Creating an Aura
Verisante Technology Inc (VRS.V) is seeking to introduce a lot more skill than art into the diagnosis of cancers. Using Raman spectroscopy in a convenient, non-invasive probe, Aura offers superior sensitivity/specificity than alternatives for skin cancer. Validated in a nine-year, 1,000 skin lesion study, Aura is approved in Canada and the EU, where the focus is now on commercialisation. A de novo filing to the FDA is planned. Even greater market potential perhaps lies in Core, an endoscopic probe shown to improve the early detection of lung cancer; results from a key study and a commercial prototype are imminent.
Saving time and money
Aura is a rapid, real-time Raman spectrometer that can distinguish between benign and malignant skin lesions in one second. The validation study, conducted by the originators of the technology (the BC Cancer Agency and the University of British Columbia), found Aura effective in distinguishing between malignant and benign skin lesions with decent accuracy (ROC=≥0.82; sensitivity at 90-95% = specificity of 66-52%). This could help avoid missing melanomas (occurs ~33%) while significantly reducing biopsies, 80% of which are negative, leave scarring and cost $80.
A versatile technology
The same laser Raman spectroscopy (LRS) has been adapted for endoscopic use in Core, to potentially improve the detection of lung, colon and cervical cancers. Final results from a key study in >300 cases of lung cancer are expected in 2014, and interim data in 26 subjects showed the addition of LRS to standard imaging detected pre-neoplastic lesions with high sensitivity (96%) and specificity (91%). Improving specificity (currently ~60%), without significantly reducing sensitivity, would reduce false-positive biopsies, which are costly and hazardous to health.
Focus on commercialisation
Verisante’s challenge is to convert the apparent technological advantages with LRS into substantial revenues. For Aura we estimate FY13 sales at C$1.1m (C$0.85m at 9M13), with a switch to self-promotion in Canada, FDA acceptance of a de novo pathway and roll-out in Germany as potential catalysts. A commercial prototype of Core and final lung cancer study data could earn Health Canada approval in 2014.
Valuation: Modest C$16.7m EV
We estimate a cash balance as of end-Q114 of C$0.225m, following a C$0.480m raise in March. A US$5m financing is sought, which could be transformational in making Aura into a more commercially viable product and advancing Core.
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