Optiscan Imaging (OIL)

I was surprised this company wasn’t followed by anybody on Strawman.

OIL Markets itself as a global leader in the development of endomicroscopic technology. The technology allows real-time in vivo imaging of human tissue for cancer screening, diagnoses and in surgery.

OIL develops and manufactures hand-held confocal endomicroscopes for medical and research use.

It has three devices all at various stages of development.

Invivage

Invivage’s application and use is for:

• oral cancer screening and surgery;

• breast cancer surgery;

• cervical cancer screening and surgery.

OIL is currently preparing the 510(k) application for clearance with the FDA for use in the United States (for oral treatment)

OIL received a government grant of approximately $1 mil for funding for oral cancer screening trials with Melbourne University Dental School.

As I understand it, detection of oral cancer is quite a difficult and invasive process. Taken from the Optiscan website in relation to the announcement with Melbourne Dental School, the long-term goal is to “reduce the need for scalpel biopsy in the future, allowing for more comprehensive assessment of changes in the mouth and earlier detection of oral cancer.”

It’s an exciting product with hopefully a big future. Obviously there’s quite a bit of risk with the FDA approval and such, but given the faith we investors tend to have in many a company, I cannot see why OIL doesn’t deserve a bit of backing.

FIVE2

Its second product is Five2. Again, taken from the Optiscan website, Five2 is:

“A hand-held, confocal endomicroscope, especially designed for translational and pre-clinical research, enabling imaging in 3D at the cellular level. The system’s flexibility facilitates research in applications including live imaging of dynamic processes, assessment of dysplastic and diseased tissue, tumour margin mapping, imaging of molecular disease markers, blood flow and clots, barrier function, infection and pharmacokinetics across tissue types and organ systems.”

In the FY21, OIL generated sales of $370k USD from its Five2 Product. Importantly, it now has a distribution network in China, Taiwan, South Korea, North American and Australia. In FY21 OIL completed its first two sales in China and its first sale in Australia. Covid restrictions have greatly reduced OIL’s ability to demonstrate the product to potential customers, they hope to resume demonstrations, particularly in North America, as COVID-19 restrictions are lifted. The company’s roadmap specifically mentions that marketing of the Five2 Product is a significantly priority moving forward, particularly now the distribution channels have been created.

An interesting and worthwhile point to note is the findings of Five2 research are transferrable to Invivage’s use in human patients. So as Five2 is used more, the “flag ship” product as it were in Invivage will strengthen.

Despite its infancy, Invivage does generate revenue, up from $170k to $390k between FY20 and FY21.

The technical specifications can be found on the website here:

https://www.optiscan.com/products/five2/

Zeiss Convivo

The third product is the Zeiss Convivo. OIL worked in collaboration with Carl Zeiss to develop the product, which enables the visualisation of the tumour margin during neurosurgery. Again from the website:

“Digital biopsies” with CONVIVO enable unlimited number of digital images which can be transferred for analysis anywhere anytime.

In recent years it has has received FDA 510(k) clearance, CE Mark and TGA approval.

Current trials are underway and approved in Europe, the United States and Australia. OIL is optimistic and expects to increase endorsement and publicity from leading neurosurgeons. The latest results mention that despite COVID-19 restrictions, Carl Zeiss have continued to make sales in Europe and North America during the pandemic. However, I will have to double check what the expectations for sales were, as they decreased from $940k to $500k between FY20 and FY21.

There is no doubt that the company has been greatly impacted by COVID-19. A snapshot of the company’s P&L, Balance Sheet and Cash Flow Statement clearly demonstrates it (attached).

In April 2021, OIL appointed Robert Cooke as a non-executive chair.

Robert brings his background in the private health care sector to the role, with more than 40 years' experience in the health industry.  He previously held the role of Managing Director and CEO of Healthscope, one of Australia’s leading hospital, medical centre and pathology operators and has also held non-executive director positions at Icon Group and Evercare Group.

In May 2021, OIL appointed Professor Camile Farah as a non-executive director. Professor Farah is a leading international expert in oral cancer and precancerous pathology based on his clinical and research expertise having published 250 clinical and scientific articles and a bestselling textbook. He is a former Dean at the University of Western Australia, and currently an Adjunct Professor at CQ University and an Honorary Professorial Research Fellow at the Peter MacCallum Cancer Centre.

And recently in August 2021, OIL appointed Karen Borg as a non-executive director. Taken from Optiscan’s website:

“Karen is the former President (Asia Pacific and Middle East) of ResMed Inc (ASX: RMD) and prior to this held several senior roles with Johnson & Johnson Medical Devices, including Global Vice President (based in USA). Karen’s most recent executive roles include CEO of Healthdirect and inaugural Chief Executive of Jobs for NSW, with both roles fostering relationships across all tiers of government.”

I think the above appointments are a very good sign for OIL. Admittedly, I haven’t looked too deeply into them yet, but the general message is, we are growing, we are seeking to expand and we need to beef up our expertise in every line of our business.

OIL is a speculative play. Due to the capital raising the balance sheet is solid for now. I love that it has a product to market and commercialise. I love that the product is good for humanity. I love that there is a clear next step (FDA approval and then spend on marketing). I will hold and watch with interest.