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Samstag, 31. Oktober 2020

Knifeless Surgery: Theraclion bets on Varicose Veins with HIFU

 (appeared first on Seeking Alpha, October 31, 2020)

Summary

  • In surgery cutting, one's access to the operative field risks infection and bleeding. Minimally invasive surgery can reduce these risks.
  • Knifeless surgery with highly intense focused ultrasound (HIFU) acts through the intact body surface completely eliminating the risks of knife, access, bleeding, infection and wound care.
  • Theraclion's Sonovein uses HIFU for varicose veins. It is the first non-invasive and painless intervention, a unique selling proposition in a market of five million interventions per year.
  • Knifeless HIFU-surgery is a disruptive innovation like computed tomography or the balloon catheter. Its growth potential is underestimated and undervalued.

Worldwide operative interventions on varicose veins total 5 million a year. Theraclion's (OTCPK:TCLIF) "Sonovein"-device addresses this field with HIFU (highly intense focused ultrasound), a new form of knifeless surgery. Its unique advantages - no incisions, no pain, no scars, no anesthesia, no operating theatre - make for a unique selling proposition which already conquers experts and markets.

Reducing the Risks of Surgery

In surgery the actual procedure - such as removing the gallbladder or appendix - is not very problematic. The danger lies more in creating access to the surgical area, an injury which risks blood loss and infection. There's also the risk of anesthesia. Minimally invasive techniques like endoscopic and robotic surgery reduce but do not eliminate such risks.

HIFU (high-intensity, focused ultrasound), a new technology makes surgical access and knife superfluous in many cases: Ultrasound waves are focused through the intact body surface like through a lens and thereby concentrated at a point inside the body where the tissue is killed by heating up to 85° degrees Celsius. The skin not being opened there is no need for sterility, asepsis, disinfection and wound care, sometimes not even for an operating theatre or anesthesia. This saves time and costs.

HIFU's Many Applications

HIFU is used in many fields: For prostate cancer by French EDAP and US SonaCare, as discussed before. For uterine fibroids and bone metastases by Canadian Profound Medical (OTC:PROF) among others. For high eye pressure (glaucoma) by French Eye Tech Care and for brain disease by Insightec in Israel among others. For a detailed overview, see Focused Ultrasound Foundation's voluminous State of the Field-Report 2020.

Theraclion's start with thyroid and breast tumors

Theraclion is a French company traded in Paris. Those lacking trust in French engineering may be told that Napoleon founded the first technology school ever for his military engineers, the École Polytechnique. Since then, the French never had a lack of brilliant engineering and the École Polytechnique got many copies, e.g. the Massachusetts Institute of Technology.

Theraclion, like EDAP, is part of a French technology cluster which grew around the state laboratory LabTAU (Laboratory for therapeutic applications of Ultrasound) founded 1985 by INSERM (The French National Institute for Health and Medical Research) together with the departments of experimental surgery and of engineering of Lyon university. They used ultrasound for vascular imaging and for crushing of kidney stones. The latter was then miniaturized for prostate cancer and commercialized by EDAP.

Theraclion which was founded in 2004 as a spinoff of EDAP is based in Paris and its "Echopulse" device uses HIFU for safe and efficient removal of benign breast and thyroid nodes, this costing up to 65 percent less than open surgery. The market is not enormous and its map (scroll down to see it) shows only about two dozen installations mostly in Europe.

The scourge of varicose veins

So far, the story is not overwhelming. But now the company has opened another opportunity with its Sonovein system for varicose veins. Some facts of life may explain why this is a really big deal:

Varicose veins affect about 30 percent of all people, more woman than men. Most varicose veins are only a cosmetic nuisance, which moneyed people let treat in private clinics. But they also can lead to swollen legs, bleedings, thrombosis and ugly chronic ulcers which affect about 0.75 percent of the population. Of the ulcers 1/4 remain open despite constant treatment with bandages and compresses which can cost thousands of USD a year. Since 80 percent of these ulcers could be healed by operative interventions Prof. Whiteley estimates that the UK alone wastes billions on ineffective treatments every year.

