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2007 Business Plan
2007 Business Plan
CONFIDENTIALITY STATEMENT
The information, data and drawings embodied in this Business
Plan are strictly confidential and are provided with the
understanding that they will be held confidentially and not
disclosed to third parties without the prior written consent of
Cangen Biotechnologies Inc.
MEMORANDUM OF RISK
The following Business Plan represents management's best current
estimate of the future market opportunity for Cangen’s products. It
must be recognized that no business is free of major risks and few
plans are free of errors of omission or commission. Although this
plan attempts to evaluate all the risks associated with the
commercialization of Cangen’s products, the reader should be
aware that inherently there are risks that can not be foreseen or
predicted.
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Table of Contents
Executive Summary ............................................................................................................ 5
Corporate Strategy .............................................................................................................. 8
What Differentiates Cangen? .......................................................................................... 8
Collaborations ............................................................................................................... 11
Attractive Market and Investment Opportunity ............................................................ 12
Strategic Product Development / R&D Pipeline .............................................................. 14
Bladder Cancer.............................................................................................................. 14
Lung Cancer .................................................................................................................. 21
Chemosensitivity........................................................................................................... 27
Therapeutic Products .................................................................................................... 29
Portfolio Strategy .......................................................................................................... 32
Intellectual Property Summary ......................................................................................... 33
Government Regulation .................................................................................................... 34
U.S. Regulatory Approval............................................................................................. 34
EU Regulatory Approval .............................................................................................. 38
Marketing Strategy............................................................................................................ 40
MSA Bladder Pre-Launch............................................................................................. 40
Promotion and Communication Strategy ...................................................................... 41
Pricing Strategy ............................................................................................................. 42
Sales and Distribution Strategy ..................................................................................... 43
MSA Bladder Assay Forecast ....................................................................................... 44
Corporate Management Team........................................................................................... 45
Management and Key Members ................................................................................... 45
Financials .......................................................................................................................... 50
Financial Projection and Timeline ................................................................................ 52
Appendices / Attachments ................................................................................................ 56
Attachment A: Patent Summary .................................................................................. 57
Attachment B: Quintiles Market Research Report ...................................................... 59
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Table of Figures and Tables
Figure 1:
Figure 2:
Figure 3:
Figure 4:
Figure 5:
Figure 6:
Figure 7:
Figure 8:
Figure 9:
Projected R&D Timeline .................................................................................. 14
Data from National Cancer Institute ................................................................ 16
Pivotal Patents .................................................................................................. 33
Reimbursement Using Existing CPT Codes .................................................... 42
Ideal Distribution Scheme ................................................................................ 43
Total Available Market & % Penetration ..........................................................46
Five Year Forecast & % Margin ...................................................................... 46
Balance Sheet Data ........................................................................................... 53
Consolidated Statement of Operations and Comprehensive (Loss) ................. 54
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Executive Summary
Cangen Biotechnologies is a venture capital based biotechnology company with a
mission to address the unmet medical needs that exist worldwide for the diagnosis and
treatment of cancer. Cangen was formed in 2000 and has a strong relationship with, and
is based on the technology discovered by Johns Hopkins University. Our leadership and
direction since inception has been from Dr. Chulso Moon, whose reputation in the field
of oncology is well recognized worldwide. Over the course of a few years, Cangen will
be commercializing some of the innovative technologies discovered on a commercial
basis worldwide. This business plan is intended to provide stakeholders in our company
with insight into the commercial market availability, our marketing strategy, what
management believes to be our revenue potential and where we envision our future
product development efforts will be directed.
Cancer is the number two killer after cardiovascular disease, worldwide. Approximately
20 million people are living with cancer in Japan, Europe and North America and 10
million new cases of cancer are diagnosed each year worldwide. According to the
American Cancer Society, cancer is the second leading cause of death by disease in the
U.S. and imposes a heavy economic burden on the country’s healthcare system. In 1999,
the estimated total cost of cancer was $107 billion, including approximately $37 billion in
direct healthcare spending.
A significant portion of these expenditures is associated with cancer screening and
diagnostics, which rely heavily on imaging systems and lab tests to determine the
presence and extent of malignancy and used to assist in the development of optimal
treatment protocols. More than 160 million cancer screening and diagnostic oncology
procedures were performed in the U.S. in 1999, generating more than $1.6 billion in
product sales.
There are general patterns of cancer prevalence and mortality throughout the world. The
economically developing countries of Africa, Latin America and Asia tend to have high
rates of cancers of the mouth and pharynx, larynx and esophagus, and of the stomach,
liver, and cervix. The economically developed countries of Europe, North America and
Japan tend to have relatively high rates of cancers of the colon, rectum and bladder, and
of the hormone-related cancers of the female breast, the endometrium and the prostate.
This pattern has now also emerged in urban areas of developing countries. Lung cancer,
mainly caused by the use of tobacco, is the most common cancer in the world.
With the anticipated growth in cancer cases as populations’ age, the discovery of more
effective cancer therapeutics has become critical. It is becoming too expensive to
continue prescribing drugs that are largely ineffective.
Cancer drug research is moving from traditional cytotoxic chemotherapies toward higher
specificity immunological and biological approaches that target unique biochemical
receptors and signaling pathways. These new drugs will be more cancer and patient-
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specific and will have the potential for slowing cancer growth and inhibiting disease
progression, with fewer adverse effects on the patient. As these drugs come to market, in
vitro diagnostics will become critical tools for matching drug to cancer and patient, and
then for the monitoring of the drug's effectiveness in treating the disease.
Despite serious research efforts in the diagnosis and treatment of cancer, it remains a
leading cause of morbidity and mortality worldwide. There is therefore a concerted effort
to commercialize lab tests that will help physicians diagnose and monitor cancer patients.
In the next few years some 50 immunoassays for new tumor markers, 20 or so biochip
systems, and over 25 tests for genes and proteins in peripheral blood will be in process of
receiving FDA marketing clearance. In addition, at least 25 new immunohistochemical
and in situ hybridization assays will be introduced in the near future, as well as several
point-of-care DNA analysis systems. Furthermore, just about every major cancer
treatment center and research group is investigating gene and protein patterns for use in
the early detection of cancer.
Cangen’s technology has been developed to provide early cancer detection diagnostic
tools and targeted cancer therapies. The basis of our technology discovered at Johns
Hopkins University and licensed exclusively to Cangen, is called Microsatellite Analysis
or MSA. This technology looks specifically at the molecular components (DNA) of
cancer. Further explanation of our technology is provided in the body of this plan.
Cangen’s first commercial product will be the MSA Bladder Cancer Assay which we
anticipate will launch in the U.S. early in 2008. There are approximately 630,000
patients living with bladder cancer in the US and this number is growing at a rate of 5%
per year primarily due to the demographics of the aging US population. There are 17,000
deaths in the US each year from this cancer. Bladder cancer is the third leading cancer in
the US and fourth worldwide. In our estimation, Cangen’s commercial product will
generate over $350 million in revenue within five years.
Cangen’s next commercially available product will be for early detection of lung cancer,
the worldwide leading cause of cancer. Cangen is taking a two-pronged approach to this
assay utilizing two technologies which we anticipate will be used either alone or in
combination: the MSA (similar to the assay for bladder cancer) and proteomics based
technology. Anticipated revenue of over $500 million is expected within five years from
these products.
Cangen’s cancer therapeutic products are a result of collaborations with leaders in the
discovery of innovative cancer treatment modalities. A large problem with current
treatment modalities is the cytotoxic effects of the drugs in use today. These drugs are
administered systemically either alone as a cocktail (several at once) in an effort to kill
the cancer, but can also have devastating effects on the patient. The objective of
Cangen’s chemosensitivity assay will be to provide cancer specific information regarding
which drug will have the greatest therapeutic effect with minimal side effects. Cangen
anticipates the chemosensitivity product will launch in 2011. Cangen is also working on
a drug delivery system (DDS) designed to administer the most effective drug directly to
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the cancer site thus limiting the systemic exposure and consequent side effects. Our Drug
Delivery System is expected to launch 2012-2013.
Cangen’s business model revolves around 5 key objectives:
1. Initially commercialize products utilizing external resources that have
competency that would require significant financial investment and time
requirement to develop these capabilities internally.
2. Utilize profits to support continued R&D efforts for future products while
maintaining and growing our base of leading industry and academic collaborators
worldwide.
3. As the company grows, develop internal competencies in order to increase
profitability and control over essential functions.
4. Manage the company economically by maintaining a highly skilled and
experienced management team.
5. Achieve the highest level of regulatory approval to ensure commercial success
and acceptance by the medical community.
It is management’s belief that all of the diagnostic and therapeutic products we currently
have in development will be able to be commercialized at greater than a 70% gross
margin (increasing as economies of scale are achieved) and that certain of our products
have significant market opportunity approaching or exceeding $1 billion in product sales
within the next 10 years.
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Corporate Strategy
Cangen’s principal strategy is to develop a complementary suite of cancer diagnostics
and therapeutic enhancements in order to enable the large scale detection and effective
treatment of a wide variety of cancers at early stages, including the ability to detect the
presence of particular forms of cancer at the molecular level. Cangen intends to do this
by focusing resources and efforts on short and long term key objectives, by leveraging
significant assets, and by maintaining and continuing to develop strategic alliances with
key industry leaders throughout the world.
What Differentiates Cangen?
Cangen Biotechnologies Inc is poised to emerge as an industry-leading research and
development company with important healthcare products on the market that promise to
accomplish important goals: first, to address significant unmet medical need in the U.S.
and throughout the world; second, to increase survival rates and improve quality of life
for people struggling with cancer and other diseases; finally, to ensure access to patients
to the technology in a manner that ensures that the products are reimbursed and widely
relied upon by medical professionals.
Cangen has a balanced portfolio of diagnostic and therapeutic products
Our principal strategy is to develop a complementary suite of cancer diagnostics and
therapeutic enhancements in order to enable the broad-scale detection and effective
treatment of a wide variety of cancer forms at early stages, including the ability to detect
the presence of particular forms of cancer at the molecular level. Cangen differentiates
itself from competitors by balancing the commercialization strategy of diagnostic
products and therapeutic products, while continuing to focus on the research and
development of products to address unmet medical needs in the U.S. and throughout the
world.
Diagnostic Products
Cangen’s cancer diagnostic products are molecular-based assays. Such tests seek to
identify cancer biomarkers by analyzing the molecular structure a of patient’s tissue,
urine or blood as opposed to current chemical-based tests. Viable molecular-based
diagnostic tests can allow for cancers to be detected at an earlier stage and with much
greater sensitivity and specificity. Sensitivity is defined as the ability of a diagnostic test
to give a correct positive result, and specificity is defined as the ability of a test to give a
correct negative result. The degree of sensitivity and specificity of a given diagnostic test
is a measure of the test’s accuracy. Cangen is developing two molecular diagnostics
using microsatellite analysis, or MSA, based on the detection of specific DNA markers
for the early detection of bladder cancer and lung cancer. In addition we are working on
a chemosensitivity assay which is based on mass spectrometry-based biomarker analysis.
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Bladder Cancer
The technology for our bladder cancer MSA assay was developed by Johns Hopkins
University for detection of cancer along the entire urinary tract, and was subsequently
licensed by Cangen for worldwide use. The MSA assay is a genomics-based technology
that compares changes in the length and stability of repeating sequences of chromosomal
DNA, called microsatellites, from cells at the tumor site, collected, in the case of bladder
cancer screening, from a urine sample, to microsatellites isolated from a blood sample.
These changes in length and stability occur due to the fact that the DNA of several types
of cancer cells exhibit changes to these particular regions in chromosomal DNA. A
number of studies have been conducted using MSA technology, which has shown a
specificity and sensitivity between 80% and 85%.
Lung cancer
Cangen has taken two approaches to the development of a DNA-based technology for the
detection of lung cancer and is working with two partners on this project. The
collaboration with Olympus, a global leader in the manufacture and sale of precision
machinery and instruments based in Japan, is based on the microsatellite technology. The
collaboration with Dai Nippon Printing, a leader of printing manufacture in Japan, is
based on mass spectrometry biomarker analysis.
DNA based Olympus PCR technology
Together with Olympus, Cangen launched a “bridge” trial in Asia in which we attempted
to validate the use of the same two to four DNA markers for lung cancer established in
our initial study of tumor tissue in blood samples from patients. We recruited and
analyzed over 400 samples from two groups, a control group that did not have lung
cancer, and a group of lung cancer patients. These samples were analyzed using both
conventional PCR technology and next-generation PCR technology developed by
Olympus (as described below under “Olympus PCR Technology”). He initial results
from these tests indicated high specificity and sensitivity.
Mass Spectrometry-Based Biomarker Analysis
Cangen is working with Dai Nippon to develop a mass-spectrometry-based assay that can
be used to detect particular forms of cancer by indicating the presence of specific
biomarkers in blood. The analysis works by comparing a data set taken from normal
samples to that of the potential cancer patient. The plasma and sera of these subjects are
subjected to purification in a filtration system developed in conjunction with Dai Nippon,
which works to reduce the presence of “background” peaks in a sample’s mass spectrum.
Following purification, the sera and plasma are subjected to mass spectrometry.
Subsequent analysis on these mass spectra results using Cangen’s proprietary
bioinformatic and other statistical algorithms to detect protein patterns has resulted in the
development of final prediction model for lung cancer with high specificity and
sensitivity.
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Chemosensitivity
Our chemosensitivity research to date has yielded two key results. First, we have
identified biomarker-expression patterns that we believe indicate that a patient is likely to
respond to a particular form of chemotherapy. Second, we have discovered biomarkerexpression patterns that appear to correlate to a lack of response to a given chemotherapy
regimen. The ability to predict the response of patients to particular chemotherapy
regimes prior to administering the therapy would represent an important advance in the
management of cancer therapy by selecting optimal therapy initially while avoiding, to
the greatest extent possible, the toxic side effects of ineffective therapies.
Our chemosensitivity products are based on our mass spectrometry technology. In our
initial study, completed in 2005 which was retrospective in nature, we submitted sera
from 53 cancer patients who were prescribed Taxol-based chemotherapy, to mass
spectrometry-based analysis. In the study, we identified markers that appeared to
correlate to a lack of response to Taxol-based chemotherapy by patients in the study, as
no patient whose serum contained this marker experienced any positive response to
Taxol-based chemotherapy.
Therapeutic Products
We believe that Cangen is uniquely positioned to benefit from the licensing and
development of selected cancer therapies that complement our own research and
technologies, and actively seek out therapeutic treatments that we believe would benefit
from our expertise and may be able to find a significant market. We are currently working
with Fuji Film on a recombinant human gelatin-based drug delivery system with the
potential for broad application.
Drug Delivery Systems (rhG-5-FU)
The collaboration with Fuji Film is to co-develop a recombinant human gelatin-based
delivery system of 5-fluorouracil and Paclitaxel, or rhG-5-FU. This transdermal drug
delivery system would allow a specific area of the body to be targeted for drug delivery
and would initially be used to treat cancers of the head and neck. In current clinical
practice, chemotherapeutic drugs are usually delivered intravenously, generally resulting
in toxic levels of drug concentrations throughout the body. Optimized delivery of
cytotoxic therapeutics is an area of significant interest in improving cancer care.
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Collaborations
Cangen has a unique value proposition to address unmet medical needs through
collaboration with global industry and academic leaders.
Johns Hopkins University
On January 2, 2002, Cangen entered into a licensing agreement with Johns Hopkins
University. Under the terms of this agreement, we hold an exclusive, worldwide,
sub-licensable license from Johns Hopkins University to patents, pending patents and
applications related to the MSA assay and for detection of cancers through mass
spectrometry analysis. For the patents and other know-how that we license, Cangen is
required to develop products and potential markets or sublicense such technology to a
third party for development in order to retain licensing rights with respect to such patents.
Olympus Corporation
Olympus has been an innovator in the area of cancer diagnostics since the introduction of
its “gastrocamera” in the 1950s. Olympus, well known for its film and camera products,
is also developing products for minimally invasive diagnostics and treatments.
On April 20, 2005, Cangen entered into a collaboration agreement with Olympus for the
development of a hybrid DNA/mass spectrometry-based diagnostic test for use in the
detection of lung cancer.
Dai Nippon Printing Co., Ltd.
In the past couple of years, Dai Nippon has entered the biotechnology field, interested in
new applications of its core technologies. In 2006, DNP funded the establishment of
“NanoMedicine DNP” courses at the Tokyo Medical and Dental University and
established a joint research collaboration. DNP aims to continue to leverage its printing
technology to open new frontiers and develop practical applications in the biotech area.
On July 15, 2005, Cangen entered into a collaboration agreement with Dai Nippon
focused on improving the specimen purification technology in preparation for mass
spectrometry analysis for detecting cancers of the lung and for chemosensitivity testing.
Fuji Film Corporation
In addition to its main line of business, Fuji Film is the world’s largest producer of
animal gelatin. As part of its growth strategy, and as evidenced by its purchase of Daiichi
Radioisotope Laboratories in 2006, Fuji has taken steps to become more involved in the
medical area.
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On July 7, 2006, Cangen entered into an agreement with Fuji Film to collaborate on the
development of a drug delivery system based on Fuji Film’s proprietary recombinant
human gelatin, a project described in more detail in the “Therapeutic Products” section.
Attractive Market and Investment Opportunity
Bladder Cancer
Cangen’s bladder cancer test has 95% specificity and sensitivity which significantly
surpasses currently available laboratory-based screening tests; in fact, it is at about the
same level as cystoscopy, the gold standard for following bladder cancer patients. There
are an estimated 600,000 people (about 400,000 men and 200,000 women) in the United
States with a diagnosis or history of bladder cancer. Further, the American Cancer Society
estimates that 67,000 people will be diagnosed with bladder cancer in 2007. As the
country ages (especially since the large demographic bulge known as “the baby boomers”
become elderly over the next 5 years) a trend toward increasing incidence is expected, as
this is mainly a disease of persons >65 years of age.
There are approximately one million laboratory diagnostic tests for bladder cancer
ordered per year in the US, with the vast majority done for monitoring recurrence of
bladder cancer. Bladder cancer is, for the most part, diagnosed, treated and monitored by
urologists (approximately 10,000 in active practice in the US) who bring oncologists in
only when there is invasive or metastatic disease and less often when carcinoma in situ is
diagnosed.
While the five-year survival rate, which is the standard measure for a cancer “cure”, for
bladder cancer is relatively high in these markets, there is an approximate 90% recurrence
rate for tumors over a five-year period. Due to the relatively high incidence and
recurrence rate of bladder cancer, we believe there is a substantial market for the initial
detection of tumors and for the screening for recurrent tumors.
Considering its high specificity and sensitivity, Cangen’s bladder cancer kit has a unique
opportunity to achieve significant target market penetration.
Lung Cancer
Lung cancer is one of the most common forms of cancer in the developed world, with
approximately 170,000 new cases annually and 350,000 total cases estimated in the
United States, according to the American Cancer Society, Inc. The primary problem
encountered in management of lung cancer is that it is generally diagnosed at an
advanced stage. Early diagnosis is vitally important, as the five-year survival rate for
stage I development of non-small cell cancer of the lung is between 60% and 70%, while
the five-year survival rate for stage IV development is less than 1% according to the
United States National Cancer Institute’s SEER Cancer Statistics Review between 19731998. According to the same source, the overall five-year survival rate is only 14%,
indicating that the majority of cases are diagnosed in later stages. Considering the fact
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that checkups are recommended twice a year, Cangen estimates the total market size to be
approximately120 million tests per year.
In a recent study by The International Early Lung Cancer Action Program, asymptomatic
persons at high risk of lung cancer were screened with low-dose CT every 7 to 18 months
between 1993 and 2005. We can therefore assume a screening frequency with the new
blood test of once/year for high-risk individuals. For example, there are approximately
200 million adults over 18 years in the U.S, 22.0% of which are current smokers which is
approximately 44 million, and 21.1% are former smokers which is about 42 million.
Therefore, the total of current smokers and former smokers is about 86 million.
Because lung cancer has a significantly faster doubling time than other common cancers
(e.g., bladder cancer, ovarian cancer), we believe twice a year testing would be
recommended for those identified patients at risk. Therefore, we believe that there is the
potential for somewhere between 90-120 million lung cancer tests to be performed per
year.
