Corporate Profile
CEO: Jim Hitchin
Headquarters
11568 Sorrento Valley Rd. Suite 11
San Diego, CA 92121
Phone: 858-847-0200
Fax: 858-847-0880
Website: http://www.spectrascience.com
Email: info@SpectraScience.com

Principal Product
SpectraSCIENCE, Inc. has developed a proprietary WavSTAT™ Optical Biopsy System capable of determining whether tissue is normal, pre-cancerous or cancerous without physically removing tissue from the body and without waiting days for a pathology report. The WavSTAT™ Optical Biopsy System uses a spectrophotometry technique known as Laser Induced Fluorescence (LIF). During LIF spectrophotometry, cool laser light scans and excites certain tissues in the body to emit a returning fluorescent signal. The emitted fluorescence is collected, measured and analyzed by a computer equipped with a proprietary statistical tissue recognition algorithm, which provides the physician with an immediate analysis of the tissue.

The WavSTAT™ Optical Biopsy System consists of a console which houses a laser, electronic components that collect the emitted fluorescent signals, and a computer that operates the Optical Biopsy System and provides the tissue analysis results. The laser light is delivered to the tissue by making contact with the WavSTAT™ Forceps, which contain an integrated optical fiber. The WavSTAT™ Forceps and optical fiber also returns the emitted fluorescent signal to the console for analysis. The WavSTAT™ Forceps are designed to be used through the working channel of a standard endoscope and are also intended to treat the patient by removing diseased tissue after a diagnosis has been made.

Colorectal Cancer
The first application of the WavSTAT™ Optical Biopsy System is for use during endoscopic colorectal cancer screening procedures to aid in the detection of pre-cancerous and cancerous tissue. The WavSTAT™ Optical Biopsy System has been approved by the United States Food and Drug Administration (FDA) and European Union Regulatory Authorities to aid the physician during colorectal cancer screening.

According to the American Cancer Society, approximately 145,000 new cases of colorectal cancer are diagnosed annually in the United States alone. With an estimated 56,000 deaths in 2005, colorectal cancer is second only to lung cancer as the leading cause of cancer death. Colorectal cancer affects men twice as often as women. Candidates for colorectal cancer screening include all persons over the age of 50 or approximately 80 to 90 million people in the U.S. alone.

Colorectal cancer is primarily diagnosed by the detection and analysis of polyps by the insertion of an endoscope into the colon. Polyps are small, pronounced masses of tissue found in the colon and rectum that may either be benign, pre-cancerous or cancerous. According to the American Gastrointestinal Endoscopy Societies' guidelines large polyps (greater than 1 cm) are generally removed immediately and sent to pathology for evaluation. Small polyps (less than 1 cm) on the other hand generally require individualized treatment on a case-by-case basis. In some practices, a visual assessment of these small polyps is often used to determine the best course of treatment. In the case of multiple small polyps, random representative biopsies are often taken to determine the best course of action for these small polyps. After completion of the endoscopy procedure the biopsy samples are sent to pathology for evaluation. The patient is then contacted several days later with results. If results indicate the tissue is pre-cancerous or cancerous the patient is scheduled for an additional endoscopy and the polyp is removed. If results indicate the tissue is normal the patient is placed in a surveillance program.

Using current methods and techniques to detect and treat colorectal cancer the American Cancer Society reports patient outcomes to be as follows:

•	The five-year survival rate is 92% if detected and treated at an early stage;
•	The five-year survival rate drops to 64% if the cancer spreads outside the colon to the lymph nodes;
•	The five-year survival rate for those patients in whom the cancer has spread further to the liver or other organs drops dramatically to 7%.

It is clear from these outcomes that early detection is essential to long-term survival. Unfortunately, it is also reported by the American Cancer Society that only 37% of colorectal cancers are currently found at an "early stage."

The SpectraScience WavSTAT™ Optical Biopsy System is intended to be used through the endoscope during colorectal cancer screening to allow an immediate analysis which enables the physician to (i) find cancerous or pre-cancerous tissue with greater accuracy, (ii) receive an immediate analysis of the tissue, and (iii) potentially diagnose and treat in one procedure. The Company's system is intended to be used to augment the physician's clinical judgment when he/she is making critical clinical decisions as to which small polyps should be biopsied, removed completely or what surveillance schedule is most appropriate for the patient.

Multi-trial clinical studies necessary for FDA clearance were performed at the Mayo Clinic, Massachusetts General Hospital, Hennepin County Medical Center, and Minnesota Gastroenterology PA at Abbott Northwestern Hospital and United Hospital. Results of the Company's clinical trials demonstrated that the use of the WavSTAT™ System significantly increased the physician's diagnostic accuracy (clinical sensitivity) to correctly identify pre-cancerous or cancerous polyps. The Company's clinical trials revealed the physician's diagnostic accuracy to correctly identify pre-cancerous or cancerous polyps to be 82.7%. The use of the WavSTAT™ System significantly increased the physician's diagnostic accuracy to correctly identify cancerous or pre-cancerous polyps to 96.3%.

