This is the Healthcare Marketplace Specialization. Healthcare Marketplace Overview. I'm Steve Parente and this Module 5.3.4. Will the Technology Return Investment? Again we're continuing on looking at the Neil Core Technology focused on mitral valve repair. Both trends for health procedures are actually pretty strong indications that this technology is going to be pretty successful. We just look over a period of time and then extrapolate it out even further. Looking at 2% annual growth rates for heart valve procedures in the United States today. If we think about life cycle analysis for technology like this and on our right side we have Market Share and Cater and Time going out to 2024. What we would think about for this technology is about a 12 year lifecycle component where the technology is now ramping up and growing in its market share. The opposite is going to be to full maturity up to around 2023, max market share that will be about 32% and then will still declining after that. Now if we look at the intellectual property or IP landscape, it's you know it's crowded, but there's not necessarily things that can't be surmounted here. We have 210 issued patents referring to mitral valve repair. Most focus on annuloplasty and valvuloplasty, which is not what we're talking about here. Evalve and Edwards focus on valve clipping or suturing. 62 issued patents referencing chordae tendinae which is what this technology is about. There's vale staples, there's valve clips, there's fusion and prosthetic valves. There is lots of activity in this space. Prosthetic chordae tendinae placement appears not to infringe, it appears patentable at fist glance so that's kind of key is that this is a prosthetic chordae replacement and give some, if you will, clearance for folks to operate at least on the patent. So, IP analysis, with NeoChord licensed, intellectual property or patent in 2005 awaiting issuance, NeoChord filed four additional continuation patents in 2007. NeoChord technology design appears defensible through patent protection. When you think about the effectiveness of a technology, again, back to some of our cost effectiveness discussion before. There are substantial clinical testing suggests it's going to work fine. There's standard mechanical bench tests showing it works fairly well. There's qualitative assessments which each physician needs which is still a work in progress. And then the patient feedback regarding the experience. We're still in animal trials to a certain extent so we don't have all that in. And then the failure analysis, this has to be performed on the materials intended to be used to make sure things are actually going to stay where they need to be placed. Manufacturing analysis suggests that the outsources strategy for development makes most sense. Developmental costs for giving designed refinement and scale-up is about $400,000. Unit costs anticipated would be about $1,200. There is a fiber optics sensor that's going to see whether or not you get that clamp or not, that's a major cost driver. Average total gross margin will be about 80%, the cost reductions leading the volume coming up in year six. For regulatory, I'm looking at FDA, this is a class three medical device. Again, back to when we talked about this in earlier modules, we're sticking it in a person's body and it's going to stay there for awhile. And it's actually going to cover their heart functions. Major issues so PMA is going to be required. Estimated time to market about three years. Cost is going to be about $8 million, $6.6 million in the U.S. focused on their clinical trials, and $1.4 million in the EU. So for risk the concerns you're going to run into, this is more strategic, is that rather than clinical to a patient, it's going to take longer than expected, potentially, to get this thing through. You can have low enrollment or more patients required if you can't get enough animal studies quickly enough device will fail to meet clinical trial end points which is safety and efficacy requirement of FDA if that doesn't go well. Well the PMA review process can be longer than expected, sometimes maybe three years. If the FDA decide not to approve at the end and then the long run CMS or Medicare may not decide not to pay for it. This concludes our analysis on neocore technology with respect to IP and regulatory affairs.
