Cambridge Temperature Concepts (CTC) is one of the most exciting medical device companies seen in Cambridge, unusual in that it makes almost instant sense to anyone that's ever considered having a family.

It has featured on BBC TV's Britain's Next Big Thing, has been rolled out in Boots and has a number of other products in its pipeline.

For now, its success is based on DuoFertility, which attempts to overcome the problem of infertility by predicting ovulation - the best time to try and conceive.

At its head is Shamus Husheer, an amiable New Zealander with a Cambridge PhD in instrumentation for particle accelerators, "so I am a severe geek," he says.

Here Cabume and the proud geek look at CTC's startup essentials and a little more, including the problem, the solution, the opportunity, the inspiration, the competition, the team, the business model, the funding and the exit strategy.

THE PROBLEM
Raising a family, one of the oldest and strongest human instincts. But not everyone is able to and the resulting distress can be immense.

Some couples will never be able to have a baby because they're sterile, it's medically impossible. Others are infertile, which means they have been trying to have a baby for at least one year without success, and while there's a chance that you can help, it's just that the odds are long.

Common treatments include IVF, expensive and very invasive, urine-based hormone devices, not very successful, and home temperature monitoring, highly inaccurate.

THE SOLUTION
DuoFertility uses temperature monitoring, but does so by placing a small sensor under the arm pit and taking 20,000 readings every day, that's around one every four seconds. The sensor picks up tiny variations in temperature to build an overall picture that is then interpreted back at CTC through its computers and fertility experts who look at the information on a case by case basis.

A recent paper comparing it to IVF (pdf) showed that after just six months, Duo Fertility produced the same pregnancy rate as a cycle of IVF, that is in couples that have previously had IVF or qualify for it under UK rules.

Unlike IVF, other than the sensor, there is no other medical intervention, just a reliance on what Shamus calls the good old fashioned squeaky bed method.

To close the sale, CTC says that if a couple has failed to become pregnant within the year, they get their money back.

THE OPPORTUNITY
An obvious place for Duo Fertility is as something couples should try before IVF, it's cheaper and less traumatic. Shamus says that of the 30,000 couples who go through IVF each year in the UK, one third can be helped by Duo Fertility, that's a target of about 10,000.

However, there's a much larger pool of people who either can't afford IVF or don't want to go through it. Infertility affects around one in six people in the UK, about 3.5 million, with 125,000 couples diagnosed infertile every year. Shamus wants to reach them all.

This problem exists across the world and Duo Fertility already carries the European CE mark with a quarter of its sales coming from outside the UK.

Then there's the US.

"The US market is about five times larger than the UK," says Shamus. "Exactly the same problems, couples choosing their careers first and so it is equally attractive if not more so because in the US, IVF is entirely privately funded, it is not covered by insurance in all except three states, and yet it costs twice as much as it costs here."

And then, of course, there's China.

"As a result of the one child policy, the social pressure on those children that are the end of a family line is absolutely phenomenal and so the impact of infertility amongst those that have difficulty conceiving is absolutely huge and the numbers are enormous."

And the Catholic church, a long time opponent of IVF? That's a topic for another day.

THE INSPIRATION
"It was March 2005, I was sitting in a basement of a particle accelerator in the south of France, studiously avoiding my PhD research as every good PhD does, when I came up for this idea for physiological monitoring, which turned into this product (he holds up the DuoFertility).

"The reason it's in the area of fertility is my parents had a hell of a time having me and my brother, they just about divorced, I therefore had quite a good insight into what infertility does to a family.

"They went through some absolutely barbaric treatments with no success. It's an incredibly common story and it's only starting this company that I've realised how common this story is."

Shamus says he didn't know whether he could do it, but being an instrumentation guy, he knew there was a problem to address with temperature monitoring of the body basal technique. "But, I also knew that the problem there was to do with physiology, when you wake up you are out of thermal equilibrium and so the quality of data is very poor," he says. "It's the way in which you measure and treat the data which is the problem. That's my speciality, measuring data when there's lots of noise.

"That's why I knew I could help with the problem, I didn't know I could make a solution and certainly we had no idea at that stage that we would build a technology that would be as effective as IVF."

Upon finishing his experiments in France, Shamus headed back to Cambridge with his idea in the summer of 2005 and started asking around the university for people with the skills to make it all happen.

He was pointed towards a couple of women doing their PhDs in fertility in the pathology department. "I picked their brains about it and they were all very very interested in the area because as young professional women themselves they knew that a big problem facing women of their of our generation is the need to have the career and then start the family later and that's a huge problem in biology because a woman's reproductive capacity drops off very rapidly when she's in her late 30s.

"These women were acutely aware of the issue, so something that could help to enable them to naturally start families without going through IVF and so forth instantly clicked, more so than it clicked with me."

Shamus then Scott Mackie who had a medical devices background and was now at the Judge Business School and they began to form the idea, entered a couple of university competitions, where they won enough money to cover patents and build a prototype.

Big, cumbersome, potentially lethal (it plugged into a lap top that had to be running all night to record the data, itself connected to the sensor that was directly connected to the woman's armpit).

"The device worked, the quality of data that we got out of it was so much better than any skin surface temperature measurements that have been reported in the literature and as good if not better than many forms of medical core temeprature measurements such as those ear thermometers."

From there on in it was aobut honing the device.

THE COMPETITION
In Vitro Fertilisation (IVF).

