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Leonard is an editor of Before joining the blog, Leonard amassed 36 years of experience as a financial journalist, editor and manager with The Wall Street Journal and Dow Jones News Service, and The Globe and Mail’s Report on Business, where he pioneered the development and... More
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  • Verisante Readies Aura Launch For Skin Cancer

    Verisante Technology (OTCQX: VRSEF) is hoping to begin sales in the fall of a breakthrough skin cancer detection device, Verisante Aura, which has been approved in Canada, Europe and Australia.

    Thomas Braun

    "Our device has been shown to be an invaluable tool to assist doctors in determining if a skin lesion might be cancerous and should be biopsied," CEO Thomas Braun says in an interview with, referring to preliminary trial data which showed the technology detected melanoma and all major skin cancers with 99% sensitivity. According to the British Journal of Dermatology, the primary clinical diagnosis of melanoma has a sensitivity rate of 34%.

    Verisante licensed the Aura technology from the British Columbia Cancer Agency in mid-2010, with exclusive rights for the detection of skin, lung, colon and cervical cancers.

    The University of British Columbia's Department of Dermatology conducted a six-year clinical trial at Vancouver General Hospital's Skin Care Center that collected data on 1,000 lesions and focused on differentiating cancerous lesions from benign ones. Clinical study results published inCancer Research in 2012 showed the technology had 99% sensitivity, meaning that it detects 99% of skin cancers tested.

    Over the past year, Verisante re-engineered the original prototype to achieve something more compact, mass producible and commercially attractive for doctors, Mr. Braun says. The new Aura device is being placed in five dermatology clinics in Canada this summer as part of a "beta" study to collect data on 200 biopsied lesions as a final tune-up to a sales launch.

    "We won't start selling until we can deliver, and we won't deliver until we're absolutely positive that it works perfectly," he adds. "We actually believe that we may get better results from the beta testing than the original results, because the device we've built is better than the earlier one."

    If the beta testing is successful, Verisante plans to assemble about 25 Aura units in October, 35 in November and 45 in December.

    "Besides Canada, the markets we're going to focus on are Germany, Switzerland, Austria and Australia, which has the highest incidence of skin cancer in the world," Mr. Braun says. The company already has a distributor lined up for Canada and hopes to nail down the rest of its distribution chain during the summer and fall.

    Zachs Investment Research analyst, Brian Marckx, said in a report that based on preliminary trial data, high throughput and other advantages, Verisante's Aura could eventually become the "new gold standard for skin cancer diagnosis."

    Skin cancer strikes one out of five people in the U.S. and is the most common form of cancer. The National Cancer Institute (NYSE:NCI) estimates that 40% to 50% of Americans, who live to the age of 65, are expected to get skin cancer.

    Although melanoma accounts for only 4% of skin cancers, it accounts for 75% of skin cancer deaths, and the incidence of melanoma is rising faster than any other cancer, according to the NCI.

    (click to enlarge)

    Early detection vital to saving lives

    Early detection is vital to saving lives. Studies have found that the five-year survival rate of stage-one melanoma can be as high as 99%, dropping to 15% for stage-four melanoma.

    Some two million Americans get skin cancer each year, and the NCI estimates that treating melanoma alone costs $1.5-billion annually in the U.S. At a cost of more than $170,000 per lesion, advanced-stage melanoma is significantly more costly to treat than the early stage of the disease, which costs $1,800 to treat.

    Enter the Verisante Aura, which won the Popular Science "Best of What's New" award in 2011. The non-invasive system provides information about the chemical composition of skin, scanning for 21 different cancer biomarkers in less than one second and providing immediate results.

    Mr. Braun says Aura is designed to increase survival rates, reduce treatment costs, reduce unnecessary biopsies and reduce waiting times to see a dermatologist, since scans can be performed by trained technicians.

    Aura's main competitor is Mela Sciences' (NASDAQ:MELA) MelaFind. While Aura can detect melanoma, squamous cell and basal cell carcinomas - two common types of non-melanoma skin cancers - and actinic keratosis, a premalignant skin condition, MelaFind is indicated for the detection of melanoma only.

    Mr. Braun says Aura differentiates itself from MelaFind in other ways. While MelaFind is approved in the U.S. and Europe, it requires two minutes to scan a lesion using a large probe, compared with the one second required for the more compact Aura.

    Dr. David McLean demonstrates Aura device at Centre for Photomedicine, UBC Dept. of Dermatology and Skin Science

    Among other things, Aura boasts 99% sensitivity and 17% specificity, compared with 98% and 9.5%, respectively, for MelaFind. Mr. Braun says that Aura generates a result that measures the risk of skin cancer for 100% of lesions tested, while MelaFind generates a non-evaluable result 8.6% of the time.