Drug Delivery Systems (rhG-5-FU)
Cangen holds one U.S. pending patent for a recombinant human gelatin-based drug
delivery system, on which rhG-5-FU is based. We are collaborating with Fuji Film to codevelop a recombinant human gelatin-based drug delivery system of 5-fluorouracil and
Paclitaxel, or rhG-5-FU. This transdermal drug delivery system would allow a specific
area of the body to be targeted for drug delivery and would initially be used to treat
cancers of the head and neck. In current clinical practice, chemotherapeutic drugs are
usually delivered intravenously, generally resulting in toxic levels of drug concentrations
throughout the body. Specific targeting has been attempted by several biotech and
pharmaceutical companies using various drug delivery systems that employed various
methods of delivering drugs through a localized medium. It is expected that a successful
drug delivery system based on this chemotherapy/gelatin matrix would be able to deliver
high concentrations of medication to targeted areas without raising overall levels in the
body to toxic levels; thereby enhancing chemotherapy regimes and improving the overall
health of the patient.
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Strategic Product Development / R&D Pipeline
Cangen’s strategic approach to managing our product development and pipeline products
is to remain consistent with our mission: Deliver advanced technologies and products for
early detection and appropriate treatment of cancer. Each of our products currently in
development is summarized below with anticipated milestones to commercialization.
Each product is discussed in greater detail in the sections that follow.
Pre-IDE
Package
Diagnostic
Products
Pre-IDE
Meeting
Patient
Enrollment
MSI Bladder Assay
510(k) Filing
510(k)
Approval
Q3 2007
Q1 2008
Lung Mass Spec
Q2 2008
Q4 2008
Q4 2009
Q2 2010
MSI Lung Assay
Q1 2008
Q2 2008
Q3 2009
Q1 2010
Q4 2010
Q1 2011
Phase IIa
Phase IIb
Phase III
Q2 2009
Q1 2010
Chemosensiti
Therapeutic
Products
DDS
Q3 2009
Pre-Clinical
Study
Q2 2008
Pre-IND
Filing
Q3 2008
2012-2013
In-Licensing Opportunities
Figure 1: Projected R&D Timeline
Bladder Cancer
Disease Description
Malignant transformation of a normal bladder cell begins with the alteration of the cell’s
DNA. Epidemiologic evidence implicates chemical carcinogens as the causative agent in
many patients 1. More than 90% of all bladder cancer in the United States and Europe are
transitional cell carcinomas originating in the tissue that forms the bladder lining. The
greatest environmental risk factor for this type of bladder cancer is smoking and other
environmental exposures. Less common types of bladder cancer include squamous cell
carcinoma, which accounts for 3-7% of all bladder cancer in the United States and is
associated with factors such as chronic urinary tract infection and chronic irritation, and
adenocarcinoma, which accounts for less than 2% of all bladder cancer.
Diagnosis and Treatment
1
Report on the Management of Non-Muscle-Invasive Bladder Cancer, Bladder Cancer Guidelines Panel,
American Urological Association Inc 1999. p 13,14
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In most cases, blood in the urine (hematuria) is the first warning signal of bladder
cancer. 2 Initial steps to bladder cancer diagnosis include a complete medical checkup to
assess symptoms and determine risk factors. If cancer is suspected, the physician will
recommend cystoscopy. Cystoscopy is a procedure which allows the physician to visually
examine the bladder and urethra. Diagnostic cystoscopies are usually outpatient
procedures done with a cystoscope under local anesthesia.
Microscopic cytological examination of bladder specimens, known as cytology, is
frequently used to aid in the diagnosis of bladder cancer, and to detect possible cancer
recurrence. Cytology is used to examine urine or bladder washings for the presence of
cancerous or pre-cancerous cells. Cytologic assessment is the least sensitive method for
the detection of low-grade bladder tumors and has a detection rate of <30%; however,
cytology is more effective for the detection of high grade tumors, in which the cells have
substantial abnormal characteristics, sometimes approaching 90%. 3
More recently developed tests include the Bladder Tumor Antigen (BTA) test based on
the detection of certain antigens in the urine; the NMP22® BladderChek kit, a nuclear
matrix protein test; and the UroVysion® assay, which is a DNA probe assay utilizing
fluorescent in situ hybridization (FISH).
Treatment of most cases of non-muscle-invasive bladder cancer tumors include:
resection and/or laser therapy; and intravesical chemotherapy and/or immunotherapy.
The latter treatment is most often used as adjuvant therapy for superficial tumors to
prevent recurrence. 4
According to the American Urological Association, the classic follow-up protocol
consists of cystoscopic and cytologic examination every three months for 18 to 24
months after the initial tumor, then every 6 months for two years and then annually. 5
Bladder cancer may recur even after long disease-free intervals, therefore, there is a need
for lifelong surveillance.
Bladder Cancer Testing Market
According to the American Cancer Society, there are more than 600,000 cases of bladder
cancer currently diagnosed in the United States (U.S.); another 67,000 will be diagnosed
in 2007 (about 50,000 men and 17,000 women) and approximately 13,000 deaths occur
annually. Nearly 90% of those diagnosed with bladder cancer are over the age of 55years.
2
American Urological Association Guidelines. Retrieved from www.aua.org on April 25, 2007.
Report on the Management of Non-Muscle-Invasive Bladder Cancer, Bladder Cancer Guidelines Panel,
American Urological Association Inc 1999. p 15
4
Report on the Management of Non-Muscle-Invasive Bladder Cancer, Bladder Cancer Guidelines Panel,
American Urological Association Inc 1999. p 18
5
Report on the Management of Non-Muscle-Invasive Bladder Cancer, Bladder Cancer Guidelines Panel,
American Urological Association Inc 1999. p 20
3
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Increasing life expectancy is expected to result in a rise in the incidence of bladder
cancer. 6
The age-adjusted incidence rate of bladder cancer is 20.9 per 100,000 men and women
per year in the United States (U.S.). Men are affected approximately 3 times as frequently
as women (37.0 cases per 100,000 men; 9.3 cases per 100,000 women). Bladder cancer is
most common in the white population (40.2 per 100,000 men; 10.0 per 100,000 women),
followed by the black population (19.8 per 100,000 men and 7.4 per 100,000 women). 7
Figure 2: Data from National Cancer Institute
Since the bladder serves as a repository for urine through which potentially toxic
substances are concentrated and excreted from the body, the risk for bladder cancer is
affected by environmental exposures. The greatest environmental risk factor for bladder
cancer is smoking, which doubles the risk compared to that of nonsmokers. In addition,
certain occupations, including employees working in the dye, rubber, leather, textile and
paint industries, as well as those who work as painters, hairdressers, machinists, printers
and truck drivers, face increased risk of exposure to aromatic amines and other chemicals
that have been linked to bladder cancer. The risk may be particularly magnified in
smokers who work with these chemicals. This is a large population that may be
monitored from time to time using a sensitive diagnostic kit.
6
Retrieved from
http://www.cancer.org/docroot/CRI/content/CRI_2_4_1X_What_are_the_key_statistics_for_bladder_cance
r_44.asp?sitearea= on April 15, 2007.
7
National Cancer Institute. 2006. A snapshot of bladder cancer. Retrieved from
http://planning.cancer.gov/disease/Bladder-Snapshot.pdf on April 13, 2007.
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Bladder cancer is diagnosed, treated and monitored primarily by urologists, of which
there are approximately 10,000 in active practice in the U.S. Oncologists are usually
called in only when there is invasive or metastatic disease, and less often when there is a
diagnosis of carcinoma in situ, a form of bladder cancer which is relatively contained.
Bladder cancer is the 7th most common cancer worldwide and accounts for 3.2% of all
cancers. The highest incidence rates in both sexes are observed in the United States,
Europe and Australia. Bladder cancer is the 5th most common site for new cancer cases
in the U.S. 8 and has a recurrence rate of between 50 - 70% within 5 years of resection. 9
In Europe, bladder cancer is the 7th most common cancer and accounts for approximately
36,500 deaths per year. 10 Survival is directly related to the stage at the time of diagnosis.
Early detection and routine surveillance provides an opportunity for a diagnostic product
that is non-invasive, and with the requisite sensitivity and specificity to replace or
increase the amount of time between routine cystoscopic examinations. Therefore,
urologists recommend that bladder cancer patients be monitored frequently, initially three
or four times per year and then less frequently, utilizing standard detection methods such
as urine cytology or cystoscopy. 11 There are approximately one million laboratory
diagnostic tests ordered for bladder cancer per year in the U.S., with the vast majority
done to monitor recurrence. Therefore, there exists a substantial market for initial
screening and follow-up monitoring for recurrence.
Cangen’s MSA Bladder Cancer Assay
Description of Assay
Cangen’s MSA Bladder Cancer Assay is a non-invasive, highly accurate and objective
diagnostic method that may be able to detect cancer many months before cystoscopy, the
current standard of care. Cangen’s MSA Bladder Cancer Assay features high sensitivity
and specificity compared to currently marketed products, 12 and uses a technology known
as microsatellite DNA analysis (MSA). Microsatellites, also known as short tandem
repeats, are repeating units of one to six nucleotides (e.g. CACACACA) found
throughout human chromosomes. These repeating regions are frequently mutated in
tumors, either through deletions or by an extension of the number of repeats. To screen
for cancer, the MSA assay is run using DNA extracted from cancer cells that are present
in urine, and compared to normal DNA sequences from lymphocytes, both taken from the
8
Jemal a, Siegel R, Ward E, Murray T, Xu J, Thun M. Cancer Statistics. 2007. CA: A Cancer Journal for
Clinicians retrieved from http://caonline.amcancersoc.org/subscriptions/ on March 20, 2007.
9
Han M, Schoenberg M. The use of molecular diagnostics in bladder cancer. 2000. Urologic Oncology 5,
87-92.
10
European Network of Cancer Registries. 2003. Bladder Cancer in Europe. Retrieved from
http://www.encr.com.fr/bladder-factsheets.pdf
11 11
Report on the Management of Non-Muscle-Invasive Bladder Cancer, Bladder Cancer Guidelines
Panel, American Urological Association Inc 1999. p14
12
Results generated at Cangen. Available under confidentiality.
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same patient. Preliminary data have shown that the MSA assay has over 90 percent
accuracy. 13
The microsatellite technology and DNA markers used in Cangen’s assay was developed
by and licensed from Johns Hopkins University for worldwide use. Data from the 3 year,
13 center validation study conducted by the National Cancer Institute’s Early Detection
Research Network (EDRN) is expected to validate the ability of this assay to provide a
sensitive and non-invasive method of screening for bladder cancer recurrence.
Competition
Currently there are two methods used for the screening and detection of bladder cancer:
cytology and cystoscopy.
Cytology is a common, non-invasive method in which cells collected from a urine sample
are analyzed microscopically for the presence of cell abnormalities. This procedure is
painless and non-invasive; however, it can miss up to 50% of tumors. 14
The “gold standard” for diagnosis is an invasive method called cystoscopy, which allows
visualization and direct biopsy of suspicious bladder lesions. 15 Cystoscopy requires the
insertion of a cystoscope, a fiber-optic device, into the bladder through the urinary tract.
Accuracy for cystoscopy is much higher than cytology, but the procedure can be quite
painful and is subjective, as its’ accuracy depends to some degree on the ability of the
individual conducting the examination. Additionally, detecting bladder cancer in the early
stages, when it can be most effectively treated, can still be difficult.
A recent study presented at the 2006 American Urologic Association, New England
Section, confirms cystoscopy as the gold standard and the data is presented below. 16
TEST
Cytology
Cystoscopy
SENSITIVITY
27% (12-48%)
96% (79-97%)
SPECIFICITY
100% (99-100%)
97% (95-99%)
FDA-cleared in vitro tests include the BTA Tests (both qualitative and quantitative), the
FDP test, and the NM22 assay, and the UroVysion® kit; non-approved tests include the
BTA Trak, flow cytometry, and the Telomerase/TRAP assay to name a few. 17
The most significant competitor to Cangen’s MSA Assay is Abbott’s UroVysion®. The
UroVysion Bladder Cancer Kit (UroVysion Kit) is designed to detect large genetic
abnormalities (aneuploidy) for chromosomes 3, 7, 17, and loss of the 9p21 locus via
13
National Cancer Institute Press Release 2004. Scientists begin validation study of test to detect recurrent
bladder cancer. Retrieved from http://www.cancer.gov/newscenter/pressreleases/EDRNvalidation
14
Farrow GM, Utz DC, Rife C. 1976. Cancer Research 36, 2495.
15
Mao L, Schoenberg MP, Scicchitano M, Erozan YS, Merlo A, Schwab D, Sidransky D. 1996. Molecular
detection of primary bladder cancer by microsatellite analysis. Science 271, 659.
16
American Urologic Association, New England Section Poster Presentation. Retrieved from
http://www.neaua.org/abstracts/2006/7.cgi
17
Quintiles Market Report. November 2006.
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fluorescent in situ hybridization (FISH). Results from the UroVysion Kit are intended for
use in conjunction with, and not in lieu of, current standard diagnostic procedures. It is
intended to be used as an aid for initial diagnosis of bladder carcinoma in patients with
hematuria and diagnosed with bladder cancer, and for subsequent monitoring for tumor
recurrence in patients previously diagnosed with bladder cancer. 18 The kit was cleared for
marketing in August 2001 for monitoring the recurrence of bladder cancer.
The following table provides a summary of the sensitivity and specificity of available
bladder cancer tests. 19
TEST
SENSITIVITY*
SPECIFICITY**
COMMENTS
68.6%
78%
Reference Lab
Bard Trak
70%
70-90%
Reference Lab
NMP22
66%
80%
Point of Care
FISH
80%
95-100%
Reference Lab
Immunocyt
80%
70-80%
Reference Lab
HA-HAase
70-90%
90%
Reference Lab
Telomerase
75%
85%
Reference Lab
Survivin
60%
80%
Reference Lab
UroVysion
20
*Sensitivity: the probability that a person having a disease will be correctly identified by a clinical test
**Specificity: the statistical probability that an individual who does not have the particular disease being tested for will
be correctly identified as negative, expressed as the proportion of true negative results to the total of true negative and
false positive results
Cangen’s MSA Bladder Cancer Diagnostic would provide the next level detection of
capability and is differentiated from other DNA-based bladder diagnostics on the market
by its’ higher sensitivity and specificity as compared to currently approved tests.
Intellectual Property
The bladder diagnostic assay is protected by a patent estate covering use and related
methods. An exclusive worldwide licensing agreement with Johns Hopkins provides
Cangen with access to certain DNA markers and for the use of MSA technology for
detecting the presence of neoplasia in bladder cells found in the urine, and for the use of
MSA for the detection of neoplasia in other cancer types in human samples, including
lung, and head and neck cancer.
Three patents have issued securing the use of microsatellite technology applied to
detection of cancer of the urinary tract, including bladder cancer. The licensed patent
estate covers the detection of cancer by analysis of microsatellite DNA sequences
(5,935,787) and to the methods of detecting cancer from patient samples (6,291,163).
18
Urovysion Package Insert. Vysis Inc, a wholly-owned subsidiary of Abbott Laboratories Inc.
Quintiles Market Report. November 2006.
20
Healthcare Sales & Marketing Network. 2005. Retrieved from
http://72.32.58.171/news_release.php?ID=2002990&key=urovysion
19
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These patents are exclusively licensed for worldwide markets to Cangen from Johns
Hopkins University and are described in Appendix 1.
Certain licenses are required for Cangen to commercialize the bladder cancer MSA
Assay; including reagents and instrumentation from Applera (Applied Biosystems, Inc
ABI), and polymerases from Roche Molecular Diagnostics, and are currently under
active discussion.
Project Status
A three-year study to validate the MSA Bladder Cancer test, sponsored by Cangen and
conducted by the National Cancer Institute (NCI) under the Early Detection Research
Network (EDRN), is nearing completion. The study involves 13 of the leading cancer
centers across the United States and Canada and has just completed the accrual phase
(baseline collection). The lead investigator for this study is Dr. Mark Schoenberg, a
Professor of Urology at the James Buchanan Brady Urological Institute, Johns Hopkins
University, Baltimore, MD.
This validation study, overseen by Jacob Kagan, Ph.D., program director of NCI's Cancer
Biomarkers Research Group, tests 15 different biomarkers in 300 patients diagnosed with
bladder cancer for the ability of the assay to monitor for cancer recurrence. Individuals
with healthy bladders and individuals with non-cancerous bladder problems that could be
misdiagnosed as cancer, such as kidney stones or urinary tract infections, were used as
controls. The participating institutions collected samples from patients in this study, and
the samples were analyzed using Cangen’s technology by Commonwealth
Biotechnologies Inc., located in Richmond, VA. 21 Final baseline results are expected in
September 2007.
The validation data from these studies will form the basis of Cangen’s 510(k) submission
to the U.S. FDA for the use of a kit for monitoring for recurrent bladder cancer in
conjunction with standard cystoscopy in patients previously diagnosed with bladder
cancer. Cangen is preparing to submit the 510(k) application to the Food and Drug
Administration (FDA) for approval of the Bladder Cancer MSA Assay in 4Q07 or 1Q08.
Approval is expected 30 to 90 days after the application is submitted.
At the same time, Cangen is in final contract negotiations with Roche Applied Science
related to the design, assembly and manufacture of this kit; manufacturing is scheduled to
begin in 3Q 2007.
In the next two years, Cangen intends to file a 2nd 510(k) for longitudinal screening from
the FDA for the use of the MSA Bladder Cancer in diagnostic screening. This submission
is proposed for 3Q09.
21
National Cancer Institute Press Release 2004. Scientists begin validation study of test to detect recurrent
bladder cancer. Retrieved from http://www.cancer.gov/newscenter/pressreleases/EDRNvalidation
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Commercialization
Commercialization of a diagnostic product requires significant resources and
infrastructure. Understanding the necessity to build credibility in this market and in order
to meet these demands, Cangen has identified and/or is already working with external
partners with excellent reputations and specific expertise in critical areas including
manufacturing, distribution, sales and marketing. This approach will provide Cangen
with more immediate access to the market, and product performance will build brand and
company recognition, which will be invaluable to the commercialization of future
products.
In order to achieve the desired market penetration for bladder cancer testing, Cangen’s
MSA kit will contain the necessary reagents to perform the assay at hospital and testing
labs in a user-friendly configuration.
Cangen expects to receive FDA market clearance for the MSA Bladder Cancer Assay in
the 1Q08. This will trigger commercialization activities including in the following areas;
Manufacturing, Marketing Strategy, Distribution, Sales, and Post-market Surveillance
(cGMP compliance). A complete marketing plan is currently in development (Marketing
Strategy Section).
Each of these activities is currently at the planning stage and management expects that
each will be completed in sufficient time relative to commercialization. Detailed
progress reports will be provided by 3Q07.
Lung Cancer
Disease Description
Lung carcinogenesis is a multi-step process characterized by the accumulation of
successive molecular genetic and epigenetic abnormalities, resulting in the selection of
clonal cells with uncontrolled growth in the respiratory tract which ultimately results in
the formation of invasive tumor. As in other cancers, accumulation of genetic alterations
is common in lung cancer and can include gene mutations, allelic losses, allelic
instabilities and aberrant gene methylation that target oncogenes or tumor suppressor
genes. 22
There are two major types of primary lung cancer: non-small cell and small cell lung
cancer. Each affects different types of cells in the lung and grow and spread in different
ways, so treatment of each is different.
22
Beau-Faller M, Gaub MP, Schneider A, Ducrocq X, Massard G, Gasser B, Chenard MP,Kessler R,
Anker P, Stroun M, Weitzenblum E, Pauli G, Wihlm JM, Quoix E, Oudet P. 2003. Plasma DNA
microsatellite panel as sensitive and tumor-specific marker in lung cancer patients. Intl J Cancer: 105, 36170.
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Non-Small Cell Lung Cancer (NSCLC)
Non-small cell lung cancer is the most common type of lung cancer, accounting for about
80% of all lung cancers; it is usually associated with a history of smoking. The three
main types of non-small cell lung cancer are named for the type of cell found in the
tumor: squamous cell carcinoma (also called epidermoid carcinoma); adenocarcinoma;
and large cell carcinoma. Non-small cell lung cancer is described using four stages: in
stage I, the cancer is confined to the lung; in stages II and III, the cancer is confined to
the chest; and in stage IV, the cancer has spread from the chest.
Small Cell Lung Cancer (SCLC)
Small cell lung cancer (sometimes called oat cell lung cancer) accounts for approximately
20 percent of all lung cancer cases and is also associated with a history of smoking. The
extent of the disease is described using a two-stage system. A case can either be limited,
meaning the cancer is confined to a portion of the chest where it originated, or extensive,
meaning the cancer has spread throughout or from the chest.
Tumors found in the lungs sometimes originate from cancers elsewhere in the body.
