See below for audio and full interview transcript
Brett Johnson: Welcome, Brett Johnson from New York City with OneMedRadio. Today, we are with Thomas Braun who is the CEO of Verisante, symbol VRSEF on the Over-The-Counter QX and VRS on the TSX Venture Exchange. It’s a Vancouver based firm that’s developed an innovative approach to melanoma diagnostics. Welcome today, Thomas.
Thomas Braun: Thanks, Brett. It’s a delight to be here and thanks for having me on.
BJ: So tell us what’s novel or important about what you’re doing? What’s the discovery here?
TB: Well, the Verisante Aura is a non-invasive light ray that uses an innovative proprietary technology to measure 21 different cancer biomarkers to detect skin cancers in less than a second. So this device provides immediate and accurate results.
BJ: So this is important because obviously melanoma and skin cancer is a very big disease?
TB: Yeah. Well, skin cancer is the most common form of cancer. It’s the most rapidly increasing type of cancer. In fact, every hour, one person in the United States dies of melanoma, which is the deadliest form of skin cancer. As it turns out now, skin cancer is actually the number one cancer killer of women age 25 to 30 in the United States.
The reason we’ve targeted this disease is because you’ve got about 2 million people a year in the United States being diagnosed with skin cancer. They’re supposed to go back for screenings every 6 or 12 months and if you catch a lesion early, particularly melanoma, which can be deadly, your survival rate is over 95%. In the late stage of catching one of these after it’s metastasized, your survival rate is 15%. So that’s why there’s this huge emphasis on going back frequently for screening particularly if you’re a high risk individual.
We’ve got sort of a mantra, which is that the Verisante Aura saves money and saves lives. The way it saves lives I’ve just explained, but the way it saves money is that the treatment cost in that early stage where you’ve got 95%+ chance of survival is about $5000. Once that cancer has metastasized and it spreads throughout your whole body, the treatment cost goes up to about $110,000. The survival rate is 15% because this type of cancer doesn’t really respond very well to radiation or chemotherapy. So early detection is the key to surviving this.
BJ: Interesting. Can you tell us about the technology and where did this come from and how does it work?
TB: Okay. Well, we’re using infrared Raman spectroscopy to scan 21 biomarkers. We’re measuring the chemical composition of the skin. We’re seeing things that you can’t see with the human eye. So right now, doctors are using their eyeballs. They’re using dermatoscopes, which are magnifying glasses. They’re using digital dermatoscopes, which are basically fancy digital cameras that blow up the image of a lesion. They’ve got booths with multiple cameras in them that do something called photomapping where they’re trying to take pictures of the patient’s entire body and then compare those every six months to see if there’s been any evolution. So those are all good, but they’re very time consuming and not everybody can do that kind of screening because it can also be very expensive.
Our device came out of a hospital environment at the British Columbia Cancer Agency and it was developed so that you could almost in real time take measurements on a person’s body. A high risk patient can have 50 to 100 moles on their body so that was sort of the unmet need and our solution is that we’ve got this very small probe that attaches to a device that will be on a cart. And that with that probe in under a second, you can go and take a quick measurement of each lesion and then the device will tell the medical practitioner if it’s a high risk lesion that needs to be biopsied or a low risk lesion that doesn’t need to be biopsied.
The biopsy is still the gold standard in this practice and you would still get a pathology report that either confirms the diagnosis or says that it’s not yet evolved into a full-blown cancer. In which case, it could be a pre-cancerous lesion that then can be treated with photodynamic therapy or liquid nitrogen.
BJ: So currently, if the doctor sees a mole that they are a suspect of, how do they make the decision to biopsy it?
TB: Well, right now, doctors are using a method called ABCD. So, they’re assessing the lesion based on the asymmetry of the lesion, border irregularity, color variation, and a diameter over 6 mm and that’s mostly for melanoma. ABCD doesn’t really apply to basal cell and squamous cell carcinoma, which make up about 97% of skin cancers. Our device is indicated for use on all skin cancers.
If you look at somebody who is a high-risk individual who has up to 100 moles, it can be quite a daunting task for doctors to decide which ones to biopsy. So our device gives them an objective tool to take measurements and assist them with that task.
BJ: Interesting. So what’s the business model and the economics? I mean how does this work from the point of view the clinical practice?
TB: Well, the way it would work, you know, can vary from jurisdiction to jurisdiction. I can tell you in Germany, for example, their public health insurance pays 150 Euros for skin cancer screening, but they only pay for that once every two years. So a healthcare practitioner would purchase the machine from us and we make money off of that as a profit margin on the machine. And then we also have a disposal tip to prevent cross contamination between patients. So each patient would get a fresh tip.
