Making Earlier Cancer Detection Possible

Transcription

1 Making Earlier Cancer Detection Possible Annual Report 2004

2 is making earlier cancer detection possible using our patented nuclear matrix protein (NMP) technology we are developing diagnostics for the detection of major cancers. Our first two products, the NMP22 Test Kit and NMP22 BladderChek Test, are approved for both the monitoring and detection of bladder cancer. The NMP22 products are based on our proprietary NMP technology, which correlates levels of NMPs in body fluids or cells to the presence of cancer. Additionally, we have discovered other proteins associated with cervical, breast, prostate, and colon cancer. Several of these proteins are in product development with the objective of developing clinical applications to detect cancers. Total Corporate Sales ($ in millions) Total Sales NMP22 BladderChek Test ($ in millions) % increase our success with the NMP22 BladderChek Test marks a milestone in our mission of providing improved diagnostics for the early detection of cancer through our proven NMP technology.

3 NMP22 Test Kit bladder cancer: the facts + Highest rate of recurrence of any cancer + Over 63,000 new cases of bladder cancer will be diagnosed in the U.S. in % of bladder cancer is detected at advanced or metastatic stages + Primarily affects people over the age of 40, with more than 80% of cases diagnosed over the age of 60 + Men are 4 times more likely than women to have bladder cancer risk factors + Smokers are twice as likely as non-smokers to have bladder cancer + Cigarette smoking accounts for 50% of bladder cancer in men and 30% in women + Smoking cessation diminishes, but doesn t eliminate, risk + Occupational exposure to carcinogens is a major risk factor + Occupations exposed to carcinogens are: Firefighters, truck drivers, petrochemical and rubber workers, hairdressers, painters, textile workers + Synergistic effect of smoking and carcinogen exposure Cancer can be treated more effectively, if it is detected early. Our bladder cancer diagnostic products detect cancer more easily and accurately than many of the commonly used tests. The NMP22 BladderChek Test helps diagnose bladder cancer even in the early stages of the disease, when the five-year survival rate exceeds 90 percent. Of all major cancers, bladder cancer has the highest recurrence rate. The NMP22 BladderChek Test is the only FDA approved in-office test for the diagnosis of bladder cancer. It is an assay that detects elevated levels of NMP22 protein in urine. Performed in a physician s office, results are available during the patient visit a rapid, accurate and cost-effective aid in the detection of bladder cancer. In our clinical trials, when used with cystoscopy, the medical reference standard, it increased the accuracy of cancer detection to over 90%. In addition, the NMP22 BladderChek Test detects cancers missed by cystoscopy alone and detects three times as many malignancies as cytology, a commonly used laboratory based urine test. Our NMP22 technology is also available as a laboratory based test, the NMP22 Test Kit, which is the only quantitative urine immunoassay tumor marker approved by the FDA as an aid in the detection of bladder cancer. The laboratory based test detects elevated levels of NMP22 protein in the urine. Healthy individuals generally have no or very small amounts of NMP22 protein in their urine, while the level of NMP22 protein is often elevated in the urine of patients with bladder cancer, even at early stages of the disease. MATRITECH 2004 Annual Report 1

