Impedimed Building On A Fluid Situation In America
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Listed in 2007, Impedimed has taken its lead product, L-Dex, to market initially aimed at the accurate early detection of lymphoedema, which is a painful build-up of fluid in the limbs of cancer survivors.
Australia’s medical device developers have been kicking goals of late, and Queensland-based Impedimed Limited (IPD) is no exception. The company’s bioimpedance spectroscopy (BIS) system, which came out of research from the University of Queensland and Queensland University of Technology, accurately and simply measures tissue composition and hydration, for use in the non-invasive clinical assessment and monitoring of human disorders and diseases.
Listed in 2007, Impedimed has taken its lead product, L-Dex, to market initially aimed at the accurate early detection of lymphoedema, which is a painful build-up of fluid in the limbs of cancer survivors. It does this by passing a low frequency current through the limbs to measure and compare the extra cellular fluid levels.
Treatment for cancer can damage the lymphatic system and result in fluid build-up in the extremities. Simple and accurate measurement of fluid in limbs allows early detection and intervention. If detected, the progression of lymphoedema can be prevented – or even reversed, by wearing a compression sleeve. If not treated, it can become an irreversible, life-long debilitating condition that gets progressively worse. Early detection of lymphoedema using BIS allows early treatment, which prevents progression to serious disease. Lymphoedema currently affects more than 100,000 people recovering from breast cancer in Australia alone and millions worldwide.
BIS is a platform technology, and further out, the company believes it could be directed at identifying potential fluid imbalance in dialysis patients, to identify heart failure and stages of progression, in remote monitoring of changes to extra-cellular fluid, obesity, drug toxicity and hydration in elite athletes. Fluid imbalance has significant clinical implications, and detailed knowledge of fluid levels can tell doctors a lot.
However, lymphoedema in breast cancer patients has been the focus, and the company has achieved market approval from the Food & Drug Administration (FDA) in the US, Therapeutic Goods Administration (TGA) in Australia, the CE Mark in Europe and the Certificate of Listing in Hong Kong. Impedimed’s device was the first with an FDA clearance in the US to help health care professionals clinically assess secondary lymphoedema.
The device has achieved some big breakthroughs recently. In September 2014 the American Medical Association (AMA) released coding for the L-Dex device that covered lymphoedema as a result of all cancers, not just breast cancer, in US Medicare patients, covering people over 65. That greatly expanded Impedimed’s potential base of insured customers, and thus its market opportunity.
Then, in November last year, the Centers for Medicare & Medicaid Services (CMS) in the US published the valuation for CPT (Current Procedural Terminology) code, the government pay code through which physicians and hospitals will be able to seek reimbursement from US Medicare and Medicaid, based on a payment rate of US$112.67 if billed by a hospital outpatient facility or an average national physician payment rate of US$114.99 per read.
The company says the publication of this CPT code valuation will be central to driving market adoption of L-Dex. It will provide greater access for patients, facilitate claims processing and accelerate coverage from payers.
Not only did the CPT standardised reimbursement arrangement usher in the basis under which Impedimed could launch L-Dex in the US from 1 January 2015, it came at a reimbursement rate that was a lot higher – up to three times higher – than Australian analysts had expected.
More recently, in July, the National Comprehensive Cancer Network (NCCN), an alliance of 26 of the world's leading cancer centres, and an authoritative source of comprehensive cancer treatment and clinical practice guidelines, incorporated lymphoedema into its official breast cancer clinical guidelines for the first time. The NCCN guidelines have formally recognised lymphoedema as a major, long-term chronic disease that needs to be addressed. Each centre will have to develop an “acceptable” monitoring program for baseline and periodic evaluation for development or exacerbation of lymphoedema – and BIS is the only objective measure.
Full commercial launch of L-Dex in the US will come before the end of the year. The company has six US cancer centres conducting a commercial pilot program. The addressable lymphoedema market in the US is between US$840 million–US$1.8 billion. The rest of the world market is more than five times the size of the US market.
A completed trial conducted at a large US teaching hospital showed that in 180 patients, BIS reduced the clinical lymphoedema rate from 36.4% to 4.4%. The second trial result is expected later this year. Both trials investigate whether early intervention – identified with BIS – halts the progression of lymphoedema to a chronic, irreversible state. There are also trials being conducted in the UK and France. The post-market approval trial for Level 1 Evidence – featuring 1,100 patients – is on track for interim data release in late 2016 or early 2017.
Impedimed says the aim is to get bio-impedance spectroscopy included in the NCCN Survivorship Guidelines, which are the recognised standard for clinical policy in cancer care in the US. That would make L-Dex the standard of care.
In FY14, Impedimed generated revenue of $3.58 million, up 34%, and recorded a net loss of $7.94 million. In FY15, revenue rose by 34%, to $4.8 million, but the operating loss widened to $14.3 million, as operating expenses almost doubled, to $18.5 million. Lymphoedema revenue has moved from $525,000 in FY13 to $2 million in FY15.
Impedimed ended the financial year with cash on hand of $32.6 million at 30 June 2015, up from $10.8 million at June 2014 and $3.1 million at June 2013. (This was after a capital raising of approximately $32.5 million, before costs and expenses, conducted in November 2014.)
At 95.5 cents, Impedimed is capitalised at $280 million. The stock has appreciated by 127% in the last 12 months, but is down from its August 2015 peak of $1.21. With the details of IPD’s full commercial roll-out of L-Dex in the US still to come, a lot of potential is already in the share price – but, arguably, a lot is not, given the company’s hopes of building on L-Dex’s success to demonstrate its BIS intellectual property as a true platform technology.
James was founding editor of Shares magazine, and oversaw one of the most successful magazine launches in Australia. He has also written for BRW, Personal Investor, The Age and Management Today, and was subsequently personal investment editor at The Australian and editor of financial website, investorweb.com.au