MELA Sciences, Inc. (MELA) Analyst Meeting Conference Call August 13, 2014 8:00 AM ET
Darrell Rigel - MelaFind Scientific Advisory Committee
Rosemary Crane - President and Chief Executive Officer
Unidentified Company Representative
Good morning, and thanks for coming this morning, and braving the weather. Today it's my pleasure to introduce a couple of speakers this morning. One is Darrell Rigel, who's Professor of Dermatology at NYU Langone Medical Center. Dr. Rigel's research focuses on the risk factors and prognosis for malignant melanoma and other skin cancers.
He is lead editor of Cancer of the Skin, has served as President of the American Academy of Dermatology, American Society for Dermatologic Surgery and The American Dermatological Association. It's really a pleasure to have Dr. Rigel here with us this morning.
His presentation will be followed by a presentation from Rose Crane, CEO of MELA Sciences. And then after the presentations, we will open the floor for Q&A.
Well, thank you very much for that nice introduction on this beautiful rainy day, you don't think about melanoma maybe, but it's certainly important issue to us as dermatologist, and you'll see a significant national public health issue.
What I'd like to do with you this morning is first talk about why this is such an important problem, really the magnitude of issue. And then talk to you a little about how MelaFind can make an impact from our point of view as physicians and dermatologist involved in this area.
So just to begin with, why this is such an important problem, you can see this is the 2014 data, and you can see that there are more skin cancers than all other cancers combined in the United States. This is a low-end estimate about 2 million, but probably the real number is probably 3 million to 4 million skin cancers each year in the United States really diagnosed. So a significant public health problem, but most importantly more than all other cancers combined.
Now this is where you look at the types of skin cancers. You can see that melanoma makes up only a small part about 5% of the overall skin cancer pie, but it is the most important, as you'll see in a moment, because it is the one type of skin cancer, where people can and do die from it.
This is one of the first papers I was involved in, so it's over 30 years ago with Al Kopf, and at that time we made the first estimates of the lifetime risk of America's developing melanoma. And you can see at that point that it was about one in 250 in 1980, we projected it would be one in 150 by the year 2000. And actually when that paper came out, we were criticized for being too liberal on our projection, but it turns out we weren't too conservative of our projections, because we hit that numbers you could see by 1985, the one in 150.
This is the current data for 2014, the lifetime risk of an American getting invasive melanoma, and this is all comers, all Americans is one in 53. And should that rate of increase continue, we estimate it will be about one in 40 for invasive melanoma by 2020. So despite everything we're doing, you can see there is a constant increasing rate of risk of melanoma in the U.S.
Now if you add to that, 76,000 cases of invasive melanoma, another 63,000 cases of in-situ melanoma. In-situ melanoma is earlier, where it has invaded yet. And put it altogether, the risk of getting any kind of melanoma in the U.S. is now lifetime risk is about one in 24 or about 4%. And again, that's a significant public health issue and problem.
This is data from the American Cancer Society, and this is all major cancers. You can see now, melanoma is the fifth most common cancer in men, seventh most common cancer in women, but way up there in terms of scale and frequency. And more importantly, this is actually incidence rates of different cancers of the U.S., melanoma is this tanned line, so you can see it's increasing both in men and women.
A lot of cancers are decreasing in rate. This is actually prostate cancer and this is when PSA testing came in. So that's why there was a spike, because earlier cases were taken out of the pool, but the overall trend was basically like that. So prostate cancer is still increasing, but more importantly overall melanoma is still increasing for men and women in the U.S.
Now, melanoma, we'll show a couple of slides here to show you, it's a clear cut case where early detection is good, and we've gotten better in survival rates with melanoma. And you can see over here, this is again data from the American Cancer Society, that over time the five-year survival rate for melanoma in the U.S. has improved, but it's only improved because of early detection.
The treatments for advanced melanoma, I'm sure many of you are, I know the companies are involved in those. They are still not quite there yet, getting closer, but the real cure for melanoma is not to get it or to catch it early. And this just demonstrates, there's a slide that this is basically melanoma that's localized, melanoma that's made into nodes and melanoma that's made beyond the nodes.
And you can see it's a dramatic difference, if you catch and treat this cancer early, probably at least as much, if not more, than any other one of the major cancers. And again, this shows you over time with localized disease, if you catch it early, it's almost a 100% curable.
So to remind you the [ph] dialogue you'll get in melanoma, who die of melanoma, it's estimated over 9,700 people will die from melanoma in the U.S. this year. So every one American dies every hour from this cancer. And this is just to show you the data for the last nine years, and what you see from this is that despite everything we're doing more people continue to die from this disease. So that's the challenge we face as dermatologist, to try to stop that from happening and despite everything we're doing to put the date, we're not reaching that goal.
So again, about 80% of skin cancer deaths are from melanoma. The incidences have been doubled every 10 to 20 years. The number of melanoma case is increasing worldwide, faster than for any other cancer that's out there, and every hour 15 Americans get melanoma and one dies roughly, so one-plus dies. So just summarizing it, it's a significant public health problem, and therefore we need all the tools we can get to try to make an impact on this.
So why is early detection show important? Well, this is data to show that the most important prognostic factor in how you're going to do in melanoma is how thick the melanoma is. In other words, how much it is penetrated down from the surface of the skin. And what you see is melanoma in-situ, in-situ means in place, so it hasn't invaded yet, the opposite of invasive.
And you can see there the survival is virtually 100%. Viewed at 1 millimeter, you can see the survival because of the fall of, as you get down further to different stages, the survival becomes much poor. So again, the earlier you detect this cancer, the better you do, and that's the goal.
So here is the challenge as we face. Which of these lesions is a melanoma? I think if you saw all four of these, I haven't taught you what melanomas looks like, you think all four of these lesions look little funky. And the fact is, these are all melanomas, but they tend to be relatively advanced melanoma, these are not hard one. So you can see this has got a big nodule on it. This has a big ulcer. I hope that's not too gross for you for breakfast, I apologize.
Now, as I decide, I gave a lecture, we like testified before a congressional hearing on ozone depletion, and they had it live on C-SPAN, and I was told before to not bring gross pictures, because it was 10:00 in the morning on East Coast time, so 7:00 in the morning California. So I brought the grosses pictures I can find. And it really did make an impact and C-SPAN got some complaints about it. So I hope I'm not ruining your breakfast also.
