Viatar CTC Solutions Ltd (OTCBB:VRTT), (ASX:VTR) President and CEO, Ilan Reich, talks about its cancer dialysis therapy, the market opportunity and growth plans.Carolyn Herbert: Hello I’m Carolyn Herbert from the Finance News Network and joining me from Viatar CTC Solutions Incorporated
(ASX:VTR) is President and CEO, Ilan Reich. Ilan, welcome back.
Ilan Reich: Thank you very much.
Carolyn Herbert: For investors who aren’t familiar with your company, can you start by giving us a brief introduction to Viatar?
Ilan Reich: Viatar is the cancer dialysis company. People understand intuitively that dialysis purifies the blood in the case of people with kidney failure, of the toxins. In the same way, our system and our therapy purifies the blood of tumour cells, which circulate in the blood and are responsible for spreading cancer to distant sites.
Carolyn Herbert: To your dialysis machines, how do they actually work?
Ilan Reich: The system is composed of a machine with pumps, sensors much like a dialysis machine. And then a disposal single use circuit that includes tubing and a filter. The filter is the proprietary part of our technology. It has 160 million pores that are very, very small laser machined and those pores allow normal blood cells to flow through. But they’re too small to allow the larger and stiffer circulating tumour cells, to pass through. In that way we do a mechanical separation of a huge percentage, over 90 per cent, of the circulating tumour cells that are in a patient’s body.
Carolyn Herbert: What stage are the machines at in the approvals process?
Ilan Reich: We’re just about finished with the validation and testing, so that we can begin our human trials early next year. The machines are built under the regulatory framework, both in Europe FDA around the world; you have to demonstrate safety of the machine. The software’s been validated; the manufacturing process works and the fluid circuits are sterile. So we anticipate starting our human clinical trials early next year.
Carolyn Herbert: When do you expect to go into production and when will sales commence?
Ilan Reich: Once we finish the clinical trials by the middle/end of next year and get regulatory approval, that’s when we begin commercialisation. So parallel to doing the clinical trials, we will be scaling up our manufacturing and being prepared for a commercial launch, with dozens of these machines ready to go into the clinics and hospitals of key oncology leaders, initially in Europe. And also obviously producing thousands of these filter sets, because they’re single use and involve a lot of complex technology.
Carolyn Herbert: Now to your IPO. How much are you looking to raise and why did you decide to list in Australia?
Ilan Reich: The offering is for $7 million to $12 million and we chose Australia, because this is a very thriving market for medical technology companies. There are a couple of very good examples of companies with very good valuations and growing products. There’s also ultimately an Australian R&D credit for doing research here, and we’re actively exploring that opportunity as well.
Carolyn Herbert: What is the high-level investment case as outlined in your IPO prospectus?
Ilan Reich: First of all, this is a large market. There are 10 million patients each year, new patients with metastatic cancer. If we have only a one per cent market share, that would equate ultimately to an almost $AUD2 billion top line revenue. And with the manufacturing efficiencies and the proprietary nature of our technology, this would be a very profitable company, somewhere in the order of a 30 per cent operating margin.
The valuation today in Australia is $US1.00 a share, which is equivalent to what the founders paid eight years ago for this stock. And by contrast, both Australia and on the US markets, medical device companies once they achieve commercial, begin commercialisation and have regulatory approval, typically sell for $200 million to $400 million. So there’s a huge value gap and we think that we’ll see some substantial price appreciation, as we achieve our milestones and gain more and more support, from the medical and investment communities.
Carolyn Herbert: Finally Ilan. Where would you like to see the company 12 months from now and what’s your long-term ambition for Viatar?
Ilan Reich: 12 months from now we should have our CE Mark approval, which means we will have passed our Phase One and Phase Two clinical trials and shown the safety, and basic efficacy of the system. We will have begun commercial sales in Europe, probably on a private pay basis as well as Canada, Mexico, possibly here in Asia Pacific. We will have begun discussions, active discussions with the FDA on our human clinical trial Phase Three trial, in the US. We’ve already had preliminary talks with them and we have a pretty good road map of where we’re going.
So that in 2018, we would be rolling out our commercial effort with reimbursement in Germany, France and England, the three major countries where we could get reimbursement quickly. We’re doing our FDA trial and moving towards FDA approval in probably 2019, assuming all goes well.
Carolyn Herbert: Ilan Reich, thanks for the update.
Ilan Reich: Thank you.
Click here to see how the Viatar Therapeutic Oncopheresis System works.
