Entrepreneurs seeking investment must be prepared for anything and have canned answers at the ready, especially if issues are presented at inopportune times.
Sometimes, you need to take a step back to get two steps ahead.
In the almost two months since we last touched base with Matt Lemelin, CEO of Genevolve Vision Diagnostics, this has certainly proven to be the case.
Genevolve was planning to make a big splash at the annual meeting of the American Academy for Pediatric Ophthalmology and Strabismus this month. An impressive showing here could spark the endorsement and early adoption from the broader medical community Genevolve needs to kick start the process for qualifying its Eyedox Genetic Test for Color Vision for insurance reimbursement. However, Lemelin decided to pull out of the show and refocus on the largest industry show of the year – the annual meeting of the American Academy of Ophthalmology taking place in Chicago in November.
“The stars are not aligning as planned for our launch,” he said. “We have had delays on the science side. A major challenge lies in, for a lack of a better word ‘transferring’ the test collateral from the research side to a commercial entity so that it works flawlessly. This has turned out to be quite a challenge. It is imperative to release a perfect product to preserve our reputation.”
There is a substantial market demand
It is a reputation that is still in the early stages of being established in the marketplace. Genevolve was founded in 2009 to commercialize non-invasive molecular diagnostic assays and treatments for clinical applications in the colour vision industry. Eyedox is the company’s first commercial product – a genetic test that can diagnose colour blindness in a far more accurate and thorough manner than existing tests, such as the century-old Ishihara test.
A growing number of daily activities and professions rely on normal colour vision and on accurate diagnosis of the presence and severity of any colour vision deficiency. However, traditional tests often cannot provide a proper diagnosis in terms of the type and severity of a deficiency, and often result in misdiagnosis.
“Over the years, we have received emails, calls and letters from thousands of frustrated colour-blind people,” Lemelin said. “The outcry from patients, together with feedback from practicing clinicians who have indicated that a genetic test will change everything for them, motivated us to develop the test as a commercial product.”
With its genetic test, Genevolve is blazing a new trail to create a global colour vision standard for all occupations. But this is a risky proposition at a time when investors remain wary of life sciences investments into new areas of research and the complex U.S. system for health insurance reimbursement is facing an overhaul.
Last month, Lemelin pitched Genevolve at a Gathering of Angels event in Atlanta. Inevitably, the issue of insurance reimbursement came up. But like every savvy entrepreneur hustling for cash, he understands the need to be ready for hard-nosed questions from potential investors.
“I suggest that entrepreneurs seeking investment be prepared for anything and have canned answers at the ready, especially if issues are presented at inopportune times,” he said. “I came away with some good leads and learned lots to add to my arsenal of knowledge.”
Among those lessons learned, which we will explore in more detail in our next post: how to better present to angel investors, how to negotiate with investors over the valuation of your company, and trying to make progress at industry gatherings where the social aspects appear to overtake the business agenda.
But it all comes back to reimbursement …
In our last post, we talked about how Genevolve’s colour-vision test falls into the category of molecular diagnostics, which can qualify for reimbursement through a complex pricing and fee schedule that uses “stacked codes.” These codes are used to tally up the costs associated with each step that is required to carry out the test, as well as the technology involved. A new test must go through a long and complex process to have new codes created and qualify for long-term insurance reimbursement.
Genevolve believes its Eyedox test can also save doctors time, by a factor of 10. While anything that saves time is a plus, the challenge is how doctors are compensated for their time and how this is claimed for insurance reimbursement.
At present, doctors are only able to bill the U.S. insurance system for their time if they are able to diagnose the type of colour blindness. Due to the limitations of standard tests, they seldom can. As a result, many doctors shy away from carrying out colour vision tests or see it as a loss that they write off. Not only must Genevolve attempt to execute a culture change in how doctors regard colour vision testing, it must still determine if doctors who use its test are able to make an insurance claim using existing codes.
Casting a shadow over all of this is U.S. President Barrack Obama’s new health care plan, which threatens to tighten the rules governing what qualifies for insurance reimbursement, the uncertainty of an election year and a new tax on medical devices intended to help extend health insurance coverage to uninsured Americans.
“All of this has a ripple effect on innovation and trickles all the way down to creating considerable investor angst,” Lemelin said. “Nobody, even the big boys, can figure out the reimbursement changes, many variables and many unknowns. It is causing many to sit in the sidelines, stifling innovation.”
… and developing contingency plans
One of the challenges for Genevolve is to design its test in such a way that it becomes easier for physicians to derive revenue from carrying out colour-vision testing, either by being able to bill the insurer or the patient. With changes to the U.S. medicare system, Lemelin said physicians are looking for new lines of business. Genevolve hopes to tap into this by bundling its test with other related vision products and services that are not billable to the insurer, such as contact lens prescriptions. In other words, make the colour vision test part of a service that the patient is already accustomed to paying for and is already a source of revenue for the physician.
Genevolve also has a contingency plan up its sleeve if it doesn’t qualify for reimbursement.
“We would switch to a boutique model in which we would then compensate doctors,” Lemelin said. “But, realistically speaking, we would need to take a volume approach and bring our price way down to make this model successful. There is a fine line here as far as losing our shirt, but we feel we can make it work as a last resort.”
Another option that Lemelin is considering is a group purchasing organization, or GPO, involving early adopter physicians and possibly partnerships with other vendors of vision products. The incentive for physicians to sign up would be that they would have exclusive access to unique products.
“It’s just an idea,” Lemelin said. “It is critical to evaluate all options … they all have their pros and cons. You have just got to somehow find the sweet spot and unfortunately there are so many unknowns that some of it is wait and see and shifting on the fly.”
Next time, we’ll talk about the pros, cons and complexities of wooing angel investors.
This is the fourth article in a continuing monthly series chronicling the growth path of Genevolve Vision Diagnostics, a life sciences startup based in Albuquerque, NM that is commercializing cutting edge genetic research to develop new diagnostic tests and gene therapies for colour blindness.