Investment Highlights

• A life-saving solution for intravenous medication safety.
• Laser verification of intravenous drugs, using an analyser and consumables.
• Intravenous drug error is one of the most common and most dangerous of hospital medication errors.
• Safety-as-a-service business model consisting of setup fee, service fee and consumables.
• Five granted US patents.
• Ten second data capture time.
• Completed validation trial at a major New Zealand hospital.
• Advisory team of some of New Zealand’s leaders in anaesthesia and medication safety.
• Long established relationships with potential global partners in IV medication delivery.
• Highly experienced board and executive team.

Welcome to Veriphi

Veriphi has developed a ground breaking laser based analyser that minimises the risk of death and injury due to intravenous medication error in hospitals. The company is seeking to raise up to NZ$2m to commercialise its solution. Medical error is the third leading cause of death in the United States and medication error is one of the most common forms of patient harm in hospitals globally. Intravenous errors are twice as likely to harm patients than from drugs administered via other routes. As drug regimens for an aging population become more complex, new intelligent solutions are required to minimise the risk of patient harm whilst fitting seamlessly with existing clinical practice. The Veriphi system works by using lasers to automatically verify the drug identity and concentration. Veriphi will verify IV drug doses as they are compounded or administered and be paid every time that happens, providing greater safety by fitting seamlessly into within existing clinical practise.

The Problem

Medication errors are among the most common medical errors, harming millions of people globally every year. In New Zealand hospitals, medication error causes an estimated 400 permanent disabilities and 3,500 temporary disabilities, costing an estimated NZ $158 million per annum. In US Hospitals, medication error injures approximately 400,000 people and causes an estimated 7,000 deaths at a cost of US$3.5B-$5.6B per annum. Intravenous medication errors account for over half of this total and are twice as likely to cause harm than from drugs administered via other routes. Examples include a 33 year old mother in Sydney in 2010, left paralysed from the waist down when injected epidurally with a cleaning agent. In 2012, a Wairarapa patient was unintentionally administered two doses of adrenaline causing heart arrhythmia requiring defibrillation.

The Solution

Veriphi has developed a highly innovative laser based analyser to verify intravenous drugs to prevent medication error in hospitals. The Veriphi medication safety solution will be arguably the simplest and safest way to prevent such tragedies occurring. The system works by placing Veriphi’s consumable containing the drug in the beam path of the analyser. The consumable has optical windows that allow the laser beam to pass through the drug onto a detector. The optical information received by the detector is compared against a library of known signatures for specific drugs. The Veriphi system then alerts the clinician if the drug presented is not the one that is intended to be administered.

The Benefit

To be able to simply and quickly verify the correct identity and concentration of IV drugs in non destructive testing is widely acknowledged in New Zealand and abroad as the holy grail of IV medication safety. As such, a solution that does this would be a “game changer”. This is particularly the case since recent overhaul of pharmaco-vigilance legislation in the EU and USA. The objective of the changes was to tighten up on drug traceability and verification as part of Good Manufacturing Practice. The US changes were sparked by a major tragedy due to non compliant preparation of sterile drugs in a single compounding pharmacy that caused the death of over 60 people across the United States in 2012 and 2013.

Review of 2016 Capital Raise Goals

We raised capital in 2016 to achieve six performance milestones that would pave the way for us to commercialise our drug-verification technology. We have made good progress in a number of these areas, however other areas have taken longer than expected or not eventuated as we expected. This has resulted in the first commercial sales of the analyser being delayed from 2017 to 2018.

Despite the delays, our original timeline for international sales that was outlined in 2016 remains largely unaffected. The reason we believe we can maintain those international sales targets is because of an initial exclusive focus on hospital compounding pharmacies. This is the result of in-depth discussions with the US FDA on the best path for Veriphi to enter the US market. Focusing on hospital pharmacies means we have removed the heavy compliance requirements associated with approval for a medical device included in previous timelines.

Key Learnings

Speeding up the development process

• Veriphi has brought the majority of its development in-house by expanding its own in-house technical team and capabilities.

Avoiding hospital delays

Veriphi was impacted by a 6 month wait for approval of hospital trials. It will therefore mitigate its risk against delays in hospital decision making in the following ways:

• Commencing hospital discussions early for conditions of purchase.
• Move to a service, rather than product sales model, to avoid capital expenditure approval process.
• Run parallel approaches to private customers.

Reducing exploratory testing of new drugs

• Focus on one application, pharmacy testing of high risk/oncology drugs, to move quickly from customer to customer, without as much exploratory testing.
• Narrow the number of drugs being tested.

Speeding up US market entry

• We are in ongoing discussion with the USFDA who have advised us how to enter the US market without the need for medical device compliance.
• We have therefore accelerated our US market entry plans and will visit the US in March 2018.

Maximising recurring revenue from fewer analysers

• Focusing on the hospital based compounding pharmacy market allows us to expand globally faster and maximise recurring revenue from fewer analysers in higher volume testing locations.

Key Achievements

Key Milestones

Veriphi will bring on stream 5 new prototypes for hospital and compliance testing in January 2018. Depending on the outcome of compliance approvals, we anticipate first sales to NZ customers in August 2018. Compliance approvals will be initially for NZ and Australasia with US approvals following shortly thereafter. A visit to the United States in March 2018 is designed to expedite hospital trials and first commercial revenues.

• August 2018. Compliance for NZ and Australia as laboratory equipment.
• August 2018. First commercial revenues in New Zealand.
• March 2018. Visit to Texas Medical Center Houston.
• December 2018. First sales in Australia.
• March 2019. First US sales.