4 Stephen D. Chubb CHAIRMAN AND CEO David L. Corbet PRESIDENT AND COO dear shareholders We are pleased to report that we made substantial progress in our business in 2004 and entered 2005 with vigorous, focused programs to build on these strong successes. Several years ago, our NMP22 BladderChek Test product development team laid the groundwork for our 2004 sales achievements. Years of investment in NMP technology and its clinical applications are delivering results record sales that reflect a confirmation of the clinical utility and market potential of accurate, cost-effective, non-invasive cancer tests. Product sales in our bladder cancer core business were up by almost 150% for our NMP22 bladder cancer tests. This increase was fueled principally by a 228% growth in sales of our NMP22 BladderChek point-of-care test, which now comprises over 80% of the sales in this product line. Both in the U.S. and Germany, our sales teams have been effective in carrying to the urologist one central message: the Matritech NMP22 BladderChek Test, combined with cystoscopy, is the best way to detect and monitor bladder cancer. When used together, the NMP22 BladderChek Test and cystoscopy detect 94% of the cases of bladder cancer, which is an achievement unmatched by any other bladder cancer test. Urologists listened and agreed with our message. Today, we are successfully converting growing numbers of urologists into routine users and establishing NMP22 BladderChek Test as a standard of care. Many independent clinical investigators have evaluated our NMP22 tests in four rigorous FDA trials and presented the results in numerous scientific forums as well as in peer reviewed publications, including the prestigious Journal of the American Medical Association (JAMA) in February The report in JAMA by independent clinicians from the M.D. Anderson Cancer Center, the University of Rochester and the University of Miami concluded, The NMP22 test is a useful adjunctive tool in the evaluation of patients at risk for bladder cancer and it identified several malignancies missed by initial cystoscopy. These physicians also cited the low cost of the test, about half that of cytology, coupled with its accuracy and ease of use as important features for making it an adjunctive test to cystoscopy. This article is but one more in a rich cataloging of clinical data on the NMP22 products. Using these recommendations, our sales force is building an even larger base of users. Both first time and repeat orders confirm that the NMP22 BladderChek Test is securing its place among urologists as the test of choice. During the fourth quarter of 2004 over 60% of our NMP22 BladderChek Test sales in the United States were from physician repeat orders. In Germany, where we have been selling NMP22 BladderChek Test for over three years, sales more than doubled for the year. NMP22 BladderChek Test is making early cancer detection possible. We believe the next market opportunity for the introduction of the NMP22 BladderChek point-of-care test is with primary care physicians. NMP22 BladderChek Test offers primary care physicians an easy to use, effective and accurate in-office diagnostic aid to screen symptomatic or at risk patients. Our scientists have created complementary tests for bladder cancer in two formats, Laboratory Test Kits and Point-of-Care Tests for diagnosing bladder cancer. These tests have a number of distinctions: the NMP22 BladderChek Test the only point-of-care fluidbased test for cancer detection the approval by the FDA for both monitoring bladder cancer as well as aiding in its detection a breadth of clinical usage no other point-of-care cancer test has achieved the achievement of a key Medicare milestone reimbursement of the NMP22 BladderChek Test for monitoring bladder cancer in all 50 states and for initial detection in 49 states 2 MATRITECH 2004 Annual Report