These tumors are called lung metastases. 23
Diagnosis and Treatment
According to the American Cancer Society, most lung cancers do not cause any
symptoms until they have spread too far to be cured. Lung cancer screening tests include
imaging procedures such as chest x-ray and low-dose computer tomography (CT), and
cell or tissue sampling, which includes procedures such as sputum cytology or needle
biopsy.
Surgery offers the best probability of cure for NSCLC but cannot be used in advanced or
metastatic stages. In spite of available therapies, the prognosis of lung cancer patients is
generally very poor. Survival at 5 years is 35% for NSCLC patients who undergo
surgery and <5% for inoperable NSCLC. Survival is less than 20% for limited SCLC
and less than 2% for extensive disease. 24,25 ,26
At the present time, most patients who receive an initial diagnosis of lung cancer have
advanced stage disease, making cure with currently available therapies unlikely.
However, those with early stage disease can achieve cure through surgical resection
23
Lung Cancer Overview. Memorial Sloan-Kettering Cancer Center. Retrieved from
http://www.mskcc.org/mskcc/html/12163.cfm on April 30, 2007.
24
Livingston, RB. Combined modality therapy of lung cancer. 1997. ClinCancer Res, 3, 2638-47.
Adjei AA, Marks RS, Bonner JA. Current guidelines for the management of small-cell lung cancer.
1999. Mayo Clin Proc 74, 809-816.
26
Non-Small Cell Lung Cancer Group. Chemotherapy in non-small cell lung cancer:a meta-analysis using
updated dats on individual patients from52 randomized clinical trials. 1995. Brit Med J 311, 899-909.
25
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Lung Cancer Testing Market
According to the Centers for Disease Control (CDC), more people die annually from lung
cancer than any other type of cancer. The US Cancer Statistics Working Group estimated
that in 2003, over 190,000 people (105,508 men and 84,789 women) were diagnosed
with lung cancer, and about 160,000 people (89,906 men and 68,084 women) died from
lung cancer. 27 Among men, the incidence of lung cancer has been declining, but it
continues to increase among women. The number of lung cancer deaths among women
surpasses those from breast cancer.
A 2005 report from researchers at the International Agency for Research on Cancer
(IARC in Lyon, France) on global cancer trends finds men and women in North America
have the highest cancer incidence worldwide, and that lung cancer is the main cancer in
the world today, with the highest incidence in North America and Europe. 28
According to the Lung Cancer Guidelines, this dichotomy in outcome associated with the
stage at which lung cancer is diagnosed, “there has been a persistent interest in designing
and testing methods for early detection of lung cancer.” 29
Lung carcinogenesis is a multi-step process characterized by the accumulation of
successive molecular genetic and epigenetic abnormalities. Molecular lesions precede
morphological changes for years. The length of this interval may provide an opportunity
for early detection. 30
Additionally, the financial costs of lung cancer are high. Among the four most common
cancers, the first-year costs for lung and colorectal cancer are higher because screening is
not as commonly used in the detection of these cancers. For example, the cost of treating
lung cancer in the United States in 1996 was about $5 billion per year.
Given the availability of a screening method for lung cancer, the proportion of cases
presenting at advanced stages, when treatment is more extensive and costly, would be
significantly reduced. 31
Cangen’s Lung Cancer Assays
According to the Health Outcomes Research Group, the benefit of a screening test for
lung cancer is typically assessed relative to two major concerns. First, it must provide
benefit to individuals who have the illness, typically through increasing life expectancy,
and it must be capable of detect disease at a point in which the course of the disease can
27
Centers for Disease Control and Prevention. Retrieved from http://www.cdc.gov/cancer/lung/statistics/
on May 1, 2007.
28
March/April issue of CA: A Cancer Journal for Clinicians.
29
Bach PB, Kelley MJ, Tate RC, McCrory DC. 2003. Screening for lung cancer. Health Outcomes
Research Group. Chest 123,1, p 72.
30
Bremnes RM et al. 0000. Circulating tumor-derived DNA and RNA markers in the blood. P 1.
31
National Cancer Institute. 2005. Cancer Trends Progress Report. Retrieved from
http://progressreport.cancer.gov/doc_detail.asp?pid=1&did=2005&chid=25&coid=226&mid=
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be altered by treatment. Second, the screening test should be sensitive and specific, and
should not be dangerous or painful. 32
The genetic and epigenetic abnormalities observed in tumors include genetic gains, losses
and loss of heterozygosity, that is the deletion of one copy of allelic DNA sequences,
may affect several chromosomes. Of diagnostic significance the fact that some of these
changes are also detectable in the plasma/serum of cancer patients. 33
Cangen is presently pursuing a two-pronged approach utilizing two technologies, each
with the potential to provide a valid lung cancer screening method at the molecular level:
the microsatellite technology, which is the basis for Cangen’s Bladder Cancer MSA
Assay currently under development, and a method based on mass spectrometry.
A. Cangen’s MSA Lung Cancer Assay
Cangen’s MSA Lung Cancer Assay is a non-invasive, highly accurate and objective
diagnostic method that may be able to detect cancer many months before lung cancer
symptoms appear. Based on Cangen’s experience with this technology, we believe that it
has the potential to exhibit high sensitivity, specificity and accuracy.
The lung cancer assay uses a technology known as microsatellite DNA analysis (MSA).
Microsatellites, also known as short tandem repeats, are repeating units of one to six
nucleotides (e.g. CACACACA) found throughout human chromosomes. These repeating
regions are frequently mutated in tumors, either through deletions or by an extension of
the number of repeats. For screening for recurrent lung cancer, DNA can be easily
extracted from cells that are normally present in urine, and compared to DNA sequences
of unaffected cells, such as lymphocytes, from the same patients. Early studies have
shown this non-invasive analysis can have over 90 percent accuracy.
The microsatellite technology and DNA markers used in Cangen’s assay was developed
by and licensed from Johns Hopkins University for worldwide use.
Molecular detection techniques make it possible to detect circulating aberrant DNA due
to its high sensitivity and specificity. In 1996, LOH and microsatellite instability (MSA)
were found in both the primary tumors and the plasma and serum of patients with lung
cancer. 34, 35 Cangen is evaluating the use of 9 markers to identify and characterize tumor
DNA in the plasma of lung cancer patients using its microsatellite instability assay.
32
Bach PB, Kelley MJ, Tate RC, McCrory DC. 2003. Screening for lung cancer. Health Outcomes
Research Group. Chest 123,1, p 72.
33
Chan KCA, Lo YMD. 2002. Circulating nucleic acids as a tumor marker. Histol Histopathol 17, 937-43.
34
Chen XQ, Stroun M, Magnenat JL et al. 1996. Microsatellite alterations in plasma DNA of small cell
lung cancer patients. Nat Med 2, 1033-5.
35
Beau-Faller M, Gaub MP, Schneider A, Ducrocq X, Massard G, Gasser B, Chenard MP,Kessler R,
Anker P, Stroun M, Weitzenblum E, Pauli G, Wihlm JM, Quoix E, Oudet P. 2003. Plasma DNA
microsatellite panel as sensitive and tumor-specific marker in lung cancer patients. Intl J Cancer: 105, 36170.
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Project Status
Cangen’s current focus is on the confirmation and preliminary validation of the
performance of the assay using well-defined clinical samples that are processed to
differentially enrich for, and analyze, circulating cancer cells and cancer DNA.
We are currently optimizing the existing nine marker lung cancer-based assay that is
designed to detect loss of heterozygosity (LOH) in DNA taken from lung cancer samples.
This project, which Cangen is doing in collaboration with Olympus Corporation, is being
carried out at Commonwealth Biotechnologies Inc (CBI) in Richmond Virginia. This
project phase should be completed by Q3/4 07.
This will be followed by the testing of normal and test samples from the same subject in
order to identify the parameters for determining whether or not there has been a loss of
heterozygosity.
Cangen intends to submit a pre-IDE meeting request to the FDA in Q108 and has already
developed a protocol for a validation study to be conducted in the United States
beginning in Q208. This will allow Cangen to file a 510(k) application to the FDA in
3Q09, with anticipated commercial availability in 1Q 2010.
B. Cangen’s Lung Cancer Mass Spectrometry-Based Biomarker Analysis
Mass spectrometry-based analysis attempts to detect particular forms of cancer by
indicating the presence of specific biomarkers in blood by comparing samples from
people with and without lung cancer.
Prior to subjecting the samples to mass spectrometry, each is purified using a filtration
system developed in conjunction with Dai Nippon Printing. This filtration system serves
to reduce the presence of “background” peaks in a sample’s mass spectra. Subsequent
analysis of these mass spectra results, utilizing Cangen’s proprietary bioinformatic and
other statistical algorithms, allows one to detect certain protein patterns which we believe
will serve as a prediction model for lung cancer.
Project Status
In clinical testing completed in 2006, a peak was identified that appears to be consistent
with the presence of lung cancer with a specificity of approximately 90% and a
sensitivity of approximately 75%. 36 This work continues and an update will be provided
by Q208.
36
Cangen-generated Data. Available under confidential disclosure.
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Competition
To Cangen’s knowledge, there is at least one, and probably more, lung cancer screening
assays in development. An updated assessment of the competitive landscape is presently
underway and will be ready by the end of Q207.
Intellectual Property
The bladder and lung diagnostic assays are protected by a patent estate covering use and
related methods. An exclusive worldwide licensing agreement with Johns Hopkins
provides Cangen with access to the use of technology for detecting the presence of
neoplasia in bladder cells found in the urine, and for the detection of neoplasia in other
cancer types in human samples, including lung, and head and neck cancer.
Three patents have issued securing the use of microsatellite technology applied to
detection of cancer. The licensed patent estate covers the detection of cancer by analysis
of microsatellite DNA sequences (5,935,787) and to the methods of detecting cancer
from patient samples (6,291,163). These patents are exclusively licensed for worldwide
markets to Cangen from Johns Hopkins and are described in Appendix 1.
Commercialization
Cangen believes there is a significant market potential for a screening method that could
be used to detect lung cancer at an early stage. Updated market projections are underway
and will be provided by the end of Q307.
Commercialization of a diagnostic product requires significant resources and
infrastructure. Understanding the necessity to build credibility in this market and in order
to meet these demands, Cangen has identified external partners with excellent reputations
and specific expertise in critical areas including manufacturing, distribution, sales and
marketing. This approach will provide Cangen with more immediate access to the
market, and product performance will build brand and company recognition which will
be invaluable to the commercialization of future products.
In order to achieve the desired market penetration for lung cancer testing, Cangen intends
to develop an assay kit (marketed as MSA Assays) which contains the necessary reagents
to perform the assay at hospitals and testing labs.
Cangen expects to receive FDA market clearance for the MSA Lung Cancer Assay in Q1
2010. Commercialization of the product will be as quickly thereafter as possible and
includes multiple activities in the following areas: Manufacturing, Marketing Strategy,
Distribution, and Sales.
Each of these activities will be completed in sufficient time to minimize the time to
market. A complete marketing plan is in development (see Marketing Strategy section)
and further details will be provided as we get closer to commercialization.
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Chemosensitivity
Description
The National Cancer Institute defines chemosensitivity as the susceptibility of tumor cells
to the cell-killing effects of anti-cancer drugs. The ability to predict the chemosensitivity
of individual patients to particular chemotherapies may provide an opportunity to
improve the efficacy of cancer chemotherapy. One approach is to understand the genes
that determine the chemosensitivity of cancer cells. Numerous attempts have been made
to predict the chemosensitivity of cancers using genome-wide expression profile analyses,
such as cDNA microarray and single nucleotide polymorphisms. These genes can be
used as markers to predict chemosensitivity; moreover, some of these genes may directly
determine the chemosensitivity of cancer cells. 37
The goal of chemosensitivity testing is to determine the response of a patient's cancer
cells to proposed chemotherapy agents. Knowing which chemotherapy agents the
patient's cancer cells are resistant to is important, as it could spare patient exposure to the
toxicity of ineffective agents. In addition, chemosensitivity assays could predict tumor
cell sensitivity, that is, determining which agent would be most effective. Choosing the
most effective agent can help patients avoid the physical, emotional, and financial costs
of failed chemotherapy and experience an improved quality of life. 38
Chemotherapy Treatment
For many forms of cancer, physicians have little insight into the efficacy of a particular
chemotherapy regime to treat that cancer. For example, of the four chemotherapy
regimens for non-small cell lung cancer commonly referred to as “first line” therapies,
none shows efficacy on more than 20% to 25% of patients for whom the therapy is
administered. 39 As a result of the low response rate, the lives of lung cancer patients are
extended only seven to nine months on average from the time of diagnosis. However, for
patients who respond to one of these therapies, survival is extended to approximately two
years. Each of these “first line” lung cancer chemotherapies is sufficiently toxic that
patients typically cannot tolerate more than two cycles of treatment, further underlining
the positive effects of prescribing an effective treatment in the first instance.
The ability to predict the response of patients to particular chemotherapy regimes prior to
administering the therapy may represent an important advance in the management of
cancer therapy by selecting optimal therapy initially while avoiding, to the greatest extent
possible, the toxic side effects of ineffective therapies.
37
Nakatsu N, Yoshida Y, Yamazaki K, Nakamura T, Dan S, Fukui Y, Yamori T. 2005. Chemosensitivity
profile of cancer cell lines and identification of genes determining chemosensitivity by an integrated
bioinformatical approach using cDNA arrays. Mol Cancer Ther. 2005;4:399-412.
38
The Cancer Forums. 2006.
39
Article. 200X. New England Jlof Med.
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Chemosensitivity Market
Use of pharmacogenomics to select patients most likely to benefit from treatment may
have a number of benefits in at least two areas: disease management and clinical trial
costs.
First, the ability to predict the response of patients to particular chemotherapy regimes
prior to administering the therapy would represent an important advance in the
management of cancer therapy. By selecting optimal therapy initially, one would be able
to avoid, to the greatest extent possible, the toxic side effects of ineffective therapies.
Secondly, the size and cost of clinical trials may be significantly reduced since fewer
subjects would be needed in treatment and control arms to establish statistical
significance. Patients likely to tolerate a drug’s side effects could be pre-selected,
potentially allowing drugs that might be toxic to some patients to reach the market, if
accompanied by a diagnostic to identify those patients at risk. 40
An updated assessment of the chemosensitivity market opportunity is currently underway
and is expected by 3Q 2007.
Chemosensitivity Assay
Cangen’s chemosensitivity assays are based on mass spectrometry technology. Cancer
patient samples are subjected to mass spectrometry analysis. The results of this mass
spectrometry-based analysis suggests the ability to identify biomarker-expression patterns
that correlate to a patient’s response to a particular regimen of chemotherapy, that is, in
predicting the sensitivity of individual patients to chemotherapy treatments by identifying
the presence or absence of certain candidate biomarkers. Cangen’s data suggests that this
chemosensitivity assay has the potential to provide information critical to predicting
therapeutic efficacy of a therapeutic for a particular patient. 41
Competition
At present, chemosensitivity testing is only performed by approximately 16 CLIA labs in
the US, using “home-brew” reagents and protocols that are not FDA-approved. However,
for each of these products, testing is conducted on human tissue, and for any test, there
must be a biopsy of the tissue in question. This puts significant practical and financial
limitations on the utility of these tests. Cangen believes its biomarker-based
chemosensitivity assay which uses blood and/or serum samples, may offer significant
advantages; both a more practical approach and more meaningful test results.
An updated assessment of the competitive landscape is presently underway and will be
ready by the end of Q2 2007.
40
41
Reference
Cangen-generated data. Available under confidentiality.
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Intellectual Property
Cangen is establishing a strong patent portfolio around the chemosensitivity technology.
More details will be available by Q3 2007.
Project Status
Preclinical research to date has yielded two key results. First, Cangen has identified
biomarker-expression patterns that appear to indicate whether or not a patient is likely to
respond to a particular form of chemotherapy. Second, we have discovered biomarkerexpression patterns that appear to correlate to a lack of response to a given chemotherapy
regimen. 42 Further work continues in this area.
Therapeutic Products
Cangen believes that we are uniquely positioned to benefit from the licensing and
development of selected cancer therapies that complement our own research and
technologies. Cangen actively seeks out therapeutic treatments that we believe would
benefit from our expertise and which may be able to find a significant market. Cangen is
working with Fuji Film to develop a drug delivery system with unique characteristics
which we believe meets these criteria and has the potential to offer considerable benefit
to patients.
Drug Delivery System for the Treatment of Head and Neck Cancer
In current clinical practice, chemotherapeutic drugs are usually delivered intravenously,
resulting in toxic levels of drug concentrations throughout the body. A transdermal drug
delivery system, that is, a drug that is delivered through the skin, would allow a specific
area of the body to be treated, thus potentially reducing total patient exposure to toxic
chemotherapies and the associated debilitating side effects. Cangen is collaborating with
Fuji Film to develop a recombinant human gelatin-based transdermal drug delivery
system with this specific objective.
Head and Neck Cancer
Head and neck cancer accounts for approximately 3-5% of all cancers in the United
States and about 90% of these are comprised of squamous cell carcinomas. 43 There were
approximately 40,490 cases of head and neck cancer diagnosed in 2006. 44 Worldwide
incidence is reported to be greater than half a million cases per year. Head and neck
cancer is more common in men and in people over the age of 50 years. Tobacco and
alcohol use are the most important risk factors, particularly for cancers of the oral cavity,
oropharynx, hypopharynx and larynx. Other risk factors include sun exposure, radiation,
and environmental exposures.
42
Cangen-generated data. Available under confidentiality.
Retrieved from http://www.jamesline.com/cancertypes/headneck/about/
44
Cangen internal document 2007.
43
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Diagnosis and Treatment of Head and Neck Cancer
Symptoms usually trigger a visit to a physician and may include a lump or sore that does
not go away, difficulty swallowing, a sore throat or hoarse voice. The physician will
evaluate one’s medical history, perform a physical examination and will order certain
diagnostic tests, which vary depending on the symptoms presented. These tests can
include endoscopy, clinical assays, x-rays, computer-aided tomography (CAT) scans,
positive emission tomography (PET) scans, and magnetic resonance imaging (MRI).
Diagnosis is usually made by a team of specialists, depending on the type and stage of
cancer.
Treatment also depends on the type and stage of cancer and includes surgery, radiation
therapy and chemotherapy, often in combination 45 In current clinical practice,
chemotherapeutic drugs are usually delivered intravenously, generally resulting in toxic
levels of drug concentrations throughout the body. There is a need for a targeted therapy
that would optimize cancer treatment and minimize overall patient exposure.
Cangen’s Drug Delivery System for the Treatment of Head and Neck Cancer
Cangen is collaborating with Fuji Film to develop a recombinant human gelatin-based
transdermal drug delivery system. It is anticipated that a drug delivery system based on a
chemotherapy/gelatin matrix would be able to deliver higher concentrations of drug to
targeted areas without raising overall levels in the body to toxic levels, thereby enhancing
chemotherapy regimes and improving the overall health of the patient. A transdermal
drug delivery system, presently in development for the treatment of head and neck cancer,
would allow one to target the specific area to be treated, minimizing patient exposure to
the potentially toxic chemotherapy.
Vital to the success of any gelatin-based drug delivery system is the ability to develop
appropriate cross-linkages, or structural characteristics, and with it the ability to disperse
the chemotherapeutic agent uniformly within the gelatin matrix. Fuji Film has developed
a unique way of synthesizing and producing human gelatin through recombinant DNA
technology in a yeast enzyme-based production system, which we believe represents a
technological advantage over other chemical production methods. 46
Competition
Specific targeting of chemotherapy has been attempted by several companies using
various drug delivery systems that employ various methods of delivering drugs through a
localized medium. An updated examination of the competitive landscape is currently
underway and will be completed by 2Q 2007.
45
46
Retrieved from http://www.cancer.gov/cancertopics/pdq/adulttreatment
Cangen internal document. 2006. Available under confidentiality.
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Commercial Opportunity
Initial efforts in this area will focus on cancers of the head and neck using commonly
used FDA-approved therapeutics, like 5-fluorouracil (5-FU) and Paclitaxel. Cangen
believes that developing alternative methods to deliver already proven chemotherapeutic
agents more effectively minimizes the development risk for Cangen’s drug delivery
system and may facilitate a more aggressive regulatory submission timeline.
Cangen and Fuji Film expect that a drug delivery system based on this
chemotherapy/gelatin matrix would be able to deliver higher concentrations of
medication to targeted areas without raising overall levels in the body to toxic levels,
thereby enhancing chemotherapy regimes and improving the overall health of the patient.
Cangen believes that the human gelatin drug delivery system will serve as a platform and
thus may be able to be adapted to treat other cancer types as well. An updated
examination of the market opportunity for this technology is currently underway and will
be completed by 3Q 2007.