Older interventional treatments include open surgery or stripping, the latter pulling out the veins with force. Both can lead to a painful and prolonged postoperative recovery with hematoma formation, nerve injury, and infection. The state of the art are minimally invasive therapiesSclerotherapy injects toxic substances into the vein, adverse effects being rare but sometimes severe, e.g. infections, extensive tissue damage, arterial occlusion. This century saw the "endovenous revolution" where radiofrequency or laser is introduced into the vein over a wire or a light guide and acts by heat. This mostly need anesthesia which adds risk. To me as a physician all these techniques never seemed worth the risk in cosmetic indications. E.g. I would not let my wife or my daughter do it.

HIFU as a quantum leap

Theraclion's "Sonovein" is the first completely non-invasive technology for venous disorders. Its HIFU-beam is guided by ultrasound imaging and acts through the intact skin. There is no relevant pain, no infection and no anesthesia. The 30-minute procedure can be performed single-handedly in an ambulatory office setting. A first successful study from the vascular clinics of Dr Alfred Obermayer in Austria led to a CE-mark and was confirmed by Prof. Mark Whiteley, the pioneer of the "endovenous revolution" in the UK who runs the renowned Whiteley clinics for venous diseases: According to him HIFU is a quantum leap and a potentially disruptive technique, see him explain here. Clinical experience led recently to the second-generation "Sonovein S" machine which generates shorter ultrasound pulses (0.5 versus 4-8 sec) and works much faster and without pain.

Sonovein in action: HIFU probe on the right

Are such first studies significant? Sir Austin Bradford Hill the pioneer of medical statistics held that there is not always a need for big series: E.g. when under penicillin the first 10 patients with pneumonia had become afebrile and well within 48 hours no further studies were needed. Similarly, in some dozens of patients treated HIFU was as effective as other endovenous techniques while doing away with asepsis, disinfection, knife, incisions, scars, injections, toxic substances, pain, anesthesia and even an operating theatre. In fact, this is the first technique I would personally accept for cosmetic varicose vein indications as a physician.

Chances of wider adoption

By 2021 Theraclion will have expanded their user base to 12 academic or leading European institutions, which will refine the technique, generate corroborating studies, train physicians and drive accelerating commercialization in Europe from 2022.

Initial reactions by specialists are enthusiastic. The learning curve for the experienced is minimal, because all previous treatments use ultrasound imaging, and instead of placing a needle, a wire or a light guide one places the HIFU-probe over the vein.

According to the CEO David Caumartin, a super smart physicist and telecommunications engineer, the Sonovein system is placed free of charge under a pay-per-use model (around EU 1,500 for Switzerland), thereby eliminating the hurdle of an initial investment.

There is no insurance coverage yet and costs are higher than for endovenous radiofrequency. However, varicosis is unique, because most cosmetic treatments - a substantial minority - are anyway paid out of pocket.

There are an estimated 5 Million venous procedures per year worldwide, and alone 100,000 in the UK, of which Theraclion wants to conquer a significant part. Awaiting insurance coverage "Sonovein S" has a role as a "premium-treatment" for self-paying customers. In most bigger towns and many hospitals there are vein specialists and in every country there a several specialized clinics each treating hundreds of varicosis patients a year. Patient demand will force them to adopt HIFU if they do not want to lose well-to-do clientele. From medical circles here in Switzerland, one hears of a keen interest. Knifeless surgery without anesthesia is just a unique selling proposition. Insurance coverage is probably a question of time.

The technology had been submitted to the FDA already in 2019. Studies in the US had to be postponed due to COVID but will start in summer 2021 and will be the base for requesting the 510k approval from the FDA. A realistic time frame for sales in the US is 2024.

Financials

Theraclion is a small start-up with ca. 25 employees. Market cap is USD 27 million, yearly loss is USD 4 million and debt USD 7 million. Revenue comes from selling devices, service and disposables, and for "Sonovein S" from pay-per-use. Revenues grew from USD 2 to 3,4 million in the last years. 2019 showed a growth of total revenue of 66 percent and of income of 38 percent. For 2020, it expected sales growth of 30-50 percent. Then came COVID, which however the company weathered rather well: Revenues in the first half of 2020 were 15 percent lower on a y/y basis, but due to early cost containment, operating loss was reduced by 5 percent y/y.

According to the report for first half of 2020, it had cash of EU 1.4 million as of December 31, 2019. During the first half of the year 2020, the company obtained EU 1.4 million under a State Guaranteed Loan (PGE) and an innovation loan from Bpi France, and it also received the EU 1M Research Tax Credit. Given a cautious estimate of system sales in 2020 with a second half expected to be more dynamic than the first, as well as the issuance of tranche 2 of the financing contracted in early 2019, Theraclion considers that it will be able to cover its cash flow needs until mid-2021. In addition, Theraclion obtained an EU 3.6 million credit line in the first half of 2020, which could be activated, if necessary.

