Building an AI-Powered Pharmaceutical Services Business: VIDA CEO Susan Wood (Part 5)

Sramana Mitra: What is the average deal size?

Susan Wood: In phase three, it’s in the order of $3 million to $5 million. I want to mention something else. When patients couldn’t go to a centralized site to get evaluated during COVID, they were shut out. The big push in the industry is what’s called decentralization of clinical trials. The trial comes to you.

I could be a nurse practitioner and you could be a subject. I’d say, “Take the drug now and we’ll take your blood pressure.” We can’t do that with imaging. Someday, I think we will. I can’t put a CT scan on your front yard easily. What we do is decentralize it. They would use decentralized imaging centers.

Instead of going to an academic site for two hours, in some cases, you can go to your local imaging center. The importance of that is, it takes technology to decentralize. There has been a big technological boom in the pharmaceutical services space.

Sramana Mitra: I still don’t get the $50 billion TAM. I’m talking about bottom-up TAM analysis. We don’t pay attention to top-down analysis.

Susan Wood: It’s the number of clinical trials out there not just in respiratory and reduction of the timeline that it takes to get to those trials.

Sramana Mitra: There aren’t enough trials that happen in the market for $3 million to $5 million deals to get to $50 billion TAM.

Susan Wood: It’s $1.6 billion per drug.

Sramana Mitra: That’s the budget for that drug to go to market.

Susan Wood: I’m agreeing with you, but what I’m suggesting is that we can take a big chunk out of that.

Sramana Mitra: $3 million to $5 million is what you take out of the $1.6 billion.

Susan Wood: That’s what I’m doing now. But my market and check size continues to increase. My services are continually increasing.

Sramana Mitra: In that $1.6 billion, how big do you think your check size is going to get?

Susan Wood: It’s probably three to five times what I’m getting now.

Sramana Mitra: So $10 million to $15 million per drug.

Susan Wood: On that $1.6 billion, it’s not just one trial. There will be 30 trials for that drug. You can take my $10 million and multiply by 30 times. My check size for the phase one is lower and it gets continually bigger. For that $1.6 billion, there are multiple trials within that.

Sramana Mitra: Of the $1.6 billion, how much of that comes to you? Of the $1.6 billion, it’s still in the $10 million to $15 million range.

Susan Wood: What I’m saying is for a $1.6 billion drug to get to market, there could be as many as 30 trials going on.

Sramana Mitra: So 30 times $10 million?

Susan Wood: Yes.

Sramana Mitra: So you take $300 million of the $1.6 billion?

Susan Wood: Potentially. If I can shorten the timeline of a respiratory drug, it’s 12 years. I have a patent timeline of 17 years. Every day I can shorten it, it’s a million dollars a day not being spent on patent. If I can shorten it by two years, I have two extra years that patent is earning me money.

Sramana Mitra: What I like about the discussion is, it’s an industry-level discussion. The pharmaceutical services opportunity is a very large opportunity. You’ve basically provided us an analysis of the space.

Susan Wood: On a high level, I can get that drug to a patient earlier by having better data, better endpoints, and having a better understanding of how those subjects should match to those trials. I’ve given them the data so that you will be classified accordingly. I can match you. That is an enormous value to pharmaceuticals. I’m mining your data from a routine clinical workflow. That’s not how they do it now.

This segment is part 5 in the series : Building an AI-Powered Pharmaceutical Services Business: VIDA CEO Susan Wood
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