Security Type: Preferred Stock
Round Size: Up to $1.07 million
Price per Share: $3.26
Valuation cap: $23 million
Deadline: Midnight (PT) on Thursday, December 14
Investment portal: MicroVentures
Liquidation preference: Pari passu with other series of preferred stock and senior to the common stock.
Conversion provisions: In connection with an equity financing of at least $1 million, the company has the option to convert the Crowd SAFE into shares of a series of non-voting preferred stock, at a discount of 20% of the price per share of the new preferred stock sold in the equity financing or a valuation cap of $5 million, whichever results in a lower conversion price. Please refer to the Crowd SAFE form for a complete description of the terms of the Crowd SAFE, including the conversion provisions.
Dear First Stage Investor,
Time is of the essence with this recommendation. Its fundraising deadline is this Thursday. So I’m going to keep this short.
Fortunately, this company – 20/20 GeneSystems – doesn’t need a whole lot of explaining. It’s made the kind of progress in early cancer detection that is going to make a real difference in many thousands of people’s lives around the word.
This is a serious company with deeply impactful technology. The nice thing is the technology is proven. It doesn’t need FDA approval. So it can be rolled out in the U.S. right away.
Which is what 20/20 plans to do with the money it’s raising right now.
Usually, I need to mention a bunch of risks to you. In 20/20’s case, its biggest risk is simply failing to do a successful fundraise. The scientific risk has been minimized from years of building advanced algorithms.
Since launching its first equity crowdfunding campaign about seven weeks ago, it has raised several hundred thousand dollars. So even that risk is now much reduced.
Are We Losing the War on Cancer?
What I want to tell you now is 20/20’s story… how it’s developed a technology and a strategy to roll it out that should significantly reduce the mortality rates of some of the deadliest forms of cancer.
After all, you and I are painfully aware that hundreds of millions of dollars have been spent on cancer treatment, yet announcements of real breakthrough progress have been few and far between.
Our “war on cancer” has turned into a standoff. We’re told that victory is just around the corner. But we’ve been told that seemingly forever. In the meantime, this awful disease has caused untold suffering for countless millions.
It’s the second leading cause of death in the world, responsible for 14 million new cases in 2012 and 8.8 million deaths in 2015.
Worldwide, approximately one in every six deaths is caused by cancer.
Cancer runs in my family. But I’m not the only one. Almost everybody has been affected by this deadly scourge.
So when I first came across what 20/20 could do, I had to take a closer look. Could this small unknown startup succeed where dozens of much bigger companies had failed?
Cancer’s Achilles Heel
20/20 focuses on a sort of loophole in cancer’s seemingly unyielding resistance toward breakthrough treatment progress…
Early detection… its Achilles heel.
20/20 can prevent cases from becoming fatal. In lung cancer, for example, more than 90% of patients survive for at least 10 years if diagnosed at Stage 1.
Lung cancer is by far the No. 1 cancer killer, responsible for more deaths than breast, colon and prostate cancer combined. It’s also the second most common cancer (not counting skin cancer).
Quietly, behind the scenes, 20/20 is introducing to the U.S. (and eventually China, Japan and other countries) a surprisingly effective way to detect lung cancer and other forms of cancer early on…
With the kind of accuracy never seen before.
20/20 identifies cancer risk early on by using tumor antigen markers. Then, by adding its proprietary machine-learning algorithms, it improves cancer detection by up to 30%.
These algorithms incorporate the patient’s individual risk factors, such as age, gender and smoking history.
These biomarker tests are used in many countries. 20/20 improves its accuracy by creating algorithms based on data it has gathered on more than 40,000 patients.
Individuals identified to be at risk are given recommendations for follow-up testing so that the cancer can be pinpointed, biopsied and treated through surgery.
How the Business Will Grow
In the last two years, 20/20 made around $400,000 a year. Its revenue growth, however, won’t begin in earnest until spring 2018.
