larger market

• Periodontal imaging

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• Manufacturers

• Resellers

• Distributors

• Marketers





network



& support• Legal

• Direct sales

• Trade shows

• Distributor




• Crack detection






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• Manufacturers

• Resellers

• Distributors

• Marketers





network



& support• Legal

• Direct sales

• Trade shows

• Distributor




• Crack detection






Hypothesis Tested:

• Periodontal imaging is of greater interest to dentists

dentalOptics



• Manufacturers

• Resellers

• Distributors

• Marketers





network



& support• Legal

• Direct sales

• Trade shows

• Distributor




• Crack detection

• Accuracy

• Reduced time

• Patient comfort


• Improve records

• Patient education

• Reduced malpractice

• Periodontal imaging✔

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• Manufacturers

• Resellers

• Distributors

• Marketers





network



& support• Legal

• Direct sales

• Trade shows

• Distributor





• Manufacturers

• Resellers

• Distributors

• Marketers


• Insurance companies

• Accuracy

• Reduced time

• Patient comfort


• Improve records



New hypothesis:

• Insurance companies could be strategic partners

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Overview





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• Manufacturers

• Resellers

• Distributors

• Marketers





network



& support• Legal

• Direct sales

• Trade shows

• Distributor





• Manufacturers

• Resellers

• Distributors

• Marketers



• Accuracy

• Reduced time

• Patient comfort


• Improve records



dentalOptics






network



& support• Legal

• Direct sales

• Trade shows

• Distributor





• Manufacturers

• Resellers

• Distributors

• Marketers



• Accuracy

• Reduced time

• Patient comfort


• Improve records



Hypotheses Tested:

• Insurance companies would embrace this technology

• FDA compliance is not prohibitive

dentalOptics

Key Partner: Insurance

“Periodontal probing is the single most inaccurate piece of data we get from dentists. Fraud and abuse are common”

Largest dental insurance provider in California

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Key Partner: Insurance

“Periodontal probing is the single most inaccurate piece of data we get from dentists. Fraud and abuse are common”

Dental Policy Committee • Meets regularly to evaluate new technologies• Determines which technologies will be added to annual

contracts based on efficacy and cost savings to insurance company

Willing to recommend use of new technologyNeed more clinical data, but are enthusiastic about the idea!

Largest dental insurance provider in California

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What we make

DentistDentalOptics

~$2000

Device cost (one time)

~$2.50 per patient

Disposables

dentalOptics

What the dentist normally makes

Dentist Patient

Insurance

Co-pay

Membership

$250

$250

Equipment / Variable Costs

Note: Assumes 50/50 copay-insurance split

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What we’d add for the dentist

Dentist PatientDentalOptics

Insurance

Co-pay

Membership

~$2000

$250

Device cost (one time)

$250

~$2.50 per patient

Disposables

Equipment / Variable Costs

Device creates

additional periodontal procedures

Note: Assumes 50/50 copay-insurance split

dentalOptics

Three classes of FDA Devices

Class I(eg, dental pick,

gloves, toothbrush)

Class II(eg, dental fillings,

ceramics, drills)

Class III(eg, stent,

implantable pacemaker)

Criteria FDA Requirements

Minimal health and safety risks, established precedent

Need to register with FDA but not get approval before putting it on the market

Presents safety and health risks that aren't completely controlled by GMP (good manufacturing processes)

Submit 510-K application to FDA, include detail about device, marketing materials, device safety features, and other paperwork

Invasive, inflammable, or presents other significant significant safety risks. Often times a new type of device

Very thorough process similar to drug approval. Requires clinical trails and mountains of paperwork

dentalOptics

Some regulatory riskDevice key risk:

misdiagnosisProxy suggests our

device will be class II

Intra-oral, non-invasive laser light caries (tooth decay) detector

Approved as class II medical device. Clinical tests conducted to prove accuracy

Device carries little direct risk• Intra-oral, non-invasive

probe • Uses non-harmful

wavelengths of radiationKey risk: misdiagnosis• Clinical evidence required to

establish efficacy

Source: Iowa Dental Supply

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Class II FDA approval process

• Construct device prototype

• Determine device diagnostic capabilities

• Begin FDA 510(k) documentation

• Enroll 1-2 periodontists in preliminary efficacy study

Feasibility study

0 18

93 6 12

15

Month

Class II device FDA trials and approval

• Determine predicate device(s)

• Enroll 4-7 sites and 10+ periodontists in study

• Fix critical end-points based on device capability (eg, 1 mm measurement error)

• Submit 510(k) to FDA and obtain approval

$200 K

30 patients

$200 - 400 K

200-400 patients

$1,000 – 2,000 K

1000-2000 patients

Without a predicate

Costs

Trial Size

dentalOptics



• Manufacturers

• Resellers

• Distributors

• Marketers





network



& support• Legal





• Manufacturers

• Resellers

• Distributors

• Marketers



✔✔

• Direct sales

• Trade shows

• Distributor

• Accuracy

• Reduced time

• Patient comfort


• Improve records



Hypotheses Tested:

• Insurance companies would embrace this technology

• FDA compliance is not prohibitive

dentalOptics






network



& support• Legal

• Direct sales

• Trade shows

• Distributor





• Manufacturers

• Resellers

• Distributors

• Marketers



• Accuracy

• Reduced time

• Patient comfort


• Improve records



Question asked:

• How do we sell our product?