A study by CIC market solutions equity research from October 22nd prognosticates a slowly growing thyroid and breast business and a rapid adoption of "Sonovein S" with 12 centers 2021, 20 in 2022 and 40 in 2023 and so on which is realistic. Assuming one center generating 300 procedures a year this amounts to total companywide sales of EU 4,6 million in 2021, 8.4 million in 2022 and 13.6 million in 2023 which should take them to breakeven and profits.

CIC-Market Solutions previously thought that the company might need further financing but now it concludes that it will be able to begin marketing without additional capital. I would agree as long as the COVID epidemic will be brought under control by next spring.

Downsides

Start-ups can go down, but Theraclion rides an emerging international wave of HIFU-adoption and will probably get the resonance and means to survive. COVID remains a danger but it resisted well.

There are no downsides inherent to the technology, which does basically the same as previous methods, just with considerably less inconvenience and adverse effects. Therefore, one can hardly imagine how further growth could be impeded by company-specific factors or factors inside the MedTech and medical ecosystems.

Theraclion has not yet obtained insurance coverage for its venous treatment and is presently limited to the substantial minority of self-payers. HIFU being more expensive than other minimally invasive treatments it has to succeed as a "premium product" which is reasonable given the advantages. FDA-approval can but will probably not be as cumbersome as with previous HIFU applications.

In the domain of veins, Theraclion is protected by patent until 2026. Thereafter it remains the first-mover with solid links to leading experts which will help to convince and maintain users.

Investment Thesis

Theraclion rides the global wave of HIFU-adoption and with "Sonovein S" has a unique selling proposition of painless non-invasive intervention in the enormous venous market. This disruptive breakthrough has low hurdles for adoption and must result in explosive growth of revenue and profits already over the next few years.

Afterthoughts: Risk and investment strategy

Investments must reside in a context, which for us is the following: The growth of world economy is not assured and may give way to shrinkage, causes being economic or belligerent conflicts, environmental and resource problems or other turmoil. Fiat currencies, blue chips and value investments are all at risk of losing value, perhaps sharply and for good. Somewhat better may be real estate, physical precious metals and maybe shares of relatively resistant industries, e.g. health, food and utilities. These may resist inflation but have no growth prospects.

If one looks for real growth one can put a percentage of the available means  into breakthrough adventures as long as one understands them. This may be rewarded by one- or double-digit multiplication. As long as they grow there is no point in much selling or rebalancing - never change a winning horse - except putting minor parts of the profits into other growth candidates or in safer investments. Theraclion and EDAP have further potential, especially after the recent dip. 

Freitag, 23. Oktober 2020

Taboos and illusions in the environmental question

(First appeared in Ugo Bardi's Blog Cassandras Legacy October 23th, 2020This is a translated and abridged version of "Tabus und Illusionen in der Umweltfrage", which appeared on Journal21 and on this Blog on 20.11.2020. Updated August 26th 2021)

I am not a climatologist, but as a physician, you only master certain areas and otherwise you listen to various other specialists. We are also used to deal with uncertainties: e.g. If you are considering an operation, you estimate the chance of success based on the patient's age, nutritional and physical condition, morale, heart health and previous illnesses such as hypertension, diabetes etc. Every risk factor reduces the chances of success. Inability to calculate anything precisely does not release you from making an estimate.

Similarly, the uncertainties in the climate discussion do not release one from making an assessment. There we are unfortunately hindered by some taboos and illusions, but let’s try:

I grew up in Basel where in the museum hangs a picture of the dead Christ, painted by Holbein 500 years ago.

This made a deep impression on me and I had it above my desk for years: A mercilessly realistic view of our God, his passion and the end of us all. We have to measure our actions against this end. Until then we must do, what we do as well as possible and not lose time. And there is already the first taboo, death. Death being repressed in the prevailing consciousness, much that is related to it cannot be seen.

Later I studied medicine and learned some principles:

1.     Illnesses often begin in secret: First symptoms are often not the beginning, but the last act. A drunkard or a smoker take decades to ruin their liver or lungs; this goes unnoticed because the organism compensates. Once jaundice or shortness of breath occurs, the further course is not in decades, but rather years. Similarly, if our bees die, this is not a beginning but the end, because they have been poisoned already for a long time.