That’s when 20/20 plans to introduce the OneTEST. It’s a multicancer blood test covering lung, liver, stomach/gastric, pancreas, colon and cervical/ovarian cancers.
Each of these cancers is deadly unless detected at an early stage.
Patients will be charged $150 to $200 for the test, an extremely reasonable price. Importantly, this price also allows 20/20 to bypass the hoops it would need to jump through to get insurance coverage.
The company plans on scaling globally beginning in 2019. It will be able to do so without the usual complications companies face because tumor marker detection kits and automated instruments are available in thousands of testing labs worldwide.
20/20 plans to market its tests to the physicians in these networks of screening centers.
In China, it already has a head start…
One of 20/20’s key partners is Ping An, China’s largest health insurer (by market value). It invested $2.5 million in 20/20… has a network of 10,000 health clinics in China… and is expected to use 20/20’s analytics tools for its patients.
China is an enormous market.
These biomarker tests are administered to the vast majority of adults at least once a year. China has an eye-popping 80 million people with incipient lung nodule growth.
I spoke by phone with 20/20’s Shanghai-based partner last week. He told me that 20/20’s OneTEST should generate great interest among the population there.
He believes that 20/20’s machine-learning layer placed on top of the biomarker results “is a significant improvement in early diagnosis in China,” he says.
A Low-Risk, High-Impact Investment Opportunity
20/20 is the first to introduce a multicancer-screening blood test.
To do this, it had to beat out all of its bigger competitors… on a shoestring budget… while getting approval for 14 patents (plus 12 that are pending).
But the most remarkable thing? It’s that 20/20 hasn’t had to reinvent the wheel.
I’ve already mentioned this, but it’s worth repeating: Its tests utilize established tumor marker detection kits and automated instruments.
The big-data-based learning algorithms are the critical piece that 20/20 is adding. (And it’s going to be very hard for other companies to duplicate that, CEO and founder Jonathan Cohen emphasizes, because the data is extremely difficult to find and access.)
Cohen, by the way, was patent and general counsel for Ventana Medical Systems (acquired by Roche Diagnostics in 2008 for $3.4 billion) and Oncor. In my half-dozen interviews with him, he made it quite clear that his company is not your typical high-tech medical startup.
“The tests are the same, just simply enhanced through our proprietary algorithms,” he said.
“Our risk,” he added, “is more akin to a low-tech company. But our impact, because we’re significantly improving early cancer detection, will be huge.”
Cohen, who has a Master of Science in biotechnology from Johns Hopkins University and a law degree from American University, is leading his company where no other company has gone.
Most cancers don’t have screening tests available to the general public. The handful that do (such as breast, ovarian and colon cancer) are available under most insurance plans because they’re expensive.
20/20’s multicancer detection test, OneTEST, done with a single tube of blood, will be offered to patients at a very affordable price.
I think thousands of Americans will be very happy to have this option. I certainly plan to take the test as soon as it becomes available next year.
It’s the best thing to happen to the cancer treatment space in years. And you can participate in 20/20’s upside for as little as $101.
How to Invest
This deal is being hosted on MicroVentures.com, a licensed broker and dealer. We have worked with MicroVentures on a number of recommendations over the last few years.
Adam and I have seen how well the portal has taken care of our members. No worries there.
The first step (if you don’t have a MicroVentures account yet) is to go here.
Then simply click the orange “Sign Up” button and follow the site’s instructions.
If you run into problems at any point, please call our friends at MicroVentures directly at 1.800.283.9903.
Editor’s Note: If you’re new to First Stage Investor, or if you just need a refresher on how to invest in startups through portals, check out our video tutorial “Investing in Startups Through Online Portals.”
20/20 GeneSystems is an early-stage tech investment, and like all such investments, it’s risky. Do not invest money you can’t afford to lose.
Also, remember that these types of investments are not liquid, meaning you can’t buy or sell your stake easily. If and when an exit opportunity arises, you’ll be informed immediately.
Co-Founder, First Stage Investor