Underestimating the time, cost and complexity of replacing a gold standard

Article by:
AUGUSTA DWYER
Special to The Globe and Mail Last updated on Tuesday, Jul. 07, 2009 11:12AM EDT

The problem Dentist's business stalls as he competes with bigger firms and struggles to gain acceptance from dental community

The plan Warm up to dental stakeholders, improve Internet presence, restructure the company and approach investment bankers

The payoff A better go-to-market strategy and heightened customer awareness

When Norman Kwan invented a new type of dental implant in 1993, he was convinced it would revolutionize a costly, two-step procedure and generate a successful business.

The dentist from St. Catharines, Ont., set up Biomedical Implant Technology Inc. and gained approval for his device from Health Canada in 1996 and from the United States Food and Drug Administration a year later.

Yet success has proven elusive. Dr. Kwan has invested $5-million of his own money in BIT Inc. but treats only 200 to 250 patients a year. Schools of dentistry and the dental community at large have yet to embrace his implant, called BioHex. The Royal College of Dental Surgeons of Ontario, for instance, frowns on practitioners making and selling their own products. Where Dr. Kwan sees a faster, cheaper alternative, the RCDSO sees a conflict of interest.

In the traditional implant procedure, a screw is planted into the bone where the old tooth used to be. It is left to heal, then reopened surgically to attach the new tooth. The cost: up to $6,000 per tooth. In Dr. Kwan's procedure, a combined tooth-and-screw is implanted into the bone. It can be done in a single operation and costs about half as much.

"Everybody in the world is using the two-piece approach, in which the weak link is the connection between the implant and the post that's supporting the tooth," he says.

A reliance on entrenched methods means universities are not interested in his technology and won't include it in their curricula, he says. He has tried sending product brochures to other dentists, but so far only a handful regularly refer patients to him. He maintains two websites with similar information, one for patients and one for dentists.

Finding investment capital has also been a struggle. "I'm in a very narrow market that most people would not understand except dentists," Dr. Kwan says. "There is no revenue from investors unless you are with a university or supported by a big company."

Nonetheless, he is convinced that opportunity abounds. As companies cut employee benefits, many people are looking for cheaper alternatives. And the dental prosthetics business is highly lucrative.

Dr. Kwan's goal is to expand BIT Inc. so that he can devote himself full time to the company and relieve the pressure on him from the RCDSO.

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What the experts say

The BioHex story is a common one, says Dan MacDonald, chief executive officer of Halifax-based InNOVAcorp, which helps small companies commercialize their technology. There is "compelling technology, little investor interest, modest market acceptance, founder facing a go-forward dilemma," he says.

The problem "is most often related to the entrepreneur grossly underestimating the time, cost and multi-stakeholder complexity of replacing a long-entrenched 'gold standard,' " he adds.

He suggests that Dr. Kwan try a new strategy in which he engages key stakeholders - dental-innovation thought leaders, industry media and market analysts, insurers, employers and dental product suppliers, among others.

Mr. MacDonald advises hiring a respected independent medical-device marketing consultant to help refine BIT Inc.'s go-to-market strategy. Without identifying the product or company, the consultant should sound out a representative group of stakeholders in one influential market.

Restructuring the company is a good idea, too, Mr. MacDonald says. Staying on as founder and chief scientific officer, Dr. Kwan should make way for a CEO with a proven track record in bringing similar products to market. What's more, some of those top stakeholders, who have looked at and like the product, could be asked to join the company's board of directors.

The company should also obtain "medical-device-savvy investment banking advice" and garner new investors, Mr. MacDonald says. An investment banking representative should contact potential investors and test interest. Listening and learning from these interactions will help identify the company's strengths and weaknesses, as well as opportunities and threats.

And with each step, he advises that Dr. Kwan stop and assess how things are going. Has there been a material increase or decrease in the probability of the company's success in the eyes of advisers and investors? Or does it make more sense to prepare the BioHex intellectual property for sale or license to a larger global partner?