Intellectual Property
Cangen is establishing a strong patent portfolio around the recombinant human gelatinbased drug delivery system platform, upon which rhG-5-FU is based. More details will
be available by 3Q 2007.
Project Status
Preclinical studies are underway, including pharmacokinetic, efficacy and a number of
other studies. Results of these studies will be used to support an IND so that a phase IIa
clinical study can be conducted. 47
47
Cangen internal document. 2006
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Portfolio Strategy
Cangen will continue to differentiate itself from the competition by maintaining a balance
in our product portfolio between diagnostic and therapeutic products. We will also
continue to maintain and aggressively seek collaborations with leaders in the industrial
and academic fields. Our portfolio strategy involves managing the mix of product
development projects so that it conforms to various strategies for technologies, markets,
and business segments. Strategically we balance portfolio management by the business
segment, R&D focus, and long versus short term impact to our business. While bladder
cancer kits will be the first to reach the market in early 2008, we are currently focusing
on our lung cancer project targeting commercialization by 2010.
While developing a balanced product portfolio mix, Cangen is also balancing the use of
capital, assets, and capabilities among our different pipelines taking external factors into
consideration. Since bladder and lung cancer represent the best short-term market
opportunities, we are planning to leverage our technology to address opportunities in
other segments such as liver cancer diagnostic and therapeutic products, which will offer
us the opportunity to expand globally. Since lung cancer represents the largest potential
global market we plan to seek regulatory approval for our products in the US, Japan,
Korea and Europe.
By taking the strategic approach of outsourcing key functions such as manufacturing and
sales, Cangen can focus on our key competencies including R&D and the development of
strategic alliances. We will manage and control such vital functions as product
development, marketing strategy and research. Cangen already currently in the final
phases of negotiation for manufacturing of our MSA kits with Roche Diagnostics, a
leader in molecular technology. We are also in discussions with several companies with
specific expertise in related areas. This strategic approach will allow Cangen to
commercialize products in the most expedient manner giving us the greatest potential
revenue potential and allowing us to focus on our core competency of R&D and product
development.
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Intellectual Property Summary
Cangen seeks to procure patent protection for its anticipated products and obtain such
protection from the relevant patents owned by Cangen licensors. To date we have
applied for six US patents, and obtained licenses for 7 issued and 5 pending US patents
for which 24 additional foreign patents have either been issued, are pending or are in
review. Cangen has jointly applied, or is in the process of applying, for eleven US
patents and foreign patents. Combined, these patents and pending patent applications
contain claims directed to, among other things, compounds, compositions, methods of
use and/or methods of manufacturing. The following is a summary of Cangen’s
intellectual property rights.
MSA Assay
The bladder and lung MSA diagnostic assays are protected by a patent estate covering
use and related methods. An exclusive worldwide licensing agreement with Johns
Hopkins provides Cangen with access to certain DNA markers and for the use of MSA
technology for detecting the presence of neoplasia in bladder cells found in the urine, and
for the use of MSA for the detection of neoplasia in other cancer types in human samples,
including lung, and head and neck cancer.
Three patents have issued securing the use of microsatellite technology applied to
detection of cancer of the urinary tract, including bladder cancer. The licensed patent
estate covers the detection of cancer by analysis of microsatellite DNA sequences
(5935787) and to the methods of detecting cancer from patient samples (6291163).
These patents are exclusively licensed for worldwide markets to Cangen from Johns
Hopkins and are described below.
Mass Spectrometry-based Biomarker Analysis
Cangen owns one US patent pending and jointly holds four US pending patents with Dai
Nippon Printing Company, relating to the method of analyzing mass spectrometry
patterns to predicting lung cancer. In addition, we hold one U.S. pending patent for
analyzing mass spectrometry peaks to predict responses to chemotherapy treatment.
Pivotal Patents summarized below. A summary of patents is attached.
Description
Area
Patent Number
1 Early detection of cancer by analysis of nucleic acids in sputum or
2 saliva. Detection of cancer by analysis of microsatellite DNA
sequences
3
U.S.
5,561,041
U.S.
5,726,019
U.S.
6,235,470
4
U.S.
5,935,787
5
U.S.
6,497,234
U.S.
6,291,163
6
Detection of hypermutable nucleic acid sequence in tissue. Early
detection of cancer by analysis of microsatellite DNA sequences
Figure 3: Pivotal Patents
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Government Regulation
Regulation by governmental authorities in the U.S. and other countries is a significant
factor in the manufacture and marketing of our products and in ongoing research and
product development activities. All of our products require regulatory approval by
governmental agencies prior to commercialization. Our products are subject to rigorous
preclinical and clinical testing and other premarket approval requirements by the FDA
and regulatory authorities in other countries. Various statutes and regulations also govern
or influence the manufacturing, safety, labelling, storage, record keeping and marketing
of such products. The lengthy process of seeking these approvals, and the subsequent
compliance with applicable statutes and regulations, require the expenditure of
substantial resources.
U.S. Regulatory Approval
Overview
In the United States, testing of diagnostic and pharmaceutical products is regulated by the
FDA under the Food, Drug, and Cosmetic Act, as well as state and local government
authorities. Our product candidates are in various stages of testing and none has been
approved.
In order to receive FDA approval, we are required to follow certain steps. These steps
depend on the classification of the product being tested. All of the products we are
currently testing have been classified as either an in vitro diagnostic product, or a drug or
drug-delivery system under the FDA guidelines.
In Vitro Diagnostic Products
All of our diagnostic products are classified by the FDA as in vitro diagnostic products,
which are reagents, instruments, and systems intended for use in diagnosis of disease or
other conditions. In vitro diagnostic products are regulated as medical devices under the
1976 Medical Device Amendments to the Food, Drug and Cosmetic Act administered by
the FDA. In vitro diagnostic products are classified into one of three classes by the FDA
(Class I, Class II or Class III, in ascending order), depending on the level of regulatory
control that is necessary to assure the safety and effectiveness of the device in question.
In order to obtain FDA approval for our diagnostic products, we are required to submit to
the FDA a 510(k) pre-market notification form or a pre-market approval application, or
PMA.
To date, we have not received market clearance from the FDA for any of our products.
We are currently developing additional diagnostic products that the FDA will have to
clear through the 510(k) notification procedures. These new test products are crucial for
our success in the human diagnostic market. If we do not receive 510(k) clearance for a
particular product, we will not be able to market that product in the United States.
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The steps required for FDA approval of a medical device are generally as follows:
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voluntary filing of a Pre-IDE submission;
for non-IDE exempt devices, submission of an IDE application, which must be
approved prior to beginning clinical trials in the United States;
an adequate and well-controlled validation study to establish the safety and
efficacy of the product candidate for each indication for which approval is sought;
submission to the FDA of a 510(k) or a PMA application;
development of a GMP-compliant system for the design, manufacture, packaging,
labeling, storage, installation, and servicing of finished medical devices intended
for commercial distribution in the United States, as well as registration and listing
of the device; and
FDA review and approval of the 510(k) or PMA.
The testing and approval process requires substantial time, effort, and financial resources.
We cannot be certain that any approval will be granted on a timely basis, or at all.
The IDE Process: Generally, our in vitro diagnostic products are exempt from the IDE
process.
Validation Study: After initial research to create and develop the technology for a
diagnostic product are completed, clinical trials are designed and conducted on a
sufficiently broad scale to test initial research results and determine the accuracy and
efficacy of the product. Results are generally tested against results from an approved
device.
510(k) or PMA submission: If clinical trials are successful, the next step in the regulatory
approval process is the preparation and submission of a 510(k) or PMA application to the
FDA.
For Class I, Class II and some Class III in vitro diagnostic products, a 510(k) application
is required to be submitted to the FDA at least 90 days before marketing commences. A
510(k) is a pre-marketing submission made to the FDA to demonstrate that the device to
be marketed is as safe and effective by way of being substantially equivalent to an
already-approved device that is not subject to pre-market approval. Applicants must
compare their 510(k) device to one or more similar devices currently on the U.S. market
and make and support their substantial equivalency claims. A determination by the FDA
is usually made within 90 days based on the information submitted by the applicant. The
FDA must issue a written order finding “substantial equivalence” before a company can
market a medical device. Devices approved under 510(k) applications may be marketed,
but must be used in conjunction with an existing FDA-approved device.
Most Class III in vitro diagnostic products require an application for a PMA. For in vitro
diagnostic products, the safety of the device relates to the impact of the device's
performance, and in particular on the impact of false negative and false positive results,
on patient health since the safety of the device is not generally related to contact between
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the device and patient. In our case, this would apply to our diagnostics being used for
screening of cancer in high risk persons. This requires an in-depth review and approval
by the FDA (as opposed to a determination of substantial equivalence). The process takes
a minimum of 180 days to complete after submission of the PMA application, but if there
are unaddressed scientific issues, the review scientists can ask for additional information
and put the submission temporarily on hold. Devices approved through a PMA can be
marketed and can be used without any other device. For this reason, we intend to
eventually submit certain of our products approved through a 510(k) submission using a
PMA.
GMP Compliant Systems: The 1976 Medical Device Amendment also requires us to
manufacture our products in accordance with GMP guidelines. Current GMP
requirements are set forth in the Quality System Regulation of the FDA. These
requirements regulate the methods used in, and the facilities and controls used for, the
design, manufacture, packaging, storage, installation and servicing of medical devices
intended for human use. In addition, various state regulatory agencies may regulate the
manufacture of such products.
The FDA’s policies may change and additional government regulations may be
promulgated which could prevent or delay regulatory approval of our products.
Moreover, increased attention to the containment of health care costs in the United States
and in foreign markets could result in new government regulations that could have a
material adverse effect on our business. We cannot predict the likelihood, nature or extent
of adverse governmental regulation that might arise from future legislative or
administrative action, either in the United States or abroad.
Drugs
Our therapeutic products are classified as drugs by the FDA. Before our therapeutic
products may be marketed in the United States, they must be approved by the FDA. The
steps required before a drug can be approved generally involve the following:
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pre-clinical laboratory and animal tests;
submission of an IND application, which allows us to ship our therapeutic
products to clinical investigators in the United States and must become
effective before clinical trials may begin in the United States;
adequate and well-controlled human clinical trials to establish the safety
and efficacy of the product candidate for each indication for which
approval is sought;
submission to the FDA of a new drug application, or
development of manufacturing processes which conform to FDAmandated GMPs and satisfactory completion of an FDA
FDA review and approval of an NDA
The testing and approval process requires substantial time, effort, and financial resources.
We cannot be certain that any approval will be granted on a timely basis, or at all.
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IND Process: An IND application must be effective to administer an investigational drug
to humans.
Prior to initiation of each clinical study, an independent IRB at the medical site proposing
to conduct the clinical trials must review and approve the study protocol and study
subjects must provide informed consent.
Clinical Trials: Human clinical trials are typically conducted in three sequential phases
that may overlap:
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Phase I: The drug is initially introduced into human subjects or patients
and tested for safety, dosage tolerance, absorption, distribution, excretion
and metabolism.
Phase II: The drug is introduced into a limited patient population to assess
the efficacy of the drug in specific, targeted indications assess dosage
tolerance and optimal dosage, and identify possible adverse effects and
safety risks.
Phase III: The drug is introduced into an expanded patient population at
geographically dispersed clinical study sites to further evaluate clinical
efficacy and safety.
We cannot be certain that we will successfully complete Phase I, Phase II or Phase III
testing of our drug candidates within any specific time period, if at all. The FDA and the
IRB at each institution at which a clinical trial is being performed may suspend a clinical
trial at any time for various reasons, including a belief that the subjects are being exposed
to an unacceptable health risk.
The NDA: If clinical trials are successful, the next step in the drug regulatory approval
process is the preparation and submission to the FDA of an NDA. The NDA is the vehicle
through which drug sponsors formally propose that the FDA approve a new
pharmaceutical product for marketing and sale in the United States. The NDA must
contain a description of the manufacturing process and quality control methods, as well
as results of pre-clinical tests, toxicology studies and clinical trials and proposed labeling,
among other things. A substantial user fee must also be paid with the NDA. The FDA
may refer the NDA to an advisory committee for review, evaluation and recommendation
as to whether the application should be approved, but the FDA is not bound by the
committee’s recommendation. The FDA may deny or delay approval of applications that
do not meet applicable regulatory criteria or if the FDA determines that the clinical data
do not adequately establish the safety and efficacy of the drug
Accelerated Approval: In addition to the standard progression of phases and NDA
application as outlines above, in special cases, the FDA has made approvals on an
accelerated basis following Phase II trials. This type of approval is reserved for cases
where there is no available treatment for a particular medical condition and an urgent
need exists for one. We are considering whether to submit DDS for this type of
accelerated approval, pending successful current trials and discussions with FDA .
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Manufacturing and Other Requirements: Both before and after approval, we and our
third-party manufacturers are required to comply with a number of requirements. For
example, certain changes to the approved product, such as adding new indications,
manufacturing changes and additional labeling claims are subject to additional FDA
review and approval. Advertising and other promotional material must comply with FDA
requirements and established requirements applicable to drug samples. The NDA holders
and manufacturers of approved products will be subject to continual review and periodic
inspections by the FDA and other authorities where applicable, and must comply with
ongoing requirements, including the FDA’s GMP requirements. Because we intend to
contract with third parties for manufacturing of our products, our ability to control thirdparty compliance with FDA requirements will be limited to contractual remedies and
rights of inspection.
The FDA’s policies may change and additional government regulations may be
promulgated which could prevent or delay regulatory approval of our products.
Moreover, increased attention to the containment of health care costs in the United States
and in foreign markets could result in new government regulations that could have a
material adverse effect on our business. We cannot predict the likelihood, nature or extent
of adverse governmental regulation that might arise from future legislative or
administrative action, either in the United States or abroad.
We are also subject to various laws and regulations regarding laboratory practices, the
experimental use of animals and the use and disposal of hazardous or potentially
hazardous substances in connection with our research.
EU Regulatory Approval
Similar to the U.S. regulatory framework, the various phases of research are subject to
significant regulatory controls within the European Union. Variations among national
regimes exist. However, most jurisdictions require regulatory and institutional review
board approval of interventional clinical trials. Most European regulators also require the
submission of adverse event reports during a study and a copy of the final study report.
Where possible, we will strive to choose the European regulatory filing route that will
most rapidly enable us to obtain the needed regulatory approvals. However, the chosen
regulatory strategy may not secure regulatory approvals or approvals of the chosen
product indications. In addition, these approvals, if obtained, may take longer than
anticipated.
Other Regulatory Approval
We will have to complete approval processes, similar or related to the U.S. approval
processes, in virtually every foreign market for our products in order to conduct research
and to commercialize our drug candidates in those countries. The approval procedures
and the time required for approvals vary from country to country and may involve
additional testing. Foreign approvals may not be granted on a timely basis, or at all. In
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addition, regulatory approval of prices is required in most countries other than the United
States. We face the risk that the resulting prices would be insufficient to generate an
acceptable return to us or our collaborators.
Other Regulatory Matters
In the United States, our manufacturing, sales, promotion, and other activities following
any product approval are subject to regulation by regulatory authorities in addition to the
FDA, including the Federal Trade Commission, the Department of Justice, the Centers
for Medicare & Medicaid Services, other divisions of the Department of Health and
Human Services, and state and local governments. Among other laws and requirements,
our sales, marketing and scientific/educational programs will need to comply with the
anti-kickback provisions of the Social Security Act, the False Claims Act and similar state
laws. Our pricing and rebate programs will need to comply with pricing and
reimbursement rules, including the Medicaid rebate requirements of the Omnibus Budget
Reconciliation Act of 1990. If products are made available to authorized users of the
Federal Supply Schedule of the General Services Administration, additional laws and
requirements apply.
All of our activities are potentially subject to federal and state consumer protection and
unfair competition laws. Finally, certain jurisdictions have other trade regulations from
time to time to which our business is subject such as technology or environmental export
controls and political trade embargoes.
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Marketing Strategy
The key objective for Cangen at our current state of development is to commercialize our
technologies for the benefit of patients and Cangen investors.
Ideally a
commercialization approach and marketing strategy would be similar for all of the
products in Cangen’s pipeline. However, management is also aware of the need to
generate revenue and profitability as quickly as possible to provide a return on
investment as well as sustainable revenue for future R&D activities. Additionally,
Cangen will need to develop a brand and name recognition in the market with their first
commercial product. Therefore future products may follow a different commercialization
and marketing strategy in order to maximize profitability and build core competencies for
the company. Our first product to be commercialized is our MSA for detection of
bladder cancer. For the purposes of this business plan the marketing strategy and
commercialization approach will be discussed specifically for this product. It should be
noted that a comprehensive marketing plan is in development for MSA Bladder Assay
and will be completed by Q3 2007 subsequent to resolving the critical success factors
listed below.
MSA Bladder Pre-Launch
The core element of the marketing strategy for our MSA bladder cancer diagnostic
product is to utilize companies and partners on an outsource basis in order to build brand
and company recognition as well as to generate revenue. Cangen has sought out
companies and partners that have established relationships with our potential customers
in order to build a reputation (branding) in this market. There is an inherent cost
associated with this type of marketing strategy which could potentially cost the company
as much as 20-30% of our net revenue. However, this approach will allow Cangen a
more immediate access to the customer base while product performance will build brand
and company recognition which will be invaluable to the commercialization of future
products.
It is currently estimated that Cangen will receive FDA marketing clearance for our MSA
bladder cancer diagnostic product in early 2008. Commercialization of the product will
be as quickly thereafter as possible given that several critical success factors are
addressed prior to FDA approval. These critical success factors are as follows:
1.
Determination of manufacturing costs
Current negotiations are occurring with Roche for the manufacture of our MSA
bladder cancer diagnostic kit.
2.
Completion of obtaining reimbursement
We have contracted with Reimbursement Principles, Inc., to confirm our
reimbursement strategy and level from Medicare/Medicaid and Private Insurance.
We should have the final report by the end of Q2 2007.
3.
Development of a Pricing Strategy
We have contracted with Northstar Consulting, Inc., to conduct a series of 3 focus
groups consisting of urologists and laboratorians. The objectives are to obtain pricing
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sensitivity data and driver analysis (decision making process). These are currently
being scheduled to be completed by the end of Q3 2007.
4.
Product Positioning
This will also be addressed in the marketing plan for this product but specifics to be
considered are not only competitive positioning but also replacement of current
practice.
5.
Product Promotion and Public Relations
There are many activities which will be included in the marketing plan for product
promotion and public relations. Initial steps have already been taken for participation
in trade shows and preparation for publication of clinical trial data. See below.
6.
Sales
Finalize an agreement with a sales organization or equivalent that meets our specific
requirements. See below.
7.
Distribution
Finalize procedures for packaging, order entry and shipping. See schematic below.
Each of these is currently being addressed and management believes each will have
resolution prior to commercialization.
Promotion and Communication Strategy
Publish Clinical Data
The most important tactical accomplishment that Cangen must achieve at this point is to
publish clinical data associated with the research and development of the company’s
technology. In short, we are in the middle of preparing manuscripts and abstracts
regarding the clinical trials and deploy initiatives to have them peer reviewed and
presented to the medical community.
Medical journals that will be targeted include Journal of the American Medical
Association, The Lancet Oncology, Clinical Chemistry, American Journal of Pathology,
Urology, Urology & Oncology, Cancer New England Journal of Medicine, Journal of
Clinical Oncology, Annals of Oncology, American Journal of Cancer, Anticancer
Research, and Cancer Causes & Control.
The clinical data will be presented in abstract form to medical associations, with the
intention of formally presenting the data at high profile medical meetings, including:
American Society of Clinical Oncology. American Society of Hematology, American
Urological Society, American Association for Cancer Research, Society of General
Internal Medicine, American Association for Clinical Chemistry, Federation of European
Cancer Societies, European Association for Cancer Research, European Oncology
Nursing Society, European Organization for Research and Treatment of Cancer.
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Pricing Strategy
Reimbursement Strategy – CPT code establishment
Based on the currently available CPT (Common Procedural Technologies) codes which
are used by Medicare/Medicaid and Private Payors to reimburse suppliers of medical care,
the following is the reimbursement scenario that Reimbursement Principles, Inc., is
confirming. Should we receive confirmation that this will be the accepted reimbursement
level, our pricing, positioning, profitability, etc., will need to be reevaluated.
