Excerpt from the MD&AI think the main concern of shareholders in the last few days has been how the company is going to roll out Aristotle to consumers. The MD&A addresses this in several places. It doesn't look like the rollout of Aristotle is being confined to the oncological clinics purchased. Instead it looks like it's full speed ahead on all fronts. The oncological clinics are just one access point and add value by offering treatment if the tests reveal a high risk of developing cancer. The MD&A also mentions the prospect of full clinical validation within 2 years.
From pages 3 and 4:
COMMERCIAL ACTIVITIES
The Company has a national, clinical reference laboratory specializing in personalized blood-based tests to find, understand and treat cancers, which operates from a single facility in Richmond, Virginia, that is capable of servicing the entire United States, Canada and Europe.
The Company is working to secure multi-year agreements with hospitals, integrated clinical networks, large physician groups and healthcare organizations for StageZero Life Sciences’ risk assessment tests to assist in the early detection of cancer. This is in addition to work being done with high-risk populations, their employers and in the telemedicine arena.
The focus is on Four Primary Growth Areas:
Small Independent Medical Practices: Ranging in size from 1 to 10 providers, with reimbursement for the tests via billing to insurers and patient-pay, is an important sector of the market. We are steadily increasing the number of practices using our tests, especially on a routine, weekly basis and have significantly restructured and upgraded our billing procedures. We expect this segment to contribute about 10-15% of our test volume.
High-Risk Populations/self-funded employer plans: Early detection of cancer as well as risk stratification into normal, high and “raised” risk is of critical importance in workers exposed to carcinogens. The Company is working with multiple high-risk employer partners across the country and has initiated screening within these high-risk groups. We are also in discussion with several self-funded employer plans and have significant interest in our programs.
Reimbursement to the Company is direct and either immediate, or within 45 days upon invoice.
TeleMedicine/Patient Directed Testing The global telehealth market was valued at US$50 billion in 2018 and some predict it to reach US$267 billion by 2026.1 Currently, 74% of employers in the United States now offer telemedicine as a covered benefit.2 Similarly, Americans age 45-54 and 65+ are most likely to delay needed care due to wait times.3
On average, it takes approximately twenty-one (21) days for a new patient to see a primary care provider4 and 66% of consumers are willing to use telehealth to get faster service and costs savings.5 According to the National Business Group on Health Plan Design Survey, large employers offering telemedicine is increasing.
Large Healthcare Systems Are one of our largest opportunities and we are in discussion with several large systems. The company is working on implementation of our programs into these systems. Implementation is complex as there are many stakeholders within a large system and all have to be coordinated. Contracts will be executed and announced once implementation is fully in place. Payment to the Company is by invoice and within 45 days.
Aristotle As potentially the first multiple cancer diagnostic test from a single sample of blood, will expand our offering into this commercial framework which is being expanded now. This is a $35 billion opportunity, and the early diagnosis of cancer via an affordable, patient-friendly test will have an impact at the population level that is simply not achievable now.
We anticipate that the high-risk population/self-funded employer plans, the Patient Directed Testing/Telehealth and large healthcare systems will contribute approximately 85-90% of our test volume.
Flat Fee Model
The typical path to commercialization of new, novel diagnostics is often lengthy and involves many steps, with limited uptake and adoption. By offering the StageZero Life Sciences diagnostic testing portfolio through large healthcare systems and networks as well as to high-risk groups/employers and via telemedicine, we expect to be able to shorten this cycle, thereby driving adoption and increasing utilization of our tests. By contracting with StageZero Life Sciences to provide blood-based, early cancer risk stratification tests, a healthcare system has access to novel tests. StageZero Life Sciences receives an established payment amount for each processed sample. This model can be adopted if the healthcare system provides services through integrated provider networks, self-funded employee plans or value based reimbursement systems. Payment to the Company is therefore reliable and predictable.
