Atherosys is delivering a profoundly radical approach for heart attack and stroke prevention using AI-enabled pay-per-use ultrasound test to primary care physicians (PCPs) to ultimately displace indeterminant cholesterol testing.
This is a continuation of a product that was launched by Panasonic Healthcare (Panasonic has since exited the healthcare market). Existing customers of Panasonic need an upgraded product and there is ample opportunity to expand the market with a better defined product. We have developed core technology from scratch and have a working prototype. The CEO was intimately involved in developing, obtaining regulatory approval and marketing the Panasonic device and has permission from Panasonic to continue the work independently.
Our targeted customers are primary care physicians (>700,000 in USA) at 250,000 offices. The comparable number of cholesterol tests administered in the USA is 100m/year and this is the scope of our market size. Global market size is 3-5 times that of the USA. Market size is growing as high population countries such as India transition fr om being inflicted with infectious diseases to chronic conditions of western societies wh ere heart disease in the number one killer.
Problem or Opportunity
Medical intervention decision in primary care (i.e. statin therapy initiation) is mainly driven by serum cholesterol levels (there are 100m cholesterol tests ordered every year in the USA at ~$20/test). Cholesterol is a risk factor for heart attacks and strokes but the underlying disease that causes heart attacks and ischemic strokes is atherosclerosis. Not everyone with high cholesterol develops cardiovascular disease symptoms in much the same way that not all smokers develop lung cancer. Despite our best efforts, 1 in 2 seemingly "healthy" individuals end up in emergency with a heart attack or stroke. Clearly cholesterol testing is not enough; direct evidence of atherosclerosis would improve therapy initiation decision-making. Reimbursement in Texas for our test is mandated at a minimum of $200/test. Other states vary. We will focus initially on PCP offices in Texas and other cash-pay PCP offices.
Solution (product or service)
We aim to provide direct evidence of subclinical atherosclerosis through ultrasound imaging of peripheral arteries. Our extensive past experience has shown that such a test can be performed by non-experts (nurses/assistants) in PCP offices using highly customized image guidance and AI enabled portable ultrasound machine. The test can be completed in less than 5 minutes with the results provided immediately to the PCP. We have also validated a pay-per-use business model of $20/test (comparable to cholesterol test). The technology also allows therapy effectiveness monitoring (repeat revenue opportunity).
Competition will be from traditional ultrasound companies but their machines do not have the automation to guide or interpret images for our specific application. Besides, they focus on the hospital market. There will be competition from service providers (ultrasound technicians that schedule onsite visits at a PCP) but the cost is prohibitively high. Other AI enhanced imaging companies and predictive diagnostics companies are mainly focused on workflow improvements at hospitals.
Advantages or differentiators
No other company will have the field experience that Atherosys has in this specific application. Our CEO has personally led research projects involving detection of atherosclerosis on thousands of individuals worldwide (Bolivian Amazon, rural northern India, Kosovo, Texas, Toronto etc.). He was also instrumental in setting up ultrasound imaging in the UK Biobank cohort (a subset of 100,000 individuals will be scanned) and China Kadoorie Biobank. All this global research experience coupled with real market experience through the launch of the Panasonic CardioHealth Station(TM) provides us with unique insights that are augmented with wide-ranging blocking patent claims of the core technology.
We plan to install our machines at a modest fee of $1,000/install. Past experience has shown that a model whereby machines are supplied free are under-used and when supplied at a higher cost, there is financial resistance. We have signed an agreement with a supplier who plans to retail the machines at $2,000. Our initial target is to install 2,500 machines in two years (1% of total addressable market). Initial target will be early adopters including existing Panasonic customers, concierge offices (4,000 in USA), Executive Health program of hospitals (>4,000), PCP offices in Texas (> 17,000) where reimbursement of up to $200 is mandated by Texas Law HB1290.
Our business model will be pay-per-use of $20/test for both therapy initiation decision and subsequent follow-ups for therapy effectiveness monitoring. This is based on a highly successful business model of $30/test for Panasonic. We aim to contract PCPs to perform a minimum of 20 tests/month (i.e. one per business day). Most PCP offices perform 2-3 cholesterol tests per day and we know where to find high volume users.
Money will be spent on
Most of the money will go towards hiring an engineering team, including the CTO full-time. A team of five engineers and the CTO will be based in Bulgaria to save costs; one engineer will be hired in the USA to co-ordinate integration efforts with the US based ultrasound machine supplier. Management will be based in the state of Washington. The funds will be used to (a) integrate the proprietary software based working prototype into a commercial ultrasound machine;(b) develop image acquisition guidance; (c)further test AI algorithms for automated image interpretation.
Offer for investor
$2M Convertible note with a 20% discount and $6m Cap. Offer of $250,000 already available from one investor. Looking for additional investors to close the round.
Failing to complete the product as originally planned i.e. incomplete product being launched as was the Panasonic device. Mitigate the risk by learning from past mistakes and making sure image guidance and AI enabled image interpretation works to specification. Reimbursement not universally available (mitigate by working with insurance companies even before the product is launched; leverage contacts already established) Business model not scaling as expected (mitigate by alliance with a well-entrenched strategic partner) We don't anticipate any regulatory clearance risks.