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Private PracticeDentist

PurchasingDepartment

Big Distributors

InstitutionalDentist

Direct Sales

Channels

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Big Distributors


Direct Sales

Channels

80% Market Share30% Margin

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Big Distributors


Direct Sales

Channels

80% Market Share30% Margin

ContinuingEducationCourses

Magazines& Email

TradeShows

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Dental Charting Software

Entrenched incumbents in the management/charting space

Will accept new images: intra-oral cameras do this already without needing explicit partnerships (anything beyond images will require deep integration)

Our own software: extra barrier for many dentists based on conversations, but some tools have succeeded

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network



& support• Legal

• Direct sales

• Trade shows

• Patterson/Schein





• Manufacturers

• Resellers

• Schein/Patt.

• Marketers



• Accuracy

• Reduced time

• Patient comfort


• Improve records



dentalOptics






network



& support• Legal

• Direct sales

• Trade shows






• Manufacturers

• Resellers

• Distributors

• Marketers



Hypothesis Tested:

• Value Propositions are strong enough to sell products

• Accuracy

• Reduced time

• Patient comfort


• Improve records



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Our Sales Pitch

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Patient experience is key

• Accuracy• Reduced time• Patient comfort• Patient education• Reduced malpractice exposure• Up-sell procedures• Improved record keeping

☐

Value Props

Cost Props$1000 $2000 $8000

“I’d write you a check today!”

“This seems reasonable”“We would have the discussion”

“It would be cost prohibitive”

Per patient consumable cost < $5

dentalOptics



• Manufacturers

• Resellers

• Distributors

• Marketers





network



& support• Legal

• Direct sales

• Trade shows






• Manufacturers

• Resellers

• Distributors

• Marketers



• Accuracy

• Reduced time

• Patient comfort


• Improve records



dentalOptics



• Manufacturers

• Resellers

• Distributors

• Marketers





network



& support• Legal

• Direct sales

• Trade shows






• Manufacturers

• Resellers

• Distributors

• Marketers



• Accuracy

• Reduced time

• Patient comfort

• Improved records


dentalOptics



• Manufacturers

• Resellers

• Distributors

• Marketers





network



& support• Legal

• Direct sales

• Trade shows






• Manufacturers

• Resellers

• Distributors

• Marketers



• Accuracy

• Reduced time

• Patient comfort



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periOptics

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Our Product: periOptics

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Our Product: periOptics

$2000 per unit$2.50 per silicone sleeve

Distributed through:Patterson Dental & Direct

Imaging Resolution:< 1mm

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$400 MM annual total addressable market for Periodontal Diagnostic Device

Device sales Consumables Total0

50

100

150

200

250

300

350

400

450$400 MM

$320 MM

$75 MM

• Device cost - $2000• Amortized over 4 years

• $2.5 consumables per patient

• 128 MM patients per year

Total addressable market ($MM)

Source: Department of Health and Human Services

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Growth Plan

Feasibility study

Month


$300 K $1.5-2 MCosts

Regulatory

ProductDevelopmentScale-up Preparation

Early Prototype Dev.

Planning with Manufacturers

Product Cycle I Product Cycle II

0 24

6 12

18

dentalOptics

Growth Plan

Feasibility study

Month


$300 K $1.5-2 MCosts

Regulatory

ProductDevelopmentScale-up Preparation

Early Prototype Dev.

Planning with Manufacturers

Product Cycle I Product Cycle II

$500*

Unit Economics

Cost of Goods

Margin

$900 $600

Distributor

Revenue

Cost to Dentist:$2000

*At scale: 10K units

0 24

6 12

18

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Next Step: Evaluate Technical Options

Optical Acoustic

function

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Lessons Learned

Physical prototypes engage potential customers

Consumables are key to revenue models in dental devices

Listen to your customers for new directions

Caregivers don’t think exclusively like businesspeople: the patient experience is paramount

“Hi, I’m a Stanford student…” gets you a conversation with pretty much anyone

dentalOptics

Appendix

dentalOptics



s• Specialist

s






• Lower price



• Direct sales

• Trade shows

• Dental schools



• Manufacturers

• Resellers

• Distributors

• Marketers





network



& support• Legal

dentalOptics





• Lower price

• Reduced time



• Manufacturers

• Resellers

• Distributors

• Marketers





network



& support• Legal



• Direct sales

• Trade shows

• Distributor




dentalOptics



• Manufacturers

• Resellers

• Distributors

• Marketers





network



& support• Legal

• Direct sales

• Trade shows

• Distributor







• Procedure type


dentalOptics



• Manufacturers

• Resellers

• Distributors

• Marketers





network



& support• Legal

• Direct sales

• Trade shows

• Distributor




• Crack detection






dentalOptics



• Manufacturers

• Resellers

• Distributors

• Marketers





network



& support• Legal

• Direct sales

• Trade shows

• Distributor





• Manufacturers

• Resellers

• Distributors

• Marketers



• Accuracy

• Reduced time

• Patient comfort


• Improve records



dentalOptics



• Manufacturers

• Resellers

• Distributors

• Marketers





network



& support• Legal

• Direct sales

• Trade shows






• Manufacturers

• Resellers

• Distributors

• Marketers



• Accuracy

• Reduced time

• Patient comfort



dentalOptics

Periodontal care right nowConsiderable undertreatment

70% of offices don’t regularly do a full probe test of all teeth! Time & effort

50% of US population has mild-severe periodontitis, only 5-10% of are treated

“The number-one reason dentists are sued is failure to diagnose periodontal disease”*

30% of patients don’t feel the need for the recommended treatment*

Increases with aging population

*K. Esler, Sidekick (2009)

Dentaloptics E245 final presentation

Education

Transcript of Dentaloptics E245 final presentation