So these are clearly all they are problematic. If you do nothing about skin cancer, you know that these are problematic. But these are more of the kinds of things that we see, and I will tell you that two out of four of these are melanomas and two of them aren't. These are all from my patients, so they're all biopsy positive. So I want you to think about that for a second, you're faced with a patient walking in or patients walking in, which of these are the melanomas you have to biopsy, which of them aren't?
And I will tell you now that the answer was the two melanomas are this one and this one, but this one and this one weren't. So it's not always so obvious, as to what they are, and this is the typical patient that we see. So it's not just a bunch of lesions out of context. This guy comes in and he's got all these lesions, which one is the melanoma on him. Well, it turns out, it's not one of the big ones, actually this was the melanoma, right here on you have. So it's not so obvious.
When you see this, and you can use your best clinical judgment, but having a tool that helps you out to do better with this, really makes a difference. And this is another example, why early detection is important. Hopefully, you'll never see a case this again. This is a bottom of a person's foot, and he came to see us at NYU, and we wanted to biopsy it. As you can see, it's a little bit funky looking. And he was running off to a meeting in Europe, catching a plan that day, didn't want to have biopsy.
So he came back 11 months later, and this is the same lesion. You can see it's still less than a 1 centimeter. Now, it's thickening out its rays. He already had positive lymph nodes in his groin. In fact, he expired about four months after that picture. So what else also makes melanoma so lethal? The metastasis is very early of its course. And a melanoma, the size of a dime on your skin has a 50% chance of having already spread, so you have to detect it early.
So how accurate are we as dermatologist at detecting melanomas? Well, we think we never miss them. But the reality is when you do test, we're better than anybody else, but we still do miss them. These are bunch of studies that were done looking at these and it's hard to actually to do these studies. So you're not really looking at a real clinical context, so you do retrospective reads and stuff like that, and we'll talk about that in a moment, but you can see that, overall the data is such that the number is about 80% on average or so sensitivity for dermatologist.
And one study showed a little more-ish 94%, and used more advanced lesions here. These were thicker lesions, were easier to diagnose, I showed you earlier. But in general, almost every study says, we're about 80% right, which is again better than anybody else to do this.
So how do you these studies to determine how right people are? There is something called reader studies, where you're giving images, just kind of like I showed you before, and based on the data provided, you decide if its melanoma or not, would you biopsy it or not. And this is just an example of atypical reader study.
So here is a lesion you got it distant, here is the close up, here is looking under dermoscopy, we'll talk about that in a moment. And then I would ask you, is it a melanoma? So how many people think this one is a melanoma, raise your hand? How many think it's not a melanoma? If you don't raise your hand, you can't go for the consoles, so you have to one way or the other raise it.
Well, it turns out actually this is an early melanoma. So the early ones are much tougher to pick out and this is probably a representative one that we see right in the middle of a degree of difficult to diagnose. So not only a dermatologist should be 80% right, but if you look at a bunch of dermatologists, they get it 80% right, but they tend to pick a different 80% subset. So the best diagnostic tool in the world would be a room full of dermatologist that go in with the majority vote, but again its kind of hard to do that and hard to build that out.
So how do we do it? Well, one of the ways is looking at unaided visual detection, the A, B, C, D, Es, we'll talk about in moment in the so called ugly duckling sign, when a mole look so different than its different neighbors. And then there is a technique called dermoscopy, which is looking through the skin.
It's basically a modified otoscope looking into the ear, but it has a polarizer around the end, so you can look down a little bit to the skin and see some other features. And then there is other technique called confocal microscopy, and again that's a more expensive microscope that lets you look down at the skin a little bit too.
But when you talk about unaided visual detection, these are the A, B, C, D, Es. Now A, B, C, D, Es that are group at NYU developed and published in 1985. And the idea behind that was to teach non-dermatologist physicians in a way public what early melanoma looked like. And that in fact has been effective number of studies I looked at and showed that it is one of the ways to help detect melanoma, when these are early and you can see these are examples of what early melanomas might look like.
Now, there are limitations with this, because you only can look at the surface of the skin, it's very subjective, and maybe less useful for early melanomas, because not all of them exhibit those characteristics. Also when we said the 6 millimeter criteria for early melanoma that was almost 30 years ago, and we're getting better at detecting early melanomas. So there are a lot of melanomas treated in less than 6 millimeters now.
So now there are other ways to augment these kinds of diagnoses, and one of them obviously is MelaFind, which uses a multispectral digital skin lesion analysis in an attempt to try to determine whether or not the lesion has enough atypia to be considered for biopsy.
So again, this is a slide from the company, and you can see the idea behind this is that this is a device that uses a number of narrow band wavelengths to look down into the skin at different levels and to look at to degree of atypia of the architecture of the cells to determined whether or not the lesion is atypical enough and be considered for biopsy. And again, the different wavelengths allow it to penetrate down into the skin, down to about 2.5 mm of depth.
So again, when we see things clinically, this is what we do. But with MelaFind, there is a whole bunch of other features that are in there and the classifier scores that, in fact, we cannot visualize because also some of the wavelengths that are used are infrared, so we can't see those with a naked eye. So that additional piece of information with the ability to see down to 20 microns, enables us to get additional information that we cannot see with the naked eye.
And I'm going to show you a number of these studies that we've done, looking at this. And you can see the most important thing is here is one of the studies we did, we looked at a 179 dermatologist and this is one that's been published, and you could see that the sensitivity beforehand was 69%, which were a small sample sizes in that 80% range, after MelaFind 94%. And more importantly in this particular series of 24 lesions, there were five melanomas. The percent of the dermatologist who would biopsy all five prior the information was 13%, it actually went up to 70% when biopsying all five of them.
The specificity, all history and peripheral factors went up in a nice way to do this, so that additional piece of information beyond what we can see visually made a difference than what we did. And I'll show you an example from that study, we did another reader study, instead of making sure individual lesions, we had four virtual patients, who each had six spots.
So it was like a patient coming to see you, who had six moles and wanted to know which ones had to be biopsied, this was a female in her 20s, and this is the lesion over here, so we gave a distant. Here's a close-up of the lesion, and this is the dermascopic views. This is looking at it with a polarized view to see the area. And again, we've shown a composite, we asked would you biopsy this lesion, and how many of you would biopsy this lesion now, if you were dermatologist? I see. Okay. Good. We got one of the dermatologists at back, there my fellow did one of biopsy, you should watch him, he has the answer.
