Seeking Alpha

Len Zehr's  Instablog

Len Zehr
Send Message
Leonard is an editor of BioTuesdays.com. 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
My blog:
BioTuesdays
  • Verisante Readies Aura Launch For Skin Cancer 1 comment
    Jul 3, 2012 7:46 AM

    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 BioTuesdays.com, 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.

    Themes: long-ideas
Back To Len Zehr's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (1)
Track new comments
  • skin cancer
    , contributor
    Comments (2) | Send Message
     
    II have a scar on my right cheek from a large mole removed when I was three years old. It was itchy and the bumpy red part bled when scratched. Turns out it was Basal Cell Carcinoma.
    14 Oct 2012, 02:28 AM Reply Like
Full index of posts »
Latest Followers

StockTalks

More »

Latest Comments


Most Commented
Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.