molecular diagnostics business plan

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You may think that your students are only interested in fiction readingbut the truth is that children are fascinated by the world around them. Studies have long touted the benefits of teaching students how to read nonfiction. Nonfiction text helps students develop background knowledgewhich in turn assists them as they encounter more difficult reading throughout their school years. Nonfiction can also help students learn to read text features not often found in works of fiction, including headings, graphs, and charts. Students used to rely on nonfiction non fiction book report activities for research projects from science to art. With the rise of digital sources, many students choose to simply do their research online.

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Molecular diagnostics business plan

The most important is that, often, the diagnostics business model is neither understood nor appreciated by venture capitalists — and, too often, for good reason. The good news, though, is that solutions exist, and several new diagnostics companies have the elements that are essential to securing equity financing and building a sustainable and successful business.

A variety of factors make diagnostics a field whose time has come. With an aging population and the availability of new, expensive medical technologies driving up total costs, the need to allocate resources more cost-effectively is the biggest factor supporting wider use of predictive diagnostic tests. Diagnostics can do more than help save money; there is technology available that can make existing drug therapies safer and more efficacious.

Consumer involvement in healthcare decision making also is accelerating the pace of change. These trends are supported by a new emphasis on translational research to apply advances in knowledge and technology to medical care. The diagnostics field represents an outstanding example of how new knowledge can be applied swiftly to the delivery of health care.

Molecular diagnostics encompasses those tests that are based on a fundamental understanding of normal biological processes and how they are involved in the pathogenesis of disease. Drivers underlying the expected rapid adoption of these new diagnostics include the growing cost of drug therapy, rapid increases in the costs of drug development including clinical trials , and — most importantly — our increasing ability to target therapies to patients on the basis of their genetics or the genetics of their disease.

This ability will enable drug developers and prescribers to conserve resources by reserving therapies for patients in whom they will be safe and effective. Recent successes with targeted therapies, including trastuzumab Herceptin for breast cancer, gefitinib Iressa for lung cancer, and isosorbide BilDil for African Americans with congestive heart failure in this case, using ethnicity as a surrogate marker for genetic differences in drug response have highlighted the tremendous potential of pharmacogenomics.

Currently, more than clinical trials of targeted new therapies are under way for cancer indications alone. The FDA supports this trend, encouraging drug developers to include pharmacogenomic studies as part of the drug discovery and development process. Because targeted therapies typically require an accompanying diagnostic test to identify candidates for the therapy, the launch of these new drugs should increase the value of companies marketing molecular diagnostics.

Despite the clinical and commercial promise of molecular diagnostics and the great advances in technology that make routine use of this approach feasible, venture capital VC investment in diagnostics companies has remained minimal; according to BioCentury , only about 3 percent of all healthcare VC dollars were allocated to diagnostics companies in Why are venture investors hesitant, despite an opportunity to invest in a field seemingly poised for major commercial growth?

Certainly, skepticism is to be expected, given the promise of large and rapidly rising revenues by a multitude of genomic enterprises launched in the boom years of to that failed to materialize for investors. Diagnostics startups also are hampered by the fact that they generally serve smaller markets than pharmaceuticals, with little promise of the blockbuster phenomenon that fuels investor enthusiasm.

Compounding the situation is fear of the lower margins that traditionally have characterized much of the diagnostics industry. Fierce competition and commoditization of routine services has driven down prices and margins in the large service sector that dominates the field.

Another major deterrent to venture investment is third-party payment. Despite the promise of far greater efficiency and effectiveness from pharmacogenomic-guided therapies, insurers may be reluctant to pay in the absence of guarantees of near-term, tangible financial benefits.

Payers may not be won over easily by studies that show benefits to patients but limited cost savings, and they may balk at paying for disease-susceptibility testing — where the payoff from lifestyle changes, prophylactic measures, and early diagnosis may be far in the future. Regulatory issues can be just as confounding for investors. While pharma companies confront the reality of a shift from the blockbuster model of drug development to new models focused on targeted or personalized therapies, there are few role models, nor is there a clear regulatory path for the codevelopment of diagnostic and therapeutic tools.