2.     Risk factors for disease can more than add up: E.g. depression occurs in one percent of the population every month. A serious stress factor (death of family member, loss of workplace, illness, etc.) adds two percent more. Two stress factors add three percent. With three stress factors, one could assume depression in nine percent, but it is 24 percent: Suddenly the risks multiply. Similar mechanisms may apply in other situations.

3.     Patients and insurances want forecasts. Diseases often remain true to themselves: A patient with multiple sclerosis who is only slightly disabled after ten years, will probably not be in a wheelchair after another decade.

4.     This is only true in the absence of self-reinforcing mechanisms: The most dreaded example is the narrowing of the aortic valve, the valve of the main artery. The heart adapts, uses more energy, generates more strength and pushes enough blood through the valve; patients can even practice athletics. But when the heart can no longer get enough blood for its own energy requirements, heart failure and death occur within seconds. We physicians are terrified of such self-reinforcing and uncontrollable mechanisms.

5.     In our profession there are authorities: If a physician repeatedly has made diagnoses missed by everyone else, he will get a fabulous reputation. You believe him with advantage, even if you don't quite understand his reasoning.

6.     Cheating is useless: If the patient dies you are dealt with by the pathologist or the coroner. They are merciless.

Let's apply this wisdom to the environmental situation:

In 1972 the Club of Rome fed whatever one knew into a computer and he predicted that if we don't stop economic growth and limit the population at four billion, ecosystems will destabilize in the middle of our century. They even mentioned the greenhouse effect hoping for a timely solution. The limiting factor was pollution, not scarcity of resources or of land. Whoever pretends that the Club of Rome is discredited because it incorrectly predicted a resource shortage tells a lie or has not read the report. Later, the Club of Rome corrected, that perhaps even a population of 8 billion could be sustainable, but they explicitly stated that the consequences of human aggressiveness could not be modelled.

In 1988 James Hansen first demonstrated that the greenhouse effect was happening while predicting the future warming with great accuracy to this day. Hansen is an authority. If he questions official forecasts and measures, this must raise concern.

James Hansen is taken away by police in shackles

The Paris Treaties of 2015 wanted to limit the temperature increase to 1.5 or 2 degrees. And this brings us to the illusions

First illusion: The IPCC (Intergovernmental Panel on Climate Change) takes 1850-1900 as the starting point which gives a temperature rise of more than one degree. But industrialization started 100 years earlier, and starting from the lower pre-industrial values we may already be near the 1.5 degrees.

Second illusion: From the start it was clear that the Paris 1.5-degree target would be missed. James Hansen speaks of a fake deal. If it were kept, the temperature would rise tp 2.4 degrees Celsius, more over land. Moreover, the Paris Agreement assumes large-scale sequestration of CO2 from the air, which Hansen describes as illusory.

Third illusion: Hardly anyone is keeping the Paris Agreements, tthis brings us to global warming of 3,1 degrees Celsius egrees Celsius by 2100, again meaning significantly more over land.

This is official mainstream, i.e. the predictions of the IPCC.

The fourth illusion assumes that this is hysterical alarmism. Even the greenhouse effect is denied although he has been proven more than 150 years ago.

But in fact, all statements made so far are not alarmistic, but rather too tame,

Fifth illusion: Many think that the temperature increase is linear. But it becomes faster, as one sees with the naked eye:

 

Even the IPCC suffers from this illusion: Before 2015 they talked of limiting the increase to 1.5 degrees by 2100. In 2018, the IPCC moved this to 2040. American climatologists immediately objected: The IPCC had forgotten that greenhouse gases continue to rise which takes the 1.5 degrees to 2030, a shift of 70 years in  some years.

The sixth illusion holds that the greenhouse mechanism is the whole story. This would be bad enough, but the many positive feedback mechanisms are even worse  because according to Hansen they were always match-deciding in the previous history of the earth and they can cause tipping points.

The IPCC neglected these feedbacks in their previous reports, saying that precise predictions are impossible. However for a physician they are more frightening than anything else: All go in the wrong direction, each can become uncontrollable, and their effects can not only add, but possibly multiply. And then, developments can be shortened to years.

The seventh illusion imagines that the CO2 concentration only depends on how much we blow into the air. However almost a third of the CO2 emissions have been absorbed by the ocean and a warmer ocean absorbs less CO2.

