This post is part of our series on the National Science Foundation I-Corps Lean LaunchPad class in Life Science and Health Care at UCSF. Doctors, researchers and principal investigators in this class got out of the lab and hospital and talked to 2,355 customers, tested 947 hypotheses, and invalidated 423 of them.  The class had 1,145 engagements with instructors and mentors. (We kept track of all this data by instrumenting the teams with LaunchPad Central software.)

We are redefining how translational medicine is practiced. It’s lean, it’s fast, it works and it’s unlike anything else ever done.

Sometimes teams win when they fail.

Knox Medical Devices was building a spacer, which contained a remote monitoring device to allow for intervention for children with asthma . (A spacer is a tube between a container of asthma medicine (in an inhaler) and a patient’s mouth.The tube turns the Asthma medicine into an aerosol.)

Asthma

Knox’s spacer had sensors for basic spirometry measurements (the amount of air and how fast it’s inhaled and exhaled) to see how well the lung is working. It also had a nitrous oxide sensor to provide data on whether the lungs' airways are inflamed, an inhaler attachment, and a GPS tracking device.

Knox Spacer

The spacer hardware was paired with data-analysis software for tracking multiple facets of asthma patients.

The Knox team members are:

Allan May, founder of Life Science Angels, was the medical device cohort instructor. Alex DiNello, CEO at Relievant Medsystems, was their mentor.

The Knox team was a great mix of hands-on device engineers and business development. They used agile engineering perfectly, continually testing variants of their minimum viable product (MVP’s) in front of customers often and early to get immediate feedback.

Knox was relentless about understanding whether its device was a business or whether it was technology in search of a market. In 10 weeks they had face-to-face meetings with 117 customers, tested 33 hypotheses, invalidated 19 of them and had 53 instructor and mentor interactions.

Here’s Knox Medical’s two-minute video summary:

If you can’t see the video above, click here.

Knox was a great example of having a technology in search of a customer. The initial hypothesis of who would pay for the device--parents of children with asthma--was wrong and resulted in Knox’s first pivot in week 4. By week 6 they had discovered that 1) peak flow meters are not as heavily prescribed as they thought; 2) insurance company reimbursement is necessary for anything upward of $15; and 3) nitrous oxide testing isn’t currently used to measure asthma conditions.

After the pivot they the found that the most likely users of their device would be low-income asthma patients who are treated at asthma clinics funded by federal, state, or county dollars. These clinics reduce hospitalization, but insurers weren’t paying to cover clinic costs, nor would they cover the use of the Knox device. The irony was that those who most needed the Knox device were those who could least afford it and wouldn’t be able get it.

Watch their Lesson Learned presentation below. Listen to the comments from Allan May, the device instructor, at the end.

If you can’t see the video above, click here.

In the end, Knox, like a lot of startups in life science and health care, discovered that it had a multi-sided market.  The group realized late in the class the patients (and their families) were not their payers--their payers were the insurance companies. If they didn’t have a compelling value proposition for the insurers (cost savings, increased revenue, etc.), it didn’t matter how great the technology was or how much the patients would benefit.

The Knox medical device presentation slides are below. Don’t miss the evolution of the business model canvas in the appendix. It’s a film strip of the entrepreneurial process in action.

If you can’t see the slides above, click here.

Knox is a great example of how the Lean LaunchPad allows teams to continually test hypotheses and fail fast and inexpensively. They learned a ton. And saved millions.

Lessons Learned

  • In medical devices, understanding reimbursement, regulation, and IP is critical.
  • Sometimes teams win when they fail.