    Verisante is preparing to file an investigational device exemption with the FDA this year so that Aura can be used in a clinical study to collect safety and efficacy data required to support a premarket approval application. Mr. Braun is targeting FDA approval of Aura before the end of 2014.

    During the initial commercial rollout in approved markets, the company plans to sell Aura for $60,000 and collect $10 from the use of each disposable tip that touches the patient. Verisante will also provide service contracts after the warranty expires on leased machines.

    Zachs' Mr. Marckx figures the size and high incidence of skin cancer, combined with Verisante's razor/razor blade business model and low cost base, "means revenue and earnings could ramp very quickly."

    (click to enlarge)

    Verisante Aura: Regulatory pathway to commercialization

    Mr. Braun estimates that there are about 500 dermatologists in Canada, 21,000 in Europe and 350 in Australia, where an additional 1,000 general practitioners are specially trained to treat skin cancer. In addition, there are about 9,500 dermatologists in the U.S. "We're targeting 14% penetration of dermatologists by year five after launch."

    "Skin cancer detection is an underserved market," he contends. "The only other market in life sciences that is comparably large is diabetes, which is very crowded with devices."

    Verisante Core: Enabling detection of other cancers

    In addition to Aura, Verisante has developed an endoscopic system called the Verisante Core to determine whether a lesion in the lung, colon or cervix is malignant or benign. "It's the same platform technology, but with a different probe," Mr. Braun points out.

    Pilot study results published in the Journal of Thoracic Oncology in July 2011 remarkably demonstrated 96% sensitivity and 91% sensitivity for detection of lung cancer. The results warranted continuation of clinical testing by the BC Cancer Agency at Vancouver General Hospital. The study is expected to conclude this summer. Earlier this year, the Canadian Cancer Society named the Core a "Top Ten Cancer Breakthrough".

    At about the same time as the lung cancer study will finish, a colon cancer study will start, Mr. Braun adds.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Tags: long-ideas
    Jul 03 7:46 AM | Link | 1 Comment
  • SQI Diagnostics Nears Big Diagnostic Contract

    SQI Diagnostics (TSX-V:SQD), a maker of in vitro diagnostic (IVD) tests and automated analyzers to process the tests, expects to announce a major diagnostic tools and services customer during the first half of this year to drive near-term revenue.

    Andrew Morris

    "By successfully achieving our operational milestones, we expect to exit the fourth quarter of 2013 on a cash flow positive basis," CFO Andrew Morris says in an exclusive interview with

    "We believe there are significant opportunities to create revenue streams from customers who have existing single-plex diagnostic tests and who are seeking to multiplex this content using our multiplexed product development, commercial diagnostic production and SQiDworks and SQiDlite automated analyzers," Mr. Morris says, referring to SQI's ability to analyze multiple biomarkers simultaneously from a single patient sample.

    "We have successfully overcome the technical challenges associated with microarray, multiplexed protein diagnostics and achieved our initial commercial objectives," he adds.

    Last fall, SQI realigned its business plan to focus on the following three key areas: IVD products in production; completing regulatory filings for later-stage quantitative multiplexed products in development; and converting prospects for its diagnostic tools and services segment in order to generate near-term revenues.

    The expansion into diagnostic tools is intended to enable SQI's lab and diagnostic customers to expand their use of the company's platforms by converting their content to microarrays. Applying SQI's in-house processes and systems to develop microarray formatted tests incorporating customers' content will allow customers to reduce their assay costs with less development risk and effort by purchasing their microarrays and development services directly from SQI.

    "For example, our customers will be able to add requested target biomarkers to an existing panel of biomarkers, or they may request an entire panel of protein-based or antibody-based biomarkers to be developed into a research-use only microarray that they may use as a lab-developed test," Mr. Morris says.

    SQI's claim to fame is high-throughput analyzers that are capable of measuring multiple protein, antigen and antibody biomarkers in a single test array to aid in the diagnosis of autoimmune, allergen and infectious diseases. "To our knowledge, no fully automated high-throughput microarray systems exist that are capable of addressing the combined multiplex testing needs of these markets," Mr. Morris says.

    According to Mr. Morris, the company's core IVD technology gives laboratories the ability to analyze simultaneously multiple biomarkers in 96-well microarray plates, deliver accurate and quantitative patient results in less time, significantly reducing labor costs, and increasing profits. In a 96-well consumable plate, SQI's technology can analyze 74 patients with up to 12 biomarkers tested quantitatively and 24 biomarkers for screening.