Based on the clinical study results, the Company believes that the use of its WavSTAT™ Optical Biopsy System will:

•	Significantly improve the physician's diagnostic accuracy to determine whether tissue is pre-cancerous or cancerous;
•	Improve patient survival rates by earlier detection and treatment of cancers, and more importantly pre-cancers, by more accurately identifying cancers or pre-cancers the physician may misdiagnose;
•	Improve the patient's quality of life by providing an immediate analysis of the tissue thereby eliminating the anxiety of waiting several days to hear the pathology results;
•	Enable the physician to diagnose and treat the patient during the same endoscopy procedure with the same biopsy instrument, thereby potentially reducing the need for scheduling a second costly endoscopy for treatment purposes;
•	Be cost effective by significantly reducing the number of physical biopsies performed and by reducing the number of unnecessary second endoscopies performed and;
•	Be cost effective by reducing the number of misdiagnosed patients, thereby potentially eliminating the need for more costly advanced treatments such as surgery, chemotherapy, and or radiation.

The Market
SpectraSCIENCE is focusing its sales and marketing efforts on Managed Care Organizations with high volume colorectal cancer screening programs, particularly Health Maintenance Organizations (HMO's) and Preferred Provider Organizations (PPO's). These capitated programs will benefit the most from the features and benefits demonstrated in previously performed clinical studies of the WavSTAT™ Optical Biopsy System. These providers have been aggressive in creating centralized, high volume colorectal cancer screening programs because they recognize the cost savings of endoscopic screening and the financial value of early detection. According to industry sources approximately 69% of all working Americans in 1998 were covered by one of these two types of Managed Care Organizations, i.e. 40% by PPO's and 29% by HMO's. Actual 1998 HMO enrollment figures totaled slightly more than 84 million enrollees, including both working and non-working members. The combined enrollment for HMO and PPO organizations is estimated to be 189.5 million (including both working and non-working people).

According to the American Cancer Society and other medical guidelines for colorectal cancer screening all persons with or without symptoms who are 50 years of age or older should receive a colorectal cancer screening procedure once every five years. Age distribution statistics for 2004 from the United States Census Bureau estimates 28% of the general population to be 50 years of age or older. When US Census age distribution percentages are applied to the 189.5 million Managed Care enrollees, approximately 53 million individuals were aged 50 or older and considered by the medical guidelines to be candidates for colorectal cancer screening in 2004.

The Company intends to implement the following marketing strategy:

•	Become the first to commercialize an endoscopic optical biopsy system for colorectal cancer screening.
•	Enter the market and establish the WavSTAT™ System in managed health care organizations.
•	Conduct clinical outcome and cost effectiveness studies in the United States to satisfy outcome-based requirements necessary to obtain coverage and reimbursement for our products.
•	Leverage SpectraSCIENCE's proprietary technology into other gastrointestinal applications, for example, the esophagus, stomach, etc.

Similarly, the Company may conduct an outcome study in Europe, where healthcare reimbursement is delivered by the National Health Services, similar to Medicare and Medicaid in the United States. Adoption of this new technology will require the following outcome based studies:

•	Cost-benefit analyses: Studies that quantify both the costs and the clinical benefits of medical technology in terms of monetary values.
•	Cost-effectiveness analyses: Studies that look at both costs and patient outcomes, the outcomes measured as the effectiveness of the technology, usually in terms of patient quality-of-life outcomes.

Ultimately, the focus of our analyses on outcomes creates a "value" model to provide purchasers or users of financial information and patient care information to reduce service intensity, and avoidance of unnecessary and more costly therapeutic procedures.

Regulatory Status

United States

SpectraSCIENCE completed the appropriate clinical studies, safety testing and technical document requirements necessary to submit a pre-market approval (PMA) application to the FDA for approval of the WavSTAT™ Optical Biopsy System for use during endoscopic colorectal cancer examinations. During 4^th Qtr. 2000, the FDA approved the PMA application for use of the Optical Biopsy System as "an adjunct during endoscopy of the colon to aid the physician in determining whether polyps (less than 1 centimeter) are normal, pre-cancerous or cancerous."

The WavSTAT™ Optical Biopsy System is classified as a Class III product by the FDA, and as such, any new application for the Optical Biopsy System will require its own pre-market approval application (or supplement) and approval prior to commercialization. SpectraSCIENCE has successfully completed a Phase I clinical study for the detection of esophageal cancer and is currently conducting a Phase II study. The Company will use the clinical study data and all necessary testing documentation to prepare a PMA application (or supplement) for FDA submission regarding detection of cancerous and pre-cancerous tissue in the esophagus.

