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Clinical validation of the AutArt rheumatoid arthritis diagnostic device

Periodic Reporting for period 1 - AutArt (Clinical validation of the AutArt rheumatoid arthritis diagnostic device)

Reporting period: 2015-07-01 to 2015-10-31

This Phase 1 feasibility study proposal will explain our present plans regarding the Phase 2 clinical validation of the AutArt diagnostic toolkit. AutArt is an automatic diagnostic software solution developed with the joint financial subsidy of the EU and the Hungarian Government. The code for this successfully completed project is GOP-1.1.1-09/1-2010-0207.
AutArt is potentially a huge improvement in the diagnostic phase of Rheumatoid Arthritis (RA). RA is a chronic autoimmune disease that causes inflammation of the lining of the joints, which can destroy cartilage and bone, causing deformity of the joints. As the condition progresses, patients can experience considerable pain and loss of function. At the moment there is no other automatic system available for RA evaluation and there is considerable interest from European imaging device manufacturers and pharmaceutical companies but they require clinical validation before moving forward.
RA is a disease with a prevalence of approximately 0.8 (range: 0.3–1.0) per 100 adults, and the onset of disease peaks between 55 years and 64 years of age [ref]. The incidence of RA appears to have increased from 1995 to 2007 [ref] and the projections for the future show the same tendency. In the last decade there was a considerable increase in direct costs of RA attributable to increasing prescription of the most effective therapy, biologic agents (cost of biologic agent treatment/year/patient: $19,016 vs. other treatments: $6,164) [ref, ref].
Prevalence (million people) Cost of treatment (EUR Bn)
2009 1,9 1,3 25,1 8,3
2015 2,1 1,4 26,1 9,0
2020 2,2 1,5 28,1 9,8
2030 2,4 1,7 30,2 10,5
Prevalence and cost of treatment for RA in 2009 and projections for the future. [ref]
RA is a serious economic and social problem, 20-30% of early RA patients become permanently work disabled during the first 2-3 years of the disease and more than 50% of patients with RA became work disabled during the first ten years of the disease [ref]. Classical disease-modifying drugs are ineffective in about 10-15% of the cases, furthermore, biological agents may also be ineffective [ref]. This is further complicated by the fact that changes in biological therapy might become necessary as even successful biological agents can become obsolete over time as antibodies are developed against them. Also, studies suggest that non responsiveness to therapy is responsible for discontinuation of treatment in 17-35% of cases [ref]. Early detection, regular clinical monitoring and comparable, objective evaluation is essential for successful treatment.
X-Ray imaging is a widely adopted technology to analyze these deformities, like the narrowing of the joint spaces and the erosion of the bones. AutArt is able to automatically evaluate uploaded X-Ray images and score them according to the internationally respected Sharp/van der Heijde scoring method [ref]. This is an objective, precise way of evaluating the actual state and progression of the disease. This method at the moment is the standard in pharmaceutical validation but time constraints prevent it from being adopted in daily clinical practice. Our automated scoring and follow-up device will make wide deployment possible for practical diagnostic use.
In the case of RA, precise diagnosis and patient follow-up is essential because the progress of the illness varies according to the patient and patients respond to different treatments in different ways. Scarce treatment resources must be individualized and optimized to patients based on objective, regular evaluation.
Subjectivity is a serious problem with the present RA evaluation protocols. Studies confirm that inter- and intraobserver variability is large; manual evaluation is just not precise enough [ref]. The automated evaluation technology implemented in the AutArt software will make it possible to evaluate patients according to the severity and progression of the illness and objectively monitor treatment response, making it possible to maximize the effectiveness of treatment procedures. In this way, scarce healthcare resources are used in an optimal way and patient outcomes seriously improve.
By completing the Phase 2 clinical validation project, we expect the AutArt prototype to successfully:
• pass clinical tests,
• satisfy regulatory requirements and
• to become a directly marketable, licensed medical device in the global healthcare market within 2 years.
We estimate that in 5 years this project will produce 4.5 million EUR in revenues, 780 000 EUR of which is profit. The whole project will have an Internal Rate of Return of 21%, NPV of 2.3 million EUR and create 20 jobs. The automation of the procedure will save 16.2 EUR / evaluation for medical institutions and if our software manages to help 5% of all patients then approximately 0,4 Billion EUR/year is saved in more effective treatment for social security systems.
Since the project took place during 1 reporting period, we have completed the project.
In the SME Instrument Phase 1 project we have examined the feasibility of the AutArt diagnostic toolkit. We have outlined our preliminary assumptions in the Phase 1 feasibility study proposal, and set out our Phase 1 goals. Based on the results we declare the project feasible and we believe that it possesses high potential in every examined dimension. The feasibility study consists of the overview, analysis and evaluation of the four tasks, as follows: a) technological and medical feasibility (Task 1) b) economic feasibility (Task2) c) legal feasibility (Task3) d) work process feasibility (Task4).
i. Technological and medical feasibility
Our technological and medicals feasibility study primarily concerns the IT specification and preparation of the clinical validation plan of the AutArt diagnostic toolkit for medical device. Completing the medical validation examinations, we conclude that AutArt is potentially a huge improvement in the diagnostic phase of Rheumatoid Arthritis (RA).
