Every 40 seconds.
That is how often someone suffers a stroke in the United States. It just gets worse from there. Globally, stroke is the leading cause of disability. But it is also a ruthless killer. Stroke is the 4th leading cause of death in the U.S.
There are 795,000 stroke incidents in the U.S. each year. Most people would be surprised to hear that this is roughly equivalent to the number of heart attacks in the U.S. annually. Perhaps more surprising, stroke creates greater economic costs (because so many people are disabled).
Why does stroke produce so many casualties each year? One of the reasons is that until now there has been no practical, cost-effective manner to screen large numbers of people at risk for stroke. This means diagnostic testing doesn’t typically occur until after someone has suffered some serious health event.
CVR Medical Corp. (TSX: V.CVR, OTCQB: CRRVF, Forum) is about to change all that. There are actually two types of strokes: ischemic and hemorrhagic. Roughly seven out of eight strokes are ischemic. CVR’s Carotid Stenotic Scan (CSS) is revolutionary technology which, for the first time, allows for the cost effective detection of blockage within the carotid arteries, which is a leading indicator for ischemic stroke.
The Company’s CEO, Peter Bakema, lays out the corporate mission for CVR Medical:
“By leveraging our strong intellectual property portfolio along with the breadth of internal industry know-how, CVR is poised to revolutionize healthcare and improve clinical outcomes within the cardiovascular field.”
Specifically, the CSS uses proprietary sensors to analyze changes in blood flow. The CSS is designed to listen to the blood flow in the carotid arteries and delineate any blockages.
What sort of irregularities does the CSS detect? When plaque builds up along arterial walls (atherosclerosis), the flow of blood starts to become restricted. In turn, this restriction generates low-level noise in our arteries.
The CSS is capable of sensing this increased noise in our arteries, implying a high risk of stroke. Once alerted, the patient can be put on drugs to address the atherosclerosis and (if so choosing) has the chance to make lifestyle changes to further reduce risk.
The CSS sounds the alarm on stroke, making Carotid Artery Disease detection and stroke prevention a more feasible objective. But this is only ½ of the appeal of this healthcare innovation. The technology is fast, relatively inexpensive versus other diagnostic options, easy-to-use, and less intimidating for patients.
- Non-invasive
- Non-emitting
- No certified tech required to administer test
- Repeatable
- Small footprint
The current diagnostics available for arterial analysis are Doppler ultra-sound followed by highly expensive angiography. These tools are much more time-consuming when compared to the CSS. This coupled with the high cost associated of those tools, presents a hurdle within the healthcare system.
The CSS offers a cost-effective alternative, resulting in a streamlined process and improved patient flow. The CSS does not emit potentially harmful radiation and thus scanning can be repeated as often as necessary to monitor patients for risk of stroke as they age.
Expense? CVR is forecasting a user fee of roughly $100. This estimate is based upon the selling price of the device ($49,000), the estimated frequency of use, and the user operating costs.
How fast is the CSS? Altogether, the total length of time required for this non-invasive test is about two minutes.
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Fast, inexpensive, user-friendly. But this medical technology did not materialize overnight. Ten years and $30 million. That was the commitment in time and resources which was necessary to advance the CSS to the point where it is ready for FDA submission and subsequent market launch.
Along with the research is an impressive IP portfolio. CVR has already been issued one U.S. patent. Thirteen more patents are pending. More than 20 additional patents are “in process” (being developed).
This ground-breaking research was initiated by CVR Global. CVR Global Inc. is a private corporation based in Denver, North Carolina. CVR Global had the talent, leadership and resources to develop the Carotid Stenotic Scan technology. What that company needed was a publicly-listed entity which could raise the capital necessary to market the CSS.
CVR Medical is a public company that came into existence in conjunction with a joint venture. The business structure is a 50/50 split between CVR Medical and CVR Global. With the two entities essentially part of a single whole, there is considerable overlap in management, especially at the senior level. Peter Bakema is the President and CEO of both entities.
Bakema has 42 years of expertise in creating businesses and corporate development. His leadership experience extends into managing larger companies encompassing hundreds of employees and contractors, and also includes mergers and acquisitions and capital-raising. Ten years of that experience has been earned in the medical device space.
Bakema’s right hand in management is Tony Robinson, the COO for both corporate entities. With an MBA in healthcare management, Robinson has been immersed in the day-to-day operations of CVR Global and CVR Medical for the past eight years. In previous experience with a global medical device manufacturer, Robinson played an active role in supporting more than 25,000 SKU’s into the healthcare marketplace.
Along with a research team stacked with PhD’s, this management group has already accomplished the first part of CVR’s mission: developing this revolutionary diagnostic tool to the point where it is poised to be released into market. Presently, the CSS is moving through the final stages of testing, prior to FDA submission.
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A clinical trial is currently underway at Thomas Jefferson University Hospital (located in Philadelphia, PA), involving a minimum of 1,000 patients. This is the fifth clinical trial, with the original trial dating back to 2007. More than 1,000 carotid studies are associated with this research.
Because the CSS is non-invasive and non-emitting, there are no potential health risks associated with its use. This means that the Carotid Stenotic Scan is intended to go before the FDA as “a Class 2 medical device” and under this classification it benefits from a streamlined testing and approval process in the United States compared to higher risk Class 3 devices.
As a result, the CSS is approaching the FDA submission process (for the U.S. market). Management anticipates making its final product submission to the FDA at the end of this year. This sets up a targeted product launch for early 2018. Then the excitement begins.
With 10 years spent in product development, management has had plenty of time to plan their marketing strategy and crunch the numbers – and the numbers look very promising. The Company has laid out two scenarios for marketing the CSS.
Initial marketing will take place under the “early adopters” scenario. What this means is that CVR has prepared a marketing strategy which assumes that there will be no patient or physician reimbursement via medical insurance. This is typically the starting point for new medical technologies until they have been assimilated into the healthcare marketplace as part of the accepted standard of care.
The target market is the total number of practicing physicians in the U.S. A 2014 census of actively licensed physicians pegs that number at over 900,000 doctors. These practitioners are spread across approximately 185,000 medical offices.
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Revenue projections are based upon increasing levels of market penetration. CVR is forecasting 3rd year revenue potential at $521,819,000 (USD). Of note, the Company’s internal research indicates that this represents merely an average level of market penetration for new medical device technology.
Assuming even higher levels of market penetration would produce proportionately more robust numbers. Even with the extremely conservative penetration rate projected in the first year, the resulting sales would make the Company solidly profitable.
These parameters are only applicable with respect to the early years of marketing the CSS (“early adopters”). Once this revolutionary technology has gained broad acceptance and full reimbursement is widely available, the economic potential for the Carotid Stenotic Scan becomes far more lucrative.
For investors who are skeptical of such robust revenue forecasts, management is also happy to point to peer comparisons.
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CVR Medical has a current market cap of only $24 million. Even in the Company’s “extremely conservative” forecast (in the early adopters scenario) revenues would be comparable to the takeovers listed above.
Every 40 seconds. That’s how often someone suffers a stroke in the U.S.
Two minutes. That’s how long a CSS test takes, potentially preventing those strokes.
One year. That’s how long CVR estimates it will take for its CSS scanning technology to become a commercial success.
cvrmed.com
FULL DISCLOSURE: CVR Medical Inc. is a paid client of Stockhouse Publishing.