European Union

The European Union consists of 15 countries encompassing most of western Europe. The principal directive prescribing the laws and regulations pertaining to medical devices in the European Union is the Medical Devices Directive, 93/42/EEC. According to the Medical Device Directives, in order to sell a medical device within the European Union the product must obtain the CE mark from a Notified Body (regulatory equivalent to the US FDA).

In 4^th Qtr. 2000, SpectraScience received CE mark authorization for the WavSTAT™ Optical Biopsy System from a Notified Body giving SpectraScience approval to make sales in the European Union. In addition, SpectraScience received ISO 9001 certification prior to CE mark authorization. The ISO 9000 series is an internationally recognized standard for quality systems similar to standards required by the FDA for manufacturing a medical product. Obtaining ISO 9001 certification requires a production facility audit to review the Quality System and manufacturing processes necessary to build the product.

Patents
SpectraSCIENCE currently owns exclusive rights to a total of eight issued US and international patents. SpectraSCIENCE is the exclusive licensee through the Massachusetts General Hospital of US Patent 5,843,000 entitled, "Optical Biopsy Forceps and Method of Diagnosing Tissue" and an EU international patent. The patents are focused on types of forceps having an optical fiber and biopsy jaws which are positioned to take samples for biopsy or to remove tissue as therapy from the precise area of view of the optical fiber, methods of tissue diagnosis using these forceps, and the mechanism of action regarding the entire WavSTAT Optical Biopsy System.  To date, no claims have been brought against SpectraSCIENCE alleging that the Company's technology or products infringe intellectual property rights of others.

Recent Events
Please click on the links at the top of this page, including the "Quarterly Filings" link to receive the latest business information.  Recent News can be found on the NewsRoom tab.

Directors
Jim Hitchin, President and Chairman joined SpectraSCIENCE in 2004 as part of the acquisition team. Previously he was the founder, CEO and Chairman of Infrasonics, Inc., a medical device company in the respiratory care field. The company was the first in its market to have ISO9001 and the CE Mark for fourteen 510(k) and two PMA products. Growth was at a compound rate of 62% during its fifteen-year life before being sold to a competitor. In previous companies, he was COO of a public energy company and the VP, General Manager of a public oceanographic engineering firm. Mr. Hitchin has extensive experience in all phases of manufacturing and company operations. He graduated from San Diego State University with a degree in Physics.

Honorable Tommy Thompson.  Before entering the private sector in 2005, Secretary Thompson enjoyed a long and distinguished career in public service. In 1966 he won a seat in Wisconsin’s state Assembly. He became assistant Assembly minority leader in 1973 and Assembly minority leader in 1981. Elected governor of Wisconsin in 1986, he was reelected in 1990, and in 1994 became the first governor in the state’s history to be elected to a third four-year term. In 1998 he was elected to a fourth term, and served in that position until his appointment as Secretary of Health & Human Services in 2001. As the head of the Department of Health & Human Services, Secretary Thompson served as the nation’s leading advocate for the health and welfare of all Americans. He worked to modernize and add prescription drug coverage to Medicare for the first time in the program’s history. A leading advocate of welfare reform, he also focused on expanding services to seniors, the disabled and low-income Americans. As governor of Wisconsin, Secretary Thompson was perhaps best known for his efforts to revitalize the Wisconsin economy, for his national leadership on welfare reform and for his work in expanding health care access across all segments of society. Secretary Thompson is well-known for his contributions to the U.S. response to the threat of bioterrorism and for his leadership in the fight against HIV/AIDS in the United States and abroad; he currently serves as the chairman of the Global Fund to Fight AIDS, Tuberculosis and Malaria. Secretary Thompson has received numerous awards for his public service, including the Anti-Defamation League’s Distinguished Public Service Award, Governing Magazine’s Public Official of the Year Award and the Horatio Alger Award, which is awarded annually to “dedicated community leaders who demonstrate individual initiative and a commitment to excellence—as exemplified by remarkable achievements accomplished through honesty, hard work, self-reliance, and perseverance.” He is a former chairman of the National Governors’ Association, the Education Commission of the States and the Midwestern Governors’ Conference. Secretary Thompson received both his B.S. in 1963 and his J.D. in 1966 from the University of Wisconsin-Madison. He is a member of the District of Columbia and Wisconsin Bars.

Chester E. Sievert, Jr. joined SpectraScience as a consultant in June 1996, and held various executive positions including Chairman of the Board, President and CEO. He is currently President of Advanced Photodynamic Technologies. Prior to SpectraScience, Mr. Sievert was a founder and President at two medical product companies; ReTech, Inc. from 1980 to 1986; and FlexMedics Corporation from 1986 to 1985. Both Companies were sold respectively to American Endoscopy, Inc. and Phillips Plastics Corporation. As a former Senior Research Health Science on staff at the University of Minnesota Medical School and the Veterans Administration Medical Center, Mr. Sievert has published more than 50 medical journal articles in the fields of Gastroenterology, endoscopy and fiber optics. He has also been awarded eight United States and international patents. Mr. Sievert has a Bachelor of Science Degree in Comparative Physiology from the University of Minnesota.

