Miraculins Moves One Step Closer to Meaningful Revenue with Scout DS Launch in China

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The world needs new, reliable diagnostic tests for a host of indications and at a variety of levels to help manage costs and deliver better patient outcomes. A high degree of variance in unmet needs for different diseases from country to country presents a broad set of challenges, but there are some exciting developments in the diagnostics space that can provide some solutions. For instance, in developed nations, liver tests to monitor the side effects of HIV and tuberculosis drugs are readily available and covered by payers, but in many emerging countries, those where the two indications remain leading killers, simple diagnostics and equipment are limited, to say the least. However, researchers at Diagnostics for All are developing a simple test that uses only a drop of blood to evaluate any possible liver damage that only costs about 10 cents a piece and gives results of the test in 15 minutes. In the U.S., diagnostic companies, such as Foundation Medicine (NASDAQ:FMI) have introduced tumor sample tests that can scan biopsies for more than 200 cancer-related genes to try and delineate what's driving tumor growth, but the U.S. Food and Drug Administration still hasn't approved it and Medicare still fights the company to receive reimbursement, again, highlighting unique problems in the system to provide the best medical care. Winnipeg-based Miraculins Inc. (TSX-Venture:MOM), a diagnostics company focused on non-invasive technologies for unmet medical needs, is rolling-out tests for diabetes, coronary artery disease and preeclampsia, a complication of pregnancy characterized by high blood pressure and often kidney damage. Miraculins acquired PreVu, a non-invasive skin cholesterol test, from PreMD Inc. in September 2010. The point-of-care test takes less than five minutes for results that measure skin cholesterol without the need for needles or overnight fasting. PreVu has marketing clearance by Health Canada, a CE Mark for European sales and specific FDA clearance. Sales haven't exactly been robust to date, but the company announced this month that it has executed a non-binding letter of intent with Indian healthcare services company Citizen Doctor Pvt. Ltd. as the exclusive distributor of the PreVu test in India and non-exclusive distributor in other Asian countries. The World Health Organization estimates that cardiovascular disease will be the largest cause of death and disability in India in the next six years. If the LOI is finalized into a definitive agreement (which is capped at 90 days to happen), regulatory approvals for sales in India happen and minimum orders are met, the deal represents a minimum of $4 million in sales for Miraculins. Last July, Miraculins acquired the Scout DS technology from VeraLight Inc. The Scout DS system is the first non-invasive diabetes screening system designed to provide high sensitivity for screening for pre-diabetes and Type 2 diabetes based upon diabetes-related biomarkers in the skin. Like PreVu, the Scout DS system doesn't require a blood draw, fasting or a lengthy wait for lab results. The system has been cleared for sale by Health Canada and has a CE Mark in Europe as a general population screen. Pre-submission documentation was filed late in 2013 with the U.S. FDA with the goal of receiving marketing clearance in the States. It has been a grind for Miraculins, as bringing new products to market is chock full of obstacles, but a launch of PreVu in 20 locations of food retailer H-E-B last fall and a major Canadian supermarket chain conducting a pilot of the Scout DS diabetes screening system may lend some traction to the products. On Wednesday, Miraculins announced that, after months of negotiations, it has finalized the terms of a definitive agreement with Cachet Pharmaceutical to exclusively distribute the Scout DS diabetes screening test in China. The signing of the definitive agreement and receipt of regulatory clearance by the Chinese FDA will trigger an initial order of Scout DS devices valued at $15 million to Miraculins. "I am pleased to confirm that we have now finalized the major aspects of the Agreement for the exclusive distribution of Scout DS® in China by Cachet, and that the signatory parties have advised of their intentions to proceed with the execution of the Agreement within the next 30 days," said Christopher J. Moreau, President and CEO of Miraculins, in a prepared statement today. Both of these recent deals are contingent upon regulatory clearances, but the CE Marks and Health Canada approvals (and clearance by the FDA for PreVu) bode well for receiving clearance in India and China. Of course, both deals still require the signing of a definitive agreement as well, so investors will likely remain cautious ahead of these milestones occurring. If they do happen, though, it would be a watershed moment for Miraculins, as $19 million in sales is a far cry better than the $87,832 in revenue in 2013. Proper due diligence is, as always, encouraged.

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