Cyclopharm Limited (ASX:CYC) CEO & Managing Director, James McBrayer provides an update on the company's Technegas lung imaging technology, sales and US regulatory timeframe.
Jessica Amir: Hi I’m Jessica Amir for the Finance News Network. Joining me from Cyclopharm Limited (ASX:CYC) is Managing Director and CEO, James McBrayer. Hi James and welcome.
James McBrayer: Thank you, it’s nice to be here.
Jessica Amir: First up James for those new to the company. Can you just give us an introduction?
James McBrayer: Cyclopharm listed on the ASX, it’s been in operation for about 30 years, we were listed in 2007. We’re best known for a product called Technegas. It’s a nuclear medicine imaging agent, predominantly used to diagnose pulmonary embolism, or blood clots in the lung. The technology itself is quite unique in the world, where it mimics oxygen. Anywhere that oxygen goes our product is deposited there. And whilst we’re best known for diagnosing these blood clots in the lungs, with the advent of new technology, we’re starting to see more and more applications being developed.
Jessica Amir: Now to your FY17 results. What were some of the highlights James?
James McBrayer: From our FY17 results we’re operating on a calendar year, so we’re closing in on our final order. So we’ll be producing those results in early February, but most of ’17 was about getting ready for I guess, the future. We relocated our facility, we’ve started our US FDA clinical trial, we commenced another clinical trial to expand the use of our proprietary products. We’ve commercialised a new product called Ultralute that we’re looking to launch in the market, in early 2018. And I think from an organisational point of view, we’ve got all the pieces in place now to leverage off our opportunities.
Jessica Amir: Just for the purpose of investors at home. Can you tell us a little bit more about your lead product Technegas, about its application?
James McBrayer: It was originally invented in Australia nearly 30 years ago and it’s considered best in class. Anywhere that Technegas is distributed, it’s seen as the market leader. In fact in Europe, where we’re best known for it, it’s actually listed in the European guidelines as the agent of choice. Quite basically the technology itself, anywhere that oxygen goes our product is delivered there. So whilst we’re best known for diagnosing blood clots in the lungs or pulmonary embolism, with the advent of new technology, there’re more applications that are evolving that we’re looking to expand into.
Jessica Amir: Just before we go to the new areas. Maybe you can tell us about the established areas and the sales?
James McBrayer: Technegas is 60 per cent of our revenues and based in Europe. Our largest single country market is Canada; that took our number one slot about three years ago. And we see Canada as a great lead indicator of what to expect for market penetration in the United States, when we become US FDA clear.
Jessica Amir: Maybe you can tell us a little bit more about that?
James McBrayer: Our US FDA program kicked off about 10 weeks ago actually, with our first patients being imaged at the Washington University in St Louis. The clinical trial itself is going to cost about $USD7 million. We’ve already spent about $AUD2.4 million of that already. We’re in a very enviable position I suppose from a development point of view, where we raised about $AUD7 million in June this year. So we’re fully funded from the point of view of actually delivering on our near-term objectives, of getting US FDA approval.
Jessica Amir: And maybe you can tell us about the market opportunity in the US?
James McBrayer: When you look at the nuclear medicine industry, half the world’s nuclear medicine departments are in the US. We’re already servicing the other half. So when you look at the US, it was a market that we have to be in. The market itself, the opportunity just in diagnosing pulmonary embolism in the US, is worth $USD90 million. And that only represents 15 per cent of the overall market in diagnosing pulmonary embolism.
Jessica Amir: You alluded to new products earlier, but maybe you can unravel that for us?
James McBrayer: We have a new product coming out on the market called Ultralute. Ultralute had its origins in nuclear medicine where about eight years ago, there was a global shortage of this isotope called Technetium-99. Technetium is the isotope used in about 85 per cent of all nuclear medicine studies; it’s produced with nuclear reactors. We don’t have the ability to build a nuclear reactor, but we can build technology that can make that isotope more efficient, more useful and more applicable in how nuclear medicine departments handle that. That’s where Ultralute came in. So we’re launching that product in early 2018, and any nuclear medicine department that has this isotope in use, is a potential customer of ours.
Jessica Amir: A more general question now James. Tell us about the prevalence of lung disease and how your company is really curbing that?
James McBrayer: We’re about functional lung ventilation imaging and that covers a whole raft of different applications. We’re best known for pulmonary embolism, but we’re starting to see applications in disease states like chronic obstructive pulmonary disease. One in seven Australians over the age of 40 has COPD and that doubles, when they get over 75. In applications like asthma, one in nine Australians has asthma. Mostly a youthful disease, but when you look at the whole economic impact, COPD is attributable to about $8 billion. When you think about lost productivity and the implications of hospitalisation, asthma is about 0.9 per cent of the total Australian Healthcare dollar.
We see our application being developed in not only early diagnosis, but also patient management. How well are they reacting to these types of new procedures or new drug therapies? And every month, it’s almost that we’re discovering new applications that we haven’t conceived before.
Jessica Amir: Just wrapping up James. What can investors expect in terms of news flow over the next 12 months?
James McBrayer: Our biggest near-term milestone will be our first 40 patients, out of our 240 patients trial that we’re working on and getting US FDA approval. We expect that to be in the first quarter of 2018. And when we look at what’s happening over the next 12 months, the FDA is absolutely our number one laser-focused objective. When you look at the opportunities that that opens up with us, $USD90 million market when we’re trading at $AUD12-13 million on a per annum basis. With form, when you look at what we’ve been able to achieve in Canada in converting that market, it’s our number one objective.
Jessica Amir: James McBrayer, thank you so much for the update.
James McBrayer: Thank you, my pleasure.