5 NMP22 Bladder Cancer Market Size (U.S. & Germany) TYPE OF DOCTOR SEEN EST. # OF PATIENTS TOTAL AVAILABLE MARKET OPPORTUNITY MONITORING PATIENTS WITH CANCER Urologist 700,000 (1) DIAGNOSING PATIENTS WITH SYMPTOMS Urologist $33,000,000 (2, 3) $33,000,000 (3) EVALUATING PATIENTS WITH SYMPTOMS GP+GYN 2,000,000 (4) 5,000,000 (4) SCREENING AT-RISK ASYMPTOMATIC PATIENTS (5) GP+GYN 20,000,000 (6) $83,000,000 (3) $330,000,000 (3) (1) Based on prevalence of about 490,000 in U.S and about 250,000 in Germany, as reported by NCI-SEER and as derived by Matritech from incidence data reported by Robert Koch Institut, Berlin, respectively. (2) Based on frequency of testing recommended by AUA Guidelines, but actual number of tests is dependent on physician and patient conduct. (3) Based on projected Matritech pricing. (4) Based on Matritech estimates. (5) Additional regulatory approval not likely to be required in Germany, but may be required in the U.S. for Matritech to promote this application. (6) Based on Matritech estimates, including estimates of the population of male smokers over the age of 40. the point-of-care format of the NMP22 BladderChek Test allows us to share the revenue generated by our test with the urologist, not a clinical lab, which in our opinion, is a more appropriate allocation of value Indeed, we had an outstanding year in our bladder cancer core business. It is against this backdrop that we believe 2005 should continue the growing market penetration we have been achieving, with sales of our NMP22 BladderChek products exceeding the sales growth we achieved in In the United States we began the year with 12 territories and ended the year with 15 in total. Our goal is to continue adding territories during 2005 with a target of having 20 fully staffed by the end of the year. Increasingly, our scientific know-how and proprietary NMP technology is being directed to the development of products for the early diagnosis of other major cancers, including cervical and breast. Our own research and development group has concentrated on our NMP66 marker for breast cancer. Matritech s scientists have continued to refine methods for detecting the NMP66 protein complex in the blood of women with the disease. They made significant progress this past year. At the 4th Annual European Conference: Perspectives in Breast Cancer, our scientists presented results of our preliminary serum-based NMP66 testing. The results of two methods were presented: an immunoassay and a recently developed qualitative reverse-transcriptase polymerase chain reaction (RT-PCR) procedure. The RT-PCR method detected seven out of eight cancers in the group. We are presently conducting additional testing using larger numbers of samples in order to optimize the methods for routine analysis and detection. Pending positive outcomes of these studies, we plan to use these detection methods to pursue our goal of clinical trials for FDA approval. instrument/reagent system to perform rapid, highly accurate cell-by-cell analysis for cervical cancer for clinical pathologists. The Pap smear is currently used in most clinical laboratories, but only a percentage of the cells collected are examined and it requires manual visual review of each cell, limiting its accuracy. Sysmex s progress on this project can be seen on the Sysmex website, While 2004 proved to be a year of record growth for us, we believe that 2005 will mark the next level of achievements. Our goals for 2005 include: supporting the marketing and sales of our NMP22 products, especially the NMP22 BladderChek Test. This includes supporting our core bladder cancer franchise by continuing to expand our direct-to-urologist sales forces in the United States and Germany. continuing clinical trials by our partner Sysmex to complete a large cervical cancer study using our NMP179 technology for the automation of cervical cancer detection aggressively moving our NMP66 breast cancer detection program forward to develop an optimal method for the routine clinical testing of blood specimens We would like to acknowledge our employees on a job well done this year and recognize their continued commitment to our mission. And to you, our shareholders, thank you for your ongoing support. We look forward to updating you throughout the year on our progress to achieving our goals. Sincerely, In 2004, Sysmex Corporation, our development and marketing partner for our NMP179 cervical cancer marker, began preclinical testing of 10,000 samples using this patented marker, combined with its own flow cytometry technology. The goal is an automated Stephen D. Chubb CHAIRMAN AND CEO David L. Corbet PRESIDENT AND COO MATRITECH 2004 Annual Report 3

6 Products in Development PROGRAM NPM66 Breast Cancer NPM179 Cervical Cancer NPM48 Prostate Cancer NPM35 Colon Cancer STAGE OF DEVELOPMENT Preclinical Testing Preclinical Testing Deferred Inactive PARTNER Mitsubishi Kagaku Japan Sysmex TBD Inactive products in development Using our patented proteomics technology, we are working on changing the way cancer is detected. Our objective is to develop diagnostic products for the early detection of cancer that have the same level of accuracy and ease of use as our NMP22 bladder cancer products. The products in development are based on our proprietary nuclear matrix protein (NMP) technology, which Matritech originally licensed from the Massachusetts Institute of Technology. Since then, our scientists have made additional discoveries for which the Company holds its own patents. NMPs comprise the protein framework that organizes DNA inside the cell. They change in amount in cancerous cells, making them excellent markers for a variety of cancers. NMPs are found in body fluids, are highly accurate and can be detected in a minimally invasive manner. NMP66 proteins and breast cancer Continuing to refine the methods for detecting the NMP66 complex in the blood of women with breast cancer, our scientists tested samples using both immunoassay and reverse transcriptase polymerase chain reaction (RT-PCR) methods. The RT-PCR assay is designed to measure a unique RNA sequence associated with the NMP66 complex. Additional studies are being conducted to optimize the methods for analysis and detection. Pending the outcome of these studies for designing the optimum method for detection, we anticipate we will be able to proceed into clinical trials for FDA approval. NMP179 proteins and cervical cancer Sysmex Corporation, our partner for cervical cancer, is developing an automated test for cervical cancer using our proprietary NMP179 tumor marker. Sysmex has begun preclinical testing of 10,000 samples using the NMP179 biomarker, combined with its automated flow cytometry technology to perform rapid, highly detailed cell-by-cell analysis for cervical cancer that reduces the human error in existing procedures, as well as the overall cost of screening for cervical cancer. The Pap smear, the widely used diagnostic test, analyzes cervical cells visually, looking only at a percentage of cells collected, limiting its accuracy. Sysmex is continuing its European preclinical trial and is responsible for U.S. FDA submission. NMP48 proteins and prostate cancer Our scientists discovered the existence of NMP48 proteins in the blood of prostate cancer patients that are generally not present in the blood of individuals without prostate malignancy. The goal of this program is to develop sample preparation and testing methods to enable partners to conduct a proprietary laboratory procedure that will be more reproducible, controlled, and cost-effective than the research procedures used in making the original discovery. All of the blood specimens for use in generating reproducible clinical data prior to launching a proprietary laboratory procedure have been collected. 4 MATRITECH 2004 Annual Report