Eggs are taken from the ovaries, mixed with sperm outside the body. The fertilised eggs become embryos and are then transferred to the woman's uterus. Anything between four and ten times the cost of DuoFertility, IVF is expensive, invasive and distressing as it inserts hormones into the body that need to stimulate what is in effect a temporary menopause, with further drugs and injections also needed.

CTC says there does exist a large pool of people that Duo Fertility can't help, such as a woman with two blocked fallopian tubes as the sperm is never going to make the journey to the eggs. However, Shamus says about a third of all IVF is done for people that medicine can't see anything wrong with.

Urine based hormone tests.

Or pee-on-a-stick, the colloquial term according to Shamus. These are Du Fertility's biggest competitor at the other end of the market, they are like pregnancy tests, but they show you when ovulation is likely to occur.

"They're very good," says Shamus. "We don't exactly compete, in fact we often bundle up for a free a pile of them for customers that might need them. They're a couple of pounds at Boots, but the same technology is also repackaged and put in a box at £35 or £50 pounds or whatever, all the way up to going to a fertility clinic."

Nothing.

"The competition that's biggest is doing nothing," says Shamus. "The number of people who are 'we'll keep trying'. That may work, but the statistics suggest that's an extremely risky proposition. There's a point where people realise that they do need some help, but unfortunately that's often so late that they need some severe help."

CTC cites a team of six as the founders, though the core is Dr Shamus Husheer and Dr Oriane Chausiaux, they are the two that started at the Cambridge Science Park when CTC first moved out of the student digs.

Dr Chausiaux spent eight years conducting infertility research at Bachelors, Masters and PhD and joined Shamus in 2005, mid-PhD. She was CTC's first chief scientific officer, though the official title didn't accurately reflect the extent of her input at the beginning, typical of a startup, she also took on accountancy, HR, marketing, sales, legal and manufacturing roles.

Shamus was also mid-PhD and was advised to finish it by CTC's investors because of the weight a founder with a PhD gives a medical devices company. He says that the fact it's in instrumentation of particle accelerators is not as irrelevant as one might first assume, both that work and CTC's use fine sensors that need to filter out large elements of 'noise'.

Shamus did experience running a business at a young age, thrown in at the deep end in the worst of circumstances when his father's death meant he and his brother had to take on the family chemical distribution business in New Zealand. Husheer was only 16. He and his brother alternated years running it, working one, studying the other, until they received their first degrees.

"A totally different kind of business than an angel backed technology startup," says Husheer, "but at least you got the idea that customers give you money and if customers dont give you money you have a problem."

More than a grounding in the fundamentals of business though, Husheer says the experience gave him the belief that you could alter your life's path and start a business. "It gave me the sense that actually, you can just jump into a new area, yep it's a learning curve, but learning's fun right?"

Dr Lydia Ferguson, fertility expert with a Cambridge PhD.

Scott Mackie, four years experience in the design, development and clinical testing of medical devices with an Mphil from the Judge Business School of Cambridge University.

Dr David Naumann, a practicing as a surgeon.

Chafic (Sasha) Ayoub, also an Mphil from the Judge Business School, as well as an MSc in Molecular Biology from NYU and paramedic experience with the Red Cross Beirut. Fluent in French, Italian and Arabic.

THE BUSINESS MODEL
Duo Fertility is an over-the-counter device that is avialble in Boots as well as online where it retails at £495. The price is reflective of the PhD qualified staff employed to assess the data for every user rather than the cost of the device's components.

It carries CE certification, which means it is available throughout Europe, but the idea is to push it worldwide.

Further products unrelated to fertility are also under development, with about 10 per cent of the company's cash flow dedicated to this. "We are also taking the same technology and helping with infection control in hospitals, sleep probelms, chronic pain, elderly care, various veterinary applications."

THE FUNDING
CTC won around £20,000 from winning Cambridge University Entrepreneurs' competions and other university programmes.

In December 2007 it raised £250,000 from three main groups of private investors: The University of Cambridge, Downing Enterprise, Cambridge Angels and Cambridge Capital Group. This was later followed by another £300,000 fund raising.

There's a one year grant underway to compare the CTC technology to existing processes in monitoring sleep quality for patients with chronic pain.

More money may be needed if CTC hits the US, says Shamus: "Everyone says it's going to be very expensive to go and enter there because we're probably going to have to do a direct consumer play and if not direct consumer, then we'd probably have to buy in a lot of people in the medical chain, obstatrician, gyancoligists, educating them and so on."

THE EXIT STRATEGY
CTC is looking at further products that would make it a more attractive acquistion target and there are obvious suitors, either in ovulation tests or in medical devices interested in telemedicine. Some have even approached CTC already, but Shamus isn't tempted yet.

"At the moment would be extremely foolish even to start walking up the garden path with someone. The data that we're getting coming in is just validating the product so continously and increasing the value so much.

"Once we've got a stable, reproducable business as opposed to something that we're absolutely booming and learning how to scale at every step, then it makes a lot more sense to start talking about the next step.

"But you've always got to keep in mind where you can take it. As one of our investors has very frequently told us, you want to plan for a company that grows organically and makes a profit because all of the other options are predicated on that: for someone else to make a profit and grow or you have a stock market listing and investors are investing in a company that grows and makes profit, so that's got to be plan number one.

"Yes you might get there quicker if you partnered with a big corporate or you might get there quicker if you did a listing and took on more cash, but you always have to be looking at making a company that's inherently profitable."

Posted by cbm_startup on Sun 11/09/11 @ 21:47