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Results and payback
Financial, strategic, and human results
- startup to
acquisition for $6.2 Billion
- Market Research
steers engineering to the right product
- 65% more disease
detection for women
- False Positive
and False Negative (error rates) cut by a factor of 4
- multi-million
dollar VC financing
- approaching 100%
world market share
- FTC declares
Cytyc a monopoly
The entrepreneur,
Stan Lapidus, realized his entrepreneurial dream and became a multi-millionaire.
I supplied,
identified, and interviewed enough customers and industry gurus to validate the business opportunity and to motivate multi-million dollar
first-round Venture Capital (VC) funding for $3,600,000.
"Deadly
accurate!" was Stan's independent appraisal of the customer interviews.
I developed payback
evidence to confirm
the market validation and to demonstrate that Cytyc could command high prices. I
then went beyond the assignment by identifying and cultivating the first major prospective customers.
Cytyc, one of the
largest VC financed startups on the East Coast, raised $177,400,000.
| Cytyc
financing |
|
|
|
|
|
| $
3,600,000 |
|
first
round VC startup |
| $
40,000,000 |
|
other
VC rounds |
| $
48,000,000 |
|
IPO |
| $
85,800,000 |
|
secondary
public offering |
|
|
|
| $
177,400,000 |
|
financing |
Cytyc went public
with an IPO in 1996, achieving a market capitalization of $3.65 Billion in 2001. The US Federal Trade Commission (FTC) declared
Cytyc a (legal) monopoly in 2002. Hologic is purchasing Cytyc for $6.2 Billion in 2007. Cytyc is on their way to achieving
100% market share in the world.
Testimony before Congress results in new legislation
My market research
was used in testimony before Congress and resulted in new legislation that will speed market demand; the Clinical Laboratory Improvement
Amendments (CLIA), Public Law 100-578. CLIA led to a focus on quality of the complete Pap screening system, and an emphasis on
increased disease detection.
CLIA
- Clinical Laboratory Improvement Amendments
US Food and Drug Administration (FDA) web site
Public Law 100-578 - PDF, 13 pages, 0.6 MB
The Wall Street
Journal writer won the Pulitzer Prize for his exposé. Cytyc received the benefit of a new law.
Marketing steers Engineering to the right product
The initial product
idea was machine vision; a TV camera through the microscope lens, coupled to a special computer, which would examine 250,000 cells in two
minutes and subject each cell to perhaps forty separate medical criterion in software. The machine vision would pre-screen every
slide (without humans) to select the few "worst" cells from each slide for presentation to a human Cyto-Technologist who would
perform a medical determination. The intent was to replace the (tedious, error-prone) data processing of human eyeballs with
(tireless, consistent) machine data processing.
Early market
research, in advance of engineering, identified profound changes from the initial product concept. Upstream market research
identified the real customer problem; data gathering and data preparation of the Pap smear slide, before any human data
processing. A patented slide prep system emerged, the ThinPrep® System, which adds to product differentiation and simplifies Pap
screening. The ThinPrep® Pap Test® makes Pap smears by an automated slide preparation unit, the ThinPrep®
2000 Processor, that produces uniform thin-layer slides, virtually free of obscuring artifacts such as blood, mucous, and
inflammation.
With marketing
guidance, engineering designed the right product, and captured the business opportunity.
The Food and Drug
Administration (FDA) approved the ThinPrep® Pap Test® as a replacement for the conventional Pap smear, and approved labeling allowing
Cytyc to claim that the ThinPrep® Pap Test® is "significantly more effective than the conventional Pap smear."
| Conventional Pap Smear |
|
|
|
ThinPrep® |
| Cell
presentation - pictured is a portion of one field of view as a Cyto-Technologist might see it looking through a microscope.
The conventional
Pap smear has False Negative (FN) rates higher than
50%.
A human Pap
reader must view about two thousand separate fields under a microscope, examining perhaps 250,000 cells to attempt to find a few cells
(as little as five or six) that have slightly misshapen nuclei.
With the
conventional Pap smear method, cells can be obscured by blood, mucus, and inflammation. Furthermore, the three-dimensional (3D)
character of overlapping cells in lumps and clumps makes the examination a daunting challenge.
Accurate
interpretation of up to 40% of conventional Pap smears are compromised by the presence of blood, mucous, obscuring inflammation, scant
cellular material and air-drying artifact. |
|
|
|
Both
views contain abnormal cell nuclei. However, the abnormal cells on the right are considerably easier to see.
Clinical trials
demonstrated that the ThinPrep® Pap Test® increases disease detection 65%.
Specifically,
the clinical trials showed Cytyc's ThinPrep® System detected 65% more cancerous or precancerous samples when used in screening
centers (where 95% of all Pap smears are processed) compared to the conventional Pap smear.
The ThinPrep®
Pap Test® method preserves the cells and minimizes cell overlap, blood, mucus, and inflammation. It creates a mono-layer, a
layer one cell thick, with no overlapping cells.
False Positive
and False Negative (error rates) were cut by a factor of 4 |
| Conventional Slides |
|
|
|
ThinPrep® Slides |
|
The conventional
Pap smear is made by hand; the physician "smears" the sampling device across a microscope slide to spread a layer of
cells. Each physician may do it differently, leading to some slides with thick lumps and clumps, and some slides with clear
areas of no cells.
The conventional
Pap smear has False Negative rates higher than 50%.
Up to 90% of
those False Negatives are due to limitations of sampling or slide preparation.
The National
Cancer Institute estimates that about 3.5 million Pap smears are found to be inconclusive each year in the US which often lead to
unnecessary colposcopy, biopsy and office visits. The average cost of the standard management of such cases is about $1,200 per
case. The NCI estimates the cost to the US health care system at about $3.6 billion each year. |
|
|
|
ThinPrep®
slide-to-slide uniformity.
The ThinPrep®
Pap Test® makes Pap smear slides by an automated slide preparation unit, the ThinPrep®
2000 Processor, that produces uniform thin-layer slides, a one-cell thick monolayer, virtually free of obscuring artifacts such as
blood, mucous, and inflammation.
By reducing the
number of sub-optimal or "satisfactory but limited by" (SBLB) slides by as much as 50%, the number of return visits and
repeat Pap smears is diminished.
The significant
improvement in specimen quality will substantially reduce costs and patient anxiety associated with re-screening and unnecessary
follow-up testing. |
|
|
|
| Benefits |
|
Beneficiary |
|
|
|
|
|
|
65%
more
disease
detection |
|
For
women, catch disease sooner and live. Cervical cancer is 100% treatable if caught early, but inevitably fatal if not.
About one-third of the 15,000 women diagnosed with cervical cancer annually still die because the cancer was detected too late.
Better
medicine for the physician and pathologist.
Less
expensive to treat for the 3rd party payer since disease will be caught at an earlier stage.
|
|
|
|
| sub-optimal
slides reduced 50% |
|
For
women, reduced anxiety because of less re-screening and unnecessary follow-up testing.
Saves
re-screening expense for the 3rd party payer.
|
|
|
|
| reimbursement |
|
Clinical
Labs make money
Before Cytyc,
many Clinical Laboratories used Pap smear screening as a loss leader to attract other business such as biopsies. They would
offer Pap screening at below cost. Cytyc's ThinPrep® Pap Test® merits a new medical procedure designation (CPT Code) and a
higher reimbursement rate. Thus clinical labs can now make money on Pap smear screening. |
|
|
|
Cytyc
was acquired by Hologic in 2007 for $6.2 Billion.
|
|
