Assessing Market Potential and Development Strategy

Abstract

RG+A was engaged by a diagnostics manufacturer to help determine the best business approach to for their new prostate cancer screening product – continue development, sell the asset, or discontinue. RG+A conducted telephone-based mini-groups among key stakeholders, and incorporated the findings into a Monte Carlo model. The model showed that the product would reach peak revenue of over $400M in 6 years with a 49% chance of hitting $50M within 2 years. It also identified a low-cost targeted sales and marketing approach that would increase forecast Year Two revenue by 29%. These findings were pivotal in the client securing $60M in venture funding to continue development of the product for launch in 2016.

Background

RG+A’s client, a diagnostics company with novel technology for both blood- and urine-based liquid biopsies, was facing a decision regarding an in-development, urine-based diagnostic for prostate cancer. If successful, this product had the potential to significantly reduce unneeded biopsies as a diagnostic tool among a segment of potential prostate cancer patients, though at a higher price than the current standard of care – PSA testing. At a critical point in development of the product, the company sought to optimize investment and needed to determine whether they should continue development and commercialization of the product on their own, seek a buyer for the asset, or discontinue development of the product altogether. RG+A was engaged to assess the market potential for the product including forecasting peak revenue, and to identify key sensitivities and market strategies that might impact the potential for product success.

Methodology

To address the client’s objectives, RG+A conducted telephone-based mini-groups among key stakeholders with likely impact on adoption of the product – practicing urologists, managed care payers, and key opinion leaders (KOLs) in the field of prostate cancer diagnosis and treatment. These mini-groups focused on identifying the criteria required for establishing credibility for the client’s product, assessing the financial impact to providers of administering a biopsy-reducing test, and determining the receptivity of payers to step biopsies through the client’s product. After identifying key behavior drivers and sensitivities through qualitative interviews, RG+A constructed a market model to simulate likely product uptake scenarios and worked with the client to determine success metrics for revenue generation.

Key Challenges

  1.  PSA screening represent a significant source of revenue for urologists diagnosing prostate cancer
  2.  Awareness and credibility of the client’s testing method in general may be limited among providers
  3.  With limited time and resources, the research would need to provide the client with a clear direction for their go/no-go decision

How the Design Addressed the Challenges

  1.  Qualitative mini-groups provided interaction among providers, fostering exchange of ideas and exploration of the technology and potential financial impact
  2.  Discussions with KOLs highlighted pathways for product support among academic centers and leaders in the field
  3.  Monte Carlo modeling synthesized inputs from qualitative interviews, tightened confidence in results, and identified key sensitivities to market success

RESULTS

The research showed overwhelming support for the product among KOLs and urologists, who saw the strong appeal of reducing unnecessary biopsies. Financial impact among providers proved to be of little concern, and despite the increased cost of the client’s diagnostic, they saw the potential for overall reduction in cost of diagnosis. The research underscored the pivotal role that support from academic centers and policy-making bodies to drive the adoption of the client’s diagnostic as a standard of care. Based in these insights and rigorous secondary data analysis, RG+A’s Monte Carlo model showed peak revenue of over $400M for the product occurring within 6 years, and a 49% probability of achieving $50M within 2 years of launch. Additional modeling suggested that a specific sales and marketing strategy targeted at academic centers would improve Year Two revenue by 29%.

GUIDANCE

RG+A recommended that the client continue development and commercialization of the product. To support the pathway for success of the product at launch, RG+A recommended near-term actions that included aggressive promotion of the product in academic centers, publication of trial results in academic institutions, and continued discussions with payers to ensure widespread acceptance. Longer-term, RG+A recommended that the client seek inclusion for their product in AUA guidelines and conduct evidence-backed studies regarding economic and clinical benefits of the product.

ACTION

RG+A’s findings and revenue forecast drove the decision to continue development and reshaped thinking around critical success factors. These findings provided foundational data for a successful $60M private placement.