RE:AAMI ST/WG84
I was unable to take in all of the meeting of WG84, but here are my take aways from the morning of 19th and some of afternoon:
1) AAMI committee members fought off a proposed change the draft of the standard that used wording trying to assert that scopes passing through dirty cavity like mouth or bowel don’t need to be sterilized because having passed through a nonsterile cavity they could no longer be considered sterile when they are used to enter a sterile cavity (such as to do a biopsy). The group soundly rejected this revision and discussed that the point of all of this WG84 work since the FDA meeting in early 2015 is that duodenoscopes and other endoscopes do need to be sterilized because of cross contamination between patients (and the issue is not contamination from the patient themselves). This attempted revision also listed a group of scopes that specifically mentioned all relevant endoscopes but not duodenoscopes. This attempt to exclude duodenoscopes was soundly rejected and the list itself removed and reference was left to only all endoscopes needing to be terminally sterilized.
2) It was felt no date should yet be published by which implementation of low temperature sterilization adoption by a hospital or GI suite must necessarily be completed, though they recommended wording stating sterilization is recommended when possible for the whole list of endoscopes. This is very important! Not establishing a date like mid 2019 or 2020 for adoption by all does not mean that the new standards do not recommend terminal sterilzation as soon as possible, it simply recognizes that the group cannot take on establishing a date for practical reasons. Will TSO3 be able to meet demand of not only 1500 low temperature sterilizers per year to replace existing sterilizers that are old and failing, but what of the entire installed base of 20,000+ units in NA alone that will need to be upgraded over the next few years to this new technology standard and provide the best patient care? The group recognized in their comments that these recommendations will definitely cause a dramatic shift in practice and standard of care with implications for all involved, (including legal liabilities for those who do not yet have a VP4 sterilizer if and when patients become il or die due to being exposed to contaminated duodenoscopes, complex gastroscopes, or colonoscopes for example- with the VP4 being the only LTS system that is effective and recognized by the FDA to terminally sterilize this huge swath of endoscopes).
3) The point was reiterated that HLD has been repeatedly found in independent studies NOT to be effective in eliminating bacterial contamination for many endoscopes including duodenoscopes and that only terminal sterilization does this. (It was not discussed that ETO has also been shown also to be ineffective as a method of terminal sterilzation of duodenoscopes among other scopes, but the group appeared to be referring to TSO3's VP4 as THE terminal low temperature sterilization solution and they spent about 40 minutes discussing wording and housekeeping regarding references to TSO3's H2O2 and Ozone technology alone.)
4) The group also discussed again and accepted (over Olympus’s comment and half-hearted objection) that IFU’s are to be accepted if done by scope OEM or sterilizer manufacturer. This latter has now gone through second draft and is extremely positive. Olympus did not object and supports the wording! Again, this accepts a total shift in practice re: FDA and IFU’s that will allow TOS to do their own IFU’s and that these will meet standard of FDA.... all excellent!
5) Olympus did request that it be recognized that terminal sterilization results in more wear and tear for scopes over HLD but the comment was rejected as Olympus has no actual data to support this contention, recognizing the FDA is looking into and studying this, (in consultation with TSO3). This is for further study and is to be part of Olympus’s internal risk assessment but not part of the WG84 standard of care recommendations. This rejection which was politely accepted by the Olympus rep is also extremely positive for TSO3, with group reiterating emphasis on doing more preventative maintenance and the group again emphasizing the need to inspect scopes routinely between uses.
6) A revision was also soundly rejected that might have claimed that terminal sterilzation was impractical and inefficient due to time but the group rejected that terminal sterilation with new technology (=VP4) takes significantly longer than HLD. It was noted that with H2O2 + Ozone technology HLD is not required as part of the reprocessing protocol and that the cycle time was in the range of only an hour. A busy endoscopy clinic might need to add one or two duodenscopes to maintain their high volume and turnover, but this was reasonable and certainly not prohibitive to improving the quality of care for patients. Washing protocols were of course discussed as essential prior to terminal sterilization as is the new standard of 10 minutes of drying time after washing before putting the endoscope through the sterilizer.
IMHO.... this is exactly what TOS had hoped for with this latest draft revision. The VP4 remains a market disruptive techology! With the team from TSO3 at table, all went extremely well!! I would anticipate a final draft might be prepared for the fall AAMI Standards Meeting.
The market has seriously mispriced TOS in light of the value of this technology. But, investors have definitely lost confidence in management's ability to deliver on expectations and take over this LTS market. However, I strongly expect that the next few days and weeks will bring news that will substantially surprise on the upside in terms of the VP4 getting market traction (both in terms of Getinge sales recently and TSO3 orders) following FDA extended unique claims for the Olympus duodenoscope and the growing positive user experience. Again, IMHO, RR will never do an equity financing at any share price level remotely near where we are today and he won't need to. Why would they not simply get a LOC for a 3-5 year term from a bank or Caisse at a reasonable interest rate that would remove the prospect of a financing completely and reassure the market? If sales take off, as I suspect they are and will be in light of FDA news, strategic installs and excellent cost efficiencies to users being reported by early adopters, etc., TSO3 would not even need to use much or any of a Line of Credit financial cushion over the next year to continue growing independently as well as working with Getinge (and others possibly in markets where Getinge is not active) under similar arrangements to the one that exists now. This share price remains ludicrous.
