Common use of Industry Background Clause in Contracts

Industry Background. Radiation therapy, with a market size approaching two billion dollars annually, is commonly used in the treatment of cancer, either alone or in combination with surgery or chemotherapy. An important advantage of radiation therapy is that the radiation acts with some selectivity on cancer cells. When a cell absorbs radiation, the radiation affects the cell’s genetic structure and inhibits its replication, leading to its gradual death. Cancerous cells replicate very fast and therefore the radiation they absorb can disproportionately damage them. Currently, the most common type of radiotherapy uses X-rays delivered by a linear accelerator or LINAC. The most prevalent use of LINACs is in intensity modulated radiation therapy or IMRT. Using IMRT, the intensity and angle of the radiation beams are varied or modulated across the target area of the patient being treated. This conforms the radiation beams more closely to the tumor and allows doctors to deliver higher doses of radiation to tumors while limiting the amount of radiation directed at nearby healthy tissue. In this way, clinicians can design and deliver an individualized treatment plan for each patient, targeting the patient’s tumor as closely as possible. The holy grail of radiation therapy, however, is image guided therapy, referred to as IGRT, wherein real-time visualization and precise treatment of moving and changing tumors (resulting from moving and changing anatomy) is expected to enable greater radiation dosing and accuracy while preserving healthy surrounding tissues. IGRT, however, is a nascent technology that is not yet widely recognized: real time imaging of a patient while dosing with radiation presents monumental engineering challenges. Those challenges include the gross incompatibility of LINACs and magnetic resonance imaging or MRI, as LINACs cannot function in the extreme magnetic field of an MRI unit. The alternative to MRI—x-ray or CT scanning—while having no affect on LINAC functionality, is currently too slow to provide real-time visualization, and is itself a source of radiation dosing over and beyond that of the radiation treatment. This additional dosing, particularly with the volume of imaging required for real-time, bathes the patient in an entirely unacceptable level of radiation. [***] LINACs, which are priced in the $2 million a unit range, are sold by Varian Medical Systems, Siemens, Elekta, TomoTherapy, and Nucletron. Varian presently has the largest share of the market (primarily hospitals, clinics, private and governmental institutions, health care agencies and doctors’ offices) with 2003 radiation product sales of $732 million. Varian’s long-term expectations for growth is 10% to 15% annually. ViewRay is a Florida corporation having offices at the Sun Center in downtown Gainesville. The company has three founding managers: Xxxx Xxxxx, President and CEO; Xxx Xxxxxxx, Ph.D., CSO; and Xxx Xxxxxxx, Vice President of Operations. [***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. The company proposes to advance the Technology from its present conceptual state to U.S. market saturation with an FDA approved device (the “Device”) that provides simultaneous radiation treatment and real-time tumor imaging. While the company’s early stage activities will center on R&D, its later efforts are expected to emphasize marketing, service, and education; it anticipates securing an OEM manufacturer to produce the Device. The fundamental milestones of the commercialization plan, in order, are: