Cyclopharm (ASX:CYC) Presentation, FNN Online Investor Event, December 2020

Company Presentations

Cyclopharm Limited (ASX:CYC) CEO and Managing Director James McBrayer provides an overview of the company, discussing pulmonary embolism and Technegas, competitor products and imaging modalities, the use of Technegas for treating COVID-19, and the market opportunity.

Well thank you, Clive. Next slide please. Next slide.

I've just returned from a five-week trip to the US, and I'm eight days into my 14-day hotel quarantine. Speaking of keeping Australia safe, here is our safe harbour statement.

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I want to thank the Finance News Network for the opportunity to provide you a brief overview of Cyclopharm. Whilst 15 minutes can't cover the clinical depth and commercial potential of Technegas®, I have, for your convenience, provided numerous references throughout these slides for you to do your own homework. Furthermore, we're going to launch this presentation on our website.

Our company is best known for our proprietary product, Technegas® . Technegas® is currently available in 60 countries around the world. The USA represents our nearest term major opportunity with approval expected in early 2021. We're considered the gold standard and world leader in nuclear medicine functional lung ventilation imaging. We have over 4.3 million patients studies to date supported by hundreds of peer reviewed publications. Given the unique properties of Technegas® , most recently, we're seeing applications in patients with COVID-19.

We have recurring revenues that are generated predominantly from single patient consumables. But when we exclude our investments in gaining USFDA approval, we have a history of being a profitable growing company that holds a rare feature in this ASX listed space by paying dividends to our shareholders. Whilst the USA represents a significant near term opportunity, we are particularly enthusiastic about the applications beyond PE that we've been developing in areas such as COPD and asthma that could dwarf our pulmonary embolism market.

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Today our commercial offering is based on diagnosing pulmonary embolism or PE or a blood clot in the lung. It's estimated that approximately three million people suffer from pulmonary embolism every year, but the number is much larger than that. However, what we do know for certain is that if left untreated, 30% of pulmonary embolism is fatal. That's why there's so much effort in trying to diagnose this condition. This is where Technegas® comes in. With the advent of 3D imaging or SPECT imaging, nuclear medicine provides the most accurate method for diagnosing pulmonary embolism than any other modality.

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To know Technegas® is to love Technegas® . As investors and looking at listed companies, you have to sift through what is speculative bias versus what is proven fact. If you're looking for what is fact, there's nothing more factual than clinical guidelines. Guidelines equate to a clinical Bible. Guidelines are based on rigorous clinical data that transcends company's spin. Guidelines are years in the making and based on extensive evidence. For example, the 2019 European Association of Nuclear Medicine guideline, and update to their 2009 edition, is based on 193 articles.

Technegas® is rare in the clinical world, in that our brand is actually named in and synonymous with superior clinical outcomes. This is what some of the guidelines say about Technegas® . Technegas® is superior than the best aerosol, particularly in patients with COPD. And my personal favourite, liquid aerosols are inferior for SPECT and should not be used unless Technegas® is not available.

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Radiation dose is one of those areas that garners a great deal of debate or discussion. A key objective for imaging PE is to minimize radiation exposure without sacrificing image quality, resolution, diagnostic accuracy. The amounts of radiation involved must be considered together when determining the best course of diagnosis. The takeaway for this slide though is that nuclear medicine, even with the addition of low-dose CT, is exponentially lower in dose than a diagnostic CT. A key fact to underscore is that clinical outcomes will always win out over the radiation dose. But what about the clinical outcomes?

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Well, on that front, nuclear medicine is a clear winner. Don't take my word for it. Look at the comparative clinical data. The numbers speak for themselves. What is important to emphasise here is the jump that nuclear medicine made when it went from Planar two-dimensional imaging to SPECT three-dimensional imaging. In the last few years, even with the addition of a low-dose CT, this hybrid imaging, nuclear medicine clinical outcomes are in the 90 percentiles and nearing 100%. Now these results are virtually unheard of in the diagnostic world. The only place left in the world that still predominantly uses Planar imaging to diagnose PE is in the US, and that's because Technegas® is not available there yet. Once approved, we expect a nuclear medicine clinical resurgence in the USA for lung imaging.

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Well, this is the world of Technegas® . We've got over 4.3 million patient studies to date. We're in 60 countries, hundreds of peer reviewed articles, the agent of choice in several guidelines, and over three decades of clinical use with no attributable adverse event recorded. This is an enviable record. So, why is this? Technegas® is easy to use and well tolerated by patients. It only requires a few inhale breasts to deliver the picograms of particles required to image the patient.

Once inhaled, the particles adhere to the insides of the lungs, showing the clinicians functioning how the lungs are functioning, are being ventilated. We show how oxygen is diffused throughout the lung. It's not an algorithm. It's not a software. We actually show where oxygen goes. There are no contraindications with Technegas® and in comparison to competing products, our product is cost-effective. With COVID-19 patients, it's safer to use than its competitors. I'll speak a little bit more about that in detail later.

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There are two competing products that we use in nuclear medicine. So, Technegas® , Xenon-133, a true gas, and Technetium-99 DTPA, a liquid radioactive product that is delivered through a nebuliser. In comparison to these products, Technegas® wins every time. I won't speak today about the comparative reasons why we're clinically better. You can look at that on the slide. I'll let the guidelines previously mentioned speak to that point.

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Whilst we're hands down better than any other nuclear medicine competing product, our true competition in diagnosing pulmonary embolism is CTPA. There are numerous contra-indications relating to CT, including pregnancy, contrast media allergies, diabetes, and renal impairment. However, the biggest competitive advantage that we have in nuclear medicine compared to CT is that we're clinically superior if 3D SPECT imaging is being used. Also, nuclear medicine using Technegas® has several significant advantages over CT. Firstly, CT delivers a very high radiation dose compared to a nuclear medicine scan. For example, the breast dose is 27 times higher using CT compared to nuclear medicine.

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When we try to gauge our potential success in the US, we simply look north to Canada. When we entered the Canadian market 16 years ago, it looked very much like the US did today, equally split between Xenon and DTPA. Today, Canada is our single largest country market for Technegas® .

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We have every reason to be bullish about the United States and the United States, there are over four million procedures conducted annually to rule out the presence of pulmonary embolism. Of those procedures, 85% are imaged through CT. Our immediate addressable market for that is 15% or 600,000 procedures equal to about US$90 million. At present, most nuclear medicine departments in the US are applying our imaging. Guess why? Because again, they don't have a great ventilation imaging agent like Technegas® available to them. But the takeaway on this slide is that we expect to convert 80% of the US market, equal to $72 million. Once Technegas® is available, we expect a conversion of CTPA use from 15% to 30%, growing the market to a potential of US$180 million.

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When we get there, we already have reimbursement in place. Nuclear medicine lung imaging is based on a procedure. Reimbursement is agnostic to the agents being used. Technegas® will be reimbursed from day one. This is the table and the actual table, the Medicare reimbursement codes for nuclear medicine lung imaging.

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Given the pandemic, it's more important than ever to have Technegas® approved in the US. This slide depicts the disease progression of COVID-19. In the early stages, clinicians usually use CT to show more of some of the earlier manifestations, like the ground glass opacity that you might've heard of. The second phase, when the virus does most of its damage, is the critical period where intervention is more important and it's where Technegas® is best used.

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We know we have a place in fighting COVID-19. We don't have to speculate this or hope for this. We already know that we're the best agent in diagnosing PE. Up to 39% of COVID-19 patients admitted to hospital develop blood clots. We even made the image of the month in the European Association of Nuclear Medicine in April. The bottom right image shows the fusion of CT and SPECT together with Technegas® . Together, these two modalities show elements that neither one alone could predict.

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Our use in COVID doesn't just stop at stage two. We've been approached by McMaster University, a rural respiratory researcher in respiratory medicine, to assess through imaging some of the viruses long-term damage. As we learn more about COVID-19, we're seeing more and more examples of long-term respiratory complications and recruitment is underway. We not only excel clinically in the countries where Technegas® is available, we're also viewed as a safest product in nuclear medicine throughout the world when it comes to COVID. I won't go into the details in the short time today. You can refer to the slide.