7 corporate information Corporate Officers STEPHEN D. CHUBB CHAIRMAN AND CHIEF EXECUTIVE OFFICER DAVID L. CORBET PRESIDENT AND CHIEF OPERATING OFFICER MELODIE R. DOMURAD, PH.D. VICE PRESIDENT, CLINICAL AND REGULATORY AFFAIRS GARY J. FAGAN, PH.D. VICE PRESIDENT, RESEARCH AND DEVELOPMENT FRANZ MAIER PRESIDENT, MATRITECH GMBH JOHN E. QUIGLEY, JR. VICE PRESIDENT, SALES AND MARKETING PATRICIA RANDALL VICE PRESIDENT, GENERAL COUNSEL, CHIEF LEGAL OFFICER AND SECRETARY RICHARD A. SANDBERG VICE PRESIDENT FINANCE, CHIEF FINANCIAL OFFICER, TREASURER AND ASSISTANT SECRETARY Directors STEPHEN D. CHUBB CHAIRMAN AND CHIEF EXECUTIVE OFFICER DAVID L. CORBET PRESIDENT AND CHIEF OPERATING OFFICER WALTER O. FREDERICKS (1,3) FORMER PRESIDENT, CEO AND DIRECTOR OF LIFECODES CORPORATION JUDITH KURLAND (1,2,3) FORMER PRESIDENT AND CEO OF HUNT ALTERNATIVES JONATHAN M. NILOFF, M.D. (3) PRESIDENT, PROVIDER SERVICES NETWORK, INC. RICHARD A. SANDBERG VICE PRESIDENT FINANCE, CHIEF FINANCIAL OFFICER, TREASURER AND ASSISTANT SECRETARY T. STEPHEN THOMPSON (1,2,3) PRESIDENT AND CEO, IMMTECH INTERNATIONAL, INC. C. WILLIAM ZADEL (1,2,3) FORMER CHAIRMAN AND CEO, MYKROLIS CORPORATION (1) Compensation Committee (2) Audit Committee (3) Nominating and Corporate Governance Independent Registered Public Accounting Firm PricewaterhouseCoopers LLP 125 High Street Boston, MA Transfer Agent Registrar and Transfer Company 10 Commerce Drive Cranford, NJ Legal Counsel Goodwin Procter LLP Exchange Place Boston, MA Annual Meeting May 25, :00 a.m. Sheraton Newton Hotel 320 Washington Street Newton, MA Financial Information Requests Our Annual Report on Form 10-K, including financial statements, other financial and general information are available without cost. Such information can be obtained either by accessing the EDGAR database on the Securities and Exchange Commission website at on the Matritech website at or by writing to: designed by curran & connors, inc. / Investor Relations Matritech, Inc. 330 Nevada Street Newton, MA Any statements in this Annual Report that are not statements of historical information are forward-looking statements which reflect the Company s current expectations regarding product and technology development, clinical trials, market acceptance, and future sales of the Company s existing and future products. Actual results may differ materially from those predicted in such forward-looking statements due to the risks and uncertainties inherent in the Company s business, including without limitation risks and uncertainties in obtaining and maintaining regulatory approval, market acceptance of and continuing demand for the Company s products, performance of distributors, the impact of competitive products and pricing, technical challenges in completing product and technology development, health care reform, the Company s ability to obtain additional financing to support its operations, as well as general business and economic conditions. We refer you to the risk factors detailed in the Company s filings with the Securities and Exchange Commission. The Company undertakes no obligation to revise or update any such forward-looking information.

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