Two reasons investment in diagnostics is attractive today: Technological advances are facilitating the discovery of better biomarkers, and earlier revenues are possible than with therapeutics. These environmental factors are not the only hurdles to greater VC investment in diagnostics. Compounding the problem further is the fact that venture investors do not fully understand the IVD company model — a situation that is made worse by the fact that too few of the new diagnostic ventures have articulated a compelling business model.

In assessing potential diagnostics investments, venture investors bring along their preferences for candidates with strong potential return on investment ROI , near-term revenues, a predictable regulatory environment, a generous or at least manageable reimbursement climate, and tangible ways to manage risk. Based on the factors described above, VCs do not see how most diagnostics ventures can score well using these criteria.

So, as an institutional investor in diagnostics, why am I bullish? I believe that future leaders in the new diagnostics space have the potential to return handsomely on the ROI criterion. In some ways, they mimic the specialty pharmaceuticals model that has been a favorite of life sciences VCs for the past few years. Optimally focused diagnostics ventures require much lower up-front investments than do traditional biotech enterprises to reach revenue generation, thus reducing the amount of investment required to achieve an exit for investors.

Although the most likely exits will be through acquisition, I believe the possibility exists for at least a few of the significant players to integrate revenues from research and development and from service, and to build significant diagnostic franchises. In all this, technology is a key enabler. High-throughput, multiparametric analysis of nucleic acids and proteins in normal and diseased tissue is facilitating the discovery of more informative biomarkers.

The establishment of highly annotated biobanks of tissue, DNA, and other biological samples is facilitating rapid validation of those markers. The development of platforms, particularly those based on micro- and nanotechnology, ultimately will enable the translation of these new biomarkers into useful assays in the clinical testing lab. Another enabler is a regulatory process that can be simpler and more straightforward than that for drugs.

Depending on the particular test, full FDA review then can proceed under the less rigorous k process or through a more extensive premarket approval application. In the diagnostics space, a company with a compelling platform capable of yielding a pipeline of diagnostics can move rapidly through the research and development process to commercial launch, and do this in an iterative way. Revenues can be generated early by performing tests in the reference lab while the decision is being made whether to commercialize and market the tests oneself, develop a partnership with exiting IVD manufacturers, or out-license.

Another possible new business approach is a mixed product-and-service model, whereby companies can reap the financial rewards of their unique diagnostic assays while participating in the margins from the service element of the business.

In this model, discovery and development of new markers is layered on an existing menu of tests performed in a reference lab. The value here is the potential to move diagnostics and platforms rapidly from discovery phase through validation, using an established infrastructure that includes operational, regulatory and reimbursement expertise.

We already have examples of new IVD companies that have attracted significant investment from VC and other sources of capital. The following represent three of these examples:. ViroLogic see box below is leveraging its diversified product base in HIV, immunologic, and cancer testing to build a sustainable, high-growth business that seems well positioned to prosper as phar-macogenomics and molecular testing become more widely used.

A pioneer in developing genomic assays to help physicians monitor and tailor therapy for HIV patients, ViroLogic has an established reference lab to assay patient samples and a service business to support biopharmaceutical companies developing treatments for HIV and cancer. XDx , another top-tier, venture-backed molecular diagnostics company, is applying microarray, real-time polymerase chain reaction or PCR, a technique for amplifying a selected region of a DNA molecule and other bioinformatics technologies to develop new ways to monitor the immune system.

AlloMap, launched in April, targets the postcardiac transplant market. Yet another pioneer illustrating the potential of this new business model is Genomic Health , which has top-tier VC financing including the firm that first funded Gen-entech , and it has begun commercializing its first product as a home brew. Data generated in its clinical studies, recently reported in the New England Journal of Medicine , support its Oncotype DX test measuring the expression of a number of selected genes in breast cancer as being more predictive of patient outcome than standard pathology testing.

The new test is intended to help physicians and patients make rational decisions about the management of newly diagnosed breast cancer. The features listed in the box at the top of this page make Genomic Health a good model for future VC-backed ventures. Others are in development, with throughput as high as , samples per run. Jonathan L. Schmid-Burgk et al. The companies pioneering such diagnostic techniques could well remain in the market in the future thanks to their technological expertise, manufacturing capabilities, and market acceptance established during the pandemic.