So now we told him MelaFind had a result. This were the earliest days with high disorganization. And now would you biopsy this lesion? How many of you would you, if you had the additional information? Okay. And it turns out it was a melanoma. So we then did another part of the study to see that how much of an influence did having the MelaFind information make a difference in terms of the biopsy process.
So this was that series of 179 derms. And here that the sensitivities for the melanomas prior having the MelaFind information, here is what if you were given the MelaFind information, and you can see that all five of the lesions, the people biopsied went up by having the MelaFind information.
We did the same study with a 126 dermatology residents and you can same, actually same as that cases went through this and you can see the sensitivity for the residents were lower than the full fledged dermatologist. But it also went up overtime, improved as it did for the full fledged dermatologist.
And then, the percentage of people biopsying the lesions that turned MelaFind, said, were of low disorganization, dropped as it should, again for the residents as well as the practicing dermatologist. So not only did you get better with the high risk ones, but you were able to do fewer biopsies with the low risk ones. So the conclusion from this paper was that, having the additional information was quite helpful to do that.
Now we took this to the next level about nine, 10 months ago now, we started working on this, where instead of telling something was high and giving you an arbitrary score, the idea behind this was, could you look at data from the original trial that was done with the 1,600 and somewhat cases, and use the data to predict a probability that instead of just giving you a score, the probability this was a melanoma or this was a melanoma or another type of high-grade lesion that was worthy of biopsy, so a pre-melanoma or high-risk mole.
We actually did a logistic regression model on both of those datas, and here is actually the data from this, and the output from the MelaFind device now, instead of just giving you a score or high/low, was to actually give you a probably density. So in this particular case, the red is the distribution of the melanomas. Here is the score of this particular lesion. So the probability of this lesion being a melanoma was 3.6% or the probability of being a melanoma high-grade dysplastic or it's probably called atypical melanocytic hyperplasia, which is basically high-risk lesions, was about 5.7%.
Now, most people obviously saw something 5.7% of a chance of being problem, you'd say, take it off, right? And this gave you a quantitative way, in an attempt to measure this, and this is what the new interface has for the devices, which is being really much more useful for physician. So we did look at this, looking at the result of the impact of predictive probability and this was actually a study done on dermatologists last winter with having the predictive probability information.
And again, I will go through all the details, but what you see is the sensitivity improved, the specificity improved and the overall biopsy rates state about the same. So although there was same number of biopsies, but your yield for melanomas were higher, because you're biopsying more melanomas and not biopsying as many benign lesions.
And again, there were five melanomas of the series of the percent biopsying, all five melanomas went up dramatically. Number of non-melanoma biopsy dropped, and we something call diagnostic accuracy, which is how accurate you are in predicting whether other biopsy should be done or not, that in fact went up dramatically too.
These were the five melanoma cases and you can see it got better and all of them be pre and post-MelaFind got improved, and these were the seven non-melanoma cases that you can see with one minor exception, the number of biopsies dropped with the non-melanomas with this two. So that's a pretty dramatic example of that.
Now, this was the second study we did this with resident dermatologists, again giving them the size of the information, the probability information too. Same idea you see that the sensitivity improves, specificity improves, with the overall biopsy rates staying about the same. So that's what you want to achieve. Percent biopsying in all five melanomas go from 3% to 49%, number of non-melanomas biopsy dropped and the diagnostic accuracy goes up. So again, the kind of results you'd want to achieve to get better handle on doing the appropriate lesions of the biopsy.
And again, here in the melanoma cases, all five of them go up dramatically after getting the MelaFind data. And again, the non-melanoma cases, there is just that one case that goes up, the case number five, which was all kind of a funky looking lesion. But the fact is, overall the number of non-melanomas that were not biopsied improved too.
And then this was a study we just did in June, which was kind of a fun, and we just actually submitted the study for publication yesterday. And the idea behind this, we went to a conference of dermoscopy, American Dermoscopy Association Meeting. So these are people that all avid dermoscopist that use that technique I showed you before with the hand lens on the polarized viewer.
And what we did is modify the study a little bit. So we gave them the clinical pictures like I showed you before, then we gave the [indiscernible] what they would do, then we gave them the dermascopic pictures, and then we gave them the MelaFind information. And we had two subsets of people here. I'm sorry, this is a slide, it just say 30 and 34, that's the total number of cases in there.
But what we did was break it down by dermatologists and non-dermatologists. Non-dermatologists were either non-dermatologists physicians or PAs or nurse practitioners, but who practiced in dermatology offices, who had a strong interest in the dermoscopy. And what you see from this is that we get a clinical evaluation on average where sensitivity was almost the same about 65%, 66%. After dermoscopy they got a little bit of an improvement, but after getting the MelaFind information, a dramatic improvement. So consistent with the other information you saw, but the difference here is we actually went from here and the other study here we had 3 points to it.
And then, if you look at the specificity in other words making sure you're not over biopsying the lesions you don't have too, you could see that in fact with clinical evaluation after dermoscopy, the specificity actually got a little worse and we're doing more biopsies. But getting the MelaFind information it went up the other direction, it was improved, and a diagnostic accuracy which is kind of the combination of the two almost no difference after dermoscopy, but a market improvement after having the MelaFind information.
And again, those biopsying, the all five lesions, with clinical only 4% or 13%, not much improvement in dermoscopy, but in fact once you got the MelaFind information, it went up dramatically. So dermoscopy is one of the technologies that MelaFind often compare to, this is the first time we sort of done a head-to-head study, these were expert dermoscopist too. And I will tell you that at the end of the study a number of them came over to me and said, wow, I get it, I get what this technology is and what it does.
We looked at a couple of other factors in the study, you can see clinical evaluation looking at other pigmented lesions biopsy over the percentage of ones that probably didn't needed to be biopsied that got biopsied, you see that improves after MelaFind. And also if you look at the overall number of lesions biopsied, it stays roughly about the same. So the idea of your fighting more melanomas, it means you're not biopsying less of the non-melanomas, so that's also good too.
