The Life Sciences Report: Verisante Technology Inc. is focused on the early detection of skin cancer. Can you talk about the market size in this area?
Thomas Braun: The most common cancers are skin cancers, with 1 in 5 people expected to get skin cancer in their lifetime. Tens of millions of people will be diagnosed. However, many more people will be screened to determine whether they actually have skin cancer. It's important to note that 95–97% of skin cancers are not melanoma. Therefore, it is critical to be able to detect all types of skin cancer, not just melanoma.
TLSR: Can you tell me about the challenges associated with the early detection of skin cancer?
TB: Skin cancer is extremely complicated. It's actually more complicated than internal cancers because there are about 100 different types of skin lesions, most of them benign. In addition, you have about 10 different types of skin on your body. The different combinations of skin type and lesion type makes skin cancer detection challenging. The difficulty is further compounded by skin diseases, such as psoriasis or eczema. The challenges lead to biopsies, many of which could be avoided with early cancer detection technologies.
TLSR: Can you describe your company's diagnostic platform?
TB: The British Columbia Cancer Agency spent 10 years developing Raman spectroscopy as a cancer diagnostic platform. Raman spectroscopy utilizes near-infrared radiation to detect variances at the molecular level. In our devices, near-infrared light is generated by a laser and this light is reflected off the skin. In only half a second, changes in the reflected light provides information on 21 different spectral markers associated with the biochemistry of cancer cells as compared to healthy cells. This is possible because, compared to healthy cells, cancer cells have different ratios of chemicals such as hemoglobin, melanin, keratin, DNA and RNA.
TLSR: How does the Verisante Aura device differ from other skin cancer detection technologies, such as Mela Sciences Inc.'s (MELA:NASDAQ) MelaFind?
TB: MelaFind only works on melanoma. Melanoma comprises only 3% or 4% of skin cancers, so MelaFind is missing about 96% of skin cancers—basal cell and squamous cell carcinomas. Furthermore, the MelaFind device requires two minutes per lesion to generate results. By contrast, our products detect all types of skin cancer in only one half a second per lesion. If a patient with atypical mole syndrome has 200 moles, a physician can't spend two minutes on each one. In addition to the detection time, the MelaFind device is so large that it can only detect melanoma on flat, exposed skin. Our devices have very small probes that can reach all surfaces, as well as hard-to-reach areas such as ears, eye sockets and the nose.
Finally, on the detection of melanoma, our Aura device was three times more accurate than MelaFind, based on a clinical study published in Cancer Research.
TLSR: Are you aware of any additional competing products?
TB: That depends on how you want to define competing products. MelaFind is the only other product that has a diagnostic algorithm approved for anything to do with skin cancer. There are other methods for diagnosing skin cancer, such as serial monitoring with digital dermatoscopes, a very time-consuming method requiring evaluation over long periods of time. No other competing products come from government cancer agencies, and none have clinical studies published in high-impact journals. In addition, none have principal investigators like Drs. Harvey Lui and David McLean, who are both Harvard fellows and professors of dermatology at the University of British Columbia. If you are looking for immediate detection of all types of skin cancer, there isn't anything else out there.
TLSR: In addition to skin cancer, Verisante is developing a device for the detection of other cancers, such as lung, colon and cervical cancer. Detection of these cancers requires more invasive procedures. How does the Verisante Core device provide an advantage over current diagnostic techniques?
TB: The Core device has a very thin fiber-optic probe that goes down the working channel of an endoscope. The endoscope, in the case of lung cancer, goes down the throat into the lung. A video chip on the tip on the endoscope enables the doctor to see where he or she is going. These endoscopes have a built-in diagnostic imaging technology incorporating fluorescence imaging or dual, narrow-band wavelengths. These imaging methods reveal abnormal tissue that wouldn't necessarily stand out under white light. Utilizing Raman spectroscopy, tissues that appear to be abnormal can be diagnosed as either cancerous or benign. Core operates on the same principles as Aura, the only difference being the ability to reach into internal spaces via the fiber-optic probe.
TLSR: How do you envision the Core device fitting into the traditional methods of diagnosing lung, cervical and colon cancer, where sputum analysis, Pap smears and colonoscopies are the respective standards?
TB: A patient's cancer, or cancer risk, can be diagnosed by sputum analysis and Pap smears. With colonoscopy, polyps, benign or cancerous, are routinely removed and later studied in a pathology lab. None of these methods directly identify the site of a cancer. Core actually complements these methods by helping to find the best location for the doctor to biopsy once a patient is deemed at risk. This eliminates the need for unnecessary biopsies and other invasive procedures. The Core can also differentiate between low-grade and high-grade dysplasia and carcinoma in situ, and can be used to monitor high-risk patients.
TLSR: It seems to me that your device could be quite useful for esophageal and bladder cancers.
