ImpediMed Limited (ASX:IPD) CEO and Managing Director Richard Carreon presents on ImpediMed's technology, the SOZO Digital Platform, and the addressable market across oncology, heart failure and renal failure.
Today I’ll cover five key topics: our transformation from a medical device company to connected digital health platform; I’ll review our technology; provide insight into the significant markets in which we compete; and show the growing global adoption of our SOZO Digital Platform; and, finally, discuss the inflection point we find ourselves at and the catalysts to accelerate our current growth.
The following is our disclaimer and forward-looking statements for you to review.
And now to start the ImpediMed journey. Our technology, Bioimpedance Spectroscopy or BIS, came out of the University of Queensland. Dr Leigh Ward was, and continues to be, chief proponent of our technology. And ImpediMed has advanced and pioneered the use of this technology, producing the first commercially available BIS device in the 1990s. You can see the U400 device on the left-hand side of the slide, which was the flagship product. It has great underlying technology, but with only a single application -- unilateral lymphoedema -- it had limited value. You can see from the graph, of the total cancer population, we addressed only a very small fragment of the total opportunity our technology is capable of delivering. It took 20 minutes to do the test, you needed a room for the patient to lie down, the test had to be taken by a trained therapist, and as mentioned, it only a addressed a single application.
In 2015, and 2016, we developed several key breakthroughs of our technology, and in 2017, we launched SOZO, the world’s most advanced bioimpedance spectroscopy device. Not only is it faster, with a test now taking less than 30 seconds vs 20 minutes, but it’s easier to use, takes up less space and the data is immediately available anywhere throughout a hospital system. More importantly, as you can see from the graph on the right, we now provide significantly more information to the physicians on a number of chronic diseases associated with cancer treatment. Today we have the ability to impact the vast majority of cancer patients undergoing treatment and help them improve their outcomes.
The underlying technology remains the same. Unlike other methods that use indirect ways to measure fluid, such as imaging, volume, or weight, BIS is a direct measure of fluid. We pass 256 different frequencies throughout the body. We measure how fast or slow each frequency travels and we get a detailed makeup of the fluid, the fat, the muscle and the bone. For fluid, we know how much is inside the cell walls and how much resides outside the cells. This level of accuracy of fluid through the body is key to many of the largest chronic disease states, such as cancer-related lymphoedema, heart failure and renal failure.
And it’s not just for fluid. SOZO measures and tracks a wide variety of critical patient data points, from skeletal muscle mass, fat mass, protein and minerals and basal metabolic rate, just to name a few. The speed and accuracy of our technology to determine fluid and body composition in medicine is unmatched.
And, as good as the device is, the power comes from the flow of data in a connected platform. Our secure cloud infrastructure allows patients to be tested at any location throughout the health care continuum: prior to surgery, when undergoing chemotherapy or radiation, and then at the outpatient clinic. Patient tests can be taken in one location and immediately reviewed online anywhere throughout the hospital system. Clinicians can track trends in patient data for actionable results. And most importantly they can use one test to look at multiple disease states. A single 30 second SOZO test generates information for a variety of different clinicians: surgeons, radiation oncologists, cardiologists, nutritionists or therapists, and for a wide range of conditions, such as lymphoedema, muscle wasting, and heart failure, caused by the toxic nature of chemotherapy drugs. And we are only just beginning to utilise the data being collected. Each test generates over 4,000 data points. To date, almost 300,000 SOZO tests have been conducted, providing us with millions of unique data points, and we are using this information to continually improve the SOZO platform.
And we have a number of regulatory clearances. SOZO has been FDA-cleared and CE-marked listed as a digital health platform that aids in the clinical assessment of lymphoedema. It provides fluid status for patients living with heart failure, and we are the only FDA-cleared device for the clinical assessment of Protein Calorie Malnutrition. We also have CE Mark for renal failure and have had preliminary discussions with the FDA for renal failure as well as bone density.
So, that’s a wide range of potential applications. However, we are focused on only three of those markets at this time. Oncology, that covers lymphoedema, which accounts for almost all our sales to date, and protein calorie malnutrition or muscle wasting. Heart failure, where we only have recently been given clearance for our heart failure index and renal failure, while being a slightly smaller market, has a concentrated user base that is very attractive to us.
