1
Investor PresentationOTC/QB: SCIE
January, 2017
2
Safe Harbor Statement
This presentation contains statements of a forward-looking nature which represent our management's beliefs and assumptions concerning future events. When used in this presentation, the words “believe,” “expect,” and similar expressions are intended to identify forward-looking statements, including statements regarding revenue, distribution agreements and potential partnerships. Forward-looking statements involve risks, uncertainties and assumptions, and are based on information currently available to us. Actual results may differ materially from those expressed in the forward-looking statements due to many factors, including, without limitation, those disclosed under “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2015 and our quarterly reports on Form 10-Q. We undertake no obligation to update any forward-looking statements to reflect events or circumstances that may arise after the date of this presentation.
3
Investment Highlights♦ Patented platform technologies using light to provide faster, more
accurate, less costly non-invasive detection and diagnosis of cancerous tissue– Replaces physical biopsies with optical biopsies when differentiating
between normal and cancerous tissue– Only “true” optical biopsy– Procedure can be performed by nurses – In vivo, in real time, approximately 1 second
♦ First indication ready for immediate sales in Europe and Middle East♦ Second indication ready for clinical evaluation♦ Product exceeds medical society’s accuracy criteria ♦ Technology & Development Risk behind us♦ Sales, Marketing and Manufacturing Execution♦ Management team with extensive turnaround and commercial
experience
4
Key ManagementTeam BackgroundMichael OliverPresident & CEO
♦30 years of experience in the medical device field spanning management, sales and marketing
♦Expertise in commercial operations and product management♦Four previous successful turnaround / restarts at Prescription Health Services,
Diatek, Inc., New Image Industries, and “A” Company Orthodontics♦MBA, George Washington University; BS, United States Naval Academy
Lowell GiffhornChief Financial Officer
♦More than 25 years of senior management experience spanning finance, operations, strategic planning and turnaround situations
♦Former CFO of Patriot Scientific & Sym-Tek Systems, Inc.♦Raised more than $30MM in public equity ♦MBA, National University; BS in Accounting, University of Illinois
Hughes WielemansDirector,European Sales
♦More than 25 years experience in medical device sales and marketing♦Experience with direct sales and distributor models♦Previous companies: US Surgical, Tyco Healthcare, Covidien♦Fluent in English, French, Dutch and German♦Economic Sciences Degree from ICHEC, Brussels, and Vierick-Leuven Ghent
Business School
♦ Board with more than 150 years of medical device experience ♦ Internationally renowned Medical Advisors
5
Platform Diagnostic Technologies
♦ Laser-Induced Fluorescence Spectroscopy (LIFS)– Colon– Bladder – Brain– Pancreas– Barrett’s Esophagus (BE)
♦ Scattering Spectroscopy– Barrett’s Esophagus (BE)– Inflammatory Bowel Disease (IBD)– Cervix– Skin– Prostate
6
Strong Intellectual Property Position
♦The largest patent portfolio for “optical methods for identifying cancer and its precursors” provides a substantial barrier to entry
♦38 utility and 7 design patents in US and approximately 28 active European and Canadian counterparts
– Optical biopsy apparatus (forceps)– Scanning technologies (detection)– Analysis and analytics– Calibration, alignment, normalizing, etc.