So when you look at this, and this is again just submitted yesterday for a publication, even after having dermoscopy having the MelaFind information gives you a significant improvement in your ability to detect and determine which of those lesions are melanoma. So this summarizes those three studies I showed you, the dermatologist, the residents or with the dermoscopist, and you can see that sensitivity, the specificity and all the other devices improve over time with this, and so having MelaFind actually improves. This is the percentage of improvement with all of them each time to do this.
So the bottomline is it does make a difference, and it gives you a significant marginal improvement and your ability to diagnose these lesions. Now again, there is a publication time, I know these are bunch of these things that will be presented in the Q and will be published whatever, and there are number of these papers, and they're more coming out and [ph] Dr. Wake, there is my fellow back there is working on a couple of studies right now that will be put out in the next couple of months.
So where do you use this in your practice setting, what's the way to do this and surely as I showed you that the gentlemen earlier had multiple lesions, how do you decide, which were the biopsy. Well, if I don't have MelaFind, I have to use my clinical judgment and maybe look the patient over and say, jeez, this one maybe the most significant. But I mean these are typical patients that come in that we see. This is not that atypical. And how do you determine that. Well, this was obviously from a MelaFind study, all those things, people are normally walking with rulers on their back. But this is showing that, so you'll see the size of these lesions.
But this was a study that was done. And actually what's interesting here is, there were eight lesions evaluated on one of these patients, and you can see they went through this whole thing and actually biopsied them all, and it turned out that two were at the highest scores. One was a melanoma and one was a very dysplastic, and the other ones were not too bad.
So you can see that MelaFind actually graded them, when they all looked somewhat the same clinically, but I don't know if I would have picked this as the highest one, I probably would have picked this one, if was looking at them clinically. So again, having that information is really helpful.
Now, when a patient comes in concerned about an individual or changing lesion, that's helpful too. And it's kind of interesting because sometimes if you'll look at a lesion, a patient comes with in, I know its okay. And the patient will say, I know you said doc, I really want to know. Well, if I put MelaFind data and shows it's okay, that's fine. They never argue with the machine. They'll argue with me, but the machine can't be wrong, right?
And similarly you have a patient sometimes who will come in and say, I'm in a rush, I'm going on a business trip, I'm flying somewhere, I don't want to have a biopsy, but if I put MelaFind data, I know it's going to be a problem and it comes back that it's high disorganization or a high probability, I never get pushed back there either, because again people just believe the machine.
And sometimes prior to cosmetic removal of a sunexposed lesion, so people will come in with large freckles typically on their face, that they want to get rid of using a laser. In the past what we've had to do is biopsy a corner of, just to make sure it's not a melanoma, before we use a laser to vaporize it, and every once in a while it comes back to melanoma.
Well, now we can just MelaFind on it and not have to leave that scar from biopsy and make it heal better cosmetically. So that's another application. And we've actually picked up one melanoma on one that we were scanning, ready for cosmetic removal, and turned out it was a melanoma.
We sometimes have a screening morning, where a bunch of patients will have to lined up and come in and say, okay, let's just check these lesions on you. And again, as I mentioned they're adding additional evidence that commits a patient that lesion should be removed and that actually does come into play fairly often.
And here's a perfect example. This was a lesion on a guys leg, who came in, and you can see, I think I hope by now you've learned what early melanoma looks like a little bit, so you'd say, that's a little suspicious, but it's pretty small. So somebody went to biopsy, happen to be somebody an investment banker, a very big investment banker in New York and was running off to a conference in Hong Kong and did want to have it done, and so we did it. And you can see here is the result from it. And that's a pretty high score, before we had the probability, but the point was we convinced him to biopsy and it was a melanoma.
When we look at dysplastic nevi, dysplastic nevi are high-risk moles that have a chance of evolving into melanoma, but you have to grade them in some way. This was a paper that came out last year that basically showed grading was important, because if you could grade them in some way, the ones at the highest end of the spectrum have a greatest chance of evolving into melanoma.
So basically it's hard to do it visually, but you can do it with MelaFind and the idea behind this, again, an example, that you had the probability of MelaFind of being a high-grade dysplastic or being a being melanoma overall. Looking at the data, you can asses that and make a projection as to where you want to go and whether a biopsy should be done. So you could use as to grade that also.
So I would leave you with two other important pieces of data, which I think are the most compelling. This was from the original pivotal trial and each of these rectangles, squares rather on dermatologist, and the red dot is MelaFind, and basically the closer you are to this corner, the better diagnostically you are.
This was out of series of lesions that were looked at and you can see MelaFind in as well as the four best dermatologist that make it to diagnosis. When I look at this I think of the time that Bobby Fisher played Big Blue in chess. Bob Fisher was pretty good as a human, and I'm not bad as a human, but when you have this device, it does make you better to do.
And the other thing was, this was from one of the studies I showed you earlier, we took the set of dermatologist, the almost 200 dermatologist over there and we broke them down into cortiles. These were the best dermatologist and these are the ones probably you would want to go see. Okay. You got a spot, you were concerned about. But you can see that their average sensitivity in this group for melanoma is only 37%. So they only found the melanomas 37% of the time, which is not really good.
However, after getting the MelaFind information look what you see that the worst dermatologist got to be much closer to the best dermatologist. So it makes dermatologist that aren't so good, better, by having this information. And to me that's a pretty compelling reason to be involved with it.
So what I hope to show a little bit of this, what I hope you got to feel for what it's like to be a dermatologist and the challenges that we face everyday in trying to make the diagnosis of melanoma on a patient. Obviously, we never want to a miss a melanoma. Missing a melanoma is a really bad thing certainly to do. But it does happen some times. We want all our abilities focused on minimizing that from happening.
And the fact is these kinds of devices do make it impact on our ability to be more accurate in finding melanomas, and I believe from my experience and from my colleagues experience that MelaFind is going to play an increasingly important role in the diagnosis of high risk pigmented lesions.
So I'm going to stop at this point. And now Rose is going to talk about, and I'll be here to take any of your questions when we finish. Thank you very much.
So good morning. I'm going to just do a quick overview on what would be the commercial side of MelaFind. I think what I'd like to do is make sure we can incorporate a lot of what Dr. Rigel just showed us because I would tell, and this is just a quick snapshot of MelaFind. What I would tell you is, since I came, the involvement and the investment in the reader trials and the new probability interface have really need a difference and I walkthrough that as we talk.
