Of the 10.5 million cases of abdominal pain that present in American emergency rooms each year, only about 300,000 end up being confirmed as appendicitis. That means an expensive glut of ultimately unnecessary – and potentially cancer-causing – CT scans performed in ERs.

Venaxis CEO Steve Lundy believes his firm’s diagnostic test can help eliminate those unnecessary abdominal scans, which use potentially harmful ionizing radiation – excessive exposure, especially at the high dose level of a CT scan, can damage tissue, leading to mutation, radiation sickness, cancer and death.

Although CT scans of the head, neck, abdomen and spine altogether are projected to increase the risk of cancer in children under 14, according to a study in JAMA Pediatrics published last June, the risks mounted with abdominal and spinal CT scans. Alarmingly for girls a solid cancer induced by radiation could result from every 300 to 390 abdominal/pelvic scans, according to the study. The use of CT scans in pediatrics more than doubled from 1996 to 2005, according to the National Institutes of Health researchers, who examined CT scan data from 7 U.S. healthcare systems.

But reducing the highest 25% of doses to the median of the roughly 4 million annual U.S. CT scans could prevent 43% of the 4,870 cancers projected by the study, according to the researchers.

Lundy, a medtech veteran who says the diagnostics space is his "sweet spot," told MassDevice.com that the Venaxis rapid test, APPY1, is designed to run side-by-side with other blood tests to rule out appendicitis, narrowing the field for those confirmatory CT scans. The addressable patient population for the test runs to about 16 million in the U.S and Europe, Lundy told us, as you’ll see from the following transcript, edited for clarity.

MassDevice.com: What’s the scope of the problem in diagnosing appendicitis?

Steve Lundy: Abdominal pain is one of the major reasons patients will show up in an ER. Based on CDC data, there were 135 million ER visits last year, with about 10.5 million related to abdominal pain. ER clinicians always want to rule out appendicitis early in the process, given that a burst appendix is not a good thing and leads to a lot of complications.

The problem is that over the last 10 years or so, doctors have been using CT scans, and to a lesser extent ultrasounds, as the primary way to rule out appendicitis. CT scan is a pretty good test, from a sensitivity and specificity standpoint, but the problem is that most of these patients don’t have appendicitis.

There are only 300,000 new cases per year, so a lot of unnecessary CT scans are being done, and especially on children as appendicitis tends to be a condition that peaks at age 12.

What has come out in a pediatric JAMA article is pretty definitive proof that these CTs are leading to long-term health risks, particularly cancer. Doctors need a way to rule out appendicitis, but they don’t want to do a CT scan. That’s where our test comes in. With a rapid, non-invasive blood test, the doc will know within 30 to 45 minutes whether they can confidently rule out a patient for appendicitis. That’s the value that this 1st-generation test will provide, the APPY1.

MassDevice.com: How accurate is APPY1 compared to CT scans for appendicitis?

Steve Lundy: From a rule-out perspective, it’s the same. We believe that our test could perform even better than CT, in terms of confidence that the patient is a true negative. It doesn’t have the same positive predictive value as a CT scan.

Our test is designed to have high sensitivity, not necessarily high specificity. It’s not a test that is specific for appendicitis. We’re not going to replace the CT scan, but we will eliminate the unnecessary ones.

MassDevice.com: Was the technology originally aimed at lowering radiation exposure, or was it aimed at lowering unneeded appendectomies?

Steve Lundy: The company was approached by a pediatric surgeon named John Bealer who really was frustrated that many patients weren’t being diagnosed properly with CT. He was actually removing quite a few healthy appendices back then, and said there was such a big need for a simple blood test. The company went down that path and ultimately led to where we are today.

When I joined the company back in 2004-2005, the company was working in a completely different area of proteomics around animal health. At the time the company was called Aspen Biopharma and the idea was to licensee in synthetic drugs that would assist in managing and enhancing animal reproduction. At the time the company had a competency around proteins and proteomics, well-known in the Denver community.

MassDevice.com: How does the test work?

Steve Lundy: Back when Dr. Bealer was helping us, in the early stages of developing this test, we obtained a number of samples and we went through a mass spectroscopy study, which looked at which protein peaks present in diseased patients versus healthy patients.

From that, you get a signature of which proteins might be associated. When we did the analysis, we found that the marker is 1 called MRP8/14. We patented the use of that biomarker in the space of abdominal pain. That work was done in the mid-2000s, and when I came on board, we added some additional biomarkers because we wanted to find what other markers we could add to the panel to increase the negative predictive value.