MSA Bladder Blood Sample
83890 Molecular isolation or extraction
83896 Molecular diagnostics; nucleic acid probe, each
Molecular diagnostics; amplification of patient nucleic acid,
83898 each nucleic acid sequence
Molecular diagnostics; amplification of patient nucleic acid,
83900 multiplex, first two nucleic acid sequences
Molecular diagnostics; amplification of patient nucleic acid,
multiplex, each additional nucleic acid sequence
83901 (List separately in addition to code for primary procedure)
Molecular Diagnostics; Signal Amplification of
83908 Patient Nucleic Acid, Each Nucleic Acid
Molecular diagnostics; separation and identification
83909 by high resolution technique (eg, capillary electrophoresis)
83912 Molecular diagnostics; interpretation and report
MSA Bladder Urine Sample
83890 Molecular isolation or extraction
83896 Molecular diagnostics; nucleic acid probe, each
Molecular diagnostics; amplification of patient nucleic acid,
83898 each nucleic acid sequence
Molecular diagnostics; amplification of patient nucleic acid,
83900 multiplex, first two nucleic acid sequences
Molecular diagnostics; amplification of patient nucleic acid,
multiplex, each additional nucleic acid sequence
83901 (List separately in addition to code for primary procedure)
Molecular Diagnostics; Signal Amplification of
83908 Patient Nucleic Acid, Each Nucleic Acid
Molecular diagnostics; separation and identification
83909 by high resolution technique (eg, capillary electrophoresis)
83912 Molecular diagnostics; interpretation and report
$7.57
$7.57
Blood
1
15
$7.57
$113.55
$23.42
4
$93.68
$63.30
1
$63.30
$31.65
3
$94.95
$31.65
4
$126.60
$31.65
$7.57
1
1
$31.65
$7.57
$538.87
$7.57
$7.57
Urine
1
15
$7.57
$113.55
$23.42
4
$93.68
$63.30
1
$63.30
$31.65
3
$94.95
$31.65
4
$126.60
$31.65
$7.57
1
1
$31.65
$7.57
$538.87
TOTAL
$1,077.74
Figure 4: Reimbursement Using Existing CPT Codes
Once our pricing sensitivity research is completed through a series of focus groups to be
conducted this summer, calculations can be completed related to cost of goods, marketing
costs, etc. The list price and estimated average selling price can be established thus
allowing for a comprehensive economic analysis. Based on the market research report
conducted by Quintiles and internal market intelligence, management has assumed a list
price of $725 with an average selling of $650 per test.
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Sales and Distribution Strategy
Sales
Our initial strategy is to outsource to a US-based diagnostic marketing, sales and
distribution organization. Our selling efforts will be focused on the specialist physician
in the private practice (urologists), hospitals and major medical center laboratories, and
reference laboratories (Quest, Labcorp, ARUP, etc.) in the US. We will utilize diagnostic
marketing techniques, including sales reps calling on individual physicians and
distributors, advertisement, professional symposia, direct mail, public relations, and other
methods. These will be further described in the marketing plan in development.
The criteria for selection of a sales and marketing partner are as follows:
1)
2)
3)
4)
5)
6)
Ability to reach our audience
Coverage, i.e. number of reps
Reach to GPs, Urologists, and molecular labs
Technically competent to represent our product(s)
Ability to invoice our customers
Ability to inventory our product(s)
Among the potential partners that Cangen will evaluate are reference laboratories with
dedicated sales organizations calling on physicians and laboratories selling their services,
molecular diagnostic companies, and independent sales organizations.
Distribution
Roche
Mfg
Reimbursement
Medicare/Medicaid
Private Insurance
(Germany)
$
Kits
$
Cangen
$
$
$
Sales & Marketing
Partner
Customers
Customers receive
Results or Kits
Partner Performs Tests or Ships Kits
Royaltie
• Orders for kits placed on Cangen
• Kits inventoried by Partner
$
Roche
ABI
JHU
Figure 5: Ideal Distribution Scheme
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MSA Bladder Assay Forecast
Below are two charts which provide our current understanding of the market potential
and anticipated penetration (adoption) of our MSA Bladder Assay (commercial product
name; MSI Bladder Cancer Assay™). Just below this chart is a graphic representing
estimated 5 year sales (based on a number of assumptions and currently known market
intelligence).
MSI Bladder Assay
900
35%
700
662
630
695
730
30%
30%
25%
600
20%
500
20%
400
15%
300
11%
200
10%
8%
100
% Penetration
Number of Patients
(Thousands)
800
766
5%
3%
0
0%
2008
2009
2010
2011
2012
Year
Figure 6: Market Availability & Penetration Rate
5 Year Forecast
$330.0
350
90%
0.88
88%
Dollar USD
(millions)
250
86%
0.86
$210.0
0.84
200
0.82
81%
150
79%
0.8
$79.1
100
50
0.9
0.78
0.76
$42.5
$16.0
0.74
0
0.72
2008
2009
2010
2011
2012
Year
Figure 7: 5 Year Forecast & % Margin
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CONFIDENTIAL
% Margin
300
0.92
2007 Business Plan
Corporate Management Team
As of December 31, 2006, we had over 27 employees worldwide. The success of our
business depends, in large part, on our continued ability to (i) attract and retain highly
qualified management, scientific, manufacturing and sales and marketing personnel, (ii)
successfully integrate some numbers of new employees into our corporate culture, and
(iii) develop and maintain important relationships with leading research and medical
institutions and key distributors. Competition for these types of personnel and
relationships is intense. Among other benefits, we use stock options to attract and retain
personnel.
Management and Key Members
Management
The following table lists our directors, executive officers and senior advisors:
Name
Dr. Chulso Moon
Lawrence J. Agulnick .................................
Takashi Chiba .............................................
Joseph Kim. ................................................
Cathy McDermott .......................................
Dana Thomas ..............................................
Maxie Gorden .............................................
Ronald H. Surkin ........................................
Title
Chief Executive Officer
Chief of Staff
Senior Vice President, Marketing & COO
Senior Vice President; Finance & Corporate Treasurer
Vice President, Regulatory and Clinical Affairs
Vice President, Marketing
Vice President
General Counsel
Dr. Chulso Moon
Dr. Moon, is our founder as well as a Director and Chief Executive Officer, and is a
tenure track Professor in the Department of Oncology, Otolaryngology and Head and
Neck Surgery at The Johns Hopkins University School of Medicine. He received his
M.D. from Seoul National University, School of Medicine and his Ph.D. in human
genetics and molecular biology from Johns Hopkins University School of Medicine, and
currently holds medical licenses in Korea and the United States. Following this, he
completed a combined residency in internal medicine from Pitt County Memorial
Hospital, University of North Carolina Systems and MD Anderson Cancer Center,
Division of Medicine, then went on to complete a medical oncology and hematology
fellowship and clinical training program at MD Anderson Cancer Center. Dr. Moon has
also served as co-principal investigator of the ONXY-015 gene therapy program for
advanced head/neck and lung cancer, the research for which is being conducted through
the MD Anderson Cancer Center. In addition, Dr. Moon is a well-respected lecturer and
author of numerous publications.
Lawrence J. Agulnick
Lawreance Agulnick is Chief of Staff for the Science Center, the world’s oldest and
largest urban research park. In this role, he is responsible for government relations at the
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local, state, federal and international levels as well as all areas of risk mitigation and
human relations. He works on behalf of the Science Center to create and grow formal
relationships with science parks and with the government of nations with strong life
science and technology research communities. He also works as a member of the senior
management team on issues spanning the spectrum of Science Center operations.
Mr. Agulnick has spent the past 15 years guiding companies on management and HR
issues. He serves as Chief Operating Officer, with responsibility for all U.S. operations
of Gembridge, a UK-based consultancy. There, Mr. Agulnick directed the integration of
management functions in connection with large “rollup” acquisitions in the public
relations and publishing industries. He has served on the staff of United States Senator
Robert Dole and has performed advance duties for the administrations of United States
Presidents Ronald Reagan and George W. Bush.
Mr. Agulnick serves on the Board of the Calcutta House established in 1987, helping
those diagnosed with AIDS live life to the fullest by providing housing and other vital
services. He also serves on the Board of the University City Keystone Innovation Zone
providing a concentration of resources for supporting and growing life sciences
companies, and on the Board of the Japan American Society of Greater Philadelphia. He
is a member of the Institute of Translational Medicine and Therapeutics (ITMAT) and a
member of the Council on Competitiveness (www.compete.org).
Takashi Chiba
Mr. Takashi Chiba is our Senior Vice President of Marketing. Mr. Chiba established the
international consulting firm “Chiba International, L.L.C.” and has been engaged in
advising American corporations doing business in Japan and/or doing business with
Japanese corporations. Prior to this, Mr. Chiba served in various positions in Hitachi, Ltd.
from 1958 to 1999, most recently as Director and senior representative of the Hitachi
Corporate Office in Washington D.C. During the course of his career at Hitachi, he held
professional, managerial and executive positions, mostly in international business
divisions. He graduated from Hitotsubashi University with a bachelor degree in Social
Science in 1958.
Joseph Kim
Mr. Joseph Kim is our Senior Vice President of Finance and Corporate Treasurer. Mr.
Kim started his career at Lotte Group in Seoul Korea form in 1988 to 1997 as a senior
financial analyst, marketing manager and director of strategic planning and development
of international investment in Russia, China, Japan and Europe. Upon receiving his MBA
degree from The Wharton School, University of Pennsylvania in 1999, he worked at
McKinsey & Company as senior associate of management consulting from 1998 to 1999.
Following this, he joined Honeywell International Inc., as senior finance manager for
mergers and acquisitions, divestitures and corporate strategy, where he served from 1999
to 2004.
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2007 Business Plan
Cathy McDermott
Cathy McDermott is our Vice President of Regulatory and Clinical Affairs. She has
extensive experience in drug development in the areas of Regulatory, Quality, and
Clinical. She has been responsible for regulatory strategic drug development worldwide
in the areas of HIV, Oncology, Cardiology, Cell Therapy, Therapeutic Biologics,
Neurology, and Vaccines. She has successfully filed several NDAs and BLAs with FDA.
She has worked in several pharmaceutical companies, CROs, and most recently as an
independent consultant. She earned BS degrees in Biology and Nursing from
Georgetown University in 1984, and a Masters in Public Health from Johns Hopkins
University in 1995.
Maxie Gorden
Maxie Gorden serves as our Medical Officer. He is board certified in psychiatry and
board eligible in internal medicine. Dr. Gorden received his medical education at
Meharry Medical College where he graduated with an MD. Dr. Gorden has served as a
senior psychiatrist, as an assistant professor, and as a clinical director. He has authored
several published research works and is a regular speaker on clinical and research related
subjects.
Dana E. Thomas
Dana Thomas serves as Vice President of Marketing. He joins Cangen with 26 years
marketing and sales experience in the diagnostic and oncology markets. Mr. Thomas
started his career with E. I. DuPont de Nemours after leaving the University of Louisville
School of Medicine where he was pursuing his doctorate in microbiology having
previously received his BA degree from the University of Louisville in 1978. Mr.
Thomas quickly rose to be DuPont’s highest producing sales representative and was
promoted into marketing in 1986. After leaving DuPont in 1990, Mr. Thomas has been
serving in senior marketing management roles and has been responsible for
commercializing five start-up companies.
Ronald H Surkin
Ronald H. Surkin, Esq. is our General Counsel and a partner of the law firm of Gallagher,
Schoenfeld, Surkin, Chupein & DeMis, P.C. He has extensive experience in all matters
relating to employment, including employment discrimination, benefits, and
employment-related contract, trade secret and non-competition issues, as well as complex
insurance and business litigation. He is a frequent lecturer and author on employment-law
related issues. He has argued before the United States Supreme Court and all of
Pennsylvania’s appellate courts, and has appeared in federal courts throughout the
Eastern United States. He earned his BA at Case Western Reserve University in 1969,
magna cum laude, and was elected to Phi Beta Kappa. He earned his JD, cum laude, at
Harvard Law School in 1972.
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Board of Directors
Cangen has a 4 member board of directors which consist of 2 internal officers and 2
external members. We are in the middle of searching process to fill out one additional
spot from outside member in the short term and 2 more additional external members in
the long term plan. The following shows the list of board of director member and its
biography.
Name
Terrell Hillebrand .......................................
Dr. Chulso Moon. .......................................
Sumio Takeichi ...........................................
George Hara ...............................................
Position
Chairman of the Board; Director
Director; Chief Executive Officer
Director; President, Cangen Biotechnologies Japan
Director
Terrell Hillebrand
Mr. Hillebrand is the Chairman of our Board of Directors and the President of Pyung Ya
Cancer Research Foundation which engages in fundraising and grant administration for
cancer research institutions including Johns Hopkins University. Previously, he worked as
a senior mortgage banker and an equity partner at the Goldstein Collection, an
international fine art importing and investment firm. He has also served as a director of a
non-profit charitable organization for fine arts and medical research, SCB Foundation. He
received a bachelor’s degree from University of Santa Barbara and a MA from San Diego
State University.
Sumio Takeichi
Mr. Takeichi is a Director and the President of Cangen Biotechnologies Japan operation.
Prior to joining Cangen, Mr. Takeichi served as Director of the International Finance
Corporation, a part of the World Bank Group, as a member of the Board of Directors of
Mitsubishi Corporation, as an Executive Vice President of Mitsubishi International
Corporation in New York, and as General Manager of Mitsubishi International
Corporation's Washington D.C. office. Mr. Takeichi is a well-respected lecturer and
served as visiting lecturer at Harvard University, SMP Program from 1999-2001. He
completed the Executive Business Program of the Japan Management Association and
received B.A. in Economics from Keio University.
George Hara
Mr. Hara is the Group Chairman and CEO of Defta Partners, where he has been
responsible for assisting portfolio companies build international business alliances that
aim to generate substantial revenue growth particularly in Japan and Asia since its
inception in 1985. He served as Chairman of the Board of Oplus Technologies (the leader
of chip processing LCD and plasma display; merged with Intel in 2005). He is currently
Chairman of the Board at XVD Corporation (world leader of the HDTV codec engine).
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2007 Business Plan
He also started creating wireless broad band service companies aiming at distant learning
education and telemedicine in least developing countries in Asia, Latin America and
Africa. His first project started in Bangladesh in October of 2005.
Mr. Hara has also been active in the public sector. He served on the boards of the San
Francisco Opera and Zoo is a current board member of the University of San Francisco,
Tokyo Foundation, and Hara Research Foundation. In 2003, Mr. Hara received the
National Leadership Award and was named Honorary Co-Chairman of the
Republican Business Advisory Council in the US. He received a L.L.B from Keio
University in 1975 and an MS from the School of Engineering at Stanford University in
1981.
Scientific Advisory Board
In addition to our board of directors, we maintain a scientific advisory board, whose
purpose is to provide guideline and consultation about overall pipeline roadmap and
scientific advice. The table below lists the members of our scientific advisory board as of
the date of this private placement memorandum:
Name
Dr. David Sidransky ......................
Dr. Saejin Chang............................
CONFIDENTIAL
Current Position
MD John Hopkins University , Baltimore, USA
MD Hyundai Hospital, Seoul, Korea
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Financials
Risk Factors
Our business plan contains forward-looking information based on our current
expectations. Because our actual results may differ materially from any forward-looking
statements made by Cangen, this section includes a discussion of important factors that
could affect our actual future results, including, but not limited to, our product sales,
royalties, revenues, expenses, and net income.
The successful development of diagnostic and therapeutic products is highly
uncertain and requires significant expenditures.
Successful development of diagnostic and therapeutic products is highly uncertain.
Products that appear promising in research or early phases of development may be
delayed or fail to reach later stages of development or the market for several reasons
including:
ƒ
ƒ
ƒ
ƒ
Clinical trial results may show the product to be less effective than desired or to
have harmful or problematic side effects.
Failure to receive the necessary regulatory approvals or a delay in receiving such
approvals. Among other things, such delays may be caused by slow enrolment in
clinical studies, extended length of time to achieve study endpoints, additional
time requirements for data analysis or New Drug Application (or “NDA”)
preparation, discussions with the U.S. Food and Drug Administration (or “FDA”),
an FDA request for additional preclinical or clinical data, or unexpected safety,
efficacy or manufacturing issues.
Manufacturing costs, pricing or reimbursement issues, or other factors that make
the product uneconomical.
The proprietary rights of others and their competing products and technologies
that may prevent the product from being developed or commercialized.
Success in preclinical and early clinical trials does not ensure that large-scale clinical
trials will be successful. Clinical results are frequently susceptible to varying
interpretations that may delay, limit or prevent regulatory approvals. The length of time
necessary to complete clinical trials and to submit an application for marketing approval
for a final decision by a regulatory authority varies significantly and may be difficult to
predict. If our large-scale clinical trials are not successful, we will not recover our
substantial investments in the product. Factors affecting our research and development
(or “R&D”) productivity and the amount of our R&D expenses include, but are not
limited to:
We may be unable to obtain or maintain regulatory approvals for our products
We are subject to stringent regulation with respect to product safety and efficacy by
various international, federal, state and local authorities. Of particular significance are the
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2007 Business Plan
FDA’s requirements covering R&D, testing, manufacturing, quality control, labelling and
promotion of drugs for human use. A therapeutic and diagnostic cannot be marketed in
the United States (or “U.S.”) until it has been approved by the FDA, and then can only be
marketed for the indications approved by the FDA. As a result of these requirements, the
length of time, the level of expenditures and the laboratory and clinical information
required for approval of a New Drug Application, are substantial and can require a
number of years. In addition, even if our products receive regulatory approval, they
remain subject to ongoing FDA regulation, including, for example, changes to the
product label, new or revised regulatory requirements for manufacturing practices,
written advisements to physicians or a product recall. We may not obtain necessary
regulatory approvals on a timely basis, if at all, for any of the products we are developing
or manufacturing or maintain necessary regulatory approvals for our existing products,
and all of the following could have a material adverse effect on our business:
ƒ
ƒ
ƒ
ƒ
Significant delays in obtaining or failing to obtain required approvals as described
in “The successful development of diagnostic and therapeutics is highly uncertain
and requires significant expenditures” above.
Loss of, or changes to, previously obtained approvals, including those resulting
from post-approval safety or efficacy issues.
Failure to comply with existing or future regulatory requirements.
Changes to manufacturing processes, manufacturing process standards or Good
Manufacturing Practices following approval or changing interpretations of these
factors.
In addition, the current regulatory framework could change or additional regulations
could arise at any stage during our product development or marketing, which may affect
our ability to obtain or maintain approval of our products or require us to make
significant expenditures to obtain or maintain such approvals.
Difficulties or delays in product manufacturing or in obtaining materials from our
suppliers could harm our business and/or negatively affect our financial
performance.
Manufacturing diagnostics and therapeutics is difficult and complex, and requires
facilities specifically designed and validated for this purpose. We are currently about to
produce our bladder cancer GMP based kit products at Roche Diagnostics manufacturing
facilities located in Penzburg, Germany through contract-manufacturing arrangements.
Problems with any of our or our contractors’ manufacturing processes could result in
failure to produce adequate product supplies or product defects which could require us to
delay shipment of products, recall products previously shipped or be unable to supply
products at all. In addition, we may need to record period charges associated with
manufacturing or inventory failures or other production-related costs that are not
absorbed into inventory or incur costs to secure additional sources of capacity.
Furthermore, there are inherent uncertainties associated with forecasting future demand,
especially for newly introduced products of ours or of those for whom we produce
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products, and as a consequence we may have inadequate capacity to meet our own actual
demands and/or the actual demands of those for whom we produce product
We face competition
We face competition from pharmaceutical companies, pharmaceutical divisions of
chemical companies, and biotechnology companies. The introduction of new competitive
products or follow-on biologics or new information about existing products may result in
lost market share for us, reduced utilization of our products, and/or lower prices, even for
products protected by patents.
Protecting our proprietary rights is difficult and costly
The patent positions of biotechnology companies can be highly uncertain and involve
complex legal and factual questions. Accordingly, we cannot predict with certainty the
breadth of claims allowed in these companies’ patents. Patent disputes are frequent and
can preclude the commercialization of products. Such litigation and other legal
proceedings are costly in their own right and could subject us to significant liabilities to
third-parties. An adverse decision could force us to either obtain third-party licenses at a
material cost or cease using the technology or commercializing the product in dispute. An
adverse decision with respect to one or more of our patents or other intellectual property
rights could cause us to incur a material loss of royalties and other revenue from licensing
arrangements that we have with third-parties, and could significantly interfere with our
ability to negotiate future licensing arrangements.
Other factors could affect our product sales
Other factors that could affect our product sales include, but are not limited to:
ƒ
ƒ
ƒ
The timing of FDA approval, if any, of competitive products.
Our pricing decisions, including a decision to increase or decrease the price of a
product, and the pricing decisions of our competitors.
