Venaxis (NASDAQ:APPY) expects to report top-line data in March from a pivotal study of its rapid, protein biomarker-based assay for appendicitis, the APPY1 Test and, depending on the results, submit a final data package to the FDA soon after.
“We continue to have very positive dialogue with emergency room physicians and administrators at leading hospitals in the U.S. and Europe as part of our market development activities,” president and CEO, Steve Lundy, says in an interview with BioTuesdays.com.
“Based on the enthusiasm and feedback we are receiving from thought leaders about the potential economic and clinical benefit of using the APPY1 Test, we believe Venaxis will be well positioned to gain significant traction in Europe on full commercial launch, as well as when we enter the U.S. market on potential FDA clearance in 2014,” he adds.
The APPY1 Test, which was cleared for sale in Europe last year, is the first blood test designed to help emergency physicians identify patients who are at low risk for appendicitis, allowing a more conservative approach to patient management. The test is targeted for children, adolescents and young adults, aged two to 21.
Mr. Lundy says this population is at the highest risk for appendicitis and has the highest risk of long-term health effects associated with CT radiation imaging. He notes that about 80% of patients who enter the ER with abdominal pain receive a standard blood test, which can be an unsatisfactory indication of inflammation, and then go on to imaging.
In two recent studies, Castle Rock, CO-based Venaxis found that the percentage of patients suspected of appendicitis, who received CT scans, was nearly identical in both the lower-to-moderate and high-risk groups. Mr. Lundy contends that this is an indication of an over-utilization of imaging.
He also points to studies reported in the New England Journal of Medicine and JAMA Pediatrics, which have shown that a single CT scan can increase the future risk of cancer in children.
Nevertheless, the use of CT imaging has risen some 500% since 1995 because it can be highly accurate if the appendix can be visualized, it decreases negative appendectomy rates, and it has the ability to diagnose other conditions.
Enter the APPY1 Test.
“We have demonstrated that our test has the ability to provide objective data, with a projected negative predictive value greater than 90%, and provide surgeons with results in about 30 minutes,” Mr. Lundy contends.
He explains that from a blood sample, the device quantitatively integrates three biomarkers – MRP8/14, C-reactive protein and white blood cell count – using a proprietary algorithm in its software. “The application of multiple biomarkers leads to improved performance,” he adds.
In a survey of ER physicians last fall, Canaccord Genuity found that 75% are either strongly likely or likely to adopt the APPY1 Test, which analyst Jeffrey Frelick describes as “[a] nice endorsement that APPY1 is clinically useful and likely to experience uptake in U.S. emergency departments.
In addition, 87% of the physicians in the survey indicated that their hospitals are reducing the frequency of CT scans. “Recall that an important driver to test adoption of APPY1 hinges on the ability of the test to rule out appendicitis and reduce the number of unnecessary CT scans, which have been shown to induce high radiation and pose heightened cancer risks, especially in children,” Mr. Frelick says.
He rates the stock at “buy,” with a price target of $7. Shares of Venaxis closed at $2.51 on Friday.
In an earlier study, Venaxis validated its multi-marker APPY1 Test in 503 pediatric patients, aged two to 21, with acute appendicitis symptoms. The key finding was a negative predictive value of 97%, which is the probability that a patient with a negative test result will not have appendicitis. In addition, the study demonstrated a sensitivity of 97%, which is the probability that a patient with appendicitis will have a positive score.
In the current pivotal study, the company recently completed patient enrollment of approximately 2,200 patients in order to evaluate a net of 2,000. “We hope to report top-line data in early March and file with the FDA by early April,” Mr. Lundy says.
Mr. Lundy says there is a large market potential for the APPY1 Test, citing the company’s “razor-razor blade” business model and an estimated 22 million emergency visits for abdominal pain in the U.S. and Europe each year.
Assuming modest penetration of 30% in four years, he figures the pediatric market alone could generate total potential revenue of more than $50-million for Venaxis. “With approval in the pediatric market, we plan to extend the APPY1 Test label to include adults,” he adds.
Canaccord’s Mr. Frelick figures the total addressable market for the APPY1 Test could be as high as $700-million.
As part of an early marketing program, Venaxis and its consultants analyzed the potential cost savings in nine categories of hard and soft costs for a sample 410-bed hospital to be some $350,000 a year, using the APPY1 Test at an estimated cost of $80.
In Europe, Venaxis has engaged regional distributors for APPY1 Test in Italy, Spain, Austria-Switzerland and the Benelux countries and is finalizing negotiations with distributors in Britain, France and Germany for a full-scale launch this year.
“We have our direct sales people in Britain, France and Germany, because we want to put the most attention on those three countries with the distributors we go with,” Mr. Lundy says, adding that the company has already made preliminary sales calls to the top hospitals in each country.
Venaxis also is working with key opinion leaders in Europe to conduct studies that would demonstrate the economic and clinical value of the APPY1 Test.
“We’re taking a totally different path in the U.S. and will commercialize the APPY1 Test with a direct sales team, assuming FDA clearance,” Mr. Lundy points out. Venaxis initially plans to hire 10 sales reps in the current quarter, with an additional 10 hires in 2015, to focus on the top 2,500 hospitals with more than 100 beds each.
The company’s current R&D is aimed at increasing the specificity of the APPY1 Test. “This will be accomplished by adding new biomarkers to the current panel and investigating new state-of-the-art instrument platforms, which detect proteins at much lower concentration levels than existing technology,” he adds.
