Nova Eye Medical (EYE) Discussion, page-34

Hey mate,

I think I can answer this for you as I have spent quite a bit of time researching 2RT

First, it is important to note that iTrack Advance is the current focus for the company, with 2RT definitely more in the background at the moment. The important thing to consider with 2RT is that at a market cap of $30m, the company is being valued on a 2x multiple to iTrack revenue alone (substantially lower than the industry average of about 4-6x revenue). This shows that the valuation is clearly only accounting for iTrack Advance and there is basically a free option to benefit from 2RT (if it is a success the potential is enormous, if it isn't then the share price should barely react given how low the MC currently is).

2RT is about 2-5 years away, with a range of factors potentially influencing the timeline. The important next step is to partner in order to fund clinical trials and commercialisation. According to the company, they are in advanced discussions with multiple potential partners and should finalise a deal in the near term. The best bit about the partnership is that it may finally give 2RT a valuation, which in itself could give the share price a re-rate (given that, as I have said, the market cap clearly does not incorporate 2RT in the valuation). In order to explain what is planned, it is perhaps a good idea to give you a bit of an overview of what has been done so far:

• 2RT is currently approved by the FDA for diabetic disease, meaning there should not be any issues with safety as it has already been approved once for a different disease (albeit a rare disease meaning the cost of the laser was typically too high to justify only treating a few patients).
• 2RT was developed by Professor John Marshall (one of the most distinguished academics in the field of ophthalmology and arguably one of the founding fathers of laser therapy for treating ophthalmic conditions)
• Since then, there has been more than a decade of pre-clinical laboratory work, pilot clinical studies and the large randomised clinical trial (LEAD) which all show that 2RT has the potential to be the first treatment for intermediate AMD.
• The LEAD Trial:
• 292 participants across 6 sites followed for 3 years, half received SNL with the 2RT laser every 6 months, half received sham treatment
• Overall, progression to late AMD was NOT significantly slowed with SNL compared to sham treatment
• However, a post hoc analysis found that there was strong evidence of a significant treatment effect modified by the presence, at baseline, of a particular deposit in the retina called RPD. RPD are thought to signify sicker eyes with more advanced stage disease.
• There was a 4-fold reduced progression rate for the 76% participants without RPD at baseline with SNL treatment (aHR 0.24, 95% CI 0.09-0.59)
• There was a 2.5-fold increased progression rate for the 24% participants with RPD and SNL treatment (aHR 2.56, 95% CI 0.8-8.18)
• This shows that patients with RPD were potentially offsetting the highly beneficial effect of 2RT on patients without RPD
• As a result, there is good evidence to engage in a second validation study to confirm slowing progression from iAMD and therefore gain FDA approval.
• The company has recently completed an Investigational Device Exemption (IDE) application with the US Food & Drug Administration in early July 2021 to commence a pivotal clinical study for 2RT. The FDA wants data to confirm the post-hoc analysis before they approve the IDE, so the current clinical trials are structured to commence in Europe and Asia etc. with 1 year data being used to gain an IDE and therefore complete the trials in the USA. Through this structure, the clinical trials will already have 1 years' worth of data prior to gaining an IDE which will hopefully speed up the approval process.

Planned International Studies Necessary to Gain FDA Approval (based on guidance from FDA)

1. Repeat LEAD (without RPD) to show 2RT can slow progression of iAMD to late AMD (cohort B)

• Cohort B, 600 patients with a high risk of AMD progression. Follow up for 36 months.

2. New subgroup study: Slow progression from the earliest signs for cell death (nGA) to late stage AMD (Cohort A)

• Cohort A, 400 patients with a very high risk of AMD progression. Follow up for 24 months

The studies will be conducted concurrently, with study A providing an earlier study outcome than study B.









Summary:

Clearly, there is debate surrounding whether or not 2RT is a game changing device. The LEAD trial was a failure, and post-hoc analyses are always questionable. A partnership would be fantastic as it would indicate that there is a player willing to make a bet that 2RT will be a success. The fact it was developed by a man like Professor John Marshall is also a major plus (definitely google him). It is also likely that as near term milestones are reached (e.g. partnerships, stages of clinical trials etc.), there should be more and more interest in 2RT by the market which could see the price rise in anticipaiton.

However, due to the results of the LEAD trial I have taken the approach of NOT considering 2RT in my assessment and valuation of the company. At the moment, I only consider the potential of iTrack Advance in driving significant sales growth this year and onwards, and I think many other long termers here would agree. 2RT is exciting, but iTrack Advance is the focus with clearance for the device expected most likely next week!