Government and third-party payer reimbursement and coverage decisions that
affect the utilization of our products and competing products.
Financial Projection and Timeline
Historical Financial Statement
We consist of Cangen Corporation d/b/a Cangen Biotechnologies, Inc, our wholly
subsidiary, Advanced Theraonostics, Inc., located in Seoul, Korea, and Cangen
Biotechnologies Japan, our branch office located in Tokyo, Japan. Our consolidated
financial statements have been prepared on a going concern basis, which contemplates
the realization of assets and the satisfaction of liabilities in the normal course of business.
As of December 31, 2005, the Company has a net operating loss carry forward of
approximately $11.2 million available to reduce future taxable income and has yet to
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2007 Business Plan
develop a commercially viable product and, therefore, have not been able to generate
revenues from products. At December 31, 2005, the Company had $618,817 of cash and
cash equivalents available to fund further operations. However, the actual costs to
commercialize our products are expected to be substantially greater than our currently
available working capital. Therefore, our continuation as a going concern is dependent
upon our ability to obtain adequate levels of financing to continue development and
commercialization of our products and to satisfy our obligations and ultimately to achieve
profitable operations. In this regard, management has plans to raise additional capital or
enter into other financial transactions.
As of December 31,
2004
2005
(dollars)
Assets
Current Assets:
Cash and cash equivalents .......................................................................
Marketable securities ...............................................................................
Prepaid expenses .....................................................................................
Total current assets ..................................................................................
Property and equipment, net ....................................................................
Intangible assets, net................................................................................
Note receivable ........................................................................................
Other assets..............................................................................................
Total assets ..............................................................................................
Liabilities and Shareholders' Equity
Current Liabilities:
Line of credit ...........................................................................................
Note payable and accrued interest ...........................................................
Accounts payable and accrued expenses .................................................
Due to shareholder...................................................................................
Deferred salaries ......................................................................................
Deferred rent............................................................................................
Total current liabilities .............................................................................
Deferred rent............................................................................................
Total liabilities .........................................................................................
Shareholders’ Equity ...............................................................................
Total liabilities and shareholders equity ..................................................
Figure 8: Balance Sheet Data
$351,651
264,600
3,260
619,511
384,899
61,396
75,000
28,541
$1,169,347
$618,817
785,180
24,417
1,426,414
287,421
56,984
25,973
$1,796,792
$108,399
—
156,651
259,995
108,333
—
633,378
27,813
661,191
508,156
$1,169,347
$250,000
156,176
345,895
—
—
6,981
759,052
20,250
770,392
1,017,490
$1,796,792
As of December 31, 2005, we had $616,817of cash and cash equivalents available. We
maintain our cash in bank deposit accounts that, at times, may exceed federally insured
limits. We have not experienced any losses in such accounts to date.
Property and equipment primarily consists primarily of furniture and equipment which
are stated at cost.
Intangible assets consist primarily of patents and other intellectual property, which are
stated at cost as contributed. The estimated amortization expense, as measure as of
December 2005, for the next five years is approximately $4,400 per year.
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A note receivable outstanding as of December 31, 2004 in the amount of $75,000
represented unsecured amounts advanced to a member of the Company’s Board of
Directors. The note was repaid during the year ended December 31, 2005. On January 15,
2004, we established a $250,000 asset-based line of credit with a financial institution. At
December 31, 2005, we had drawn $250,000 on the line of credit, which accrues interest
annually at a rate of equal to the periodically adjusted broker desk interest rate plus 175
basis points on the first $100,000 borrowed, and at the periodically adjusted broker desk
call interest rate plus 150 basis points on any additional amounts borrowed under the line
of credit.
In January 2005, the Company entered into a note payable for $140,557 to purchase
288,943 additional shares of common stock in En-Bio Technology, Ltd. The principal and
accrued interest at 12% on the note payable was due in January 2006 but was extended by
verbal agreement. The revised due date is currently being negotiated. The principal and
accrued interest as of December 31, 2005 totaled $156,176.
We received advances from a shareholder, directors, and officer of the Company on an
unsecured basis through the payment of certain Company expenses during the years
ended December 31, 2004 and 2005. At December 31, 2004 and 2005, the total amount
due was$0 and $259,995 respectively.
Year ended December 31,
2004
2005
(dollars)
$150,000
$774,545
Revenues .................................................................................................
Operating expenses:
1,474,152
Research and development ......................................................................
700,831
General and administrative ......................................................................
2,174,983
Total operating expenses .........................................................................
Loss from operations ...............................................................................
(2,024,983)
Other income (expense):
(573,941)
Permanent impairment of marketable securities ......................................
(4,286)
Interest expense .......................................................................................
—
Interest income ........................................................................................
(578,227)
Total other income (expense) ..................................................................
Net Loss...................................................................................................
(2,603,210)
Other comprehensive loss:
—
Unrealized gain (loss) on marketable securities ......................................
(217,731)
Unrealized holding gain (loss) arising during the period.........................
$(2,820,941)
Comprehensive loss .................................................................................
Figure 9: Consolidated Statement of Operations and Comprehensive (Loss)
1,419,976
2,116,956
3,536,932
(2,762,387)
(46,739)
(6,418)
23
(53,134)
(2,815,521)
—
426,763
$(2,388,758)
In February 2004, we entered into a collaboration agreement with JSR for the
development of a purification method of cancer-specific markers utilizing JSR’s magnetic
bead technology. Under the JSR collaboration, the Company received payments of
$150,000 and $250,000 during the years ended December 31, 2004 and 2005,
respectively, which were recorded as revenue. In April 2005, we entered into a
collaboration agreement with Olympus to enable Olympus to refine its MSI technology.
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2007 Business Plan
Under the agreement, we received payment of $500,000 which was recorded as revenue
during the year ended December 31, 2005.
Total operating expenses as of December 31, 2005 was $3,536,932 which primarily
consisted of research and development costs and general and administrative expenses.
Research and development expenses include all costs associated with the development of
medical and other devices and are expensed as incurred. In addition, blood samples
which are purchased in connection with clinical trial tests are expensed as research and
development expenses. During the year ended December 31, 2005, almost three quarters
of general and administrative expenses which was approximately $1,443,000, resulted in
salaries, while the balance represents administrative, travel, office rental fees and others.
The Company incurred comprehensive losses of $2,388,758 during the year ended
December 31, 2005.
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Appendices / Attachments
A.
B.
Patent Summary
The Feasibility of Marketing a Unique Diagnostic Device for Monitoring
Recurrence of Treated Bladder Cancer, prepared by Quintiles Medical
Communications, November 2006
Page 56 of 103
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2007 Business Plan
Attachment A: Patent Summary
Below is a partial list of our patents. A complete review of our patent and patent
position is underway.
US Pat No 5,935,787: Detection of Hypermutable Nucleic Acid Sequence in Tissue
Filed: May 12, 1997
Issued: Aug 10, 1999
Continuation of 477 abandoned)
Abstract: An assay for detection of a mammalian cell proliferative disorder associated
with a hypermutable nucleic acid sequence is provided. The identification of particular
hypermutable sequences such as microsatellite loci correlates with a particular cancer,
thereby allowing detection of both primary tumors and metastatic sites within a patient.
Field of the Invention: relates generally to detection of a target nucleic acid sequence and
specifically to detection of a cell proliferative disorder associated with a hypermutable
nucleic acid sequence in a sample.
US Patent 6,291,163: Method for Detecting Cell Proliferative Disorders
Filed: Aug 28, 1997
Issued: Sept 18, 2001:
Abstract: The present invention relates to the detection of a cell proliferative disorder
associated with alterations of microsatellite DNA in a sample. The microsatellite DNA
can be contained within any of a variety of samples, such as urine, sputum, bile, stool,
cervical tissue, saliva, tears or CSF. The invention is a method to detect an allelic
imbalance by assaying microsatellite DNA. Allelic imbalance is detected by observing
an abnormality in an allele, such as an increase or decrease in microsatellite DNA which
is at or corresponds to an allele. An increase can be detected as the appearance of a new
allele. In practicing the invention, DNA amplification methods, particularly polymerase
chain reactions, are useful for amplifying the DNA. DNA analysis methods can be used
to detect such an increase or decrease. The invention is also a method to detect genetic
instability of microsatellite DNA. Genetic instability is detected by observing an
amplification or deletion of the small, tandem repeat DNA sequences in the microsatellite
DNA which is at or corresponds to an allele. The invention is also a kit for practicing
these methods.
Field of Invention: relates generally to the detection of a target nucleic acid sequence and
specifically to the detection of microsatellite DNA sequence mutations associated with a
cell proliferative disorder.
US Patent No 6,497,234: Detection of Hypermutable Nucleic Acid Sequence in
Tissue and Body Fluids
Filed: Oct 1, 1998
Issued: November 12, 2002
(Continuation of 787 (which itself was a file-wrapper continuation of 477 now
abandoned) described above.)
Abstract: An assay for the detection of a mammalian cell proliferative disorder
associated with a hypermutable nucleic acid sequences is provided. The identification of
CONFIDENTIAL
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particular hypermutable sequences such as microsatellite loci correlates with a particular
cancer, thereby allowing detection of both primary tumors and metastatic sites within a
patient.
Field of Invention: relates generally to detection of a target nucleic acid sequence and
specifically to detection of a cell proliferative disorder associated with a hypermutable
nucleic acid sequence in a sample.
US Patent No 5,726,019: Analysis of Sputum by Amplification and Detection of
Mutant Nucleic Acid Sequences
Continuation of 041
Filed: Dec 29, 1995
Issued: Mar 10, 1998
Abstract: Methods for amplification and detection of target nucleic acids in sputum
specimens which contain mutations indicative of head and neck neoplasia, and reagents
therefore, are described.
Field of Invention: This invention relates to a method of detecting a target nucleic acid in
sputum and reagents useful therein.
US Patent No 5,561,041: Nucleic Acid Mutation Detection by Analysis of Sputum
Sequences
Continuation of 041
Filed: Nov 12, 1993
Issued: Oct 1, 1996
Abstract: Methods for detection of target nucleic acids associated with lung neoplasia in
sputum specimens which contain mutations and reagents therefore are described
Field of Invention: This invention relates to a method of detecting a target nucleic acid in
sputum and reagents useful therein.
US Patent No 6,235,470 B1: Detection of Neoplasia by Analysis of Saliva
Continuation of 041
Filed: Mar 10, 1998
Issued: May 22, 2001
Abstract: Methods for detection of a cell proliferative disorder, such as cancer, are
provided utilizing analysis of target mutant nucleic acids in saliva specimens are
described. The presence of target nuclei acids is indicative of a neoplastic disorder of the
lung or the head and neck.
Field of Invention: The present invention relates generally to detection of a target nucleic
acid sequence and specifically to early detection of preneoplasia or cancer in a subject by
analysis of target mutant nucleic acid sequences in a saliva specimen from the subject.
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Attachment B: Quintiles Market Research Report
The Feasibility of Marketing a Unique
Diagnostic Device for Monitoring
Recurrence of Treated Bladder Cancer
Prepared for:
Cangen Biotechnologies, Inc.
Prepared by:
Quintiles Medical Communications
Division of Quintiles Transnational
November 2006
Contact: Barry Mennen, MD
Mobile: 914 552 5716
[email protected]
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Table of Contents
Executive Summary……………………………………………………….3
Introduction…………………………………………………………………5
Market Demographics and Disease Trends……………………………6
Market Dynamics and Target Audiences……….………………………9
Market Landscape and Competitive Overview ……………………….12
Issues Related to Successful Marketing………………………………17
Pre-launch Marketing Components…………..………………………..19
Market Penetration Forecast………………….………………………..20
Appendix A: Methodology and Resources…………………………….23
Appendix B: Internet Survey Instrument and Aggregate Results...…24
Appendix C: Raw Data from Survey…………………………………...29
Appendix D: Calculations for 10% Market Penetration………………37
Appendix E: Dwindling Coronary Artery Bypass Grafts……………...38
Appendix F: NMP22……………………………………………………..39
Appendix G: UroVysion………………………………………………….43
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Executive Summary
We have looked at the feasibility of marketing a new diagnostic tool for bladder
cancer (BC) detection which uses the technique of microsatellite analysis. This
test has 95% selectivity and sensitivity which significantly surpasses currently
available laboratory-based screening tests; in fact, it is at about the same level as
cystoscopy, the gold standard for following BC patients.
There are an estimated 505,765 people (372,313 men and 133,452 women) in
the United States with a diagnosis or history of BC. Further, the American Cancer
Society estimates that 61,420 people (44,690 men; 16,730 women) will be
diagnosed with BC in 2006. As the country ages (especially since the large
demographic bulge known as “the baby boomers” become elderly over the next 5
years) a trend toward increasing incidence is expected, as this is mainly a
disease of persons >65 years of age.
There are approximately one million laboratory diagnostic tests for BC ordered
per year in the US, with the vast majority done for monitoring recurrence of BC.
Bladder cancer is, for the most part, diagnosed, treated and monitored by
urologists (approximately 10,000 in active practice in the US) who bring
oncologists in only when there is invasive or metastatic disease, and less often
when carcinoma in situ is diagnosed.
In addition to the secondary sources used for this report, we have conducted an
Internet-based survey of 25 urologists and 25 oncologists who treat BC regarding
their usage of various techniques for monitoring these patients. Although
somewhat satisfied with what is currently available, when presented with a
product description that is similar to Cangen’s MSA, they immediately saw the
benefit and would, for the most part, welcome it into BC management.
We believe that this product has the potential for not only displacing currently
available laboratory assays for monitoring BC, but eventually reducing the
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number of cystoscopies done as a routine procedure in the monitoring of these
patients since its specificity and sensitivity is on the same order as that shown by
cystoscopy. This will not necessarily be seen as immediate good news by the
urology community, since cystoscopies form much of the economic foundation
for urologic practice. It is highly likely, however, that if MSA is priced below
cystoscopies that it will be championed by Medicare and managed care because:
1) practice patterns are dictated by reimbursement rules, and 2) the procedure is
a painful procedure for patients.
Quintiles believes that 10% market penetration in its first full year is conservative.
Our research has shown that about half the practicing urologists in the US
already order approximately one million lab assays when monitoring BC, and the
MSA priced between the NMP22 (about $70) and the UroVysion (about $600)
and below a cystoscopy (about $400) should capture the attention of payers,
patients and urologists quickly gain significant market share. Looking at a
theoretical price of $300 for the MSA assay, we believe that revenues of $30
million should accrue within the first full year of market presence at 10% market
capture.
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Introduction
Cangen Biotechnologies, Inc. has obtained the global license for an advanced
DNA-based methodology for early detection of bladder cancer (BC), which can
be used for screening at-risk patients and for monitoring diagnosed patients for
recurrence. This system is based on microsatellite analysis (MSA) of cells
obtained from a urine sample (cancer cells produce significantly more
microsatellite DNA than non-cancer cells). The selectivity and specificity of this
test is approximately 95% 48 which significantly surpasses currently available
laboratory techniques. Although eventual registration will occur for screening of
appropriate individuals for BC, in this document we are only evaluating what will
be the first approved usage of this product, ie, monitoring treated patients for
recurrence
The purpose of this report is to provide a foundation for judging the feasibility of
marketing this technology in the US for monitoring treated BC. This report
includes:
•
Description of the market demographics and disease trends
•
The market dynamics including health care professionals involved in BC
•
Evaluation of current agents used for monitoring including usage and
costs/tests
•
Steps necessary for reimbursement to occur (provided as separate
document in pdf format which was produced by The Lewin Group, a
division of Quintiles Transnational)
•
Issues (including barriers) related to successful marketing
•
Pre-launch marketing components (including selected budgets)
•
Market penetration expectations
48
Final determination of sensitivity and specificity await current multicenter clinical trial. Personal
communication, David Sidransky, MD, Professor of Oncology, Head and Neck Surgery and
Urology at the Johns Hopkins Institutions of Medicine, Baltimore, Maryland),
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We at Quintiles thank you for this opportunity and would look forward to
continuing our relationship and working with you on this product and others in
development.
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Market Demographics and Disease Trends
The urinary bladder is the fifth most common site for new cancer cases in the
United States; approximately 1 in 43 people will be diagnosed with bladder
cancer in their lifetime.1,2 On January 1, 2003, an estimated 505,765 people
(372,313 men;133,452 women) in the United States had a diagnosis or
history of bladder cancer. The American Cancer Society estimates that 61,420
people (44,690 men; 16,730 women) will be diagnosed with bladder cancer in
2006.2 Approximately $2.9 billion is spent each year in the United States in the
treatment of bladder cancer.3
The majority of cases of bladder cancer occur in the older population. More than
70% of new cases are diagnosed in patients over 65 years of age.4 From 20002003, the median age at diagnosis was 73 years, and the median age at death
was 78 years.2 The incidence of bladder cancer is expected to rise over the next
20 years as the baby boom generation ages.4
The age-adjusted incidence rate of bladder cancer is 20.9 per 100,000 men and
women/year in the United States. Men are affected approximately 3 times as
frequently as women (37.0 cases per 100,000 men; 9.3 cases per 100,000
women). Bladder cancer is most common in the white population (40.2 per
100,000 men; 10.0 per 100,000 women), followed by the black population (19.8
per 100,000 men and 7.4 per 100,000 women).2 The overall incidence and
mortality have stayed the same for most racial and ethnic groups over the past
20 years.3
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From Ref. 3
Since the bladder serves as a repository for urine through which toxins are
excreted from the body, the risk for bladder cancer is affected by environmental
exposures. The greatest environmental risk factor for bladder cancer is smoking,
which doubles the risk over nonsmokers. In addition, certain occupations,
including employees working in the dye, rubber, leather, textile and paint
industries, as well as those who work as painters, hairdressers, machinists,
printers and truck drivers, face an increased risk of exposure to aromatic amines
and other chemicals that have been linked to bladder cancer. The risk may be
particularly magnified in smokers who work with these chemicals.5
The overall survival rate after a diagnosis of bladder cancer is 80.8%. Survival is
directly related to the state at diagnosis. Most cases of bladder cancer (74%)
are diagnosed when it is still confined to the primary site (localized); the survival
rate in these cases is very high, 93.7%. Approximately 19% of cases are
diagnosed after the cancer has spread to regional lymph nodes or directly
beyond the primary site (regional); the survival rate in these cases is 46.0%.
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Among the 4% of cases diagnosed after the cancer has already metastasized,
the survival rate is only 6.2%.2
While the high survival rate, especially in localized bladder cancer, is
encouraging, approximately 70% of patients who survive bladder cancer will
have a recurrence.6 For these patients, long-term surveillance is of critical
importance.
References
1
American Cancer Society, Inc. Surveillance Research. Available
at http://www.cancer.org/docroot/STT/stt_0_2005.asp?sitearea=STT&level=1.
Accessed November 3, 2006.
2
National Cancer Institute SEER (Surveillance Epidemiology and End Results)
Cancer of the Urinary Bladder. Available at http://seer.cancer.gov/statfacts/html/
urinb.html?statfacts_page=urinb.html&x=16&y=17. Accessed November 3, 2006.
3
National Cancer Institute. A Snapshot of Bladder Cancer. September 2006.
Avaliable at http://planning.cancer.gov/disease/Bladder-Snapshot.pdf. Accessed
November 3, 2006.
4
American Urological Association. Report on the Management of Non-Muscle-
Invasive Bladder Cancer. 1999. Available at http://www.auanet.org/
guidelines/main_reports/bladdercancer.pdf. Accessed November 3, 2006.
5
American Cancer Society. Detailed Guide: Bladder Cancer. Revised 8/8/2006.
Available at http://www.cancer.org/docroot/cri/content/
cri_2_4_2x_what_are_the_risk_factors_for_bladder_cancer_44.asp Accessed
November 3, 2006.
6
Chao D et al. Bladder Cancer 2000: Molecular Markers for the Diagnosis of
Transitional Cell Carcinoma. Reviews in Urology. Spring 2001:85-93.
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Market Dynamics and Target Audiences
Most patients diagnosed with bladder cancer first present with hematuria49
(usually to their primary care physician and are then referred to an urologist).
The patient then undergoes diagnostic cystoscopy. Most tumors in newly
diagnosed patients have not yet invaded the bladder muscle, and are treated by
the urologists with cystoscopic extirpation which is usually followed by
intravesicular BCG vaccine (live, attenuated bovine tuberculosis bacteria).
Oncologists are very seldom involved with the majority newly diagnosed patient
(based on primary market research, see Appendices B and C).
