Diagnostics are the opportunity to change healthcare. The number one reason that healthcare investors don’t invest in diagnostic companies is because they cannot see a path to return on their investment via reimbursement. Alva10 is fundamentally changing that by engaging with the market ahead of development to come to a contractual understanding of what is required for reimbursement, what that reimbursement will be, from whom and for how long. This enables companies to more accurately plan for data development and manage expectations around market opportunities and timing, creating confidence in the path to your return on investment.
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The number one reason that healthcare investors don’t invest in diagnostic companies is because they cannot see a path to return on their investment via reimbursement. Alva10 is fundamentally changing that...
Vicious vs Virtuous
Why does this problem exist to begin with? The standard diagnostic development cycle, coined the ‘Vicious Cycle’ of diagnostics, is what makes investors shy away from investing in innovative technologies. Companies tend to develop their test with the input from key opinion leaders, large academic centers, and their own scientists. They internally determine what the minimally viable product is, and launch onto the market with the intention of asking payers for pilot studies and joint development agreements in order to generate more data.
This is almost never successful. Here’s why:
The payers (customers) see a product that isn’t fully complete and doesn’t have enough supporting evidence. Frequently, the payer also doesn’t agree with either the clinical utility, value proposition/pricing, or both. The payer deems the test ‘experimental’ and does not cover it, waiting for more data. The diagnostic developer then needs to go to you, the investors or board, and ask for more resources to generate sufficient data. Frequently, that request is turned down, because there is no clear path to market success. Even with additional funding, it can take 18-24 months to begin to get market traction, further slowing a return for the investor. This is the valley of death for diagnostics.
Vicious Cycle
Let’s consider the above Vicious Cycle compared to the Virtuous Cycle, where the diagnostic developer engages with the customer (payer) ahead of the validation data development. This process makes for a more sound and safe investment. Why?
This ensures that there is agreement on:
1. Clinical utility
2. Value proposition (payer economics)
3. Reimbursement (diagnostic company and investor economics)
By coming to agreement upfront, the same resources are used on the payer side, but now the diagnostic developer has a clear path to the market, and therefore the investor, has a clear return on investment.
Its a WIN-WIN-WIN
Virtuous Cycle
Vicious vs Virtuous
Virtuous Cycle
Let’s consider the above Vicious Cycle compared to the Virtuous Cycle, where the diagnostic developer engages with the customer (payer) ahead of the validation data development. This process makes for a more sound and safe investment. Why?
Vicious Cycle
Why does this problem exist to begin with? The standard diagnostic development cycle, coined the ‘Vicious Cycle’ of diagnostics, is what makes investors shy away from investing in innovative technologies. Companies tend to develop their test with the input from key opinion leaders, large academic centers, and their own scientists.
They internally determine what the minimally viable product is, and launch onto the market with the intention of asking payers for pilot studies and joint development agreements in order to generate more data.
This is almost never successful. Here’s why:
The payers (customers) see a product that isn’t fully complete and doesn’t have enough supporting evidence. Frequently, the payer also doesn’t agree with either the clinical utility, value proposition/pricing, or both. The payer deems the test ‘experimental’ and does not cover it, waiting for more data. The diagnostic developer then needs to go to you, the investors or board, and ask for more resources to generate sufficient data. Frequently, that request is turned down, because there is no clear path to market success. Even with additional funding, it can take 18-24 months to begin to get market traction, further slowing a return for the investor. This is the valley of death for diagnostics.
This ensures that there is agreement on:
1. Clinical utility
2. Value proposition (payer economics)
3. Reimbursement (diagnostic company and investor economics)
By coming to agreement upfront, the same resources are used on the payer side, but now the diagnostic developer has a clear path to the market, and therefore the investor, has a clear return on investment.
Its a WIN-WIN-WIN