♦Continue to broaden product offerings through licensing and acquisition
– Recent IP license from Duke University
7
US Patent Portfolio
DIAGNOSTIC
OPTICAL FORCEPS
US6847490
US6394964
US6174291
US6129683
US6066102
US5843000
US5762613
SCANNING ARRAY
US6826422
US6411835
US6104945
US5713364
CONFOCAL OPTICS
US6760613
US6411838
SPECTRAL ANALYSIS
APPLICATIONS
US7260248
US7136518
US7127282
US7103401
US6933154
US6427082
US8005527
OBSTRUCTION
US7309867
US7282723
US6818903
NORMALIZATION
US7310547
US6839661
US6768918
US6421553
US6385484
CALIBRATION
US7459696
IMAGING
TEMPORAL ALIGNMENT
US7406215
US7187810
US6902935
FOCUS
US7469160
a/LCI
US5555277
US7903254
US8537366
US8860945
US9335154
8
85% of Cancer Originates in Epithelial Tissue
Platform Technology Adaptable to a Wide Spectrum of Cancers
Annual Procedures US ($Cost*)
Esophagus1,600,000 ($4.0B)
Colon8,900,000 ($17B)
Bladder660,000 ($1.1B)
Oral Cavity884,000 ($0.9B)
Lung220,000 ($0.38B)
Stomach294,000 ($0.6B)
Cervix1,320,000 ($1.32B)
- Areas of Interest
• US, annual endoscopy monitoring cost• and Duke (under UCSF support)
9
Diagnostic Opportunities
Lower GIColon
Upper GIBarrett’s
Lower GIIBD
UrologyBladder
US & EU Cases/year1 12.2 M 3.9 M 5.4 M 1.2M
Revenue/Case2 $162.00 $550.00 $ 650.00 $1,045.00
Total Addressable Market (per annum)
$ 2.0 Billion $ 2.15 Billion $3.5 Billion $1.25 Billion
First Revenue 2017 2018 2019 2018
1Statistics from National Cancer Institute data base2Company Estimates
10
Initial Target: Colorectal Cancer Screening
♦ Reduce total cost of colorectal cancer screening♦ 80% of physical biopsies removed during screening are normal tissue♦ Pathology savings alone in US for those unnecessary “normal tissue”
biopsies is more than $1 Billion per year**♦ UK Savings approximately £ 60,000,000 annually♦ WavSTAT Optical Biopsy System is a valuable tool in realizing savings
Economic Considerations
WavSTAT Reduces False Negatives
* AMC, Netherlands, 2012** Kessler WR, Imperiale TF, Klein RW, Wielage RC, Rex DK. A
quantitative assessment of the risks and cost savings of forgoing histologic examination of diminutive polyps. Endoscopy. 2011 Aug;43(8):683-91.
11
Future Colorectal Cancer Screening
♦ Growth in screening as population ages♦ New modalities (DNA, MRI) for preliminary screening
bring more people to colonoscopy♦ If benign: Diagnose and Ignore♦ If malignant: Resect and Discard
12
WavSTAT Meets the Need (Colon)
♦ American Society for Gastrointestinal Endoscopy (ASGE)– Preservation and Incorporation of Valuable endoscopic Innovation
(PIVI)– Real-Time Endoscopic Assessment of Histology of Diminutive
Colorectal Polyps (2011)– “…reduce costs and improve patient safety compared to current
paradigm.”– “…therapeutic threshold that must be met for a technology or device to
become considered appropriate for incorporation into clinical practice.”– 90% or greater Negative Predictive Value (NPV)– “The ASGE encourages and supports the appropriate use of
technologies that meet its established PIVI thresholds.”
♦WavSTAT NPV is 96% overall, 98% in recto-sigmoid colon*
Dr. Noor Mohammed, presentation at UEGW, October 2016Dr. Noor Mohammed, presentation to BSG, June 2016
*Dr. Timo Rath, et. al., Endoscopy, April 2016*Dr. Timo Rath, presentation at UEGW, October 2015
*Pr. Helmut Neumann, presentation at DDW, May 2015
13
MORDIS Evaluation (Colon)
♦ Multi-Center, Prospective Marketing Evaluation– 8 sites, 7 nations, 800+ patient specimens– Italy, Germany, France, Sweden, Denmark, Belgium, UK– Leading authorities in each country– Early results promising
♦ Replicate results of 96-98% NPV♦ Capture economic savings at each site♦ Submit to approval authorities in each country♦ Coverage determination♦ Accepted as “Standard of Care”♦ Completed data collection Q4 2016
14
WavSTAT Optical Biopsy System®
♦ Nothing new for the clinician to learn– Designed as a tool to assist– Procedure does not change
♦ Compatible with existing endoscopes– Uses working channel of flexible endoscopes
♦ Business Model (Razor/Blade)– Recurring revenue stream from disposables– Mobile console leased at nominal charge– Hospital customers familiar with this model
Output = 1 second
15
WavSTAT Optical Biopsy System®
♦ Definitive, instant diagnosis
♦ Non-subjective, no interpretation
♦ Significantly reduces costs of follow-on procedures
Results
Laser Induced Fluorescence (“LIF”) Technology
Optical fiber transmits laser light via endoscope to tissue
Auto-fluorescence collected by fiber and returned to optical detector within console for analysis
OUTPUT(one second)
}
16
Competitive Landscape - ColonSpectraScience
WavSTATMauna Kea
TechnologiesOlympus Medical
Fujinon
Procedure Type Endoscope Based Probe Based Endoscope Based
Endoscope Based
Technology Laser Induced Fluorescence
Confocal Microscopy
Narrow BandImaging
Confocal Endomicroscopy
Costs $0 capital cost~$175 per procedure
$125K capital cost$400+ per procedure
$125-150K capitalcost
$125-150K capitalcost
Results Suspect/Not SuspectObjective
Interpretive Subjective
InterpretiveSubjective
InterpretiveSubjective
LengthensProcedure?