But again, I think importantly the one thing up there in terms of Dr. Rigel has given us statistics, there is $2.4 billion spent on melanoma in the healthcare system. And greater than 60% of that is in mid-to-late stage. 10% of the patients cause 90% of the cost. So in the end there is no cure. It is early detection.
As we look at the focus of physicians that we're talking to, it is dermatologist. Now, I'll show you, how we're going to move into the new markets of pathology and reconstructive surgeons in both the U.S. and Germany. And optical imaging is still a nascent technology. It is still new. There is a lot of work being done in this area, but the fact that it's non-invasive and that it is a great diagnostic procedure, we'll continue to help that grow.
We are the first in dermatology. Now, it's not always easy to be the first. Let me ask you to just take a minute right now and think about this. I've worked in many therapeutic areas. And I'd like you to think about one therapeutic area, take that cardiology, orthopedic surgeon who does not use imaging or handle some type of analysis to further their diagnosis of whatever the issue is.
And with all due respect -- and Dr. Rigel is a huge fan of MelaFind. There are a number of dermatologists who are still only using their eyes. And that's fabulous. There is experience there, right. But so we are really opening a new territory here. And I would tell you as we continue to do this, it's the data, the data from the reader trials that you just saw that helps drive this forward, because if the doctor can have a tool to make the diagnosis better earlier, it really will in the end save healthcare dollars and improve patient care.
We do have a great management team. I have here with me, Bob Cook, who is the CFO; Diana Garcia in the back, Managing Director of Germany and Head of Global Marketing. We are really refocusing the company on the medical dermatologists with this new data.
So this is truly our vision. And you can read it. But let me ask you to think about something for a minute after you've seen the reader trials. There are three important takeaways from those reader trials. And it really relates to becoming the standard of care. One is, in all three studies, and I was there in all three conferences when Dr. Rigel conducted the studies. And it was amazing to watch physicians make their decisions and then see the data later. There were some of the best dermatologist actually pulled me aside later and said, wow, you know what this is really changes my view. So think about it.
First point, in the reader trials more melanomas were caught. So what does that mean? If a melanoma is caught in an early stage, it cost the healthcare system about $5,000, by the time you go through the whole pathology, reconstructive surgery. If a melanoma is caught at a late stage, it cost the system $180,000, because now you know, the new drugs are being employed, so savings to the healthcare system in the long-term in earlier detection.
Point two, if you think about those reader trials, there were less benign biopsies, right. So savings to the healthcare system in the immediate time frame, so less benign biopsies. And three, overall, there were not more biopsies done. So in the end we improved the bedding average of the physician. Three really critical take-homes for both the patient and for the healthcare system, and we believe this data will drive towards the standard of care.
Dr. Rigel did show this. What I would like to point out is the one thing is, this is really a combination in our system of the imaging and of the analysis. So it is a proprietary algorithm that was used. It took 10 years to develop this. So over 10,000 lesions it was trained on. It's truly artificial intelligence. So basically the algorithm has trained the imager to spot and figure out where the disorganization is. The true developers of this were rocket scientists. They were the guys who used this for drilling technology, so interestingly enough there its artificial intelligence under this.
And again, we do as Dr. Rigel said, complement the current clinical evaluation, the physician's eye, dermoscope, mole mapping, all of that is above the skin. We are the only technology that allows the physicians to see below the skin and as you can hear from the statistics, that's the most important thing, because when it becomes invasive, is when the issues become more difficult.
From an approach of MELA Sciences, for those of you that have been with us for a while, I think you know, when we first launch it was a focus on static dermatologist, that this was really a money making type of technology, and it was going to be a push out of pocket payment. We have really flipped that strategy upside down.
Clearly, it's extremely important medical technology. We are focused on the high-risk patients and there are many of them and many more people are becoming high-risk, as they continue to go into tanning beds. And focusing on the medical dermatologists spending time with the key opinion leaders and the institutions that really make a difference that the folks who are at the AAD, who are doing all the publications, who are at the podiums, like Dr. Rigel, and we are driving towards reimbursement.
Now, that will be a two-year process, but we believe it is the right strategy. And we have move from what would have been per click lesion to a business model where we sell the technology to the physicians, and then it is theirs to use as often as they want. And all of these strategies were tested with the dermatologists. And this has been employed, let's say, in the last six months, six to eight months. And our goal really, again is we are moved away from the old model, as we move into the new model the thing that you'll see is our goal is to take as we look at the care pathway.
So when you go to the dermatologist for the detection, the pathologist reads the slides, and then if it is a melanoma, many times physicians other than Dr. Rigel will sent it off to reconstructive surgeon to do it if it's an area that their concerned about. That is the care pathway for the patient, and our goal is to touch all of those physicians.
And I'll explain a little more as we look at filing of 510(k) that employs current technology that we have. And eventually, our goal really is to look at strategic partnerships of other technologies, so that the dermatologists have the full spectrum of technologies at their fingertips.
So we are now working on the idea of taking the current imaging that we use in MelaFind and combining it with software, that would allow pathologists and reconstructive surgeons to see volume and to see disorganization and really shape off of the lesion. So it would allow pathologist to figure out where to cut more accurately and it would allow reconstructive surgeons to decide where the margin should be.
So this is not what I would call new technology, it's using our imaging, but it is only using one of the characteristics combined with software to allow to look at volume and shape, which is important to those two physician groups. And you can see, we would triple the current market size as we focus on the dermatologists moving to derm's path and reconstructive surgeons.
This is what would be a timeline, as we move ourselves out through 2016. You can see this is in 2014, again the most important thing, as we have rolled out the new user interface, which has created a buzz in the market. It really has. And I have to thank Dr. Rigel. He really pushed for this. It's our data underneath the PMA that he brought out in terms of a logistical regression to be able to have different conversion with the patient, to say, here is where your risk is and here is the probability of melanoma. That's a much more enriching conversion than just saying here is high/low.
And I would tell you one of the big issues we had on the market, where doctors said, we were calling everything high, we had a score and a high. This truly allows you to see the curve, the histology curve. So it gives a physician more analytical tools and you can see, if you think back on the data, when we move to the probability interface, the reader trials improve both specificity and sensitivity dramatically. They were actually statistically significant in all three trials and it showed the same data.
