Overview
DataPhysics Research (DPR) is developing medical intelligence technology that will substantially reduce health care imaging diagnosis times while helping improve conclusion accuracy. In CT and MRI image exams, some Radiologists have projected time savings of at least 45%. Current revenues within our two targeted markets are approaching $2 billion with one of them growing 33% in 2007. Using a rapid growth marketing strategy and providing users with an estimated ROI starting at 800%, we plan on seizing a large share of this market with exceptional returns for investors. One recent example is Stentor, which was acquired by Philips for $280 million. One of Stentor’s Board members now serves on DPR’s Board. We are seeking $900,000 in a series A financing.
Problems We Solve
Driven by new patient demographics, exam image proliferation and a shortage of US accredited Radiologists, health care’s growing emergency is that image demand is sprinting past current capabilities for handling it. The 78 million baby boomer generation is turning age 60 at 8,000 per day, living 10 years longer while increasing their health care usage by 30%. Image exams that used to contain 10 to 20 x-rays have exploded into hundreds/thousands of digital images from today’s 64 image scanners. And Toshiba’s 256 slice scanner is just being released. Some of the key elements contributing to this acute problem are:
· Radiologists and Practitioners are experiencing exam analysis bottlenecks due to the exponential growth in images and the use of antiquated ‘slice by slice’ review methodologies.
· Because of how the data is presently organized and stored, effective performance improvement technology is not possible.
· In teleradiology applications, ‘primary read’ exam file transmission times passing through 13 minutes are a large barrier to a streamlined analysis process.
Value to Customers
Radiologists that have reviewed our technology are coming up out of their chairs. Our technology is capable of increasing a Radiologist’s average number of daily cases from 65 to over 90 exams. Key elements that will produce these dramatic results are:
· DPR’s Auto Image Segmentation technology repackages all of the image slice data into an anatomically indexed dataset that provides mission critical exam scalability, improvement in diagnosis accuracy and increasingly important Radiologist ‘service’ differentiation.
· Our Technology “Assistant” prevents the Radiologist from having to work in an information vacuum by providing exam guides, image comparisons, interactive decision support and historical patient pathology results.
· In teleradiology applications, our unique exam file transmission approach will reduce transference times by approximately 50%.
Our product concept has been cultivated using input from the health care imaging community including industry thought leaders, “front line” Radiologist and support staff. This includes discussions with The Cleveland Clinic, Mayo Clinic, USC Medical Center, Borg Imaging, Imaging on Call, Bay Imaging Consultants and many other discussions at industry conferences.
Product Description
Our product is workstation client and server software. DPR’s algorithms efficiently repackage and index all the exam image data. Then by using our unique user interface and Technology Assistant, relevant diagnosis information can be obtained far more rapidly regardless of image file size. Also, next generation diagnosis reports containing embedded key images can automatically be generated for a Radiologist approval.
Target Market
Our initial target Market consists of two segments: Teleradiology, which is the transmission of radiologic images for the purpose of consultation and/or diagnosis, and outpatient imaging centers. Teleradiology, presently an $800 million market, is projected to grow to approximately $15 billion over the next few years. Imaging centers like Radnet, Alliance and Insight Health operate over 300 US based imaging centers alone and are generating approximately 7.5 million image procedures per year. These centers are at least a $900 million market. Extraordinary projected growth aligned with DPR’s ability to dramatically increase their exam throughput makes them outstanding first market opportunities. The much larger global Diagnostic Radiology sector will be pursued at the appropriate time.
Business Model
DPR’s business strategy is designed for success within health care. Rapid market penetration will be achieved by providing dramatic results to the acute problem, sales collaborations with established product leaders and initially pursuing profit motivated imaging “businesses”. DPR’s Software as a Service pricing will also provide a simplified sales cycle eliminating hefty upfront licensing fees. We will use a low price/high transaction volume strategy designed to drive repetitive monthly revenues from both new user acquisitions and exam growth of existing ones. Teleradiology firms currently charge on average $80 per CT & MRI exam; imaging centers around $100. We’ll charge $1.50 per exam each time our service is used. This will provide users with a projected 800 to 1,400 percent ROI.