    "Our goal is to be the single source for non-molecular, microarray diagnostics products, contract manufacturing and development services," he says.

    "We differentiate ourselves from our competition in the IVD markets by taking away the need for many lab technicians spending many hours to run these tests," Mr. Morris contends. "By multiplexing, we also can reduce the number of vendors that a customer has to deal with, because we aggregate all of the biomarkers on one test."

    Regarding the diagnostics tools and services market, he adds, "we also provide assay development, development software, print optimization and our automated analyzers on an OEM basis, compared with other microarray services providers who only print content."

    SQI, which began its R&D in 2003, already has received regulatory clearance to market qualitative rheumatoid arthritis and celiac assays in the U.S., qualitative and quantitative rheumatoid arthritis and celiac assays in Canada and quantitative rheumatoid arthritis and celiac assays in the European Union.

    Mr. Morris explains that a qualitative test refers to the presence or absence of a biomarker, while a quantitative result is the measurement of the concentration of a particular antibody. "In the past, the market was all about qualitative testing, but now every one of our IVD products in development is a quantitative test," he adds.

    "One of our key operational goals is to continue to develop, and seek regulatory approval for, additional tests, as we believe that expanding our test menu will drive adoption of our analyzer platform and products," he adds.

    Robust IVD Pipeline

    SQI plans to file in the first half of this year for regulatory approval of its celiac 6-plex (the number of biomarkers tested for each patient) quantitative panel in the U.S., Canada and Europe and to follow that up in the second half of the year with filings for its vasculitis quantitative panel in the U.S., Canada and Europe and a lupus 12-plex quantitative panel in Canada and Europe.

    "A 12-plex panel for lupus is the killer app in our space," Mr Morris says, noting that there is high demand from customers. While there are not a lot of patients with lupus, the wrong treatment can make a patient very ill. "So labs try to rule out lupus, which results in a lot of testing for lupus even though there aren't a lot of patients that actually have the disease," he adds.

    SQI has signed partnerships for each of its disease targets with leading research institutes around the world, including Cleveland Clinic, Beth Israel Deaconess Medical Center, Barcelona University Hospital, the University of North Carolina at Chapel Hill and Maastricht University Hospital.

    Mr. Morris explains that partnering has given SQI access to blood samples and qualified concentrations of biomarkers from patients with autoimmune diseases. "These samples would otherwise be expensive and hard to get," he notes. He adds, "The other key thing is that our partners can help us qualify the panels we're developing, and we encourage them to publish the results from using our systems and assays."

    He figures SQI's IVD segment represents a $4.5 billion a year market opportunity in autoimmune, allergen and infectious diseases, of which about 65%, or $3 billion, is in North America and Europe. The market potential of SQI's diagnostic tools business is $2 billion a year in the U.S. and Europe, according to Mr. Morris.

    Also during 2012, the company plans to launch its SQiDlite analyzer in non-IVD markets in North America and to ink its first non-North American diagnostic deal for its SQiDworks machine and IVD products.

    SQiDworks Fully-Automated Platform

    SQiDworks, which is the only fully automated, microarray processing system with regulatory clearances in the U.S., Canada and Europe, can generate 888-plus billable assay results an hour.

    SQiDlite, the company's second generation diagnostic platform, uses the same technology as SQiDworks but is intended to be a bench-top system. A prototype of SQiDlite, which can generate 300-plus billable assay results an hour, was previewed at the American Association for Clinical Chemistry Annual Conference last summer.

    Mr. Morris says SQI initially is targeting the top 300 autoimmune testing reference labs in North America and top 50 in Europe for its IVD diagnostic products. For diagnostic tools and services, the initial target is the top 30 non-IVD testing reference labs in Europe and the top 50 CLIA labs in the U.S. "The addition of diagnostic tools and services meaningfully broadens our addressable customer base," he adds.

    A technician's hands-on time to perform a four-plex SQI biomarker test is about 7.5 seconds, compared to the four minutes required to perform the comparable traditional ELISA biomarker test. The cost of a four-plex test panel is about $23, compared to the $40 cost of the comparable traditional ELISA biomarker test, thus resulting in a savings to the lab of $17 per patient." The savings estimate increases with the number of biomarkers analyzed per panel, he says, adding that the $17 per patient potential savings jumps to more than $53 with a 12-plex test, for example.

