Miami, FL - The statistics are alarming. Over 42,000 Americans will be diagnosed with oral cancer in 2013. It will kill roughly one person per hour each day. Of the newly diagnosed with the disease, only half will be alive in five years. And it gets worse. Globally, over 640,000 new cases will be found this year, almost all discovered in advanced stages. In fact, oral cancer is routinely diagnosed after cancerous cells have already metastasized to the lymphatic system and lungs. There may be no early warning signs, no lesions, no pain or other recognizable symptoms. It is a killer unconfined by the strictures of race, gender and age and the leading cause is oral sex. Certainly smoking and drinking are contributory factors, but scientists say that the human papillomavirus (HPV), which is spread by oral sex, accounts for an astounding 64 percent of all oral cancers. Early detection is the key to survival and for most people that begins with a visit to their dentist.
Technological advancements of minimally invasive devices have altered the landscape of adjunctive medical screenings for oral cancers. Burnaby, British Columbia based LED Medical Diagnostics Inc. (OTCQX: LEDIF) (TSX V: LMD) (FSE: LME) is the creative genius behind the leading device on the market today. The company’s VELscope Vx Enhanced Oral Assessment System is the first system ever to apply a technique called tissue fluorescence visualization technology to the oral cavity. VELscope technology allows the dentist to non-invasively detect tissue changes underlying the surface of the soft tissue mucosa. This revolutionary hand-held tool emits a blue light into the oral cavity causing normal tissue to fluoresce. The healthcare provider is then able to view the various fluorescence responses to help differentiate between normal and abnormal tissue. The device does not diagnose cancer, squamous dyplasia, atypia or melanocytic atypia, but it is the most effective implement on the market for detecting tissue abnormalities that could lead to oral cancer.
LED’s larger competitors in the medical device sector such as Natus Medical Inc, (NASDAQ: BABY), MAKO Surgical Corporation (NASDAQ: MAKO) and Sirona Dental Systems Inc. (NASDAQ: SIRO) are testament to the rapidly expanding market. All showed appreciable revenue growth in their latest quarterly reports which is an indication of a healthy investment climate for potential buyers. Based upon all of these metrics, LED Medical Diagnostics Inc. is well worth a spot in your portfolio.
To date, 25 million plus oral screenings have been done using the VELscope and, in the process, thousands of lives have been saved. Over 13,000 dentists in 23 countries are using VELscope technology and the company intends to make the device standard technology, with 70,000 units in place, by 2017. As an added testament to the importance of the technology, VELscope has been sanctioned by the World Health Organization, the FDA and Health Canada.
From an investment standpoint, the underlying fundamentals of the medical devices industry are strong as an aging baby boomer population contributes to the demand for myriad medical appliances. But it’s not just an aging population that is driving the sector. Companies such as LED will continue to be driven by technological advancements as they invest in research and development. In fact, the industry as a whole invests a hefty 7.9 percent of sales on R&D. In addition, the company that is first to market with a patented product, such as LED with its VELscope, can win substantial market share. Patents are vital in order shelter key design elements that make the product unique and deserving of a top price. Receiving a premium price for products generates higher margins, which in turn gives investors a greater return on their money. Companies that are able to invent and patent quickly will benefit most, and so will investors who can spot those companies. Finally, as a discretionary spending item, medical device acquisitions are not tied to the whims of a finicky economy. As a result, these companies are able to perform well during times of robust economy as well as during economic downturns.
LED Medical Diagnostics Inc. is a micro-cap gem in this sector that ticks all the right boxes. It has a patented product that is projected to become standard equipment in every dental clinic around the world within the next five years. The underlying fundamentals of the company are sound. Gross margins for the past quarter top 60 percent. LED has proactively leveraged its success within the dental vertical by forming a strategic partnership with global dental equipment supplier, Den-Mat Holdings. The deal makes Den-Mat the exclusive global distributor for the VELscope Vx which translates into higher product visibility and a broader market reach. Also of note, there are enough product enhancements and extensions in the pipeline that VELscope Vx will remain cutting edge technology for years to come. The company, through new research partnerships, anticipates taking its proprietary tissue visualization technology beyond oral applications and into other areas of medicine. And finally, LED Medical is passionate about oral cancer awareness and educating the public on the dangers associated with the disease.
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