In the Letter to our Shareholders we spoke to the progress achieved and the attainable future success. The foundation of that success is built on several highly valuable components:
- Unique, powerful image analysis technology (unlimited potential uses)
- Robust intellectual property portfolio including expansive patent protection
- Our TBDx™ product that has been successfully proven in a large-scale clinical trial in South Africa, with a second large-scale clinical trial nearing completion in Nigeria
- Our burgeoning relationship with the Foundation for Innovative New Diagnostics (FIND) that could potentially accelerate the branding and sales of TBDx™ in the global TB marketplace
- Our BCDx™ technology, while not fully developed, the prototype solution has been successfully tested in limited mammography and ultrasound clinical trials
- Our staff of experienced scientists, mathematicians, and IT technicians
- Our focused commitment to success – as the saying goes, “failure is not an option”
A vital factor in accelerating our progress and our success will be an infusion of new working capital. It will greatly expand on management’s option to fully leverage opportunities we see ahead. Over the past several months we have identified and presented to six potential investor groups, with negotiations at various stages.
The six potential investor groups represent investment funding ranging from $10 to $20 million per investment. In each scenario the investment would be made into one of APVS’s subsidiaries or into a newly formed subsidiary. In most cases the investments would be targeted to the development of specific technologies and products. Funds would be primarily used for product development, FDA approvals, and marketing/sales activities.
As previously reported, we have an executed Letter of Intent and Term Sheet with an investment bank to provide $10 million of investment funding into our Instasis Imaging subsidiary. Funds from this investment would be targeted as follows: $500K for marketing/sales of TBDx™ with the balance for the development of a full suite of automated breast cancer detection products, including FDA approvals. As part of this investment, Instasis Imaging has entered into a perpetual licensing agreement with APVS to provide Instasis Imaging with access to the company’s core image analysis technology platform in exchange for a minimum annual licensing fee of $500K. Licensing fees will increase as Instasis produces revenues.
The most recent update from the investment bank is that the structure, participants, and legal documents have been completed. They expect to begin the marketing of the investment vehicle on June 9th with an expected APVS closing occurring by the end of July.
The order when these investment transactions close may determine the level of funding and the number of potential investors. We know that two potential investors, seeing a reduced investment risk, have indicated a strong desire to provide additional investment capital to develop additional technology applications for radiology or laboratory diagnostic needs.
“All truth passes through three stages. First, it is ridiculed; second, it is violently opposed; and third, it is accepted as self-evident.” This quote, penned by the nineteenth century philosopher Arthur Schopenhauer, aptly describes the pathway towards market acceptance we have experienced with computer vision diagnostics such as TBDx™. The history of TBDx™ has further taught us that the more unique and cutting-edge your technology, the more rigorous are the first two stages. What we experienced at the International Union Conference on Tuberculosis and Lung Disease (IUC), held in November 2013, and what has transpired since then clearly indicates the following – it is increasingly more evident that improving microscopy using image analysis technology can make available to TB-burdened countries both a highly productive and an affordable diagnostic or triage test.
South Africa – through the support and cooperation of The Aurum Institute and the South African Centre for Tuberculosis (CTB) we successfully completed a large-scale clinical trial of TBDx™ in July 2013. Using TBDx as a screening technology, with specific positive cases confirmed by a molecular test, the data were tabulated and analyzed with the following results:
- Sensitivity (identifying positive cases) 72.9%
- Specificity (identifying negative cases) 99.3%
- Positive Predictive Value (% of correct identifications) 92.9%
- Negative Predictive Value (% of correct identifications) 96.9%
- Reduction in Molecular Testing (significantly lowers costs) 80.0%
Dr. Nazir Ismail, Director of CTB, presented these results in November 2013 at the IUC and it led to considerable interest in the technology demonstrations during the exhibit. Opportunities developed from the conference appear in multiple sections below:
- The CTB has deployed a fully automated slide loader system and is currently performing an operational analysis to determine how best to utilize the system and what changes would be required to their laboratory workflow.
- Dr. Ismail and the entire scientific team involved in the clinical trial are finalizing the abstract for publication submission. That submission is expected to occur by the end of June. Timing of the publication will be determined by the journal accepting the abstract.