We’re envisioning that that will be something that will be low cost in order to keep this technology accessible, maybe $10 a patient. So the practitioner would be charging in Germany, for example, 150 Euros to the patient and of that, we would get approximately $10. 150 Euros is about $225. So if they had a busy dermatology practice and did many people a day, you could potentially do up to 50 or 60 patients a day. And you consider in these places like the United States for example where skin cancer is an epidemic, you’ve got 2 million people a year being diagnosed with skin cancer, they’re told to come back for a screening at least once a year.
TB: If they’ve had melanoma, they’re typically told to come back once every six months and you’ve got 2 million new patients every year being added to that group who are supposed to go for regular screenings.
BJ: So what are the reimbursement considerations for the service or device?
TB: Well, right now, because it’s a new technology, I don’t think that there is additional reimbursement for using the device. So if you are a medical practitioner, you would have to charge separately for it or you would just include it in your existing service. So for example, I talked to one dermatologist and currently he’s using mole mapping. He charges $500 for that and that comes out of the patient’s pocket because it’s not covered here in Canada.
In the US, it varies. Some dermatologists in Manhattan for example where there are many famous dermatologists and they don’t even accept insurance anyway and they charge as much as $625 for a five-minute visit where they’re just looking at a patient with their eyeballs to do a skin cancer screening. So I’ve also talked to dermatologists in that category who have said that they wouldn’t even charge extra for it because they’re already charging over $600 for a visit. But this will be a valuable tool that they can use to distinguish themselves from other dermatology clinics and that way their patients know that they’re getting the latest technology, they’re getting the best treatment.
BJ: Right. And they can save themselves time.
TB: Right. And then there are other potential customers for our product like hospitals, cancer agencies, they just want to have the latest technology and the best technology. You know, how they bill for it will vary from one country to another. I can tell you in the province of Ontario, I did talk to one doctor who is on a reimbursement committee there for the whole province and you know what he said to me was this is a medically necessary device because you’re going to eliminate unnecessary biopsies. Using biopsies as a method of screening is really inefficient. It clogs up the pathology labs. Pathology reports costs a lot of money, biopsies cost a lot of money.
So we are developing a device here that has much higher sensitivity than any doctor has ever been able to report. We’ve got a lower biopsy ratio. So we’re going to save lives and save money and when you can make that economic case, what this gentleman told me is that you’ll get reimbursement right away. So for those people who can’t afford to pay out of their own pocket, I think that some jurisdictions will move to adopt some sort of reimbursement scheme for this just because of the economic case that helps the overall healthcare system.
BJ: Right. So what’s the regulatory timeline? When can we begin to expect seeing this product in the market in the US and internationally?
TB: The regulatory timeline is that we anticipate getting approval, home country approval in Health Canada very soon before the end of the year and a CE mark, which gets us into all of Europe.
Then in addition to that, the CE mark is accepted in Australia, which is, sort of, ground zero for skin cancer. About 70% of the people in Australia will get skin cancer in their lifetimes so it’s a huge market for us. Getting those near-term approvals allows us to forecast early revenue. With the FDA, my understanding having discussed this early on with the FDA is that if you’re a Canadian company, they like to first see you get approval from Health Canada before you apply with them.
And that makes sense that you just get approval in your home country first. So at that point, then they know that another regulator has looked at you and you’ve passed muster with them so they know you’re not just wasting their time. And then we’ll begin with the FDA.
BJ: Okay. So in terms of the other markets, is it 2012 that you’ll begin to start seeing this product being sold in Europe and in Australia?
BJ: Okay. So why is this stock a good purchase now? Why should investors be buying Verisante today?
TB: To get the approval in Canada and the European Union, one of the major hurdles is to get ISO medical device certification. So we recently announced that we had this ISO 1345 2003 certification done, which we’ve been working on since last September. So we’ve got that certificate. That was the major hurdle. So our approval in Canada and in Europe and Australia is now fairly certain. We’re very confident that we’ll get that. So being able to buy a stock just before a major catalyst is always a good idea.
BJ: That sounds exciting. Well, it sounds like you’ve got a lot of promising developments ahead of you, Thomas. Thanks so much for joining us.
TB: No problem. And I guess there’s just one thing I’d like to add, which we didn’t cover and this relates to the regulatory timeline. The device has already undergone a six-year clinical trial at Vancouver General Hospital where over a thousand lesions have now been scanned with this.
And so we’ve got a lot of data to compare our scans to biopsies and pathology reports. The preliminary results were actually already published back in 2008 on the first 274 lesions and out of 34 melanomas in that group, our device detected all 34. So we’re using that clinical study as a basis for getting our approval in Canada and Europe and Australia.
BJ: Well, it sounds like a terrific technology that you’re bringing to the market. That is Thomas Braun, who is the CEO of Verisante, symbol VRSEF on the OTC QX and VRS on the TSX Venture Exchange. Thanks again for joining us today, Thomas.
TB: Thanks for having me, Brett.
BJ: This is Brett Johnson here in New York with OneMedRadio signing off. Good day.