Dx Rock Stars

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.

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4 thoughts on “Dx Rock Stars

  1. Chris, I offer the unthinkable. I think its time we recognize that point-of-care is dead. POC has been the mantra of public health and do-gooders for decades with pictures of pathetic patients in makeshift clinics, making the rise of Xpert predictably unpalatable. The central facts are two. 1) today virtually all TB lives under the umbrella of a cell tower making data transmission instant, and 2) the payer, which is the public health system, desperately needs the data. Xpert in particular, expertly () collects and transmits data to a central location, ie the national public health authorities. POC, not so much. The public health authorities beg for the data from distant clinics. And with the patient now living under the cell tower, that data is now readily transmitted to the doctor/patient from an efficient central laboratory eliminating the need for POC. Centralized specimen processing is much more reliable, economical and practical and we need to stop the POC mantra. POC is dead.

    Charity organizations, ie Gates, respond to public opinion with very short term, feel-good goals rather than long term strategic thinking. Help spread the word. POC is dead.

    Leo Einck Sequella, Inc. 9610 Medical Center Drive, Suite 200 Rockville, Maryland 20850 301-762-7776 (switchboard), 301-217-3822 (direct), 301-762-7778 (fax) http://www.sequella.com

    • Hi, Leo: thanks for your input and I agree with your general point- that for POC to succeed, devices need to capture data. In fact, the mHealth conferences have lots of internet connectable devices and even QuantuMDx boasts of “iApps” written for connecting patient and provider. Efficient central lab processing is needed, especially in urban ares, but where the patient population is dispersed, POC diagnosis is needed for effective treatment (assuming treatment is available). Best regards, Chris

  2. Hi Chris, nice post! Firstly, I tend to agree with Leo Einck’s comment. Secondly, I’d like to throw in another perspective. The reason why everybody, in particular in developing countries, is chasing POCs is because they are believed to be super-cheap while equally effective as a properly run central laboratory Dx system. To a large extent, the urge to optimize the cost component is driven by expectations on behalf of the corresponding governments, and in turn healthcare providers, that Dx tests for the masses have to be very, very cheap. The effect is that they squeeze producers at the margins, if they leave them margins at all. The follow-on effect is that (1) optimization of one parameter (cost) happens at the expense of another (quality), rendering the end-product less viable and (2) Dx innovation hardly occurs in developing countries themselves because (a) there is hardly anyone with the financial muscle and stamina to afford the capital-intensive and lengthy development cycles (the irony is that many believe that it’s actually cheaper to develop POCs, eg based on lateral flow technology, whereas in fact it will be more expensive owing to the need for running the Dx test in a less controlled environment) and (b) because of the government imposed constraints in terms of test reimbursement there is limited market potential for innovative Dx tests in developing countries (at least in what can be called the public sector), which in turn deprives the most needy population groups from access to improved health care. If someone would determine the full economic benefit from implementing a system like the GeneExpert as widely as possible the short-term capital layout wouldn’t be such a big problem any longer.

    • Hello, Reinhard: thank you for your thoughtful comments and I agree with you view in general but, being a business development optimist, I think that a POC Dx may be a viable product if designed and marketed right, for example, to private, for-profit hospital chains or to NGOs delivering care (like Partners in Health).

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