Following the results of the study, we have extended the goal of the clinical validation, as future prospective and changes to the phase 1 objectives. Now, besides (1) the scoring system, we want to assess and validate the following additional functions: (2) Primary screening capability, for faster diagnosis; (3) Medical decision support for better health outcome. Consequently, we must implement a new version of the software that adds the following IT capabilities: a screening interface, a follow-up interface, secure, encrypted data storing and transmission due to legal reasons, easy and secure data sharing for second opinion. Besides these capabilities, user friendliness, stability and performance are also necessary requirements to be achieved.
ii. Economic feasibility
Regarding to the preliminary business assumptions prior to the validation project of Phase 1, our estimated calculations has been made for 5 years, and considering the scoring project alone. The initial sums has been significantly increased during the examination of economic feasibility.
By the finalization of the business models in section 2.4 (Growth Plan), our calculations are indicating more optimistic numbers of revenue at this moment: more than 6 Million EUR revenues, out of which more than 3 Million of profit; IIR: 17,22%; NPV: approx.2,3 Million; and also, 18 new jobs to be created (These projections are set out for the first five years after market entry). Every automatic evaluation will result in a 16.2 EUR saving, the diagnostic cost reduction alone will reduce healthcare outlays by approximately 675 Million EUR in the EU. If our software manages to help 5% of all patients then approximately 0.4 Billion EUR/year is saved in more effective treatment for social security systems. Beside these numbers, the implicit value of the company going to raise by publishing scientific articles and attending numerous international conferences.
On basis of the above mentioned Phase 1 technical and medical feasibility examinations, the preliminary economic assumptions has been also changed and extended, as follows:
• Primary screening capability, for faster diagnosis: As the evaluation process proves to be much faster, the added value can be measured through the medical doctors’ (MD) working time. A similar evaluation of an image usually takes anywhere between 45-90 minutes per image. This added value considerably contributes to the evaluation process, complementing other parts of the diagnostic and treatment process. Financially this value can be estimated through the gained MD time, realized as basic assumption for the pricing strategy.
• Medical decision support: Since the manual evaluation process is subjective, the introduction of this method will make scoring more objective, comparable and traceable resulting in better treatment. This means a differentiated service and competitive market advantage for the medical service providers, as well to other beneficiaries. Our economic assumption may be proven in medical and technical sense as well, as examined in the Validation plan.
According to the detailed Business plan carried out in course of Phase 1, we can confirm that there are no viable competing products on the market.
Our prospective has changed widely from business aspect in order to satisfy demand for different market segments and maximize uptake and profits. In accordance to the elaborated details of the product development, we have responded to the special challenges of commercialization. Based on first degree price discrimination, instead of a substantive one item we believe that four products will cover the needs of every potential customer on the market:
1. Semi-automatic evaluation system: The software will (1) automatically find the joints on processed images, (2) zooms on the important points of interest and (3) provide a scoring template for record keeping.
2. Automatic evaluation system: The software will (1) contain the features of the Semi-automatic evaluation software version and additionally (2) it will provide scores for joint space width and bone erosion.
3. Treatment software (full package): The software will (1) contain the features of the previous Automatic evaluation software version and (2) additional tracking, administrative capabilities and comparisons for most efficient treatment decisions.
4. Screening software: This version of the software will provide a yes-no answer, whether the patient has a probable rheumatoid arthritis disease based on the X-ray image.
iii. Legal feasibility
Regarding the clinical protocol, personal and private data is not necessary for the above process to work. However, the analysis of the regulatory framework and the ethical and privacy issues in respect of the patient data pointed out that more emphasis on data protection is needed. Accordingly, the patient data as highly confidential and sensitive data shall be protected on high level IT security and in respect of any kind of regulatory requirements, in valuated and approved methods. Also, the encryption, randomization and anonymization of the data became a more complicated work package in course of the clinical protocol than it was expected at the beginning in Phase 1. Furthermore, we elaborate a data protection and data security system in order to be compliant with the high level regulatory and IT requirements.
Our business shall be protected by patent rights. During this initial 5 years, we consider filling 3 patent applications. Our patent plan is presented under section 3.3 below.
iv. Work process feasibility
We have examined the work process feasibility of AutArt project in the following documents, listed with a short summary of content:
(1) Project Initiation Document: definition the project scope and justification for the project, the definition of the roles and responsibilities of project participants, definition of stakeholders, differentiating key-stakeholders.
(2) Operational plan: investigation of the necessary structural changes in the company for the successful completion of the project, and examination the current management structure, professional skills, competences, the number of new employees, regarding (a) Company size (b) Corporate structure (c) Work processes.
(3) Risk Assessment: risk analysis regarding the project and the market entry.
(4) Schedule validation plan: due-diligence report regarding scheduling, milestones and deliverables, examining validity, reasonability, rationality and achievability.
(5) Project plan: Scheduling of work packages tasks and subtasks.
The finl results are the same as the results during the reporting period and shall not be repeated here.
The conclusion to the project is the following