Competition
Competitive landscape research has been obtained from vendor conference demonstrations, thought leader discussions, meetings with Radiologists and patent application searches.
What’s commonly referred to as the “Page” and “Scrolling” approaches is used by approximately 90% of our targeted market prospect base. Because of their image slice data organization, lack of exam scalability and poor analytic tools, our technology competes extremely well against them. In addition, Barco recently obtained a grant to begin developing some productivity tools for teleradiology and TeraRecon has developed its own approach to image segmentation. Not fully automated like ours, we see them more as a potential collaborator. We intend to establish and then retain a leadership role in our targeted markets through these following competitive advantages:
· Superior continuous improving technology that solves the acute problem by providing dramatic productivity gains and ROI results.
· IP protected medical intelligence technology highly effective in streamlining multiple steps within the imaging diagnosis discovery process.
· A potent marketing strategy designed to rapidly penetrate our markets and grow DPR.
Barriers to Entry
The principle barrier will be through DPR’s Intellectual Property and Patents.
· We have filed a comprehensive patent application that covers both current and planned technology.
· We are planning to file additional product and global patents to expand our IP portfolio.
· Our team has substantial experience and the highly specialized skill set required to develop our unique technology.
· The market plan is different from potential competitors. We are targeting niches with a “no sales barrier” approach to product adoption.
· Speed to market and rapid growth will enable us to stay ahead of competitors and leverage small company flexibility.
Founders and Management team
DPR has just completed rounding out its initial team of world class health care and technology experts. Participants include:
Executive Team:
Steven K. Douglas, DPR Co-Founder, President/Chief Executive Officer.,Experience in three startups holding positions as CEO, COO and CIO, Raised $3.4m investment funding, Twelve years experience in health care IT, Track record in successfully bringing health care products to market, Technical experience also includes ten years experience at NASA’s and five years at two Wall Street firms.
Dr. Vishwas G. Abhyankar, VP Product Development, Served as the Chief Principal Scientist in Kodak’s Medical Science and Technology Center, Significant experience working with medical doctors to
develop imaging applications, Extensive background in project management, enterprise workflow solutions, requirements definition, design and system integration and commercializing imaging technology.
Board of Directors:
H. Gerald Gibson, Co-Founder and Member of the Board, Thirty years experience in health care.
Seventeen years managing two of Siemens Americas Divisions, Eight years CEO experience with four startup companies.
Dr. Ronald Schilling, Member of the Board, President of a firm that specializes in strategic planning for health care imaging companies, Consulting with Philips’ on health care Division’s strategic planning, Seven years experience at GE’s Medical System Division, Former member of the Stentor Board of Directors, Held
executive position of Senior Vice President and General Manager at Toshiba, Lifetime member of Stanford Graduate School of Business Alumni Association.
Scientific Advisory Board
Dr. Heinrich Roder, Co-Founder, Scientific Advisory Board Chairman, German Rhodes Scholar in Theoretical Physics, 25 years experience developing algorithm based technologies, Seven years working and consulting at Los Alamos Labs; some of the time working as a Senior Scientist.
Dr. Greg Mogel, Member, Scientific Advisory Board, Assistant Professor of Radiology and Biomedical Engineering at the University of Southern California., Involved in establishing U.S. Army Medical Research & Material Command’s (USAMRMC) Telemedicine and Advanced Technology Research Center (TATRC). As the Deputy Director of TATRC, managed over $100 million in advanced medical technology research program for the Department of Defense, Diplomat of the American Board of Radiology, His research interest encompasses the impact of advanced technology on the practice of medicine and the development of novel applications of medical imaging in the clinical setting by exploiting new forms of networking, decision support and informatics.
Dr. Kevin Montgomery, Member, Scientific Advisory Board, Technical Director for the National BioComputation Center since 1998, Previously the CEO of MediLink Inc., a company for providing systems for worldwide telemedicine, Seven years of experience with NASA Ames as the Technical Director for the 3D Imaging and Visualization group, Received the FDA Group Recognition Award for 3D Reconstruction and Visualization Project.