So that it's created, it's taking care of let me say, one of the big issues that's been in the market. And I can't remember, I think it was about a week after I started. It was a Sunday night, Dr. Rigel called and sent all of the raw data to me. And he said, oh, my god, did you see this is so exciting. I had 20 pages of raw regression data in front me. I said, okay, what am I looking at? And he said, it correlates, it truly correlates all of the classifier scores with the probabilities in melanoma, and then it developed into the beautiful interface that we have.
So our goal is to continue to drive MelaFind forward to continue to do the clinical trials much of that had stop before, and to show what this kind of technology can do for the dermatologist, for the healthcare system. And in fact that data will be the basis of our reimbursement discussion with the insurers as well, because it does what they want, saves long-term, saves short-term and reduces the amount of benign biopsies that are done.
So with that, I think we are now ready for some questions.
I had two questions, one on the insurance side. Why would you think it's going to take two years, if you made a case that the savings would be from early detection and the cost would be significantly less? And then secondarily, is there any other technologies that are out there that are not in the market, but are trying to detect this growing skin cancer issue that you've seen in the marketplace?
So let me answer the insurance, and then we can both. The fact is we first have to file for a CPT code, so we can get the code that the doctors can use. So we just filed that, and unfortunately that process just happens to be a-year-and-a-half. So we have to get CMS approval, Medicaid, Medicare, before we go to the private insurers. And so we have just started that process, the earlier management had chosen not to. We believe it's the right strategy.
And as far as the other technologies, actually I went to review paper, a couple of years ago in CA, the American Cancer Society's journal on the different technologies and approaches. And there is probably half a dozen out there that are trying to go forward and there a couple of other out there that are different, I'll put it that way. But there is a couple of variables you look at when you evaluate these technologies, and one of them is basically how accurate they are. Obviously, that's the most important.
The second thing is how quickly you can get a result. So if MelaFind takes 15 seconds or whatever and there are some of these devices that take 30 minutes or an hour to get an answer. Then the third thing is, how much technical skill do you need to try to get a good result. So do you need a super high-tech person who can operate something like confocal microscopy that's a classic one that takes a very high technical level of skill or do something that's pretty simple like MelaFind when you put a video ahead on it and you get the result right away.
And the fourth variable is the cost. How much these devices cost, what's the cost per lesion, et cetera, et cetera. So when you look at across the board on the types of technologies that are out there, even the ones that are getting closer, MelaFind really has the best profile across all those variables.
People are looking at other stuff, none of them is quite close there. Some of them have suggested that have problems and fall by the wayside. I can't tell you which will be the absolute winning technology 10 years from now, that's what you probably want to know. But what I can tell you is MelaFind is ahead of everybody. And at least with those variables I gave you currently is the best really option that's there. So nothing is going to come out there in the next year or two even to market anyway they perform that's competitiveness in my view.
And then the FDA and the 510(k) process, what are the specific issues you're looking at?
MelaFind was a PMA, which was much more difficult, much more involved to clinical trials, the 510(k) is a shorter process. So we will just file against what's call the predicate, something else that shows imaging to file this in, because it's already -- the more important part of this is the product development, and it's something we already have the imager and some of the software. So we're not starting from scratch to develop the product, and the filing is typically nine-plus months or the approval is nine-plus months.
Rightly or wrongly, are any of these other competing technologies getting more attention from the dermatologists and physicians?
Not really. I think the reason is that they all have very different approaches. And one of them we saw in Phase 2 trials, I mean they're so early in the pipeline yet that it really it haven't really made much of a breakthrough. In fact, this Friday, we're just doing our next addition of our textbook Cancer of the Skin, and one of the chapters is on these technologies and augmenting the diagnosis.
And as we started to review these, they are still very early in the pipeline, and most of studies are even published or talk about and with posters at different sessions are very small and seen other pilots of 20 or 30 people as opposed to a 1,000. So nobody is really jumping up at that excited about one technology over another technology at this point.
You know what I think is interesting and I'm just going to jump in, but I was at the Bar Harbor, Maine meeting, The Dermoscopy Meeting, when we did the reader trial, when Dr. Rigel did the reader trial there. It was an interesting trial, because we did separate out dermoscopy, before if you remember we did it with the lesion. And as you said, the top dermoscopist were surprised that MelaFind improved them as well. And I think that's a testament to, I mean, dermoscopy spread around a while and it's still in the adoption phase.
In the U.S. only about 25% of dermatologist use dermoscopy, all right, which is the hand held thing. So that's the challenge, is getting the technology introduced to the day-to-day practice. And the other part of it I think that's very valuable in these reader studies, I alluded to a little bit when I spoke is that, I could tell you this is a great product. I go to your dermatologist, and I say, hey, this really works for me, it's a great product.
But until you experience it, and you see how much better you get by having it, you have to take that to get to the next level. And that happen particularly at this meeting in May and June, because these were the world's best dermoscopists there, and literally some from outside of the U.S., and they uniformly were impressed with how much better they got with this. So you have to kind of experience it. It's like going to the dealership and buying a car, really helps to test drive it, right, because you're going to get a feel what it's like and what it's going to do, and how it's going feel. And that's I think one of the things that these reader studies help to.
My last question, and your answer begs this next question. Who would be the top one or two best marketed providers to the dermatologists selling equipment to a share of mind of the dermatologists in terms of getting product into their offices?
You mean like, which company is the best market here to dermatologists? Well, used to be Medicis, but they got bought. I mean there are some larger companies out there, bigger pharmaceutical companies. The devices companies, some of the laser companies haven't been as, how do I put this, well-respected by dermatologists in the past because of over-promising and under-delivering. I mean that's been an issue.
So the device companies have a little more of a challenge, but certainly the derm pharmaceutical companies that are out there are probably the best, to answer to you question. Probably currently Galderma would be one, I think they'd be probably number one, if I were to pick a company that's respected. Valeant owns a lot of companies, but they've cutback on. And I think Allergan is probably way up there too.
In addition to the various visual detection processes, would general blood test be an good addition to observing a possibility of a melanoma?
So you ask a blood test to detect melanoma?
Sure, I'd be great to have. There is though such test that exists right now. There is no test like a PSA test or a colon cancer screen or anything like that. Part of the issue is it becomes a technical issue. First of all, unlike other cancers that have surface -- the way you do a blood test, you find antibodies, the surface antigens on a cancer cells. So cancer like colon cancer or prostate cancer, you know what those antigens are going to be. You have PSA as prostate specific antigen, right. You have the antibodies you check against those antigens.