Now, given the time constraints, let’s focus on oncology and heart failure. First, let’s look at the oncology opportunity. Clearly, a very large market. In the US alone, there are 1.8 million newly diagnosed cancer patients each year. And although I’m guessing most of you haven’t heard of lymphoedema, one in three cancer survivors will develop this chronic, lifelong disease as a result of their cancer treatment. It’s a bigger issue than a lot of conditions you have heard of, such as multiple sclerosis, rheumatoid arthritis, Parkinson’s and even glaucoma. It's estimated to cost the US healthcare system upwards of $7 billion each year. It’s a debilitating condition with significant swelling caused by a compromised lymphatic system. It’s also associated with infections, pain, disfigurement and significantly reduced mobility. There are more than 500,000 cases per year in Australia and more than 5.5 million US patients suffering from persistent cancer-related lymphoedema. And, to date, except for early intervention, there is no cure for lymphoedema. What SOZO provides is a simple, non-invasive, 30-second test that has been proven to detect sub-clinical lymphoedema, and at this stage it can be reversed. It’s currently being utilised in some of the most prestigious cancer centres in the US, such as Mayo Clinic, the Cleveland Clinic and MD Anderson. And almost all of our sales to date have come from lymphoedema. And while we have been quite successful, what’s been missing is the Private Payor Reimbursement.
Now, the PREVENT trial results are critical to obtaining reimbursement, and that’s the key to accelerating our near-term results. The publication of the PREVENT trial is the single most important, short-term milestone we are focused on. This trial isn’t about obtaining an FDA clearance, it’s about physicians being reimbursed for a test that can dramatically improve their patient outcomes. Reimbursement of our L-Dex testing is the reason we sponsored this landmark study. The data necessary to obtain insurance coverage is much more demanding than what is required to obtain an FDA clearance. As such, PREVENT was designed as a head-to-head study versus the current standard of care. It’s a level 1 evidence study, meaning it’s prospective, randomised, and multi-centred. It’s a landmark study with 1,200 patients who have been followed for three years across 13 hospitals that are some of the most prestigious cancer institutions in the US and Australia. Now, we believe it’s the outcome of this study that will provide the genesis for payment and coverage by private insurance carriers. As I mentioned on our recent quarterly call, although we don’t know the results or conclusion, we are extremely confident in the positive outcome of the trial. This confidence comes from the many studies that have proceeded PREVENT, the interim results, and the recently published meta analysis. And I would also like to reiterate the time frame we gave during the quarterly. We said at the time we were expecting the manuscript to be published in the next 90 days, which is now only 60 days away.
The other major indication I would like to talk about today is heart failure. Again, it’s a very sizable market, with 26 million people living with heart failure worldwide. It’s the most common cause of hospitalisation for people aged 65 years and older, and costs the US healthcare system almost $30b annually.
And heart failure is all about fluid. The current methods of assessing fluid burden are either inaccurate or invasive and expensive. Now, AstraZeneca has taken 375 SOZO devices to measure fluid outcomes in two drug trials in heart failure and kidney disease patients, which was a huge credibility tick for the platform. And we’ve recently obtained FDA clearance for HF-Dex, which gives clinicians an objective measure of fluid in their patients. In a recent clinical trial, we demonstrated that SOZO HF-Dex could identify patients that were over four times more likely to be readmitted in to a hospital. There is a clear path to reimbursement, and we continue to work on expanding the commercial sales of SOZO for the use in monitoring heart failure patients. The next step is hospitals establishing heart failure programs using our technology, and that’s something we will be looking to announce this year.
Now turning to adoption. Today, we have sold over 770 SOZO devices for use in medical facilities, and 375 devices that are being used in the clinical studies with AstraZeneca that I mentioned earlier. SOZO has been adopted across many of the major cancer centres across the US, including the Mayo Clinic, the Cleveland Clinic, MD Anderson, City of Hope, and the University of Kansas Cancer Center, just to name a few. In fact, the University of Kansas Cancer Center is our largest user in the US, with 15 SOZOs in a comprehensive lymphoedema prevention program. In Australia, NSW Health has over 50 SOZO devices across its network.
We just hit another milestone in the recent quarter, reaching a revenue run rate of over $10m. We saw records across a number of our metrics, including SOZO revenue, annual recurring revenue and patient tests, and this is in an environment that has been significantly impacted by Covid. An important feature of our selling model to note is the recurring revenue, shown in the dark blue columns. We sell on a SaaS subscription basis, and our annual recurring revenue has grown to $8.7m. Our balance sheet remains solid with $19.7m at the end of the June Quarter.
So, to summarise the key highlights. The transformation to a connected digital health platform is now complete. We have multiple applications for the technology with large addressable markets. We have reached an inflection point with a number of short-term catalysts to drive future growth, including: acceleration of the lymphoedema application with reimbursement post PREVENT; applications such as Protein Calorie Malnutrition, which is also an oncology application for which we already have an FDA clearance; heart failure -- this is an extremely large opportunity, again utilising SOZO’s ability to measure fluid levels in the body. We have only recently launched the heart failure application, but we are pleased with the initial level of interest; and Renal failure - we have CE Mark for Europe, but we need to obtain an FDA clearance for use in the US. Again, it’s all about measuring a patient’s fluid levels.
Now, if you have any questions or would like to follow-up, then please don’t hesitate to drop Mike an email or give him a call. He is always happy to assist. Thanks again for listening to the ImpediMed Story and thank you Clive and Finance News Network for the opportunity to present today.Ends