We ended up adding 2 tests. One is called a high-sensitive CRP and the other is a simple white blood count. The combination of the 3 actually improves sensitivity from the low 90s to the high 90s, which is a significant increase. We have a mathematical algorithm designed to maximize each individual marker, and together they are combined into a single value, which we call the APPY1 result.

We’d like to limit CT scans to those patients that really need one. Either they are at high risk, or they are patients that are at moderate risk and the doctor is concerned. If our blood test is not negative, then maybe they still do the CT scan. But if the doctor really is on the fence or really feels this is a negative patient, our test really helps them make that decision to not do the CT.

MassDevice.com: You already have CE Mark in Europe. What’s the U.S. regulatory timeline for the APPY1 test?

Steve Lundy: As part of the FDA clearance process, we are engaged a pivotal trial, which ultimately will involve 2,000 evaluable abdominal patients, where appendicitis is in the differential. Those patients will be tested with our test, and then will be compared with clinical truth, which is biologically confirmed appendicitis on the positive side. The trial will include follow-up after 2 weeks to ensure the negatives are true negatives, and will look at negative predictive value, sensitivity and specificity.

That trial should conclude in the 4th quarter of this year, with top-line data ready at that time. We started the trial in February and now we have 28 hospitals, all sending us samples, so we’re on a good track to complete that in the 4th quarter.

MassDevice.com: What’s the potential market for the test?

Steve Lundy: The way we see the market ultimately is that we look at U.S. and Europe, where 22 million patients present with abdominal pain. We know that 75% of those patients will get blood work. So for 16 million out of the 22 million, the doctors will order a white blood count test. That provides some information, but it’s not a test you can use to rule in or rule out appendicitis.

Our vision is that we will replace the white blood count as the standard blood work that is done on these abdominal pain patients, so we see 16 million abdominal pain patients in the U.S. and Europe as ultimately being our available market. We haven’t finalized pricing yet, but we’ve been guiding the investment community that we’re looking at a price per test of around $75. Given the market size of 16 million patients, times $75, that’s a billion-dollar potential opportunity just on this diagnostic. We think it’s quite compelling from an opportunity standpoint.

MassDevice.com: What’s your background?

Steve Lundy: I’ve been in the diagnostics business for 26 years. Going back number of years, I was an Air Force officer. I decided to get out of the military, and healthcare always seemed very interesting. It was cutting-edge technology, the products really do help people, so it seemed like a really good industry to get into.

I’ve stayed there ever since. It was a really good decision. I started my career in the cancer diagnostics laboratory arena with a company called Dianon Systems, than ended up coming the 1st centralized pathology lab in the country and was sold to LabCorp (NYSE:LH). More recently, I was the chief commercial officer of a private company called Genome Sciences, which developed the 1st molecular test for methicillin-resistant Staphylococcus aureus. We launched that back in 2004-2005, and it was sold to Becton Dickinson (NYSE:BDX) a couple years later.

More recently I was CEO of a private company called MicroPhage, which was also engaged in diagnostics, trying to develop better test for bacterial identification and susceptibility testing. From there I came here. I’ve been in the diagnostics industry mainly developing new tests, marketing and selling new tests or new ways of selling existing test. This is sort of my sweet spot. I’ve been involved in some really cool diagnostic tests that I think have really helped doctors and helped people. It’s been a rewarding and fulfilling career.

MassDevice.com: What have you learned about the diagnostic world from your years of experience?

Steve Lundy: There are so many new interesting diagnostic technologies that are out there. There’s 2 reasons why a lot of these tests don’t make it to the market. The 1st is companies that develop the tests are not well capitalized. We just recently raised $14 million and we’ve got $20 million in the bank, so I think we are in a position where we can invest in what’s needed to get this test to the market. And I think the 2nd piece is having the experience in commercially launching this diagnostic tests. We feel like we’ve got a team that knows how to execute on this opportunity. Those are 2 missing elements that prevent a lot of interesting companies and diagnostics from seeing the light of day.

We worked with Piper Jaffray; Sophrosyne Capital is 1 of our leading investors and Deerfield just filed its 13G. We had a number of investors that came in, and the good thing is that our large existing investors came in and supported again and wanted to stay fully invested in the company.

We also brought some new investors to the company, who we think will be with us for the long term. The stock right now is at a very attractive evaluation and we hope to see top-line data from the clinical trial, when we’ll start to launch this thing in a big way and see an increase in value. Future investors will see that this is a company that is on the verge of something in the commercial stage.