    "Our solutions can impact more than 80% of lab spending," Mr. Morris contends, explaining that lab spending is comprised of the costs of labor and benefits, supplies and, if the lab can't complete all of the testing, the cost of having the testing completed at another lab.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Feb 23 12:12 PM | Link | Comment!
  • Echo’s needle-free technology a game-changer

    Echo Therapeutics’ (OTCBB:ECTE) platform for needle-free drug delivery and a wireless biosensor that continuously monitors diabetics’ blood glucose levels without breaking the skin is giving the company a shot at several blockbuster markets.

    “The scope of the technology is applicable to the delivery of many drugs and monitoring many analytes in the blood stream,” CEO Dr. Patrick Mooney says in an exclusive interview with “Multiple billion-dollar opportunities could be addressed by this technology.”

    Of course, the bottom line is that nobody likes getting stuck with a needle. “When you think about that in the context of our current market valuation of $140 million, we’re a fraction of the value of our nearest competitor, which uses a needle to monitor blood sugar levels continuously, and we think we have a superior technology,” he adds.

    Echo’s two technologies are the Prelude SkinPrep and Symphony transdermal continuous glucose monitor (tCGM), which came out of Dr. Robert Langer’s lab at MIT.

    In a new report last week, Feltl and Co. analyst Ben Haynor said Echo’s technology has “game-changing potential.” He stated, “We believe Echo Therapeutics will revolutionize the continuous glucose monitor and topical anesthetic markets with its non-invasive technology platform.”

    He initiated coverage of Echo with a “strong buy” rating and a 12-month price target of $6.50. The stock closed at $4.15 on Friday.

    In a move that will sharply broaden the pool of potential investors, Echo has applied for a national listing on the NASDAQ or the AMEX and will move to whichever exchange accepts the listing application first.

    Prelude™ SkinPrep Platform Technology

    About the size and shape of an electric nose-hair clipper, the Prelude SkinPrep is a skin permeation device that quickly removes the outer layer of dead skin called the stratum corneum, with no pain or bleeding, stopping precisely before reaching live skin. That puts the device microns away from capillary blood vessels in the epidermis and allows for both painless drug delivery and continuous glucose monitoring with the Symphony biosensor.

    Echo has licensed Prelude to Ferndale Pharma Group for enhanced delivery of its skin-numbing lidocaine cream in North America and Britain. The $15 million deal excludes royalties and manufacturing revenues from the single-use, disposable abrasion tips on the Prelude device. “It’s a razor-razor blade business model,” Dr. Mooney says.

    “We just did a clinical trial that was the basis of our most recent FDA filing, where we permeated the skin with Prelude and then applied lidocaine and achieved numbness in three to five minutes,” he says.  Existing lidocaine creams can take up to an hour to get through the dead skin layer. “So we have a much more attractive product profile.”

    Echo estimates that Prelude and lidocaine could have an annual market potential exceeding $1 billion in cosmetics and pediatrics.

    In pediatrics, Dr. Mooney explains that a nurse could permeate a child’s skin with Prelude and lidocaine, making an inoculation painless in just a few minutes. In the cosmetics and aesthetics markets, patients would be free of painful injections of Botox and collagen fillers, for example, allowing plastic surgeons and dermatologists to get patients in and out of procedures much more quickly.

    Last February, Ferndale received FDA comments on its 510(k) submission that Echo described as minor and consistent with expectations. “They were very benign and generally related to manufacturing,” Dr. Mooney says, adding that an amended filing will be made mid-year, with possible regulatory clearance as early as the third quarter.

    Symphony tCGM System

    While Prelude SkinPrep represents a separate business for Echo, the needle-free Symphony tCGM depends on the Prelude device to prepare the skin for the non-invasive biosensor. The system also includes a wireless monitor or a portable handheld device.

    Dr. Mooney explains that after skin permeation with Prelude SkinPrep, the biosensor’s surface detects glucose as it diffuses out of the capillaries and comes in contact with the biosensor. The biosensor also contains an enzyme that reacts to glucose and relays those readings as an electric signal. The impulse passes wirelessly to a handheld device, which records the information and monitors the readings. It also can transmit readings to a cell phone, emitting an automatic alert should there be a critical rise or fall in the level of a blood-sugar reading.

    All existing FDA-approved continuous glucose monitoring systems use sensor wires inserted into the patient’s skin, increasing the risks of infection, inflammation or bleeding at the insertion site.

    In a report last month, LifeTech Capital analyst Stephen Dunn said the Symphony system has the potential to change the “current standard of care paradigm” and “improve patient compliance to frequent glucose testing and achieve better overall glucose control.”