Once the patient is diagnosed and treated, she or he must be monitored
frequently for recurrence (for example, about 8 times in the first two years) as the
cancer recurs about 70% of the time. The standard practice of cystoscopy is
painful and generally unpleasant and alternatives such as the MSA test is a goal
of bladder cancer management. For example, in the American Urological
Association clinical guidelines document A Report on the Management of NonMuscle-Invasive Bladder Cancer (1999), they state:
Source: http://www.auanet.org/guidelines/main_reports/bladdercancer.pdf
Unfortunately for patients, these urine assays do not have the selectivity and/or
specificity to replace any cystoscopies. Quintiles believes that Cangen’s product
has the requisite selectivity and specificity to answer this need as stated by the
American Urological Association and, over time, to reduce the number of followup cystoscopies administered to patients.
For the most part, oncologists are called in when the tumor becomes locally
invasive or metastasizes. Carcinoma in situ is another type of bladder cancer
that will more commonly prompt an oncology consult.
A small number of primary care physicians (PCPs) will also be considered
targets since they see the patient initially when hematuria emerges as a sign.
The MSA assay will allow particular patients to be quickly, accurately and
painlessly screened. We are not recommending attempting to communicate with
190K PCPs, but identifying those PCPs who currently order any of the urinary
assays for the detection of bladder cancer and communicating with them about
the product.
49
Schrier RW, Ed. Diseases of the Kidney & Urinary Tract. 2001, Lippincott
Williams & Wilkins, Phila. Chapter 29, “Bladder Cancer”
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Although urologists would be the primary users of this technology, oncologists
are also an important audience for a few reasons. First, as described above,
they work with urologists in the latter stages of the more advanced cases and
need to know about this new technology; second, they would be an important
validation source on the technology itself for the urologist since they are seen as
experts on the molecular aspects of cancer; and third, as a corporate goal,
Cangen needs to engage oncologists for their future product initiatives.
Additional audiences that should be addressed are the clinical pathologists who
manage laboratories and make decisions as to which tests are run; and, urology
nurses who often get to know the patients well and spend time in the office
communicating with them and are often in place to educate the patient about the
choices they can make in their management.
As so much else in American medicine is driven by the payers, the situation here
will be no different. Therefore, an important objective for Cangen during the prelaunch and launch phases will be to clearly show that adoption of this test will
be—in the long run—an efficient, economical, and clinically relevant way to
monitor patients with BC. The two main audiences in this area are: managed
care, ie., private insurers including Blue Cross, Aetna, large HMOs, etc., and the
Federal government (Medicare and the Veterans Administration).
Finally, the patients themselves need to understand the benefits of this new
technology. It is important to remember that during the first few years after
diagnosis, monitoring for BC recurrence occurs frequently (4x/year). Because of
this schedule, patients should know how this new test is an integral part of the
overall management of their disease.
In summary then, the target audiences:
Primary:
Urologists
Oncologists involved in the treatment of bladder cancer
Primary care physicians who already order NMP22 and/or UroVysion
Managed care administrators
Clinical (lab) pathologists
Government reimbursement administrators (Medicare, Veterans Administration)
Secondary:
Oncologists not covered in the primary category
Urology nurses
Oncology nurses involved in managing bladder cancer
Patients and their families
Market Landscape and Competitive Overview
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Although the obvious competitors are the existing laboratory diagnostic tests that
already exist, cystoscopy should also be considered as competition for a
laboratory diagnostic such as the MSA which has sensitivity and specificity (both
>95%) equivalent to that invasive procedure. Please see table below for a
summary of the sensitivity and specificity of available agents.
test
sensitivity
specificity
comments
VUC*
30-40%
90%
routine lab
Bard Trak
70%
70-90%
Ref.lab
NMP22
66%
80%
POC**
FISH
80%
95-100%
Ref.lab
Immunocyt
80%
70-80%
Ref.lab
HA-HAase
70-90%
90%
Ref.lab
Telomerase
75%
85%
Ref.lab
Survivin
60%
80%
Ref.lab
*voided urinary cytology, ** point of care
From: http://blcwebcafe.org/synergoworkshop1.asp#sica , see presentation 1)
by Sica.
In a more recent study done by Bocack et al presented as a poster at the New
England Section of the AUA (Sept. 2006), a range of diagnostic tests was
completed in addition to cystoscopy on patients presenting with hematuria.
These data confirm cystoscopy as the “gold standard.” Included in the table
below are the Medicare reimbursements for the various tests and procedures:
Results of Test Comparisons
Test
Sensitivity (95% CI) Specificity (95% CI) Cost (Dollars)
27%
100%
Cytology
11.78
(12-48%)
(99-100%)
73%
76%
NMP-22
29.07
(52-88%)
(71-80'%)
96%
97%
Cystoscopy
385.63
(79-97%)
(95-99%)
62%
98%
CT Urogram
640.78
(41-80%)
(96-99%)
Source: http://www.neaua.org/abstracts/2006/7.cgi
The costs in the previous table are Medicare payouts, and would be higher if
private third-party payers were quoted.
Further, a recent survey of patients who had undergone cystoscopy was
presented at the AUA meeting in Atlanta (Kiemeney, Svatek &Sagalowsky) that
provided data showing that patients sought the security of knowing they were
cancer-free and would stay with cystoscopy until its equal could be developed.
Until a screening test was at least 90% reliable, they would continue with routine
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cystoscopy.
Source: http://www.webtie.org/SOTS/Meetings/Genitourinary/gu2/transcripts/03/t
ranscripts.htm and go to slide 22.
Cangen’s MSA assay is more specific than the available diagnostics, and is not
affected by blood in the urine or other conditions that the patients may have—this
is part of its specificity. It is based on the presence of microsatellites present in
tumor DNA which are not present in normal cells.
In the market research that we conducted, both the NMP22® Bladder Chek®
Test and UroVysion™ were ordered by urologists to a significant degree. A brief
description of both follows:
NMP22
The NMP22 BladderChek® is an in-office assay assessing levels of NMP22
(nuclear matrix protein). Low levels of NMP22 are found in normal cells of the
bladder, but elevated levels are detected in cases of bladder cancer. This test
has a sensitivity of ~50%-75%, making it a suitable alternative to cytology. It is
positioned as an adjunct to cystoscopy, so that, when used together, the
detection rate is higher than when cystoscopy is used alone.
Two studies on the NMP22 test were published in JAMA. In one study, sensitivity
of the test in detecting recurrent bladder cancer was reported to be 49.5%; when
combined with cystoscopy, it increased the detection rate from 91.3% to 99.0%.
The NMP22 test was able to detect 8 of 9 cancers that were missed on
cystoscopy.1Similarly, in patients screened for bladder cancer based on urinary
symptoms or a history of smoking, the sensitivity was 55.7% alone, but the test
detected several cancers that were not visualized during cystoscopy.2 The test is
limited by a low specificity (76%), which yields a relatively low positive predictive
value (19%) when used alone.3
The test is marketed as the only FDA-approved in-office test for the diagnosis
and monitoring of bladder cancer. The test results are not hindered by the
presence of blood in the urine, but it is less reliable in the presence of
inflammation. Marketing materials emphasize the ability of the test to detect
“cases missed by cystoscopy alone and three times as many malignancies as
found by cytology.”
UroVysion
UroVysionTM is a urine screen utilizing fluorescence in situ hybridization (FISH)
molecular techniques to identify the 4 DNA changes with the highest sensitivity
for bladder cancer (abnormal number of chromosomes 3, 7, or 17 or loss of the
9p21 locus on chromosome 9). The sensitivity of UroVysionTM depends on the
stage of bladder cancer, ranging from 55% at the earliest stages to 100% at the
more advanced stages. At all stages, sensitivity of UroVysionTM was greater
than that of cytology. The specificity is over 95%, indicating that a negative test is
a strong indication that bladder cancer is not present. UroVysionTM is positioned
as an adjunct to current standard diagnostic procedures (cystoscopy).
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UroVysionTM is marketed as a “molecular urine cytology test” Results from the
UroVysion Kit are intended as an aid for initial diagnosis of bladder carcinoma in
patients with hematuria and subsequent monitoring for tumor recurrence in
patients previously diagnosed with bladder cancer “… in conjunction with and not
in lieu of current standard diagnostic procedures.”
Key Opinions from Market Research (Please see Appendices B and C for raw
and aggregate data)
More than half of the respondents said that the reason that they did not use any
or more of these lab assays was that they were “not specific enough.” About
40% said that reimbursement was a problem (while UroVysion is about $700, the
NMP22 is less than $75). About 95% of the combined group was either very
satisfied, satisfied or somewhat satisfied with available techniques for monitoring
BC (this includes cystoscopy), but when asked how they would rate the
importance of a product described with the attributes of Cangen’s MSA assay to
the management of BC (scale 1-5, 1=not at all important to 5=very important),
fully 90% of the respondents rated it a 4 or 5 (56% rated it a 5, “very important).
This seems to be a paradox, ie., at first they seem satisfied with conditions in the
current market, but when presented with a new and unique diagnostic, they all
say that they would be very interested in it. Quintiles believes that this does not
truly present a paradox for the following reasons:
The first question was taken from their own points of view, ie., the urologists were
satisfied since cystoscopy (often combined with cytology) was indeed doing the
job needed to diagnose recurrence
Further, cystscopy of the bladder is a foundation procedure for the urologist, and
he is able to bill for it
We believe the second question that was presented on the advanced MSA-type
product elicited an answer of great interest since they now shifted their thinking
from themselves to the patient. And, they could not deny that this would be a
significant advance, even if it would cut into their cystoscopy business. This
response is a credit to their medical ethics.
References
1.
Grossman HB, Soloway M, Messing E et al. Surveillance for
recurrent bladder cancer using a point-of-care proteomic assay. Jama.
2006;295:299-305.
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2.
Grossman HB, Messing E, Soloway M et al. Detection of bladder
cancer using a point-of-care proteomic assay. Jama. 2005;293:810-816.
3. Boback M. Berookhim, BA, Amanjot S. Sethi, MD, C. Charles Wen, MD,
Jing Ciu, Richard K. Babayan, MD, Louis S. Liou, MD. A Cost Comparison of the
Diagnostic Modalities Used in the Detection of Urothelial Carcinoma in Patients
Undergoing Evaluation for Hematuria. New England Section of the American
Urological Association 75th Annual Meeting, September 2006.
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Issues Related to Successful Marketing
Here we will use the Five Ps as a shortcut for what we feel are critical factors for
success:
Pricing
Perspective
Positioning
Personnel
Partners
Pricing: As a foundation to successful marketing, keen attention must be paid to
pricing sensitivity. This issue is beyond the scope of this document, but
immediate planning for thorough research is essential. Part of the attraction of
MSA technology is that it is comparable to cystoscopy in selectivity and
sensitivity for the detection of low- and high-grade tumors. However, initially, it
must be compared to other laboratory modalities rather than to cystoscopy. The
economic comparison to cystoscopy depends on how the FDA grants approval to
the device: either used alone for monitoring or in conjunction with cystoscopy.
Once the pricing sensitivity research is completed and calculations are done
related to cost of goods, marketing costs, etc., the price can be established and
economic analyses can be accomplished. With this research, Cangen can then
approach reimbursement managers, managed care, government payers, and
ultimately the target health care providers, and successfully make a case for
adoption of the new MSA technology.
Perspective: Since this product has the clear potential to change the market
dynamics of monitoring treated bladder cancer, it would be expected to
encounter resistant market inertia to its introduction. To understand this dynamic,
we must understand the perspective of our target health care audience as well as
payers and patients. Market research will help us here. Quintiles believes that
the advantages that this MSA-based system has are compelling enough to
overcome any potential inertia.
Positioning: The product position becomes the foundation for communications
about the product, and research must be ongoing to make sure that the initial
position stands up over time. Understanding the market’s perspectives and what
we need to change in the marketplace along with the product’s attributes will help
determine the product’s positioning.
Personnel: The US health care market has shown that ex-US companies coming
in to compete here must hire individuals with experience in the US market. While
in-line with the mission and vision of Cangen, these people must know the US
urology and oncology markets.
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Partners: The corporate partners that Cangen chooses to work with them must
also be companies with long-standing respect in the health care arena. Initially,
these partners must be chosen in medical communications (education), public
relations and advertising.
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Pre-Launch Marketing Components
These ballpark figures on cost represent the time period of one year prior to
launch.
Strategic semiotics
$320,000 - $370,000
Language research
Language workshops
Continuing medical education (CME)
$150,000 – $1,000,000
Market research
Publications
$500,000 - $1,000,000
Abstracts, posters
Journal articles
Presence at scientific and clinical meetings
TBD
Key opinion leader (KOL) development
$200,000 – $300,000
Mapping and identification
Speaker Training
$150,000 - $200,000
KOL database/tracking
Advisory boards (2 boards)
$200,000 - $300,000
40 sales representatives
$6,800,000
Pricing sensitivity research
TBD
Train sales force
TBD
Retain advertising agency
TBD
Market research
TBD
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Market Penetration Forecast
With approximately 500,000 diagnosed cases of BC currently in the US and
approximately 60,000 new cases of BC diagnosed per year, what might be
expected from a test with 95% selectivity and sensitivity? Based on our survey of
25 urologists who treat BC, approximately 36% are currently using the nuclear
matrix protein (NMP-22) test for monitoring and 32% are using UroVysion; 12%
of the urologists questioned are using both diagnostics (of the 25 oncologists
surveyed, only 16% used any of the laboratory diagnostics presented).
If cystoscopies are being accomplished for monitoring, then why would about half
of the practicing urologists also use the laboratory diagnostics? We asked that
question of an academic urologist at Johns Hopkins Medical Institutions,
Baltimore, Maryland (David Chan, MD, Director of Outpatient Urology Services)
and he said he wasn’t absolutely sure, but that was a question he had thought
about. It is likely that most are using it with cystoscopy in order to have a backup
check in the event that a small carcinoma on cystoscopy is missed; or, some
might use it as a screen between cystoscopies.
For 10% market penetration of the 52% of urologists who currently use a
diagnostic for monitoring BC tests, [for this exercise we are assuming 1] that our
sample is a reasonable approximation of community urology practice and that 2)
they each see about the same number of BC patients] we would calculate that
each urologist treating BC would order about 10 MSA tests/year. Please see
Appendix C for specific calculations.
If the price of the test is $300, then 100,000 tests would = $30,000,000 in the first
year.
We believe that 10% market penetration is a conservative estimate. We already
know that about half of the urologists order these lab assays. We have a
superior one, one that will even be contemplated to replace some cystoscopies.
It appears that Cangen’s MSA assay will replace both the NMP22 and the
UroVysion test once the audiences learn about them.
For the next phase, that is, after the MSA has taken market share from the
competition and proven itself in the eyes of the urological community, we believe
the position can be take that some cystoscopies can be avoided in the monitoring
of bladder cancer. Replacing a surgical or invasive procedure done for
diagnostic purposes with a less traumatic procedure is not uncommon. Initially
the surgeons may offer resistance, but data and reason will ultimately win. For
example, please see data showing that the number of open heart surgeries for
reimplantation of the coronary arteries has diminished significantly after the
introduction percutaneous coronary transluminal angioplasty (PTCA). (See
Appendix E).
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Appendix
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Appendix A: Methodology and Resources
Because of the short time lines needed for the delivery of this report, we could
not utilize aspects of our standard methodology. For example, while we were
able to accomplish primary market research, we could not schedule focus
groups; further, we could not have this document undergo the usual number of
manuscript reviews.
This document is derived from various primary and secondary resources:
Primary
One-on-one interviews with urologists and oncologists
Internet-based market research questionnaire; n = 25 urologists and n = 25
oncologists; all respondents must treat bladder cancer
Secondary
Proprietary business reports
Journal articles from the medical literature
Abstracts from medical and scientific meetings
The American Urologic Association
The National Cancer Institute
Published guidelines on the screening, diagnosis and treatment of BC
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Appendix B: Internet Survey Instrument and Aggregate Results
Please note: This analysis is for BOTH urologists and
oncologists. For raw data for each specialty, please see
Appendix C.
All comments in red are for programmers and will not be seen by respondents.
Thank you for your participation in this survey. Your opinions are very important
to us.
First, you will be asked a few questions to ensure you qualify for the survey. If
you qualify, you will be presented with the survey which should take no longer
than 5 minutes to complete.
If you qualify and complete the survey you will receive the promised honorarium
in appreciation of your time.
First Name: _________________
Last Name: _________________
E-mail: _________________
<page break>
Sample size=50 except where otherwise specified
S1. Which of the following best describes your medical specialty?
Hematology [terminate]
28% Hematology / Oncology
22% Medical Oncology
50% Urology
Other, specify __________ [terminate]
S2. Are you board-certified or board-eligible in your specialty?
100% Yes
No [terminate]
<page break>
S3. Approximately how many years have you been in practice since completing
your residency?
Page 80 of 103
CONFIDENTIAL
2007 Business Plan
Number of years [terminate if <2 or >30] Mean: 13.5, Range: 3-30
S4. Please select the setting where you spend the majority (>50%) of your
clinical time.
8% Academic Teaching Hospital
8% Non-Academic Teaching Hospital
2% VA Hospital
22% Community Hospital
60% Private Office or Clinic
0% Other, specify ____________ [terminate]
<page break>
S5. What percentage of your professional time is spent in patient
care/management?
Percentage of time in patient care _____ [terminate if <50%]
Mean: 95%, Range: 85%-100%
<page break>
S6. In a typical month, how many patients with bladder cancer do you treat or
monitor?
Number of bladder cancer patients _____ [terminate if 0]
Mean: 24, Range: 3-80
<page break>
Congratulations, you qualify to participate in this survey.
To begin, please click the "next" button below.
<page break>
CONFIDENTIAL
Page 81 of 103
2007 Business Plan
1. When monitoring treated bladder cancer patients for recurrence, which of the
following techniques do you use?
(Select all that apply)
92% Cystoscopy
74% Urine cytology
16% UroVysion
2% Bladder tumor antigen test (BTA Stat or BTA TRAK)
22% Nuclear matrix protein test (NMP-22)
2% TRAP test
12% Other, specify _____________________
<page break>
(ask only of urologists) n=25
2. What are the main barriers for you NOT using these tests more often?
(Select all that apply)
56% Not specific enough
56% Need to do cystoscopy anyway
44% Do not have enough information about them
40% Third party will not pay for them
32% Will not alter patient management
8% Other, specify _____________________
4% None of the above (exclusive)
<page break>
3. How often do you check for recurrences in patients with treated bladder
cancer?
(Select one)
78% Q 3 months
16% Q 6 months
0% Q 1 year
0% Q 2 years
6% Other, specify _____________________
<page break>
4. How satisfied are you with the currently available techniques for monitoring
treated bladder cancer?
(Select one)
4% Very Satisfied
54% Satisfied
38% Somewhat Satisfied
4% Not Satisfied
<page break>
Page 82 of 103
CONFIDENTIAL
2007 Business Plan
5. Does the initial staging of the bladder cancer affect the techniques and/or
timing of monitoring?
Timing
Techniques
Does Initial Staging Affect
Techniques or Timing of Monitoring?
Yes
No
O 74%
O 26%
O 54%
O 46%
<page break>
(ask only of oncologists) n=25
6a. How often do urologists ask you to co-manage a bladder cancer patient?
(Select one)
12% Always
20% Most of the time
44% Sometimes
24% Rarely
0% Never
(ask only of oncologists) n=25
7a. What is the most common bladder cancer stage at which most urologists ask
you to co-manage a patient?
(Select one)
8% CIS
0% Ta
0% T1
4% T2
4% T2a
12% T2b
28% T3
0% T3a
8% T3b
24% T4
0% T4a
12% T4b
(skip to Q8)
<page break>
(ask only of urologists) n=25
6b. How often do your manage a T1 bladder cancer patient with an oncologist?
(Select one)
0% Always
CONFIDENTIAL
Page 83 of 103
2007 Business Plan
0% Most of the time
8% Sometimes
44% Rarely
48% Never
(ask only of urologists) n=25
7a. What is the most common bladder cancer stage at which most urologists
would seek an oncologist to co-manage a patient?
(Select one)
0% CIS
0% Ta
4% T1
8% T2
0% T2a
16% T2b
32% T3
0% T3a
4% T3b
32% T4
0% T4a
4% T4b
<page break>
8. Imagine that a new biotechnology technique for the detection of recurrence
was available and the technique demonstrated an accuracy of 95%. Please rate
the importance of this technique for bladder cancer monitoring on a scale from 1
to 5 where 1=Not At All Important and 5=Very Important.