- Recognizing the need for a local presence in South Africa to market, sell, train, and maintain the TBDx™ solution – we have initiated discussions with a highly respected, long-standing OEM of laboratory equipment. This organization has a sound reputation and significant contacts with both the SA Government and private laboratory systems.
Nigeria – began a research study in February 2014, in Abuja. The study, funded by the European and Developing Countries Clinical Trial Partnership (EDCTP), brings together the Liverpool School of Tropical Medicine, both the Federal and State Tuberculosis and Leprosy Control Programs, and the Zankli Medical Center. The purpose of the study is to evaluate the performance of TBDx™ in a typical laboratory environment. However, there are important differences from the South Africa trial.
- This study will involve microscopy smears that are direct, rather than concentrated. The majority of global labs evaluate direct smears so it’s important to understand whether or not there are performance differences in the analysis of these images.
- TBDx™ will be evaluated as a “screening” technology for two different molecular tests. In the South Africa trial a molecular test was used to confirm all TBDx™ positive cases. A second molecular test manufacturer has been added to this trial, and performance comparisons will be made between them.
Currently, of the 1,200 cases that are to be evaluated, the laboratory has processed approximately 750 enrollees. The study is progressing well and the study team has performed an interim analysis. The study will be completed in July.
Foundation for New Innovative Diagnostics – in April, 2014 we signed a Cooperative Agreement with FIND for the purposes of evaluating the feasibility of TBDx™ and automated smear microscopy capabilities.
- The principal investigator will be the Pham Ngoc Thach Tuberculosis and Lung Disease Hospital in Ho Chi Minh City, Vietnam. We anticipate the study will begin next month and should conclude by the end of the year.
- The study will examine both concentrated and direct laboratory smears, and will involve more than 300+ suspects. Again, the performance of TBDx™ will be compared with routine microscopy and with culture as the ‘gold standard’. Also, the technology will be evaluated as a screening test where positive cases are sent to molecular testing for further analysis.
- The study budget and protocol have been finalized, and the necessary documentation for the importation of equipment has been completed.
- Recently FIND has proposed sponsoring a second site evaluation, this one in Peru. The timing will depend on the availability of the required equipment.
Given the successful outcome of the FIND study a mutually agreeable definitive agreement would be completed. The definitive agreement would include sponsorship of evaluations in multiple sites and multiple countries, assistance with product registrations in various countries, and a coordinated communications and marketing strategy.
Pakistan – is a high-burdened, low HIV prevalent country. A new TBDx™ evaluation study has been proposed following the demonstrations and discussions that occurred during the IUC last fall.
- Dr. Ejaz Qadeer, the National Program Manager for the National Tuberculosis Control Program and Dr. Sabira Tahseen, Technical Advisor at the National TB Reference Laboratory in Islamabad have approached The Global Fund with a proposal to fund the TBDx™ evaluation.
- The protocol would require 1,600 TB suspects, and the study would compare the performance of TBDx™ with routine smear microscopy using a molecular test as a confirmation test for all TBDx™ positive cases, and a thorough cost / benefit evaluation would measure the impact of using TBDx in combination with a molecular test.
- A budget has been developed and submitted to The Global Fund for review and approval. It is likely that this evaluation will take place in early fall of this year.
TBDx™ Product Distribution – we have had multiple discussions with prospective TBDx™ distributors in South Africa and Nigeria. We anticipate completing a Value Added Reseller relationship in Nigeria by the end of this month.
TBDx™ Product Characteristics, Performance Metrics and Scaled Pricing – recently we developed a two-page product sheet that will be used in marketing and sales initiatives. The document describes the TBDx™ product profile, the diagnostic and screening performance, and pricing based upon an individual unit or scaled to reflect discounts based upon slide volume processing and the length of the software license.
TBDx leverages diagnostic investments that health systems have made in familiar laboratory technology. Automated microscopy remains relevant because it extends this technology through the use of computer vision and digital analysis. This technology can be further advanced to save lives – accomplished one image at a time.
TBDx will save lives … one image at a time. If not evident yet, it is eventual.