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The Value In APPY1

|Includes:Venaxis, Inc. (APPY)

Hi,

I feel there is a lot of misconception over APPY1. I have seen many comments questioning the usefulness of such a device. When posting my article on APPY (check my profile if you are inclined), I did not anticipate such a backlash from the community.

I am going to discuss the comments that I have seen regarding APPY1 here:

Robert posted on another article:

A normal/low WBC count, which is already performed on the patient, has a NPV of 96% in children. Who needs another inaccurate test.
The APPY1 test is worthless in my opinion.

I posted a lengthy response within that SA analysis on APPY after researching and accessing the article which I assume he crept up on.

If you would like the full response, please find the article here: seekingalpha.com/article/2000261-venaxis...-march

For here, I will start by saying Robert conveniently left out a few important facts. One is that this NPV of 96% in children actually refers to toddlers aged 1-3.9 years old. For children aged 4-11.9, the NPV is 89.5%. The next thing that was left out was just what this NPV refers to. It isn't a 96% true negative result for ALL toddlers. It is a 96% NPV for toddlers who have a low or medium white blood cell count. Obviously this is not every single toddler, and so if the test were applied to ALL toddlers - the NPV would drop. Second, Robert only attached a value for NPV and not any other statistical result. There is a reason APPY1 reports more than just one statistical figure. I outline within my lengthier comment why JUST NPV is not an accurate representation of a test accuracy at all. It turns out the PPV (accuracy in predicting positive events) was 42%. Lastly, the study was not conducted in an appropriate manner - so it is on uneven grounds and cannot even consider to be compared to APPY1. The diagnostic tool from APPY is tested in a blinded study. The study Robert posted was performed unblinded, and the article authors reported within their literature paper that multiple sources of bias did exist. This included purposefully selecting patients who looked sicker and more likely to "better perform" within their study.

Within my article, rootbeer posted:

I agree with your article on PGNX. I disagree with this article. The standard of care for diagnosing appendicitis is a physical exam, followed by a white blood cell count, followed by ultrasound and/or CT. In children, we use ultrasound in an attempt to visualize the appendix. If it is seen and it is increased in size, the work up is done. If it is not seen, as is frequently the case, we proceed to CT. If the appendix is not seen by CT, then the surgeon is forced to use best judgement in either proceeding to surgery or close monitoring if WBC and physical exam are unremarkable. If appendix is seen and is normal, the work up is done. If the appendix is seen and is enlarged, inflamed, etc, the patient goes to surgery. Pregnant women are diagnosed with ultrasound and/or MRI. The reason that imaging exams are used in the work up of suspected appendicitis is to avoid a missed case of appendicitis. Even one missed case of appendicitis in a child can be devastating to the child and eventually all the physicians involved in the case. The test offered by Venaxis will have little to no value here in the US. The threat of malpractice for a missed case of appendicitis forces the ER physicians and the surgeons to request any and every test to rule in and rule out appendicitis. The test offered by Venaxis does not do a good enough job of ruling it out.

I am a fan of his posting, and his comments strike me with intelligence.

However, inspection of his profile reveals he is a radiologist. As such, he will always have an inherent bias to CT scanning. You are always going to unknowingly uphold your own work in the highest regard - it is only natural.

I also responded to his post within my article. The lengthy procedure for diagnosing appendicitis, in my opinion, already outlines the need for a speedier and more efficient test. We have already looked at the advantage of APPY1 to white blood cell count testing (see above). If ANYTHING, APPY1 would provide a SOLID replacement for white blood cell count within this diagnosis procedure. It is better suited for diagnosing appendicitis (and negative cases), and it even uses white blood cell count as one of the measurements within the test. This alone should prove that APPY1 has a place within the diagnostic testing for appendicitis - a bearish investor has unknowingly admitted a proper placement for it.

As I've also mentioned, I feel his wording further stresses the need for further testing. "In children, we use ultrasound in an attempt to visualize the appendix." ATTEMPT. The ultrasound itself is open to extreme interpretation. The process of running the ultrasound test + making sense of the data is a job in itself. This easily takes up valuable employee time. APPY1 is a quick test that is not biased by human interpretation of what "could be" or "perhaps is".

rootbeer goes on to claim that imaging is used so that appendicitis is not missed. But CT imaging (perhaps the gold standard) has a diagnostic accuracy of 95-98% (emedicine.medscape.com/article/363818-ov...). Compared to APPY1 (mean NPV of 97%, sensitivity 97%), there is no statistical significance between CT imaging and APPY1 when a negative result is present.

Closing Statements

To all those remaining bearish on the APPY1 diagnostic tool, perhaps you could better enlighten me why? If your child was waiting in the ER with abdominal pain, which would you prefer - sending them immediately to a CT scan resulting in high doses of radioactivity, and a diagnostic accuracy of 95-98%, or to attempt to avoid that situation with APPY1?

Disclosure: I am long APPY.

Stocks: APPY