As a result, China now accounts for between 70 and 90 percent of global capacity for major molecular-assay components Exhibit 2. That could eventually make China the leading global supplier for the diagnostics, too. For example, the number of nucleic-acid-isolation manufacturers expanded tenfold from around 30 to in that six-year period Exhibit 3. The molecular-assay manufacturers received extensive financial, operational, and regulatory support from the Chinese authorities.

For example, Chinese company BGI, a major player in the IVD industry, has not only exported millions of tests but also supplied equipment and the operating model for more than 70 diagnostics laboratories globally, including in Europe and the United States. By November , that amounted to a total estimated capacity of about , tests per day. In such a way, BGI and other Chinese companies have been able to build partnerships and alliances with new customers in new markets—facilitated, in some instances, by accelerated regulatory-approval processes.

Regulations may well be tightened again once the pandemic abates. However, the new laboratory capacity, as well as the new customer relationships for players like BGI, will likely endure. Diagnostic-test manufacturers are playing a critical role in government efforts to respond to the COVID pandemic. Yet their work to increase the IVD supply is also initiating changes in the industry that could lead not only to greater adoption but also to greater competition.

Much more than the course of the pandemic is uncertain. What role will POC diagnostics play in the delivery of care? How will the supply landscape for reagents evolve? How will regulators respond to the high demand for tests? Will they authorize at-home molecular tests?

Those are some of the important questions that IVD-test manufacturers need to consider as they strategize to position themselves for long-term success. For although the precise nature of the future for the IVD industry is unclear, it is clear that change is afoot. Companies would be wise to prepare. Never miss an insight.

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Understanding the market demand for your services also helps identify opportunities to grow your business in the future. Market research includes an assessment of your competition. Make note of these differences to define your marketing plan. A startup lab needs equipment that requires an initial financial investment.

As an expert in your field, create a list of what equipment is necessary for molecular diagnostics. Next, make a list of the office equipment necessary to start your lab business. One way to accomplish this is to envision your daily business routine. What tables do you need to perform your work? How many office desks are needed to run your business?

What computers are necessary for processing results and billing clients? All of these needs require initial capital expenditures to use in creating your startup budget. While defining the equipment needs for your startup lab, an idea of how much physical space you require will develop. Once you figure out how much space you need, research market rental rates.

Even the most brilliant research scientist needs help to run a lab business. Personnel needs start with the number of fellow researchers you need for an initial launch. Accounting is necessary to running a business and is easily outsourced.

Accreditation is essential for medical labs. Research what accreditation is necessary for a molecular diagnostics lab business. Then, develop a plan on how to achieve it, as well as how much it will cost. Researchers love data. Now is the time to take all the information from your research to draft a business plan. Your business plan is important for several reasons. One of the main reasons is to make the case for financing your startup lab business. The business plan process shows how much funding you need and helps you get it.

With a solid business plan, your focus shifts to securing financing. There is still some research to do regarding financing. All these products provide the utmost care to each part of the car. For instance, the exterior surface cleaners help to rid cars of dirt, ….

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Recent successes with targeted therapies, including trastuzumab Herceptin for breast cancer, gefitinib Iressa for lung cancer, and isosorbide BilDil for African Americans with congestive heart failure in this case, using ethnicity as a surrogate marker for genetic differences in drug response have highlighted the tremendous potential of pharmacogenomics. Currently, more than clinical trials of targeted new therapies are under way for cancer indications alone.

The FDA supports this trend, encouraging drug developers to include pharmacogenomic studies as part of the drug discovery and development process. Because targeted therapies typically require an accompanying diagnostic test to identify candidates for the therapy, the launch of these new drugs should increase the value of companies marketing molecular diagnostics.

Despite the clinical and commercial promise of molecular diagnostics and the great advances in technology that make routine use of this approach feasible, venture capital VC investment in diagnostics companies has remained minimal; according to BioCentury , only about 3 percent of all healthcare VC dollars were allocated to diagnostics companies in Why are venture investors hesitant, despite an opportunity to invest in a field seemingly poised for major commercial growth?

Certainly, skepticism is to be expected, given the promise of large and rapidly rising revenues by a multitude of genomic enterprises launched in the boom years of to that failed to materialize for investors. Diagnostics startups also are hampered by the fact that they generally serve smaller markets than pharmaceuticals, with little promise of the blockbuster phenomenon that fuels investor enthusiasm. Compounding the situation is fear of the lower margins that traditionally have characterized much of the diagnostics industry.