    Symphony™ tCGM Glucose Monitoring System

    Echo estimates the addressable market for continuous glucose monitoring in the hospital critical care setting at more than $1 billion a year, with the global glucose monitoring market at more than $12 billion annually.

    Last week, Echo received the key components of its next generation Symphony tCGM design that it will test in a final series of clinical trials, replacing the prototype used in earlier clinical testing. The next generation design incorporates numerous technological advances required to meet market expectations for system accuracy, manufacturability and product cost.

    Dr. Mooney says Echo plans to complete an additional critical care pilot study this summer “to make sure we have a commercially ready system.” It also plans to start its pivotal study at the beginning of 2012 and hopes to obtain regulatory approval by the end of the year.

    As in earlier testing, the pivotal study will draw blood from critically ill patients at four hospitals and compare their blood sugar levels against Symphony readings. The study, with an estimated 200 patients, should take about three months to complete.

    Echo has already completed six clinical trials with its biosensor, generating about 3,200 glucose monitoring data points from 70 patients. In those studies, Symphony’s performance was consistent and effective at monitoring blood glucose. The device had error rates between 7.5% and 16%, which were well below the FDA guidelines for error rates of 20% to 25% in diabetic glucometers.

    Citing regulatory filings of competing continuous glucose monitors, Dr. Mooney points out that the Medtronic Guardian device had an error rate of 19.7% while the DexCom (NASDAQ:DXCM) Seven was 15.7%. Dexcom is the only pure play in continuous glucose monitoring.

    “Not only are our error rates much lower than [what] historically the FDA has used as a threshold for approval, but they are also consistent from study to study,” says Dr. Mooney, a former physician, senior biotech analyst at Thomas Weisel Partners, and CMO and CEO of Aphton (NASDAQ:APHT).

    “That tells me, as a scientist and physician, that our data are reproducible, which is equally as important as the accuracy performance. We can consistently reproduce good results with our device.”

    Continuous BG Monitoring System Comparison

    Besides its glucose monitor, Echo is working on a biosensor to detect lactate levels in blood. “It’s an early development program. However, we initiated it, because we want to establish that this is a platform technology that allows us to do many things,” Dr. Mooney says. “Once you permeate the skin, we can make many different types of biosensors, and we should be able to deliver many different types of drugs.”

    A lactate biosensor could represent a big market opportunity with top-tier professional athletes, who are interested managing their lactate levels to achieve optimum muscle performance, and for critical care patients. Dr. Mooney says the technology also could be applied, among other things, to measure blood alcohol levels, thyroxine levels for thyroid hormone and coumadin levels for patients who take blood thinners.

    Echo’s needle-free technology received an unexpected shot in the arm last summer when DexCom received a warning letter from the FDA about the risks of sensor wire fractures underneath patients’ skin, especially in pediatric and adolescent patients. “We believe this should give Echo’s transdermal biosensor a significant advantage in the marketplace,” said LifeTech’s Mr. Dunn.

    Another differentiating advantage Dr. Mooney cites is Symphony’s chemical reaction strip, which adheres to the skin and converts glucose into a numerical reading. The strips are replaced every one to two days, compared with competing biosensors, which can be worn for up to seven days.

    “They make their biosensors last longer, because they want patients to use needles less frequently,” he figures. “We don’t use needles. And another problem with wearing a biosensor for so long is that the adhesive irritates the skin.”

    In 2009, Echo teamed up with Handok Pharmaceuticals to develop and distribute the Symphony system in South Korea. Handok is the largest diabetes care-focused company in South Korea and a member of the Sanofi-Aventis group. “While the deal validated our technology, it also represented a possible strategic path into Sanofi,” Dr. Mooney says. “And we still have the rest of the world open for a partnership with a bigger company.”

    There are four multinationals that dominate the glucose monitoring sector—J&J, Roche, Abbott and Bayer, while two newcomers—Novartis and Sanofi-Aventis—have moved aggressively into the space in the past few years. “They all know us, and they are all interested to varying degrees,” he points out.

    “This is a big year for us.  If we produce consistent data with our next pilot study and get the pivotal study going, I’m probably not running this company in three years. Echo could be part of a much bigger company.”

    Continuous glucose monitoring is not in question, he says, adding that the medical literature is clear that pricking your finger a couple times a day isn’t good enough to control your diabetes.

    “So the big players are moving towards continuous glucose monitoring. But all of our competitors use needles; we don’t. So there’s traction in the space, with a lot of interest in Echo. If you can monitor glucose continuously without a needle, you have the potential for a disruptive technology, and companies like that generally don’t remain independent.” 

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    May 31 10:16 AM | Link | Comment!
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