Raising Money in a Tough Environment

Securing funding in a tough environment.

Situation: A pre-commercial company had an innovative approach to address a major chronic condition that many other companies had historically pursued with very poor results. Most investors were highly jaded against this space.


Background:

  • The chronic condition was thought to be ‘large’ but had not been rigorously quantified
  • The condition is progressive and there is no cure, only drugs or procedures to relieve symptoms
  • Many previous technology solutions had failed to realize more than a niche position
  • Most investors had come to believe that this opportunity was too nebulous and challenging to participate in

What our analysis uncovered:

  • The realizable annual revenue potential was $750M
  • Earlier technologies suffered from usage issues relative to the amount of clinical benefit (more hassle than it was worth for most patients and physicians)
  • The company’s technology delivered the same clinical benefit as current therapies, but potentially would be less durable over time.
  • The company’s product reduced procedure time from 30 minutes to 3 minutes, could be delivered during a diagnostic procedure, was less painful and required much less post-procedure hassle for the patient.
  • The majority of the revenue opportunity was highly accessible as many patients were symptomatic despite being on drugs and routinely seeing specialists

Conclusions:

  • The company had a solution that could crack the broader market where others had failed
  • The market was very attractive and the clinical investments were more modest than anticipated, resulting in alarger than expected ROI to access the market

Recommendations:

  • Position the procedure as nearly a ‘non-procedure’ – just a quick tune-up of sorts, thereby limiting patient fear and reducing physician pre-procedure selling time.
  • Ensure that all aspects of the technology support the 3 minute procedure time – minimal set-up time/effort, minimal turn-on time, etc. to ensure smooth integration into the existing diagnostic procedure
  • Focus clinical efforts on validating the procedure time, improved safety profile, superior patient experience and magnitude of benefit while ignoring comparisons to other therapies’ durability
  • Revise reimbursement strategies to protect existing reimbursement levels

Results:

  • Investors became interested in the opportunity
  • R & D was refocused to ensure the final product supported the 3 minute procedure time
  • Clinical, regulatory, and reimbursement strategies were also revised to support the new market positioning
  • Recently the company secured a large funding round under favorable terms