Fierce competition and commoditization of routine services has driven down prices and margins in the large service sector that dominates the field. Another major deterrent to venture investment is third-party payment. Despite the promise of far greater efficiency and effectiveness from pharmacogenomic-guided therapies, insurers may be reluctant to pay in the absence of guarantees of near-term, tangible financial benefits.

Payers may not be won over easily by studies that show benefits to patients but limited cost savings, and they may balk at paying for disease-susceptibility testing — where the payoff from lifestyle changes, prophylactic measures, and early diagnosis may be far in the future.

Regulatory issues can be just as confounding for investors. While pharma companies confront the reality of a shift from the blockbuster model of drug development to new models focused on targeted or personalized therapies, there are few role models, nor is there a clear regulatory path for the codevelopment of diagnostic and therapeutic tools.

Two reasons investment in diagnostics is attractive today: Technological advances are facilitating the discovery of better biomarkers, and earlier revenues are possible than with therapeutics. These environmental factors are not the only hurdles to greater VC investment in diagnostics. Compounding the problem further is the fact that venture investors do not fully understand the IVD company model — a situation that is made worse by the fact that too few of the new diagnostic ventures have articulated a compelling business model.

In assessing potential diagnostics investments, venture investors bring along their preferences for candidates with strong potential return on investment ROI , near-term revenues, a predictable regulatory environment, a generous or at least manageable reimbursement climate, and tangible ways to manage risk. Based on the factors described above, VCs do not see how most diagnostics ventures can score well using these criteria. So, as an institutional investor in diagnostics, why am I bullish?

I believe that future leaders in the new diagnostics space have the potential to return handsomely on the ROI criterion. In some ways, they mimic the specialty pharmaceuticals model that has been a favorite of life sciences VCs for the past few years. Optimally focused diagnostics ventures require much lower up-front investments than do traditional biotech enterprises to reach revenue generation, thus reducing the amount of investment required to achieve an exit for investors.

Although the most likely exits will be through acquisition, I believe the possibility exists for at least a few of the significant players to integrate revenues from research and development and from service, and to build significant diagnostic franchises. In all this, technology is a key enabler. High-throughput, multiparametric analysis of nucleic acids and proteins in normal and diseased tissue is facilitating the discovery of more informative biomarkers.

The establishment of highly annotated biobanks of tissue, DNA, and other biological samples is facilitating rapid validation of those markers. The development of platforms, particularly those based on micro- and nanotechnology, ultimately will enable the translation of these new biomarkers into useful assays in the clinical testing lab.

Another enabler is a regulatory process that can be simpler and more straightforward than that for drugs. Depending on the particular test, full FDA review then can proceed under the less rigorous k process or through a more extensive premarket approval application. In the diagnostics space, a company with a compelling platform capable of yielding a pipeline of diagnostics can move rapidly through the research and development process to commercial launch, and do this in an iterative way.

Revenues can be generated early by performing tests in the reference lab while the decision is being made whether to commercialize and market the tests oneself, develop a partnership with exiting IVD manufacturers, or out-license. Another possible new business approach is a mixed product-and-service model, whereby companies can reap the financial rewards of their unique diagnostic assays while participating in the margins from the service element of the business.

In this model, discovery and development of new markers is layered on an existing menu of tests performed in a reference lab. The value here is the potential to move diagnostics and platforms rapidly from discovery phase through validation, using an established infrastructure that includes operational, regulatory and reimbursement expertise.

We already have examples of new IVD companies that have attracted significant investment from VC and other sources of capital. The following represent three of these examples:. ViroLogic see box below is leveraging its diversified product base in HIV, immunologic, and cancer testing to build a sustainable, high-growth business that seems well positioned to prosper as phar-macogenomics and molecular testing become more widely used. A pioneer in developing genomic assays to help physicians monitor and tailor therapy for HIV patients, ViroLogic has an established reference lab to assay patient samples and a service business to support biopharmaceutical companies developing treatments for HIV and cancer.