TB: Yes. In fact, it has already been used in the upper gastrointestinal tracts of 500 patients. About 20 papers from the National University of Singapore have now been published on esophageal and stomach cancer using our patented Raman technology. There is also a study in China targeting nasopharyngeal cancer, and the BC Cancer Agency is doing a colon cancer study using our technology.
TLSR: When do you expect to achieve market approval for Aura and Core?
TB: Aura is already approved in Canada and Europe. Our next step is to get U.S. Food and Drug Administration (FDA) approval. Because Mexico and Brazil accept Canadian approvals, applications are submitted and the registration process is in progress in those countries.
Regarding U.S. approval, we anticipate use of the 510(k) route. If successful, FDA approval could be 6 to 12 months away. If we cannot utilize a 510(k) application, approval is likely two years out. The Core timeline is a bit longer as we are still collecting and validating data.
TLSR: You described the Core device as primarily useful for cancers accessible through normal anatomy. Can this device be used for detection of cancers such as pancreatic or liver cancer requiring more invasive methods to reach?
TB: I think so. Right now, the probe is 1.8 millimeters (mm). Usually the channel that can be reached with catheters or biopsy needles is 2 mm, so you can get into those other places, as well. The technology can also potentially be used intraoperatively to make sure that the whole tumor has been cleaned out at the end of a surgical procedure. This could be particularly useful in brain cancer, where margins for surgical error are tight and patients are at high risk. For the time being, we're going to stay focused on commercializing the Aura and Core devices.
TLSR: What is your anticipated market penetration for these products?
TB: Right now, we think our main market is with general practitioners (GPs) because they are typically the first line of defense. This is where this device can really step in to save money and save lives. In Canada, we have a severe shortage of dermatologists, and long wait times. In some areas of the country, there are no dermatologists at all. In the U.S., there are twice as many dermatologists per capita, but they tend to be located in urban areas, especially either on the East Coast or the West Coast. In general, there are about 30 times more GPs than dermatologists. Coupling our device with a continuing education course on skin cancer, GPs could run skin cancer clinics, and they could perform the necessary biopsies. This would reduce the burden on dermatologists by eliminating unnecessary referrals, so they can focus on patients who have serious problems. This new paradigm represents a very large market.
In addition to sales of our devices, we expect additional revenue streams from sales of our disposable tips to prevent cross-contamination between patients. Additional revenue is expected from device calibration and service contracts.
TLSR: In the U.S., there are examples of useful medical devices that are not covered for use by insurance companies. One example is lasers for treatment of toenail fungi and another is retinal scanners as replacement for eye dilation during eye exams. How do you expect the use of your devices to be covered under health insurance plans?
TB: Right now, they're not covered. As you point out, when you have brand-new technology, it can take time to get coverage and reimbursement. Some of the devices are not covered because they are questionable, but the fact is that people are still paying for these services. If patients are willing to pay $600–1,000 to have their toenails laser-treated, they'll pay $150 for a skin cancer scan. Healthcare does cost money, and if you want to take advantage of the latest technology, you probably have to make some kind of copayment.
TLSR: Can you tell me a little bit about the Verisante MSI Camera?
TB: It's a multispectral imaging camera that uses 18 different, narrow-band wavelengths of light to take images of lesions either on the skin or in the mouth (for oral cancer). Assembly of these 18 colors generates a true-color image that allows visualization of lesions not visible under typical lighting. Add in the diagnostic algorithm that can detect tumor margins, and you have a valuable tool for cancer detection.
In the field of oral cancer, dentists have a CPT (current procedural terminology) code allowing reimbursement from insurance companies for oral cancer screening. With an adjunctive device useful for oral cancer screening, dentists using the appropriate CPT code can add $20,000 ($20K) a year to their revenues. Purchase of a screening device that is available for $5–$10K, with the ability to break even after three months, becomes a no-brainer for dentists. Furthermore, with more than 170K dentists in the U.S., this represents a tremendous market opportunity for us.
TLSR: Thomas, thank you for sharing your story.
TB: Thank you.
Thomas Braun founded Verisante Technology Inc. in 2006 and is president and CEO of the company, which went public in 2009 on the TSX Venture Exchange and acquired the exclusive worldwide rights to an award-winning, innovative cancer detection technology developed by the BC Cancer Agency. The two key products licensed by the company are the Verisante Aura for skin cancer detection and the Verisante Core for lung, colon and cervical cancer detection. Braun has led the company through subsequent financings and negotiated agreements and patent acquisitions that have resulted in Verisante becoming a leader in developing cancer detection systems. The company has also secured approvals for the Aura in Canada, Europe and Australia. Previously, Braun practiced corporate securities law at his law firm, Braun and Co., representing high-tech startups. His practice included technology licensing, corporate law and securities law. Braun earned a bachelor's degree from Western University, a juris doctor degree from the University of British Columbia and a master of laws degree from the University of San Francisco, specializing in international business transactions. He is a member of the State Bar of California, and the Law Society of British Columbia. Braun is married with four children, and has lived in Vancouver since 1977.
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