(Select one)
Mean: 4.44
0% 1 - Not At All Important
2% 2
8% 3
34% 4
56% 5 - Very Important
<end survey>
Page 84 of 103
CONFIDENTIAL
2007 Business Plan
Appendix C: Raw data from market research questionnaire (place following 8
pages side by side to read)
QS1
QS1Specified_5
QS2 QS3_1 QS4
Hematology / Oncology
Yes 3
Private Office or Clinic
Hematology / Oncology
Yes 3
Private Office or Clinic
Non-Academic Teaching
Hematology / Oncology
Yes 5
Hospital
Hematology / Oncology
Yes 6
Community Hospital
Hematology / Oncology
Yes 7
Private Office or Clinic
Hematology / Oncology
Yes 7
Private Office or Clinic
Hematology / Oncology
Yes 9
Community Hospital
Hematology / Oncology
Yes 10
Private Office or Clinic
Hematology / Oncology
Yes 11
Private Office or Clinic
Hematology / Oncology
Yes 12
Private Office or Clinic
Hematology / Oncology
Yes 13
Private Office or Clinic
Non-Academic Teaching
Hematology / Oncology
Yes 15
Hospital
Hematology / Oncology
Yes 15
Private Office or Clinic
Hematology / Oncology
Yes 22
Private Office or Clinic
Medical Oncology
Yes 3
Private Office or Clinic
Medical Oncology
Yes 6
Private Office or Clinic
Medical Oncology
Yes 8
Private Office or Clinic
Medical Oncology
Yes 10
Private Office or Clinic
Medical Oncology
Yes 15
Private Office or Clinic
Medical Oncology
Yes 15
Private Office or Clinic
Medical Oncology
Yes 19
Community Hospital
Medical Oncology
Yes 20
Private Office or Clinic
Non-Academic Teaching
Medical Oncology
Yes 25
Hospital
Medical Oncology
Yes 25
Private Office or Clinic
Medical Oncology
Yes 30
Private Office or Clinic
Urology
Yes 4
Community Hospital
Urology
Yes 5
Private Office or Clinic
Urology
Yes 5
Private Office or Clinic
Urology
Yes 6
Community Hospital
Urology
Yes 7
Private Office or Clinic
Urology
Yes 7
Community Hospital
Urology
Yes 7
Community Hospital
Non-Academic Teaching
Urology
Yes 8
Hospital
Urology
Yes 8
Academic Teaching Hospital
Urology
Yes 9
Community Hospital
Urology
Yes 9
Private Office or Clinic
Urology
Yes 15
Academic Teaching Hospital
Urology
Yes 15
Private Office or Clinic
Urology
Yes 15
Academic Teaching Hospital
CONFIDENTIAL
Page 85 of 103
2007 Business Plan
Urology
Urology
Urology
Urology
Urology
Urology
Urology
Urology
Urology
Urology
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
16
16
18
20
20
21
22
24
25
29
Urology
Yes
30
QS4Specified_6 QS5_1 QS6_1
Page 86 of 103
Q1_1
85
4
Cystoscopy
95
15
Cystoscopy
95
3
Cystoscopy
100
10
Cystoscopy
100
15
Cystoscopy
90
55
Cystoscopy
90
8
90
5
Cystoscopy
[Not
Selected]
95
25
Cystoscopy
85
5
Cystoscopy
95
10
Cystoscopy
95
20
100
20
95
5
Cystoscopy
[Not
Selected]
[Not
Selected]
95
25
Cystoscopy
100
30
Cystoscopy
VA Hospital
Community Hospital
Private Office or Clinic
Private Office or Clinic
Private Office or Clinic
Community Hospital
Private Office or Clinic
Private Office or Clinic
Academic Teaching Hospital
Private Office or Clinic
Community Hospital
Q1_2
Urine
cytology
Urine
cytology
[Not
Selected]
[Not
Selected]
Urine
cytology
[Not
Selected]
Urine
cytology
[Not
Selected]
Urine
cytology
[Not
Selected]
[Not
Selected]
[Not
Selected]
[Not
Selected]
Urine
cytology
Urine
cytology
Urine
cytology
Q1_3
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
CONFIDENTIAL
2007 Business Plan
90
25
Cystoscopy
100
4
Cystoscopy
100
5
100
25
Cystoscopy
[Not
Selected]
100
5
Cystoscopy
100
5
Cystoscopy
93
5
Cystoscopy
98
9
Cystoscopy
90
8
Cystoscopy
100
50
Cystoscopy
100
10
Cystoscopy
100
32
Cystoscopy
95
40
Cystoscopy
90
15
Cystoscopy
95
50
Cystoscopy
95
50
Cystoscopy
98
50
Cystoscopy
85
80
Cystoscopy
90
10
Cystoscopy
95
30
Cystoscopy
90
7
Cystoscopy
100
10
Cystoscopy
90
60
Cystoscopy
CONFIDENTIAL
Urine
cytology
Urine
cytology
Urine
cytology
[Not
Selected]
Urine
cytology
Urine
cytology
Urine
cytology
[Not
Selected]
Urine
cytology
Urine
cytology
Urine
cytology
Urine
cytology
Urine
cytology
Urine
cytology
Urine
cytology
Urine
cytology
Urine
cytology
Urine
cytology
Urine
cytology
Urine
cytology
Urine
cytology
Urine
cytology
Urine
cytology
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
UroVysion
[Not Selected]
[Not Selected]
UroVysion
[Not Selected]
[Not Selected]
UroVysion
Page 87 of 103
2007 Business Plan
90
45
Cystoscopy
95
45
Cystoscopy
100
20
Cystoscopy
90
30
Cystoscopy
100
60
Cystoscopy
100
35
Cystoscopy
100
50
Cystoscopy
95
30
Cystoscopy
100
30
Cystoscopy
95
15
Cystoscopy
100
10
Cystoscopy
Q1_4
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
Bladder tumor antigen test (BTA Stat
or BTA TRAK)
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
Page 88 of 103
[Not
Selected]
Urine
cytology
[Not
Selected]
Urine
cytology
Urine
cytology
[Not
Selected]
Urine
cytology
Urine
cytology
Urine
cytology
Urine
cytology
Urine
cytology
UroVysion
[Not Selected]
[Not Selected]
UroVysion
UroVysion
[Not Selected]
UroVysion
[Not Selected]
UroVysion
[Not Selected]
[Not Selected]
Q1_5
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
Nuclear matrix protein test
(NMP-22)
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
Q1_6
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
CONFIDENTIAL
2007 Business Plan
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
Q1_7
[Not
Selected]
[Not
Selected]
[Not Selected]
[Not Selected]
[Not Selected]
Nuclear matrix protein test
(NMP-22)
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
Nuclear matrix protein test
(NMP-22)
Nuclear matrix protein test
(NMP-22)
[Not Selected]
Nuclear matrix protein test
(NMP-22)
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
Nuclear matrix protein test
(NMP-22)
Nuclear matrix protein test
(NMP-22)
Nuclear matrix protein test
(NMP-22)
Nuclear matrix protein test
(NMP-22)
Nuclear matrix protein test
(NMP-22)
Nuclear matrix protein test
(NMP-22)
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
Q1Specified_7 Q2_1
Q2_2
CONFIDENTIAL
[Not Selected]
[Not Selected]
TRAP test
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
Page 89 of 103
2007 Business Plan
[Not
Selected]
[Not
Selected]
[Not
Selected]
[Not
Selected]
[Not
Selected]
Other,
specify
Other,
specify
[Not
Selected]
Other,
specify
[Not
Selected]
Other,
specify
[Not
Selected]
[Not
Selected]
[Not
Selected]
[Not
Selected]
[Not
Selected]
[Not
Selected]
Other,
specify
[Not
Selected]
[Not
Selected]
[Not
Selected]
[Not
Selected]
[Not
Selected]
Page 90 of 103
follow up with
urologist
CT SCAN
CT scan, CEA
ct scan
CT scan
CONFIDENTIAL
2007 Business Plan
[Not
Selected]
[Not
Selected]
[Not
Selected]
[Not
Selected]
[Not
Selected]
[Not
Selected]
[Not
Selected]
[Not
Selected]
[Not
Selected]
Other,
specify
[Not
Selected]
[Not
Selected]
[Not
Selected]
[Not
Selected]
[Not
Selected]
[Not
Selected]
[Not
Selected]
[Not
Selected]
[Not
Selected]
[Not
Selected]
[Not
Selected]
[Not
Selected]
[Not
Selected]
[Not Selected]
Not specific
enough
Not specific
enough
urine analysis
CONFIDENTIAL
[Not Selected]
Not specific
enough
Not specific
enough
Not specific
enough
Not specific
enough
Not specific
enough
Not specific
enough
Not specific
enough
[Not Selected]
[Not Selected]
[Not Selected]
Not specific
enough
[Not Selected]
[Not Selected]
Need to do cystoscopy
anyway
[Not Selected]
[Not Selected]
Need to do cystoscopy
anyway
Need to do cystoscopy
anyway
[Not Selected]
[Not Selected]
Need to do cystoscopy
anyway
Need to do cystoscopy
anyway
[Not Selected]
[Not Selected]
Need to do cystoscopy
anyway
Need to do cystoscopy
anyway
Need to do cystoscopy
anyway
[Not Selected]
[Not Selected]
Need to do cystoscopy
anyway
Need to do cystoscopy
anyway
[Not Selected]
Not specific
enough
Not specific
enough
[Not Selected]
Need to do cystoscopy
anyway
Need to do cystoscopy
anyway
[Not Selected]
Not specific
enough
[Not Selected]
Need to do cystoscopy
anyway
[Not Selected]
Page 91 of 103
2007 Business Plan
[Not
Selected]
[Not
Selected]
Q2_3
Do not have enough information
about them
[Not Selected]
[Not Selected]
Do not have enough information
about them
Do not have enough information
about them
[Not Selected]
[Not Selected]
Do not have enough information
about them
Do not have enough information
about them
Do not have enough information
Page 92 of 103
[Not Selected]
Not specific
enough
Need to do cystoscopy
anyway
[Not Selected]
Q2_4
[Not Selected]
[Not Selected]
Third party will not pay for them
[Not Selected]
Third party will not pay for them
Third party will not pay for them
[Not Selected]
Third party will not pay for them
[Not Selected]
[Not Selected]
CONFIDENTIAL
2007 Business Plan
about them
[Not Selected]
[Not Selected]
[Not Selected]
Do not have enough information
about them
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
Do not have enough information
about them
Do not have enough information
about them
[Not Selected]
Do not have enough information
about them
[Not Selected]
Do not have enough information
about them
Q2_5
CONFIDENTIAL
Q2_6
Third party will not pay for them
Third party will not pay for them
Third party will not pay for them
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
Third party will not pay for them
[Not Selected]
[Not Selected]
Third party will not pay for them
Third party will not pay for them
[Not Selected]
[Not Selected]
[Not Selected]
Q2_7
Q2Specified_6
Page 93 of 103
2007 Business Plan
Will not alter patient
management
Will not alter patient
management
[Not Selected]
[Not Selected]
Will not alter patient
management
[Not Selected]
Will not alter patient
management
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
Will not alter patient
management
[Not Selected]
Will not alter patient
management
Will not alter patient
management
[Not Selected]
Will not alter patient
management
[Not Selected]
[Not Selected]
Q3
Q 3 months
Q 6 months
Q 6 months
Q 3 months
Q 3 months
Q 3 months
Page 94 of 103
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
Other, specify
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
None of the
above
[Not Selected]
[Not Selected]
[Not Selected]
Other, specify
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
[Not Selected]
Q3Specified_5
not reimbursed
well enough
use these tests
regularly
Q4
Not Satisfied
Somewhat Satisfied
Somewhat Satisfied
Somewhat Satisfied
Satisfied
Somewhat Satisfied
CONFIDENTIAL
Q5_A_1
Yes
No
Yes
Yes
No
No
2007 Business Plan
Q 3 months
Q 3 months
Q 3 months
Q 6 months
Q 3 months
Q 3 months
Q 6 months
Q 3 months
Q 3 months
Q 3 months
Q 3 months
Q 6 months
Q 6 months
Q 3 months
Q 3 months
Q 3 months
Q 3 months
Q 3 months
Q 3 months
Q 3 months
Q 3 months
Q 3 months
Q 3 months
Q 3 months
Q 3 months
Q 3 months
Q 3 months
Other,
specify
Q 3 months
Q 3 months
Q 3 months
Q 6 months
Q 3 months
Q 3 months
Q 3 months
Other,
specify
Q 3 months
Q 3 months
Q 3 months
Q 6 months
Q 3 months
Other,
specify
depends on grade and
stage of disease
Every 3 months for first
2 years and every 6
months after that
Somewhat Satisfied
Not Satisfied
Satisfied
Somewhat Satisfied
Somewhat Satisfied
Somewhat Satisfied
Satisfied
Somewhat Satisfied
Satisfied
Satisfied
Somewhat Satisfied
Satisfied
Satisfied
Very Satisfied
Somewhat Satisfied
Satisfied
Satisfied
Satisfied
Somewhat Satisfied
Satisfied
Satisfied
Satisfied
Satisfied
Somewhat Satisfied
Satisfied
Satisfied
Somewhat Satisfied
Yes
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
Yes
Yes
Yes
No
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Somewhat Satisfied
Very Satisfied
Satisfied
Satisfied
Satisfied
Satisfied
Satisfied
Somewhat Satisfied
Yes
No
No
No
Yes
Yes
Yes
Yes
Satisfied
Satisfied
Somewhat Satisfied
Somewhat Satisfied
Somewhat Satisfied
Satisfied
No
Yes
Yes
No
Yes
No
depends on grade, stage
and last date of
Satisfied
CONFIDENTIAL
Yes
Page 95 of 103
2007 Business Plan
recurrence
Q 3 months
Q 3 months
Q5_A_2 Q6a
Yes
Rarely
Most of the
No
time
No
Sometimes
Yes
Sometimes
No
Always
No
Always
Most of the
Yes
time
Yes
Rarely
Most of the
No
time
No
Rarely
Yes
Sometimes
No
Sometimes
Yes
Sometimes
No
Sometimes
Most of the
Yes
time
Yes
Always
Yes
Sometimes
Yes
Rarely
Yes
Rarely
Yes
Rarely
No
Sometimes
Yes
Sometimes
Most of the
Yes
time
No
Sometimes
No
Sometimes
No
Yes
Yes
No
Yes
No
No
Yes
Yes
Yes
No
Page 96 of 103
Satisfied
Satisfied
Q7a Q6b
T4b
Yes
Yes
Q7b Q8
5 - Very Important
State
CA
T3
T4
T4
CIS
T2
5 - Very Important
5 - Very Important
3
5 - Very Important
4
OH
OR
KY
FL
CA
T4
T4b
5 - Very Important
4
IL
GA
T3
T4
T2a
T2b
T2b
CIS
5 - Very Important
5 - Very Important
4
5 - Very Important
4
5 - Very Important
KY
LA
NJ
PA
IN
TX
T3
T3
T4b
T4
T4
T3
T3
T2b
5 - Very Important
5 - Very Important
5 - Very Important
5 - Very Important
5 - Very Important
3
5 - Very Important
5 - Very Important
IN
PA
OH
AL
AL
MD
MD
LA
T3b
T3
T3b
5 - Very Important
5 - Very Important
5 - Very Important
5 - Very Important
4
4
5 - Very Important
4
2
3
4
4
5 - Very Important
5 - Very Important
PA
MD
OH
ME
IL
CA
DE
NJ
FL
FL
NJ
NY
CA
NY
Rarely
Never
Never
Rarely
Rarely
Rarely
Rarely
Never
Never
Rarely
Sometimes
T4
T3
T3
T4
T2b
T3
T3
T2b
T3
T4b
T2
CONFIDENTIAL
2007 Business Plan
No
No
Yes
No
No
No
Yes
Yes
No
Yes
No
Yes
Yes
Yes
Never
Rarely
Never
Never
Never
Never
Rarely
Rarely
Rarely
Rarely
Never
Never
Sometimes
Never
T4
T4
T2b
T3
T2b
T3b
T4
T2
T3
T4
T4
T3
T4
T1
4
5 - Very Important
5 - Very Important
4
4
4
3
5 - Very Important
4
5 - Very Important
4
4
5 - Very Important
4
NC
SC
NJ
TX
FL
AL
NY
TN
MA
TX
NY
NY
NC
MD
Appendix D: Calculations for 10% Market Penetration
10k practicing urologists in US
Approximately 52% use lab tests for monitoring ( based on our survey)
Average number BC patients seen/mo = 24
Assume 70% require some sort of monitoring for recurrence; therefore, 17
patients/month/uro need testing
Therefore, 52% of 17/month get lab diagnostic ordered x 12 months x 10,000
practicing uros (out of 11k total) = 1,060,800 lab diagnostics ordered per year in
the US for monitoring BC
Checking our 1.06 mil tests/year’s derivation with the known 500,000 diagnosed
patients in the US yields approximately 2 tests/year/diagnosed patient. While
this is “in the ballpark” we believe that the 1.06 mil tests/year is a bit high since
those patients with long-standing disease do not get monitored as often (current
American Urological Association guidelines for monitoring are every 3 months for
18-24 months, then every 6 months for 2 years and then annually [see reference
4 in Demographic section] for lab diagnostics for the monitoring of diagnosed BC.
Thus, the estimate based on our market research seems reasonable, and we will
use 1 million for the number of lab tests ordered each year for monitoring BC.
For 10% penetration of the current market, we would expect 100,000 tests
ordered in the first full year of the MSA’s availability; this translates into about 10
MSA tests ordered/urologist/year.
If the test is priced at $300.00 each, then $30 mil would be the expected revenue
first year.
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Appendix E: Dwindling Coronary Artery Bypass Grafts
Source: http://www.bishca.state.vt.us/HcaDiv/HRAP_Act53/HRC_BISHCAcompa
rison_2006/VandM_pdfs/FINAL_CABG.pdf
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Appendix F: NMP22 (see next 3 pages)
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The above can be found at: http://128.121.187.117/pdf/MediaKit.pdf
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Appendix G: UroVysion
From http://www.UroVysion.com/Background_356.asp
Product development
The UroVysionTM Bladder Cancer Kit (UroVysion Kit) was developed by an
iterative process that methodically tested a set of DNA probes on bladder cells
obtained from urine samples of patients with and without bladder cancer. The set
of probes was selected for testing based on reports in the scientific literature that
associated these changes in DNA (chromosome copy number changes or
deletion of the locus) with bladder cancer. For example, the 9p21 region is
important because it contains a proposed tumor suppressor gene, p16. Deletion
of p16 is one of the most common alterations in urothelial carcinoma (bladder
cancer)18.
At the end of the study, a set of four DNA probes was selected that provided the
greatest sensitivity for urothelial carcinoma detection18 .
FDA Clearance
On August 3, 2001, the US FDA cleared for marketing the UroVysionTM Bladder
Cancer Kit (UroVysion Kit) for monitoring the recurrence of bladder cancer.
The UroVysion Bladder Cancer Kit (UroVysion Kit) is designed to detect
aneuploidy for chromosomes 3, 7, 17, and loss of the 9p21 locus via
fluorescence in situ hybridization (FISH) in urine specimens from persons with
hematuria suspected of having bladder cancer. Results from the UroVysion Kit
are intended for use, in conjunction with and not in lieu of current standard
diagnostic procedures, as an aid for initial diagnosis of bladder carcinoma in
patients with hematuria and subsequent monitoring for tumor recurrence in
patients previously diagnosed with bladder cancer.
Doc ID: 30-640074
Last Modified: 4/24/2006
Revision: B
Vysis Inc., a wholly-owned subsidary of Abbott Laboratories Inc.
3100 Woodcreek Drive
Downers Grove,IL 60515-5400
USA
Phone: 800-553-7042 FAX: 630-271-7138 Email: [email protected]
Copyright Vysis Inc., a wholly-owned subsidary of Abbott Laboratories Inc.©
2006 All rights reserved worldwide.
The following data tables from the Clinical Trials for the UroVysion Kit compare
its sensitivity to urine cytology sensitivity for various stages and grades of bladder
cancer (Tables 1 and 2):
From http://www.UroVysion.com/FAQ_365.asp#12
Table 1. Sensitivity (%) by Stage
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Stage
UroVysion Kit
Urine cytology
TaG1
55%
20%
TaG2,3
83%
33%
T1
83%
67%
T2
100%
33%
Tis
100%
33%
Table 2. Sensitivity (%) by Grade
Grade
UroVysion Kit
Urine cytology
1
55%
18%
2
78%
44%
3
94%
41%
High sensitivity translates into few false negatives.
Specificity of traditional cytology and the UroVysion Kit are both ~95% among
healthy and non-healthy test subjects. T
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