The problem with melanoma is that the surface antigens on a melanoma are constantly influx. So if I take a melanoma grind it up, get at these antigens and create the antibodies, I mean do a test to detect it. By the time I do that, I'd be testing for yesterday's news. So that's the real challenge with doing it for melanoma. There is sub-genetic test that are out there that are being looked at.
But again, it's not like breast cancer, we know the most common genes that BRCA genes are basically there. We don't know all the genes yet in melanoma. And at some point that maybe a way to detect it. But those blood test will be more to see, if you had metastatic melanoma. If we took the melanoma out and the levels were still high or occult melanoma, with prostate cancer you can't see it, right. In melanoma you can do a skin exam and somewhat detect it. I'd love to have a test to do it, but it doesn't exist here.
Just taking up more questions about the reader studies. How widely are they accepted? I mean what sort of the -- you're selecting which images you're going to have people review, and I guess if I were to be highly cynical like let say, you're selecting images that are going to point to the MelaFind being most effective, et cetera. What are you hearing? You're talking about the physicians saying a, wow, but is there a critical eye to them as well?
So those are good questions. First of all, these are peer reviewed papers that are published. That means you've got critical people reviewing them prior to publication, and they have been published. So that's number one. Number two is the lesions were selected from as a subset of the 1,600 lesions in the pivotal trial, so they weren't extra lesions that we're just pulled out. And they are actually selected for being fairly representative of the entire series. They want outliers one way or the other. They are actually right in the middle to do this.
And, yes, MelaFind was good at predicting them, but again it's a predictive probability. So they are looking not at a total yes and no, but sort of a centrist area. So for all those reasons, and it points a good one, we took a lot of time trying to make it as representative as possible. And that's why we also on the early ones of the studies trying to make it instead of here individual lesions, here is a patient walking with six lesions, and the difference for that is if you came in and has six spots on you, I'm not going to biopsy all six. I'm going to choose which are the ones I think are the most important. So we try to make at as realistic as possible.
No reader study is perfect and a perfect royalty do a prospective study, where you do it and then I'd be hard to get IRRB approval to decide not to biopsy lesions that turned out to be melanoma, right. So you never can make it perfect. But I think within the constraints of reality these studies did pretty well and they again peer reviewed, published and have been pretty well received, very well received.
And [ph] Bill the FDA accepts them for imaging. They are very interested in reader trials.
The first one that we did, when I assured with the 24 cases and the five melanomas, that was actually driven because the FDA said, how much of an impact does this device make on the biopsy decisions. We actually did that unofficially after the FDA raised the question. And at the next meeting with the FDA, we presented them the data. They were very impressed with it.
And then just as a follow-up, the commercial implication of the reader studies, obviously, you're working on reimbursement, but that's a couple of years down the road. Are there clinicians that are following-up with you, having participated in these studies and saying, I needed to have MelaFind now. Is it leading to placement of the instrument?
So that's interesting. Many of our leads are coming from the physicians who sat through the reader trial. In fact, two of the major cancer institutions in the U.S. have approached us too. And that's probably more of a clinical than it is selling the unit. But it's important to be there.
And I'll add to it. Obviously, I give lectures on what's new in melanoma, and one that I gave recently in a national meeting, which was the 30 minute talk, of which probably two minutes of the 30 minutes were on diagnosis, a subset of that two minutes I was talking about MelaFind and the reader studies.
The 80% of the questions I get at the end of the talk is about MelaFind. So there is a buzz and there is interest and I think everybody wants to get better and everybody wants a better baseball bat and better sports equipment and this is a better piece of equipment to help you diagnose it. So there is a big interest that's out there.
I am a dermatologist. I am convinced. I need MelaFind. I come to you, I say, I want a buy MelaFind. How much is it going to cost me? How long before I get a return on my investment? And what's the follow-on, like in terms of any disposables associated with anything like that?
So we haven't revealed the actual price. It's somewhere, the lasers run between $20,000 and $100,000. It's somewhere kind of let's call it the middle-ish there. And really until we get reimbursement, it is out-of-pocket. And I may hand that over to Dr. Rigel to talk a little bit about the out-of-pocket payment. But essentially depending on how many at risk patients you have, you can do the math, to say, I'll get a return based on, however, many high-risk patients that I treat and do the imaging on. So that's the equation typically the doctors use.
I'll tell you how I do it. But I'll preface it by saying that, there is another reason to have it besides getting a return on it, and that's make yourself a better doctor. And we're only 1.1% of medicine, but I'm proud to say we're the tough specialty to get into. We have to have the highest board scores to get into this. We have some pretty smart people there, and they do care and the dermatologist care, they do want to be better doctor. So that is one of the driving forces.
Economics are important though, I won't downplay that. And my practice is a little different, because I only take Medicare, I don't take other insurances. So basically everybody coming to see me is out-of-pocket except for Medicare. And I take Medicare, because I'm so skewed toward skin cancer, so I want to see those patients too.
So there has been various models the company has had for charging the beds, now the model is going towards buying the machine. But I'll typically charge $150 to $200 to do a couple of lesions on a patient. But remember, it's still really not my time, because I won't know the lesions, until I have one of my assistants do the scaling of lesions or obviously somebody else. So I go and I pull the mark at a lesion, my assistant will come in and say -- I'll say, look, I want you to image three lesions, I'll go out and see somebody else, and come back and I'll have the results.
So it take space and putting in terms you guys understand every one of my treatment room is basically a revenue center, all right. People are coming in and out, so I can't block a room that long, but this is fast and also it's mobile, so I can roll it from room to room, I don't have to dedicate a room. So it actually works well for me and my setting. And I think as reimburse will come in, the economics will be clearer to a lot of people to use.
And a final question. Ultimately, I would imagine, you would like to have patients come to dermatologists and say, do you have MelaFind? If you do, I want to see you. If you don't, I don't. Did you have a patient education strategy as well going forward?
So we actually do now, we make sure that its part of what we call the integration of MelaFind in the office, so that when they come in there is brochures. Well, eventually our goal is to get to the point where the nurses and some of the staff can be able to talk about it with the patient, before they get in to the doctor.
We don't have a broad television campaign. Until we get into reimbursement, we won't imply that kind of strategy, because we don't want to drive the demand and without having the reimbursement. But once we get to that stage, we will. But there is literature and information for the patient both on the website and in the offices.