Lab Operations
2019 saw the lab continue full operation and refine all systems. We had a request in 2018 from a local, known lab to share space with us and we decided to reduce our footprint and consolidate into approximately twenty -five percent of our previous space. This will save us approximately $2.5 million in costs over the term of the lease. Operations are now more contiguous and streamlined, and we have expansion capability to meet increased testing for several years to come. We are now processing PCR and antibody tests for COVID-19 in addition to our cancer screening tests. Current capacity for COVID-19 testing is 1,000 tests per day.
Changes made to the billing system in 2019 brought certain functions in house. Recovery of reimbursement for tests previously run and billed continue, as do billing and recovery for current tests. Our focus in 2020 is to shorten the timeframe and improve the procedure for collection for tests run in the last twelve months of billings, new tests not yet billed as well as previous tests billed but not followed up to conclusion. The Company’s focus is now mostly on flat fee billing which is a more reliable predictor of revenue collection.
MyCancerRisk:
The Company’s MyCancerRisk Data Analytics™ Platform is being developed to track and analyze aggregate cancer screening data in order to monitor performance on testing and early intervention. This platform is expected to bring significant value to large healthcare systems and self-insured organizations who want to monitor compliance with cancer screening, risk stratify their patient populations, and improve early intervention.
From page 7:
OUTLOOK
At the heart of the Company’s mission to improve health outcomes is our ability to provide physicians and their patients with actionable clinical data for cancer risk assessment and diagnosis. ColonSentry, as the first blood-based, early colorectal cancer diagnostic test to be developed from the Sentinel Principle platform has been validated in both a 10,000 patient prospective study and a 100,000 patient post-marketing study, which confirmed the strength of the science. Aristotle, our next-generation diagnostic test, can test for ten cancers from a single sample of blood, with data to date indicating high sensitivity and specificity across the individual cancers. The Sentinel Principle platform is therefore proven, not promised. It is anticipated that full clinical validation will be completed within two years
Access to patient friendly, blood-based tests that can detect disease at its earliest stages is truly innovative, especially when multiple disease states can be screened for from a single sample of blood. Aristotle does that, in this case, for multiple cancers and will allow early diagnosis at the population health level. This has implications for self-funded employer plans which have employees in high-risk environments (Fire fighters, oil and gas, coal and chemical plants, pilots and flight attendants, drivers), large healthcare systems, especially those with outreach programs and benefit plans, the military, as well as individual States which have specific populations that need to be screened.
As a prelude to this in 2018, StageZero Life Sciences began the process of collecting and sharing aggregated data in an effort to build a data-driven product to help practices and healthcare systems better understand their patient populations and build more effective programs to improve patient compliance with cancer screening, preventive health programs, and early interventions. During 2019 we expanded this effort as we initiated research programs with key high-risk groups and focused on supporting these programs into the roll-out of our four distinct commercial paths. We expect data as an asset to continue to be a key strategy for us.
In 2020 and early 2021, we have:
• Aggressively expanded the programs under MyCancerRisk™ to High Risk Patient Populations and their employers. Pilot program data shows 34% of those tested had a raised risk result for cancer.
• Initiated the Patient Directed Testing program with 8,000+ draw sites and TeleHealth Physician Networks.
• Initiated test implementation planning with Large HealthCare Systems. This runs parallel with contract completion. Management’s objective is to have test introduction logistics completed concurrent with signature of agreements.
• Consolidated planning with large employers of high-risk employees to initiate extensive screening programs.
• Continued to expand the Small Clinical Practice base and upgraded Billing and revenue collection systems.
• Initiated full clinical validation of Aristotle.
We continue to develop four distinct revenue streams:
• High Risk Patients - payment collected immediately
• Telemedicine - payment collected immediately or invoiced to Networks with payment within 45 days
• Large HealthCare Systems - fixed price per test, invoiced and paid within 45 days
• Small Clinical Practices - standard billing to insurers/CMS. Process being significantly upgraded.