Changes to the objectives

In the above Part I, we already gave an overview in respect of the consequences to be drawn from the results of the Feasibility study of Phase 1. In this section we want to highlight the achievements regarding the economic feasibility, with specific regard to product development. Therefore, the main features of the software solution shall be outlined, considering the analysis of user needs and selling points:
• Preliminary screening capability is the most important feature a diagnostic device/procedure can have. Almost every disease is easier to treat if it is recognized in time before it has spread or became chronic. The AutArt diagnostic device has a good chance to become such a preliminary screening tool saving billions in healthcare costs and prolonging thousands of productive lives.
• Clinical decision making toolkit, as secondary feature includes the possibility of objective, comparable diagnosis of a patient. Often the MD has doubts about whether to change treatment, and most of the tools that are available to assist her in this decision are subjective (most common are the subjective feeling of the patient, the answers she gives to certain questionnaires, etc.) With this device, the MD could compare previous images to present images and make a better decision that improves the treatment process.
• Sharp/van der Heide scoring system, as tertiary feature covers how to objectify the subjective analysis of X-ray images. If the clinical validation confirms that automatic scoring has the same mean and deviation as manual scoring, we acquired a system that objectively presents the same scores for same images.
Considering the above features, and our first degree price discrimination resulted that the initial objective regarding the product development had to be changed, and four product will be improved:

Initial objective Present objectives:
Scoring software Semi-automatic evaluation
Automatic evaluation
Treatment software
Screening software
Changes to the impact
The impact of the project has significantly increased because of the potential primary screening capability of the project. Our project still aims to contribute to the Specific Challenge and Expected Impacts of this topic in the following ways:
• We develop a new diagnostic device.
• By using this new diagnostic device, clinical decisions can be improved, leading to better health outcomes.
• We contribute to the sustainability of health care systems.
• We are planning to combine and transfer new and existing knowledge into innovative, disruptive and competitive solutions seizing European and global business opportunities.
• Our firm as an SME represents the market sector, so we can increase the private investment in innovation (notably leverage of private co-investors and/or follow-up investments).
• Market uptake and distribution of our innovation tackles the specific challenges of this topic in a sustainable way.