The browsers are effective, because we put them out in the waiting room and people see them. But what's even most interesting on patients that we've used MelaFind, I have 3,000 patients I follow-up, histories of skin cancer, melanoma, high-risk moles or whatever. And if I view this, I just see them every six months or so, probably most of them on six month intervals. And if I use MelaFind on them in the prior visit, and then for some reason I don't need MelaFind on this next visit, they're almost disappointed.
It's very, I don't know, if you've seen the machine work, but it's very visual. You see it doing its calculations on the screen and patients actually enjoy it, because it's painless, it is quick, and they can see something happening right away. So they almost feel bad, if they don't get it the next time. They don't need it for some reason is sort of funny.
I was just wondering, what's the timeline for a new device for surgeons and pathologists? And are there similar reader type trials planned for those groups to encourage adoption?
So that will be, we're looking at filing in 2015. I haven't presented specifics on that. And typically approval takes about nine months. As opposed to reader trials, we're going to do some work some with some of the major institutions and just looking at the imaging, if you used MelaFind and if you didn't use MelaFind, are you more accurate? It's somewhat of a reader trial, but not as detailed, because of the lesion. Are you more accurate as a pathologist with and without? And same with the surgeon, can you get a better margin with or without it? So those are the type of trials we'll be doing.
And actually just from a clinical way, those are both pretty big challenges, because if I'm a surgeon trying to remove a melanoma, I have to statistically guess how wide to go around it. And there is a number that used that's 95% correct, but that means 5% of the time, I have to go back. But if I had something like an image where the edges were with knowing that, that would be great.
And for the pathologist, when they do a specimen, it's a representative sample, when it's cut through the pathology specimen. So it's not grinding up the whole thing and mincing it. There's a pattern that different pathologist use. But if I had a device that told me where the hot spot in the lesion was, so I know to cut my section through that, that would also be incredibly valuable too. And those are the concepts behind that.
I see a disconnect between the adoption of better technologies in dermatology. You mentioned dermoscopy is still 25%, and dermoscopy has been around for a long time, and this is clearly better technology and it just has not been adopted. So is there something about dermatology, something about dermatologists or about ability to explain it?
I'm going to let you answer that one.
It's an interesting point you raised. So let me back up once that. My background that I did, when I was a med student I did research in neuroradiology. I did work on some of the first CT scanner. So I love technology. I have two degrees from MIT. So I really like technology. That being said, dermatology has never been an imaging specialty. And it's kind of ironic, because it's a very visual specialty, right, and you see things. People are looking at ideas behind, let's say, teledermatology now and various other ways to do this. So it is visual.
It's just that dermatology is being very visual, have certain pride in themselves, hey, I can look at it and I can see it. We first put together the A, B, C, Ds of melanoma in 1984, 1985. The way we did that, I was a junior attending at NYU at that time, and we went and got some Kodachrome slides of early melanomas, and we brought them to senior faculty at that time, and said what are they, and they said melanomas. And if we asked why, the answer was, because it looks like one.
And it is a gestalt kind of process in your training in dermatology. You've seen enough of these, it looks like one. And I think that's that you should overcome that, you can do better with technology than your brain can perceive it. If I look at Rose, I can't describe her face, but I can say, this is Rose, because this is her face. It's a gestalt kind of thing. So it's a safe thing in dermatology. And it's been discussed, and your point is a good one, it's been discussed in other areas of dermatology.
But I think it's just the way the culture is to some extent, and it's a challenge to overcome, but it is overcomeable. And it's also more American dermatology, because if you look at dermoscopy in Europe, it's probably 80%, 90%. But it's getting better, the saturation of dermoscopy, because the residents are being trained in dermoscopy.
And for another crazy reason too, I sat on The American Board of Dermatology for nine years. And when you start putting questions on the board exams, the word gets out, you better study to learn the stuff. So we started putting dermoscopy questions on the board exams. And all of a sudden, everybody started to learn it and use it. So that's one of the other ways you can influence it too.
And I will tell you that's why we'll continue to do reader trials, because they really have to see for themselves and say, okay, with my eyes I did this, and then with MelaFind, I was able to do this. It convinces them that they're not as -- they can miss melanomas and they can biopsy benign lesions. So that's been just such a great way to have that conversion.
And you don't think you're missing them. You don't realize it. This was a room full of dermatologist, and I said, all right, how many of you have missed a melanoma in your life? And maybe 10% or 20% will raise their hands. And I believe that I've missed them, everybody's missed them.
But you obviously know you missed it, because maybe I came to see you and you didn't find anything, but six months later I went to somebody else who found that, and we don't know it was one that you missed. It was still early. It was treated. There were no lawsuits. Thank god. So you don't really realize how many you miss or things you could have detected earlier. And that's also part of the process. But when they experience it in these reader trials, they get it. I mean every people get it.
Do you have any strategies to go to the melanoma hotspot in the world, to Australia, where I can imagine the knowledge about the disease and the risk is probably greater than anywhere else?
So we do have a business in Germany, which is another big melanoma hotspot. And we are looking at Australia. I think for us at this point until we get solidly in the U.S. and continue to build Germany, to move out into Australia is probably not what from a pure financial point of view, that would be our third area that we would enter once we're in better shape financially here.
There only about 250 dermatologists in all of Australia too. It's a relatively small market. The Australia area is the size of the U.S., but it's the population in the State of New York roughly.
I am just curious, I have one company that hasn't done a laser [indiscernible] very slow to adapt. It's a huge technology they are adapting, but it takes a long time. And I'm just wondering if the same thing is going to happen with the dermatologist, because they have ego that they know how to see it. They'll take the biopsy, wait for the result. And I'm just wondering, how quickly the changeover will be from what the standard has been?
Well, I think the strategies we're implying by doing the reader trials, by showing that data really does help accelerate it. So it has been probably one of the most effective tools that I've seen in any therapeutic area, because that convinces themselves. You know what, I'm not convincing them, they convince themselves. And then once we get reimbursement the economics will be easier.
A lot of focus would be on the ones with the bottom quartile. Those ones we need to improve it. But I could go to you and say, congratulations you're the bottom quartile, you get the biggest benefit out of that, wouldn't sell very well.
Any other questions?
Unidentified Company Representative
I guess that concludes the broadcast. Thank you so much for your time. We really appreciate it.
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