Similarly with trees and vegetation: So far, they also absorb almost a third of the CO2 emitted. Most CO2 compensation programs work with actual or alleged reforestation. But we are already losing forest through logging and fires. And with a temperature increase of four degrees by the year 2100, the trees will die off over large areas, like the coral reefs, and thus trees will change from being a CO2 buffer to CO2-production. The German Climate Pope Schellnhuber says: "We kill our best friends". CO2 emissions will increase, even with zero emissions by humanity! 

In the eighth illusion the ice melts slowly, but things accelerate in the Arctic. Without snow and ice, the reflectivity of the earth decreases and warming may increase 20 percent over the predictions. That will bring us not over 3 but to 4 degrees by 2100, more over land.

The ninth illusion was that the permafrost would not thaw until the end of the century. But it is already thawing, and methane is bubbling out there and elsewhere and rising rapidly in the atmosphere. This short-lived but very powerful greenhouse gas can acutely accelerate warming with self-burning becoming a matter of years. 

The tenth illusion: At a higher temperature, the air stores more water vapor, also a greenhouse gas. Several models predict a decrease in cloud cover, which could further accelerate warming. 

The eleventh illusion is that erything goes slowly. But geologically, the pace of the current changes is unprecedented, ten times faster than the fastest changes in the last 65 million years and accelerating.

Twelfth illusion: It’s not only the climate that endangers us, but also the extinction of species, at an extraordinary pace in terms of earth history. It’s still rather climate-independent, mainly caused by hunting and by the loss and poisoning of habitats due to expanding human population and activity. E.O. Wilson thinks that half of the earth should be reserved for wildlife if one wanted to stop this extinction.

Let’s summarize, like a surgeon before an operation:

The first symptoms of disease are omnipresent: droughts, fires, glacier retreat, loss of species, not a beginning, rather the beginning of the end. The biosphere can no longer compensate.

The effects of causal factors - CO2, methane, water vapor, forest fires, cloud loss, ocean acidification, pesticides, habitat loss - don’t necessarily just add up, they sometimes multiply with unpredictable results.

But a physician panics above all about the multiple self-reinforcing feedbacks: ice melt, methane release, forest fires, CO2 release from soil and ocean. There is little handle against such self-reinforcing mechanisms, even if they occur individually, and even much less if they work together.

The 1,5- or 2-degrees goal is out of question. The Paris Agreement is fake, the governments reactions inadequate or contra productive. Only with luck will we reach four or five degrees at the end of the century, but this is improbable, because the self-reinforcing feedbacks have already all kicked in. Some experts expect six or seven degrees, meaning more over land, temperatures which human civilization cannot survive.

For Johan Rockström from the Potsdam Institute for Climate Impact Research with four degrees of global warming the earth can only feed four billion people or even less. This means widespread wars for a living space that will become increasingly scarce.  

Because death is tabooed in our consciousness we are unable to see him, even if he stares directly into our eyes. I don't blame the idiotic climate deniers. But rather the climatologists, who do not tell the whole truth. And the Greens, who are raving about the 1.5 degrees, a lie to the voters.

Last but not least, we come to the second taboo: Nobody wants to see the fact that we are too many. We are reproductive machines and reproduction is programmed into us as the most sacred goal. Therefore many - e.g. our benevolent Greens – prefer to believe into the illusion that reduction of consumption is enough.

Admittedly, only the wealthy produce the pollution: The ten percent of the wealthiest probably fifty percent, the 50 percent of the wealthier almost all the rest. But a large part of resource consumption and pollution is forced because we have to live in megastructures, which need energy-guzzling transports.

Some want to solve the problem by eliminating the privileges of the top 10 percent or even - according to old revolutionary customs - by eliminating the top 10 percent of the privileged, e.g.by guillotine. But even half the burden is too much. Therefore one would have to guillotine the wealthier half. This would work if the remaining half would not want to multiply and become wealthy, with industry, meat consumption, cars, airplanes. This they are already trying to do all over the world, e.g. in India, for the noble savage is just another illusion.

Many whose birth is not avoided by birth control will be killed by manslaughter, starvation and disease. That’s the reality we should face. Two generations of one-child family would be more humane.

I thank the climatologist Wolfgang Knorr for corrections and helpful suggestions. However any mistakes are mine.