However, safety is such a concern with the products being used in the US, that 77 nuclear medicine physicians wrote to the FDA in June requesting an expedited review of our product. Again, last month in early November, 90 nuclear medicine physicians wrote a second appeal to the FDA in response to the surge of new cases as they charge into the critical winter months.

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So where are we up to with our commercialisation plan? The first bullet point shows where we're at with the USFDA. We've submitted our application. We've just finished a clinical trial that met our primary and secondary end points that we've submitted to the FDA. Nuclear medicines physicians have petitioned the FDA twice. The only thing the thing really left beyond the Q&A that we're currently undergoing with the FDA in this phase is the site audit that's pending. Although, with 60 countries throughout the world, we're quite confident that we'll be compliant with the USFDA audit.

But in preparing for the launch, I've just gotten back from the States. I have a short list the third party logistics providers. I've got a short list of service engineering companies. I've interviewed applicants that will do onsite training for the technology. We've engaged already with several customers, and we've crystallised how we're going to do some of the back office functions there. But it's most important to reemphasise certainly in this slide is that we will have reimbursement virtually from day one. What is day one? Well, at this stage, given our particular date, the date that the FDA gives us for their review period, it's therefore conceivable that we could be generating revenues as early as April.

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But certainly the USA is our most near term opportunity as a step that will grow the company dramatically, but that's not our end game. Our greatest opportunity lies beyond pulmonary embolism. We know that Technegas® has utilities in other diseases. Our clinical trial of 204 patients has listed up to 15 different indications for use. In order to commercialize any medical technology, you have to have your assumptions based on clinical data and peer reviewed publications. Without that, you have nothing.
Despite the wide use of Technegas® in other disease states, we initiated pilot clinical trials targeting respiratory medicine refers and researchers to clinically validate the anecdotal use we see in use of Technegas® every day. This is a glimpse of some of those initiatives. Ultimately, we see our product used in patient management of chronic diseases. The impact of those applications have exponential commercial implications that we expect will dwarf the tangible opportunities the USA market shows us today.

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Well, Technegas® is more relevant today than it was when it was first invented in the '80s. Up until now, we've been best known for diagnosing pulmonary embolism. In the United States, our nearest term opportunity will be seeking to repeat the success we've achieved throughout the world and most recently in Canada. Once we're established in the US, we will then target CT by seeking to double the nuclear medicine's market share in diagnosing pulmonary embolism. However, what is providing the greatest opportunity for growth is the work that we're doing in expanding the use of Technegas® into new indications. Pulmonary embolism is just a one-off procedure. Most of the studies are negative, but if you have a blood clot, they treat you straight away. We typically don't see a follow up exam for a PE.

Expanding to patient management will change all that. We see that over half a billion suffers of asthma and COPD in the world, of these, 125 of those are residing here in Australia. These are the existing markets that we're going after beyond PE. It's important to highlight that because of the safety concerns that the competitive nuclear medicine products in the US have, in relation to COVID, we're actually re-evaluating those horizons one and two. We believe that the commercial outcomes for Technegas® in the USA actually may be more rapid than we first estimated.

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In summary, the existing business case for Cyclopharm can be best described as a well-established profitable med tech producing cash and delivering dividends to our shareholders. Technegas® 's technologies are globally recognized in the gold standard, revenues are generated from high margin, single patient consumables. We have tangible near term growth opportunities via our entry into the US. Early next year, the first step is to set more than... to quadruple the size of our existing markets. Once approved in the US, we'll seek to double the existing US market opportunities by converting those CT exams back to nuclear medicine. Finally, by developing applications in the diagnosis and responsive therapy evaluation in patient management of chronic conditions, we're well-positioned to exponentially grow Cyclopharm beyond that USA opportunity.

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Thank you for allowing me the opportunity to share with you the company and of Technegas®. If you'd like to know more about what we're doing, please contact us either through the website or my email address is listed on the slide. Thank you.


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