Dr. Walter Greenleaf, Member, Scientific Advisory Board, Founder/CEO of Greenleaf Science Corporation and Greenleaf Medical products, Prominent in the Medical Virtual Reality field, Worked as a scientific advisor and consultant to the US Public Health Service, the National Institute of Health, NASA, and the Department of Education, with more twenty years experience commercializing health care technology, Strong background in marketing and sales of health care technology.
Dr. Patrick Kelly, Scientific Advisory Board. Chairman, New York University’s Neurosurgery Department, World renowned brain surgeon that has performed over 6,500 surgeries. Dr. Kelly has pioneered image segmentation methodologies in human anatomy..
Business Advisory Board
Mr. Rob Hagen, Business Advisory Board, CEO of Property Room., Served as CFO of Penstock, Specialized while at KPMG in IPOs and acquisitions and mergers for high growth technology companies, Exceptional track record in growing technology companies, Served as President of Avnet Asia; responsible for growing business in 13 Pacific Rim countries.
Ms. Susan Trainer, Business Advisory Board, Founder and CEO of Trainer Communications, Over 20 years of experience in marketing and selling technology products and services, Trainer Communications has played an integral role in generating high-profile publicity for more than 150 startups including BROCADE, Trigo, CrossWorlds, Cloudscape, Versata and NetDialog, She has been featured in publications such as the New York Times, Hemisphere, MSNBC.com, Entrepreneur, East Bay Business Times and Silicon Valley Business Times, Has been a featured speaker at TIEcon, IBD Networks, Institute of Management Accountants, Software Developers Forum and Technet.
Law Firm
Casy McGlynn of Wilson Sonsini Goodrich & Rosati, Secretary, Partner, Head of Wilson Sonsini’s Health Care Practice.
Funds Required and Utilization
Our $900,000 in funding is allocated to meet the following milestones:
· Round A – Funding will be used to get our first generation product into the hands of our development partners for review and testing. Also, to hire some key staff members, complete an FDA 510(k) approval and cover operating expenses up to an institutional round of funding.
DPR Pro Forma Income Statement (000):
2008 / 2009 / 2010 / 2011 / 2012Transaction Volume:
Teleradiology clicks / 0 / 2,000 / 6,750 / 11,550 / 25,000
Outpatient Imaging Center clicks / 0 / 600 / 1,250 / 1,700 / 2,400
Hospital based center's clicks / 0 / 270 / 2,250 / 12,500 / 26,000
Subspecialist clicks / 0 / 0 / 250 / 1,000 / 2,000
Telemedicine & remote viewing clicks / 0 / 0 / 0 / 50 / 400
Total exams / 2,870 / 10,500 / 26,800 / 55,800
Total Revenue / $0 / $3,588 / $13,650 / $36,180 / $78,120
Expenses:
Sales and Marketing / $116 / $1,249 / $5,197 / $9,485 / $14,240
G&A / $270 / $1,060 / $2,252 / $4,248 / $6,002
Product Development / $657 / $2,232 / $3,123 / $5,000 / $7,084
Contingency & Regulatory Expenses (8%) / $287 / $1,092 / $2,900 / $6,250
Total Expenses / $1,043 / $4,828 / $11,664 / $21,633 / $33,576
Net Operating Income / $1,043 / $1,241 / $1,986 / $14,547 / $44,544
Profit Margin / 15% / 40% / 57%
Return for Investors
We expect to be acquired by a larger HealthCare Informatics company. Our research shows that over the past three years similar companies have been acquired at 5 to 10 times revenue. The following are some examples.
Applicable acquisitions:
Stentor $280m by Philips
Visicu $300m by Philips
R2 Technologies $220m by Hologic
Shared Medical Systems $2.1b by Siemens
Algotec $42.5m by Kodak
Voxar $49.8m by Barco
Witt Biomedical $165m by Philips
Emergis $766m by Telus
Terms of Current Offering
To meet its short term financial requirements, the company is offering Convertible Notes to raise $900,000. The notes will provide an annual interest rate of eight percent. They will have a one year maturity date at which time they will automatically convert into Preferred Shares, or when an institutional round of funding is received. The notes will also carry warrant coverage of twenty percent.
Steve Douglas, CEO, , 925-984-1187 4