The market for new point-of-care diagnostic tools for global health (POC Dx) got a major boost last week when it was announced that Alere, a mega-diagnostics and health management company based in nearby Waltham, MA, was receiving more than $40 million in funding from the Bill & Melinda Gates Foundation (Fierce Med Devices article and Alere press release). My spin is that, by accepting the funding, Alere is acknowledging the profit potential in diagnostics for global health (albeit initially for two of the Big Three diseases- HIV/AIDS and tuberculosis) and value in investing in the R and D needed to adapt its products for sale in resource-constrained settings. Given my interest in POC Dx as a potent tool in improving health care delivery (see my posts tagged diagnostics), I thought it would be interesting to take a closer look at the deal and at a competing company.
Alere is a up-and-coming company with a core strategy to provide relatively simple, non-lab-based tests to patients and health care providers along with systems to monitor, inform, and ultimately improve health while lowering costs (Alere and Investor presentation 2012). And it is doing well. It is publicly-owned with a $2 billion market capitalization, 14000 employees, and 2012 annual revenues of $2.8 billion which are up 16% over 2011 (Boston Business Journal article 1). Alere has grown through acquisition, buying six companies since late 2011, boosting revenue but also taking on a big debt of $3.4 billion (Boston Business Journal article 2). The Gates funding has two parts: a $21.6 million grant for R and D for incorporation of a TB test into the Alere Q platform (said to be “a compact, portable, and robust device intended for molecular testing”), and a $20.6 million loan for expanding the capacity of a German-based factory for the manufacturing of Alere’s POC TB Nucleic Acid Test and POC HIV Viral Load Test which are currently in the final stages of development. The press release implies the latter is to reduce the cost and improve the supply of the tests via automation. Apparently the money comes with the typical Gates strings. According to the press release, “The Gates Foundation will provide these loans in exchange for commitments from Alere to make these diagnostics available at an affordable price to people in need in developing countries.” I have yet to read one of these global access agreements but imagine each includes a large amount of wiggle room in terms of how, when, and at what price the products will be made available. For its TB Dx, Alere may learn from how Cepheid is selling its GeneXpert system, a expensive and non-POC machine whose development was also partly funded by the Gates (my post, “TB Dx: Getting There”).
Interestingly, the underlying technology for the Alere Q platform came from one of the recently acquired companies, Ionian Technologies, that also was a Gates grantee. In 2009, the company got a $665K grant to develop its “NEAR POC” for TB (Gates press release). Ionian began as a startup in 2000 out of the Keck Graduate Institute, one of the Claremont Colleges and therefore a sister institution to Pomona College, an outstanding liberal arts college near to my heart and wallet. So when (if) the Alere Q/TB test gets to market, it will be more than 13 years in development, so don’t let anyone (like me) tell you that Dx product development is faster than therapeutics development. As for the $21.6 million for the TB test development, I think this is a generous amount and assume that some of the grant will be used to incorporate other tests for bad bugs into the platform since the ultimate value of POC Dx will be a box that can differentiate between the many possible infections afflicting those with limited access to medical care.
In contrast to the multi-year and multi-million dollar saga of Alere’s POC TB test is the story of QuantuMDx, a UK-based company started in 2008 that has an express mission to develop Dx for “third and first world nations” (QuantuMDx). According to the company, its most advanced product is the Q-POC, a hand-held device for diagnosis of tuberculosis, HIV/AIDS, and sexually transmitted infections and their drug-resistant strains. The device will deliver results in less than 20 minutes at a fraction of the cost of lab-based tests and will be launched this year (Q-POC). The company is using a number of technologies in its products (QuantuMDx Technology):
- DNA extraction from raw samples via simple flow-through (invented by the founder when the company was garage-mode);
- Nanowire biosensors for analyte detection (licensed from NanoSys, a Harvard start-up [GEN article]);
- Single or multiple step PCR; and
- Mobile apps for Dx support.
The funding of the company is less than clear. The company has no corporate sponsors or licensees and in 2012 received shares of two UK government grants (which totaled about $7 million) that were for cancer and malaria Dx R and D. That seems a bit thin to support a 35-person company but then one founder is a “Biotech Rockstar” (O’Halloran blog) so maybe the company self-funded. It is also not clear what data have been obtained using the platform; I could find no reported test results, published or unpublished. Be that as it may, if the company is able to market a device capable of quickly profiling a range of infectious organisms, bacterial and viral, with minimal sample preparation, it will be in a good position to offer a competing product to the Alere Q, and competition is good for the public health buyers. Presumably, the company has talked with the Gates Foundation, the Wellcome Trust, PATH, Alere, and other major diagnostics companies about funding the testing and approval and manufacturing development and building phases. If not, there is no time like the present.