VRSEF: Aura Data Published. Operations On-Track. - Analyst Blog
09 Aprile 2012 - 12:04PM
Zacks
VRSEF: Aura Data Published. Operations
On-Track.
Brian Marckx, CFA
Aura Study Results Published
Comprehensive analysis of the 1,000-lesion study were accepted for
publication by Cancer Research, a peer-reviewd journal of the
American Association of Cancer Research and the most widely cited
cancer journal in the world. The manuscript, titled
"Real-time Raman Spectroscopy for In Vivo Skin Cancer Diagnosis",
was first published in the online version of the journal in late
March.
As a reminder, Verisante Technology Inc.
(VRSEF) announced the preliminary
statistical analysis earlier this year which were presented by Dr.
Haishan Zeng at the SPIE (international society for optics and
photonics) conference in San Francisco. Data was acquired on
over 1,000 lesions from 848 patients. The study analysis
focused on only those classes of lesions that are considered to be
associated with concern of skin cancer - which resulted in a final
dataset of 518 lesions from 453 patients. Specifically, the
classes of skin lesions included in the analysis were those
diagnosed as malignant or premalignant (i.e. - malignant melanoma,
squamous cell carcinoma, basal cell carcinoma, and actinic
keratosis - in aggregate, these represent essentially 100% of skin
cancers) and benign conditions that look like skin cancer (i.e. -
seborrheic keratosis, atypical nevi, malanocytic nevi, compound
nevi, and intradermal and blue nevi).
The study focused on three distinct categories, specifically Aura's
ability to differentiate; 1) skin cancers and pre-cancers from
benign skin lesions, 2) melanomas from non-melanoma pigmented
lesions, and 3) melanomas from seborrheic keratoses.
Statistical analysis was done using two methods; principal
component with general discriminant analysis (GDA) and partial
least squares. With sensitivities between 95% and 99%, Aura
demonstrated specificities in these three tasks between 15% and 54%
with GDA (in most instances using partial least squares resulted in
higher specificities) - which resulted in a biopsy ratio (the
number of non-melanoma lesions that undergo biopsy for each
confirmed case of melanoma) of between 0.77:1 to 5.56:1.
Specifically (see Table 3 from the study below) the GDA analysis
showed, in differentiating 1) skin cancers and pre-cancers from
benign skin lesions, specificity was 17% at 99% sensitivity and 41%
at 95% sensitivity (partial least squares showed specificity of 24%
at 99% and 52% at 95%) 2) melanomas from non-melanoma pigmented
lesions was 15% at 99% sensitivity and 38% at 95% sensitivity, and
3) melanomas from seborrheic keratoses was 25% at 99% sensitivity
and 54% at 95% sensitivity. The study authors concluded that,
" Raman spectroscopy can distinguish (1) malignant and premalignant
lesions from benign disorders, (2) melanomas from benign pigmented
skin lesions, and (3) melanomas from seborrheic keratoses."
The biopsy ratio is a metric which helps gauge the accuracy of
melanoma diagnosis - the lower the ratio, the more accurate the
diagnosis. Misdiagnosis of skin cancer is rampant, often
resulting in unnecessary biopsies. Biopsies can be costly,
uncomfortable, and result in scarring. If Aura can improve
the accuracy of diagnosis (which we believe it can), there should
be substantial commercial demand for the device. Relative to
the biopsy ratio, for reference the manuscript cites a
retrospective study of ~5,000 pigmented skin lesions evaluated by
~500 general practitioners which resulted in a biopsy ratio between
58:1 and 21:1 (i.e. - 21 non-melanoma lesions biopsied for every
confirmed case of melanoma). Other unrelated studies have
indicated biopsy ratios in clinical practice may be even
significantly higher than these figures. Although it's not
necessarily fair (as there could be significant differences in the
make-up of the various studies) to make a direct comparison of the
biopsy ratios in the Aura study (which appear comparably very
strong) with these other studies, at least on the face of it, the
Aura data looks potentially persuasive.
