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Company Background Gamma Medica, Inc., (GMI) is a revenue-stage company that develops and utilizes advanced solid-state digital detectors in health care imaging systems with leading-edge technology. CEO Bradley Patt, Ph.D., co-founded GMI in 2001. GMI acquired in 2005 IDEAS of Oslo, Norway, and in 2006 Advanced Molecular Imaging of Sherbrooke, Quebec. GMI and GE Healthcare entered a joint venture in preclinical imaging in 2008, and then Gamma Medica acquired the entire business in 2011. GMI has 60 employees and leverages contract engineers, contract manufacturers, and distributors. Projected 2012 sales will be $24.7 million, comprising 75 percent preclinical, 20 percent clinical, and 5 percent industrial electronics.  Technology Overview  GMI’s FDA-approved Molecular Breast Imaging (MBI) device is installed in 20 clinical sites and uses mild immobilization of the breast between two digital, solid-state gamma photon detectors that image cancer lesions regardless of breast density. The patient is injected intravenously with a tracer amount of Tc-99m-sestamibi, avid for tumor cells, and imaging begins within five minutes. The company has lowered radiation dose to equal screening digital mammography.  Market Potential  Clinical revenues were $1.8 million in 2010, $1.9 million in 2011, $4.9 million projected in 2012, and growing to $50 million in 2015. GMI recalibrated several market analyses using actual equipment sales and constructed Rogers/Bass diffusion models to predict market potential. The company divided the market for breast cancer imaging into three segments: general screening, high-risk screening (dense breasts, BRCA genes, family history), and secondary diagnosis. The primary application for MBI will be screening of radiographically dense breasts (40 percent of European and American population; 70 percent of Asian population). The Mayo Clinic and GMI predict that MBI utilization will grow to 10.5 million high-risk screening and 5 million secondary diagnostic procedures per year.  Competitive Advantage  Women with radiographically dense breasts carry a sixfold increased risk for breast cancer. However, mammography fails to detect most cancers in these women. In a Mayo Clinic 1,700-patient dense-breast screening trial, digital mammography detected only 2 of 20 tumors, while MBI found 18 of 20.  MBI has a clear advantage in specificity over competing technologies: a Mayo Clinic 1,000-patient study demonstrated 91 percent sensitivity and 93 percent specificity in dense-breasted women, much better than mammography and with similar sensitivity to MRI but better specificity (fewer negative biopsies). The GMI LumaGEM® system is 1.5 to 2.0 times more efficient than competing MBI systems, which results in the lowest dose. Financial Overview  Gamma Medica has been supported by $13.2 million in grants, including NCI STTR and SBIR Bridge grants, $82.4 million in product sales, $18.2 million in venture capital, and $16.3 million in debt financing. GMI is seeking $15 to $20 million to grow its Clinical Division by developing a mobile gantry, to conduct dense-breast MBI screening trials required for PMA, to develop international distribution capabilities, and to promote reimbursement, accreditation, and ACR/SBI clinical use guidelines.  Intellectual Property  The GMI technology is protected by eight patents for electronic detector readout and MBI with mild breast compression. In addition, GMI has licensed exclusively all Mayo Clinic patents and know-how related to MBI. Commercialization Strategy  GMI has developed a commercially successful (19 installations) MBI system (LumaGEM®) for breast cancer secondary diagnosis. The company is expanding usage of MBI for breast cancer screening, treatment monitoring, and guidance of biopsy and surgery.  The cost of the MBI system hardware and procedure is less than one-third that of MRI. Average reimbursement is $450 (plus professional component and radiotracer cost) and most payors have positive reimbursement policies or approve MBI with prior authorization.  Pipeline Products  GMI is developing an MBI-guided biopsy procedure (2012 commercial release). The company expects to introduce a mobile gantry in 2013, and plans to combine ultrasound with MBI in 2014-15. The same detector technology can be applied to prostate, brain, and other small organ cancer imaging. Management Team  The seasoned management team has a combined 150 years of professional experience with 110 years in management, 100 years in health care, and 60 years focused on women’s health.  Bradley Patt, Ph.D., CEO, President, Co-founder of GMI & Radiant Detectors (sold to Seiko in 2005), Director of Photon Imaging, DxRay, & TheraCell. James Hugg, Ph.D., VP R&D, CTO: GE Healthcare and Global Research, Henry Ford Health, University of Alabama - Birmingham, British Petroleum, Shell. Debbie Thomas, VP Marketing: Aurora Imaging Technology, WebMD, SAP America. Sharon Smith, VP Sales: Aurora Imaging, Naviscan, Hologic, Procter & Gamble. Deborah Matthew, VP Operations: Paragon Business Systems, Delphi Information Systems.