Mark McWilliams Currently serves as Director of Cell Imaging and Analysis at Beckman Coulter after the recent sale of Q3DM to Beckman in December 2003. He was President and Chief Executive Officer and Director of Q3DM, a life -sciences startup that raised several angel and venture capital funding rounds. Previously, he was founder and COO of Medication Delivery Devices (MDD), an alternate care infusion systems company that was acquired by Baxter Healthcare in 1996. Mr. McWilliams served as a VP of Research and Development at Baxter Healthcare for three years following the sale of MDD. Prior to MDD, he served as Product Development Manager at the founding of Block Medical where he was responsible for bringing the company's first two FDA approved products rapidly to market. Block was sold to Hillenbrand Industries in 1991. He previously worked for Hughes Aircraft, Vacuum General and Martin Marietta. He earned his MSME from the Massachusetts Institute of Technology, his BSME from Northeastern University and holds eight utility patents.

Rand P. Mulford Currently, Mr. Mulford serves as EVP for Strategy with Chatham Capital and Forest Health Services. For the previous two years, he was part of the senior management team of a small investment banking firm that specializes in funding early stage companies and technology-based spinouts using private placements. he has worked directly with four portfolio companies. Mr. Mulford was asked to identify critical issues and develop business strategy, serve on three of the Boards of Directors, assume a direct managerial role in two of the companies, and negotiate the successful sale of one of the companies, His corporate experience includes: Group VP of planning and control for a petrochemical company; head of corporate planning at Merck; CFO of a human tissue company; COO of a drug discovery company and president of its subsidiary, a research chemical company; COO of a diagnostics company; Chairman of the Board of a medical device company; and head of the corporate development at a bio-pharmaceutical company. Mr. Mulford started his business career with the consulting firm of McKinsey & Co. in the Chicago office. During an eight-year period, he served about twent clients working on a variety of issues primarily related to strategy and organization. Mr. Mulford obtained a bachelors degree in engineering with honors from Princeton University in 1965. For the next five years he served as a naval officer in the nuclear submarine program. Subsequently, he earned an MBA with high distinction at Harvard Business School.

Stanley J. Pappelbaum M.D., Director, is Managing Partner of Pappelbaum, Turner & Associates, a national healthcare consultancy company that advises hospital, medical group, health insurance, and governmental healthcare clients. Dr. Pappelbaum joined Scripps hospital in 1996 as Chief Transformational Officer in charge of creating and implementing Scripps’ strategic vision of the future. In 1997, he was promoted to Executive Vice President and Chief Operating Officer and, in 1999, he was promoted to President and Chief Executive Officer when the hospital reached annual revenues of over $1 billion. From 1985 to 1995, he was the managing partner of Professional Health Consulting Group, a national company of physician executives who analyzed and managed change for complex not-for-profit healthcare systems clients throughout the United States. From 1969 to 1984, Dr. Pappelbaum taught and practiced Pediatric Cardiology at the University of California, San Diego and at San Diego Children’s Hospital, where he was Chief of Pediatric Cardiology from 1972-1978. Dr. Pappelbaum completed his undergraduate work at McGill University, Montreal and received his medical degree from the University of British Columbia Faculty of Medicine in Vancouver. He completed his residency in pediatric medicine at Montreal Children’s Hospital of McGill University and did graduate studies in cardiovascular physiology and a fellowship in pediatric cardiology at the University of California, Los Angeles. He also was awarded an Alfred P. Sloan Fellowship at the Massachusetts Institute of Technology where he earned a Master's degree in management (health option) from MIT.

John Pappajohn, Director, has been the President and principal stockholder of Equity Dynamics, Inc., a financial consulting firm, and the sole owner of Pappajohn Capital Resources, a venture capital firm. Mr. Pappajohn has been involved in the development and financing of hundreds of companies during his career and has served as a director of more than 40 public companies. In addition to SpectraScience, Inc., he currently serves as a director of the following public companies; Allion Healthcare, Inc., American CareSource Holdings, Inc., CareGuide, Inc., ConMed Healthcare Management, Inc., and Healthcare Acquisition Corp. Mr. Pappajohn received his B.S.C. from the University of Iowa.

Other Information
SpectraSCIENCE began operations in May of 1983 as GV Medical, Inc. In 1992 the Company restarted under the name SpectraSCIENCE and initiated its current business focus on diagnostic and therapeutic products utilizing spectroscopic techniques.