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Results
and payback
Financial,
strategic, and human results
- startup
to $6.2 Billion market capitalization
- 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 |
|
|
|
|
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| $ 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. |
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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 |
|
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|
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.
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| Benefits |
|
Beneficiary |
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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.
|
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| 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.
|
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| reimbursement |
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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. |
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