XDx , another top-tier, venture-backed molecular diagnostics company, is applying microarray, real-time polymerase chain reaction or PCR, a technique for amplifying a selected region of a DNA molecule and other bioinformatics technologies to develop new ways to monitor the immune system. AlloMap, launched in April, targets the postcardiac transplant market. Yet another pioneer illustrating the potential of this new business model is Genomic Health , which has top-tier VC financing including the firm that first funded Gen-entech , and it has begun commercializing its first product as a home brew.

Data generated in its clinical studies, recently reported in the New England Journal of Medicine , support its Oncotype DX test measuring the expression of a number of selected genes in breast cancer as being more predictive of patient outcome than standard pathology testing.

The new test is intended to help physicians and patients make rational decisions about the management of newly diagnosed breast cancer. The features listed in the box at the top of this page make Genomic Health a good model for future VC-backed ventures. Consistent with its first-mover status, Genomic Health recently announced the filing of an S-1 registration with the U. Securities and Exchange Commission for its initial public offering. As BioAdvance considers investing in these new-era molecular diagnostic firms, what lessons have we learned from our examination of the field?

The combination of proprietary technology and demonstrable clinical and economic benefits is key. Successful companies focus on assays that address an underlying biology or disease state, and apply high-throughput techniques and bioinformatics technologies to identifying valuable biomarkers. The pipeline is essential — IVD companies need a platform for developing and launching the multiple pipeline products needed for commercial success.

Access to patient data also is a necessity — validation is required from large patient cohorts, both from well-annotated banked specimens and well-designed and executed clinical studies. The establishment of an in-house reference laboratory provides revenue, as well as the means for data generation and early acceptance by healthcare providers.

Building regulatory experience, from operating a clinical reference lab and through design and execution of validation studies and clinical trials, is critical. A strategy that ensures adequate third-party payment will be challenging, but it is essential. Securing this will necessitate a proactive, collaborative, and sustained efforts.

By May, some Indian RT-PCR laboratories had been set up in an effort to help manage the pandemic, increasing testing capacity 1,fold. The additional capacity will likely remain in place as the pandemic subsides, leaving the RT-PCR assay as the dominant method for diagnosing most viral infections in India in the future. Similar developments are afoot elsewhere, suggesting a much broader adoption of RT-PCR globally as testing capacity and the installed-equipment base expand.

The Rockefeller Foundation estimated that around 70 million POC tests a month would be conducted in the United States by October , with the number increasing to perhaps as many as million a month by the following January. Christina Silcox et al. Drive-through centers were set up in Massachusetts, in the United States, for example, giving on-the-spot results.

Laboratory-based RT-PCR tests typically take at least 24 hours to show results once the samples reach the laboratory. As the COVID pandemic gathered force, demand grew for not only faster testing but also testing in much higher volumes. NGS has benefited from similar regulatory support. After decades of development in precision medicine, NGS could potentially become a platform for large-scale diagnostics, meaning that it would be suitable for testing entire communities or for conducting epidemiology studies.

Others are in development, with throughput as high as , samples per run. Jonathan L. Schmid-Burgk et al. The companies pioneering such diagnostic techniques could well remain in the market in the future thanks to their technological expertise, manufacturing capabilities, and market acceptance established during the pandemic. As a result, China now accounts for between 70 and 90 percent of global capacity for major molecular-assay components Exhibit 2.

That could eventually make China the leading global supplier for the diagnostics, too. For example, the number of nucleic-acid-isolation manufacturers expanded tenfold from around 30 to in that six-year period Exhibit 3. The molecular-assay manufacturers received extensive financial, operational, and regulatory support from the Chinese authorities.

For example, Chinese company BGI, a major player in the IVD industry, has not only exported millions of tests but also supplied equipment and the operating model for more than 70 diagnostics laboratories globally, including in Europe and the United States. By November , that amounted to a total estimated capacity of about , tests per day.

In such a way, BGI and other Chinese companies have been able to build partnerships and alliances with new customers in new markets—facilitated, in some instances, by accelerated regulatory-approval processes. Regulations may well be tightened again once the pandemic abates. However, the new laboratory capacity, as well as the new customer relationships for players like BGI, will likely endure.

