26 Oct 2010
Jim Hitchin resigns as CEO of the company, which has developed a fluorescence-based optical biopsy tool for cancer screening.
SpectraScience, a San Diego company developing an optical biopsy instrument for early detection and treatment of colon and esophageal cancer, is set for a major strategic change under new leadership.
Former CEO Jim Hitchin, who rescued the company from bankruptcy back in 2004, resigned from his post on October 20, with Mark McWilliams stepping in on an interim basis as the company begins a search for a new, full-time CEO.
SpectraScience’s “WavSTAT” product, which detects early-stage colon cancer using a fluorescence technique, is the company’s key development project, and is currently involved in a number of clinical trials and research studies. However, the company is yet to deliver any significant revenues through sales of the tool and is running up major losses.
In fiscal 2009, SpectraScience reported annual revenues of just $167,000, and with $2.1 million operating costs in research and development alone, it posted a net loss for the year of $4.4 million. In the first half of 2010, that situation barely changed, and the company only managed to support operations by raising $3.2 million through a sale of preferred stock in the summer. Although plans for a further $7.1 million offering had been registered with the US Securities & Exchange Commission (SEC), the board of directors clearly feels that now is the time to take action:
Clear change of strategy
“We have formally reviewed the management’s strategy and record of execution,” the directors wrote in a letter to shareholders dated October 25. “We believe that key to long-term value creation for SpectraScience and its shareholders is a clear change of strategy.”
The letter continued: “Fundamental to achieving success in the company’s refocused business plan is our commitment to allocation of our resources in a more disciplined and focused manner.” Central to that aim will be a complete re-think of the company’s various distribution partnerships in Europe, and of the various ongoing clinical trials. “A tactical goal is to tighten the focus of clinical studies and trials to those which directly support our new strategy and near-term business interests.”
Exactly what those plans are isn’t clear right now, although SpectraScience has said that it will add to its management and sales team. Attracting more funding is not said to be a priority, with the board of directors saying that the $4 million in liquid assets listed on its balance sheet will be sufficient for it to execute its plans for fiscal 2011. SpectraScience lists intellectual property as one of its key assets – its patents were valued at $2.8 million on its latest balance sheet – and either licensing that technology or a sale of key assets could prove to be a way forward.
SpectraScience began existence in Minnesota back in 1983 as GV Medical. In October 1992, GV Medical refocused its development efforts and changed its name to SpectraScience. Since 1996 the company has focused primarily on developing WavSTAT, and the minimally-invasive optical biopsy system has received US Food & Drug Administration (FDA) approval for colon cancer detection.
The system scans tissue in real-time with a UV laser to distinguish between normal, pre-cancerous and cancerous cells. By enabling physicians to make an instant diagnosis during endoscopy when screening for cancer, immediate treatment can be initiated during the same procedure.