No Yes Yes Yes
Interval/Specimen
One Second Three to TenMinutes
Three to TenMinutes
Three to TenMinutes
NPV 96-98% 95% 82% 84%
17
Second Target Barrett’s Esophagus (Esophageal Cancer)
• Increased by 600% since 1975!
• Fastest growing cancer type, with 96% mortality
• Barrett’s esophagus is a precursor to esophageal cancer:
• U.S. prevalence of 3M+• 0.3M-0.5M new cases annually• Predicated on GERD (~40M in U.S.)
• 1.6M+ endoscopy screenings annually US
• Early detection and treatment can result in 90% cure!
Relevant Statistics
18
Oncoscope More Tissue = Improve Diagnostic Yields, Save Time and Money:
3M+ US Barrett’s patients are screenedevery 6 months to 2 years
Standard of Care: Random Biopsy Oncoscope: Guided Biopsy
$
$
$
$
$
$
$
19
OncoscopeDetects Early Dysplasia in Basal Layer by Enlarged Nuclear Diameters
Kelloff, et al. Nature Vol 7, 508 – 518 (2007)
9 to 13 years
Delivers smarter, targeted biopsies,requiring fewer of them
Diagnostic Area of Existing Technologies
Narrow Band Imaging
Fluorescence
Ultrasound
Pill-Cam
20
Competitive Landscape – Barrett’s Esophagus
Feature SpectraScience NinePoint Mauna KeaCompatible with current procedure – –Full tissue depth –Real-time – –Automated analysis – –Dysplasia detection High Limited Manual
Cost $ $$$ $$$
Which is easiest for clinician to interpret & act upon?
SpectraScience NinePoint Mauna Kea
21
Commercialization Strategy
♦ Market first to EU, then to U.S. managed care– Germany, UK and France, Middle East– Distribution agreements in place– EU markets are single-payer– Economic savings already determined by NIHR in UK
– Approximately £ 60M annually– Germany private pay physicians incentivized to use WavSTAT
♦Europe-based Director of Business Dev.– Direct sales organization in Germany, UK, France– Distribution elsewhere– Discussions regarding China, Korea, Japan
22
Highlights√ Distribution agreements across Europe and Middle East√ Products address large, growing and increasingly cost-
conscious markets√ Exceed the technology adoption hurdle 96-98% NPV√ No Technology or Development Risk√ Proven technology that is faster, more accurate and less
costly √ Faster for clinician; Answer in 1 second√ Safer for the patient; Fewer biopsies & polypectomies√ Less expensive for payers
√ Platform ensures multiple products to drive growth and diversify distribution
√ Robust portfolio of Intellectual Property√ Management team with extensive experience
2323
Contact Information
SpectraScience, Inc.Michael Oliver,President/CEO
11568 Sorrento Valley Rd, Suite 11San Diego, CA 92121
Phone: 858-847-0200 ext. 2001
Fax: [email protected]
24
Platform Technologies
♦ Complementary to current endoscopic standard of care
♦ Can be used wherever endoscopes are used for diagnosis
♦ Targets biochemical properties of tissue
Laser Induced Fluorescence (“LIF”)Lower GI (Colon)
Scattering Spectroscopy (“SS”)Upper GI (Barrett’s Esophagus)
♦ Complementary to current endoscopic standard of care
♦ Can be used wherever endoscopes are used for diagnosis
♦ Targets physical properties of tissue
♦ Best technology or combination for optimal clinical result♦ Multiple potential partners♦ Multiple distinct channels♦ Multiple markets
Multi-modal Future
Top Related