Company Background

Oncoscope, founded in June 2006 by Dr. Adam Wax, employs optical imaging technologies developed at Duke University. Oncoscope has been supported by grants from NCI, NIH, the National Science Foundation, and the Wallace H. Coulter Foundation. The company resides in Durham, N.C., maintains eight full-time employees, and manages close relationships with Duke University and regional service providers.

Technology Overview

Oncoscope develops diagnostic devices that use proprietary a/LCI optical technology to locate abnormal epithelial tissue, where 85 percent of all cancers begin. These devices are fast, accurate, non-invasive, and allow real-time examination of large tissue areas in vivo. They detect early pre-cancerous dysplasia, a breakthrough over existing diagnostic methods, and have demonstrated 100 percent sensitivity in human studies to date. These devices leverage the biological premise that the primary early marker of cancer examined by pathologists is enlarged cell nuclei. The system examines scattered light to determine average cell nuclei size using a technology called angle-resolved low coherence interferometry (a/LCI). Oncoscope’s first product targets the rapid in vivo identification of pre-cancerous tissue in the esophagus during standard esophageal endoscopy. The device consists of a base unit, a probe compatible with current esophageal endoscopes, and a disposable single-use probe cover. The company has collected clinical pilot data from over 200 patients and is presently preparing for its pivotal trial for FDA approval.

Market Potential

More than 12 million invasive biopsy procedures costing $25 billion are performed annually in the U.S. to detect cancerous epithelial tissue. Many cancers cannot be reliably detected at early stages with current techniques. For example, early detection in esophageal cancer could significantly improve the abysmal nearly 95 percent mortality rate. The esophagus is of particular concern given an estimated 43 million adults with Gastro-Esophageal Reflux Disease, 10 percent of which develop Barrett’s Esophagus leading to an estimated 16,000 cases of esophageal cancer and 15,000 deaths annually. Oncoscope’s device targets 1.6 million annual esophageal endoscopy procedures, each averaging 35 randomly selected biopsies. Oncoscope’s first product addresses this market by: (1) improving accuracy in the early detection of dysplasia, (2) eliminating unnecessary biopsies, (3) decreasing procedure time and cost, and (4) combining diagnosis with immediate treatment. 

Competitive Advantage

Of the many different cancer detection technologies in use or in development, none employ a/LCI or other proprietary technologies used by Oncoscope. Only two of the many devices attempting to detect epithelial cancer can see early stage growth. Of these, only Oncoscope examines deep tissue layers where cancer begins, works in real time, is non-invasive, does not require patient pre-treatment with a contrast agent, and does not require a pathologist to interpret the data.

Financial Overview

Oncoscope has been funded by SBIR grants and $5.1 million in equity financing. The company is looking to raise a $10.0 million series B to support U.S. and EU regulatory approval, product validation, manufacturing development, clinical trial support for regulatory filings, and commercial product launch.

Intellectual Property

Oncoscope has three issued patents and has developed six patent families directed to devices and methods for various optical systems. The first two cover key innovations for determining cell nuclei size in multiple tissue layers from a single data collection event using scattered light. Broad patent claims have been recently issued by the USPTO for the core technology involved in determining cell nuclear size.

Commercialization Strategy

Oncoscope will focus on marketing a product and the procedure in which the product is employed with a small, dedicated, and focused sales force. A key objective is to expand to both the earlier stage of lower risk patient monitoring and later-stage treatment. Physician customers are interested in assessing Oncoscope’s a/LCI device to improve detection and treatment in all stages of cancer. The company plans to capture as much of these investigations as possible in a number of clinical studies aimed at expanding the clinical range of use for Oncoscope’s a/LCI. On the therapeutic end of the clinical spectrum, studies will be pursued to evaluate the utility of “see-treat” methods and for post-ablation margin analysis. Thus, the initial marketing will entail an active parallel development program to capture the array of clinical use concept testing that will inevitably occur once physicians have access to a powerful new tool that provides critical insight on the condition of tissue.

Pipeline Products

Oncoscope’s device is applicable to screening for a wide spectrum of cancers with little adaptation. The company is exploring product development opportunities in colon IBD, cervix, and gastric cancers. Additionally, Oncoscope is developing product enhancements for wide area and trans-nasal scanning to further improve screening paradigms.

Management Team

Perry A. Genova, Ph.D., CEO, is a serial entrepreneur, who has held Global VP positions with GSK, KOS. He has more than 25 years developing medical devices and drug products.

Adam Wax, Ph.D., CTO, is Professor of biomedical engineering at Duke. He is a recognized biophotonics expert.

Micki Lew, Director Regulatory Affairs has significant domestic and foreign experience in clinical operations.