Diagnostic-test manufacturers are playing a critical role in government efforts to respond to the COVID pandemic. Yet their work to increase the IVD supply is also initiating changes in the industry that could lead not only to greater adoption but also to greater competition. Much more than the course of the pandemic is uncertain.

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Even the most brilliant research scientist needs help to run a lab business. Personnel needs start with the number of fellow researchers you need for an initial launch. Accounting is necessary to running a business and is easily outsourced. Accreditation is essential for medical labs. Research what accreditation is necessary for a molecular diagnostics lab business. Then, develop a plan on how to achieve it, as well as how much it will cost. Researchers love data. Now is the time to take all the information from your research to draft a business plan.

Your business plan is important for several reasons. One of the main reasons is to make the case for financing your startup lab business. The business plan process shows how much funding you need and helps you get it. With a solid business plan, your focus shifts to securing financing. There is still some research to do regarding financing. The first thing is to check into available grants for your molecular research.

Researching private funding interests in your molecular diagnostics lab starts with identifying opportunities. When you determine private finance opportunities, keep in mind that you need to convince investors to buy into your startup lab.

With your research and business plan in hand, making your case to investors is easier. Your molecular diagnostic lab requires enterprise software to operate. And we want you to be successful, which is why we provide value-added information on our website for startup labs. We know starting a new lab is not an easy task.

Startup medical labs are in a unique position to thrive in the current market. Running a lab business requires more than passion and medical knowledge. Visit our website to explore all the resources available for your molecular diagnostics startup lab today! About Aurora Diagnostics Genetics Associates. Hit enter to search or ESC to close. Research Physical Needs for Your Startup Lab A startup lab needs equipment that requires an initial financial investment.

The third, fourth, and fifth target areas involved assessment of our technology, our work force skills, and physical space needs. We wanted to determine which subspecialties were ordering which procedures, and how many they ordered.

This allowed us to zero in on the specialties of internal medicine and ob-gyn as the physicians most likely to regularly order molecular tests. This became our target market. That will increase our molecular test menu to about 40 assays. We plan to introduce a new molecular assay about every three months. We wanted our marketing and sales campaigns to succeed from day one. These described, in detail, what the assay could do, how to use it clinically, how to interpret the positive and negative, and what value it would add to patient care.

According to Kiechle, the clinical molecular diagnostics program at BRL has attained six noteworthy achievements. Third, we effectively evaluated the specific needs of our market, then filled that need with our enhanced molecular test menu. Knowledgeable clinicians are one reason why molecular test volumes grew in such a sustained manner. Our molecular lab now has a medical director, one Ph. If they work for Beaumont for a certain period of time, the loan is forgiven.

They have an incentive to stay. It is designed to appeal to all levels of medical personnel interested in molecular diagnostics, from physicians to technicians. This symposium has accomplished two things. It has added to the credibility of our molecular testing program and has helped us identify individuals interested in working in our molecular lab.

This helped immensely in our ability to introduce that technology and use it to expand specimen volume and revenues. It is a building designed to properly support clean rooms and other facility features necessary for molecular testing. It is also designed to support workflow for other laboratory processes. The building has easy access for our reference lab couriers, for example.

It allows us to support inpatient, outpatient, and outreach testing activities from this centralized site. To further build upon these achievements, Kiechle can identify several improvement goals for the BRL molecular testing program. That means doing a complete payment validation of every transaction that has taken place.

This is a definite problem on the molecular side. For now we use the test costs that we know, along with average reimbursement figures for those tests. These numbers go into our financial models. We must consistently emphasize and inform payers about the value of the tests we provide. One strategy is to use ASRs analyte-specific reagents as a source of new assay protocols.

This is not good for the laboratory business nor for patient care. For Beaumont Reference Labs, the success of its clinical molecular diagnostics program is no accident. From its inception, the executive team at BRL has taken the time to carefully study the proposed services, gather accurate data, and then develop a detailed business plan.

This is good management execution and maximizes the ability of the lab to succeed with the proposed business plan. Pathologists and lab directors interested in expanding their own molecular testing activities should take careful note of this fact.

After gaining the go-ahead, the lab maintained its credibility with the parent health system by achieving the financial and performance objectives defined in the business plan. This creates a collaborative environment between the laboratory and health sys- tem administration. You must be logged in to post a comment.

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