As we noted in our most recent update, the Aura data does look to
be very compelling relative to clinical trial data from MELA
Sciences Melafind device which showed a sensitivity of 98% and
specificity of about 10% in the detection of melanoma. Aura's
biopsy ratio appears similarly relatively strong. Also
noteworthy is that MELA opted to use a statistical method different
than either GDA or partial least squares, both of which are
considered conservative. As such, it's possible that Aura's
specificities may have been relatively even stronger than
Melafind's had the statistical methods used for both devices'
studies been the same. Also as we've previously explained,
Aura has other advantages to Melafind including a significant speed
advantage (allowing for full body scans) and the ability to detect
of all types of skin cancer whereas Melafind is used for only
melanoma.
Operational Update
- Distribution:
Verisante penned an agreement with Clarion Medical Technologies for
exclusive distribution of Aura in Canada. Specific terms of
the deal were not announced. We anticipate agreements for
distribution in Australia and parts of Europe to be
next.
- Commercial Production 2H
2012: Verisante noted in an early April press
release that they expect 10 beta Aura systems to be completed and
ready for field testing this month with manufacturing and
production expected to commence in the second half of the
year. These timelines are largely in-line with management's
prior expectations and correspond with our general forecast.
- Lung Cancer Study:
Clinical study at the Lung Tumor Center at Vancouver General
Hospital for Verisante's lung cancer application device, Core, is
expected to wrap up later this year. Data analysis will
follow and is expected to be submitted for publication. As
Core is essentially a derivative of Aura and ISO certification is
already in place, Verisante expects regulatory approval of Core in
Europe, Canada and Australia (i.e. - where Aura is already approved
for sale) to be seamless.
- FDA Meeting:
Management noted in late December that they expected to have an
initial meeting with the FDA during Q1 2012 to discuss the
potential U.S. regulatory approval pathway for Aura. We hope
to hear an update in the near future. As we noted in the
past, our expectations (although we have no particular insight on
this) are that FDA approval will need to come via the PMA process
and be supported with data from additional clinical testing - this
pre-IDE meeting will hopefully provide guidance on the regulatory
pathway as well as what the FDA will be looking for in regards to
supporting data/information. Our current (as well as initial)
assumptions are that Aura could be on the U.S. market by 2014.
- Mexico and Brazil:
Verisante has begun the registration process to sell Aura in Mexico
and Brazil. The company hopes to obtain registration in
Mexico in 2012 and Brazil possibly in late 2013.
More Awards
Verisante continues to impress the technology, medical and
investment communities. Among the latest recognition was
being named the TSX Venture Exchange's top Technology and Life
Sciences Company. The TSX Venture Exchange's annual list of
its top 50 emerging publicly traded companies is a ranking of the
strongest performers from five industry sectors. Verisante
ranked number one on the list of top 10 leading Technology and Life
Sciences companies for the year. Companies are selected based
on four equally weighted criteria - return on investment, trading
activity, market capitalization growth, and analyst coverage. The
results were obtained from data to December 31, 2011. In
honor of the award, Verisante's CEO, Thomas Braun, was invited to
the exchange to participate in the opening of the market on April
3rd.
Verisante got some icing on the cake with also being awarded the
"Pick of the Street" in the Technology and Life Sciences Sector of
the TSX Venture Exchange. "Pick of the Street" is chosen by a
poll of fund managers, analysts, bankers, and retail brokers.
The recent recognition follows Aura being given a "Best of What's
New" award by Popular Science magazine in November, naming it as a
top technology of 2011. Editor in Chief of the publication,
Mark Jannot, noted that "The Best of What's New Award is the
magazine's top honor and the 100 winners, chosen from among
thousands of entrants, represent the highest level of achievement
in their fields." Also in late 2011, the Canadian Cancer
Society cited a clinical study using Verisante's laser Raman
Spectroscopy in the detection of lung cancer as one of its "Top 10
Canadian Cancer Society Funded Research Stories of
2011".
To view a free copy of our most recent research report
on VRSEF or subscribe to our daily morning email
alert, visit Brian Marckx's coverage page at http://scr.zacks.com/
.
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