oob share their gains and pains

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It’s a fact that all com­pa­nies start with a cat­a­lyst. For Pa­cific Edge it was the death of a young girl from com­pli­ca­tions caused by cancer and the re­solve of her par­ents to find a bet­ter way of de­tect­ing cancer tu­mours ear­lier. This was the cat­a­lyst for a se­ries of dis­cus­sions with re­searchers at the Univer­sity of Otago which, ex­plains Pa­cific Edge CEO David Dar­ling, be­came the gen­e­sis of the com­pany thanks to the hard work of a num­ber of people in­clud­ing the five found­ing sci­en­tists.

Pa­cific Edge be­gan life in 2001 and was listed just a year later af­ter a US fund in­jec­tion into a New Zealand seed fund failed to even­tu­ate and cap­i­tal was ur­gently re­quired to move for­ward. Four­teen years ago the share­mar­ket was a com­mon way for Aus­tralasian biotech com­pa­nies to raise funds – due to the fact that it re­quired many months, even years, of cap­i­tal-in­ten­sive R&D to pro­duce a commercial prod­uct.

Dar­ling, who joined Pa­cific Edge pretty much from day one, ex­plained to me how pro­fes­sor Parry Guilford, prin­ci­pal in­ves­ti­ga­tor at the univer­sity’s Cancer Ge­net­ics Lab, be­came the com­pany’s chief sci­en­tific of­fi­cer, and the next three years were spent build­ing a ‘gene ex­pres­sion data­base’ across five can­cers – gas­tric, blad­der, me­lanoma, col­orec­tal and en­dome­trial (orig­i­nally based on the hy­poth­e­sis that de­vel­op­ing tu­mours have dif­fer­ent gene ex­pres­sion pat­terns from nor­mal cells).

You don’t have to be a sci­ence nut to be ut­terly fas­ci­nated by the story be­hind the de­vel­op­ment of this data­base and the Cxblad­der di­ag­nos­tic tool even­tu­ally born as a re­sult. It is a story of am­bi­tion, de­ter­mi­na­tion, per­sis­tence, as well as sheer bril­liance in the lab­o­ra­tory.

But it wasn’t enough that the Duned­in­based re­search team pro­duced worldlead­ing pro­to­type tech­nol­ogy, with the in­ten­tion of li­cens­ing it to blue chip biotech firms around the world for com­mer­cial­is­ing. Any in­ten­tions of just liv­ing off roy­al­ties were scup­pered when those firms sug­gested Pa­cific Edge keep go­ing and “come back when you have a commercial prod­uct”.

The di­rec­tors in­formed their loyal, and pa­tient, share­hold­ers that they would have to fund yet an­other step up in the value chain.

Fund­ing took place through the pub­lic list­ing process, which reg­u­larly re­quires

Pa­cific Edge to dis­close their progress, di­rec­tion and strate­gies which, as Dar­ling points out, is risky be­cause it al­lows po­ten­tial com­peti­tors to keep track of what they are do­ing

On the sub­ject of com­peti­tors, he says there were US ven­tures start­ing out the same time as them. How­ever, these “gene jock­eys”, as he calls them, were us­ing very dif­fer­ent, less ro­bust, gene dis­cov­ery pro­cesses. By ex­er­cis­ing tighter con­trols and con­sis­tent pro­cesses, Pa­cific Edge sim­ply stole the edge on their Amer­i­can coun­ter­parts. “We were out of the blocks early and able to get a good po­si­tion in the mar­ket by fil­ing these genes and their re­la­tion­ship to the can­cers as part of our IP,” re­calls Dar­ling.

“IP is not just patents; it’s also the art of how you do what you do,” he continues. “We’ve learnt how to go from dis­cov­ery phase all the way through to the val­i­da­tion of the pro­to­type; to the build­ing, then val­i­da­tion, of a commercial prod­uct; through to clin­i­cal test­ing and the fi­nal commercial out­put taken to mar­ket. It’s a long process re­quir­ing dif­fer­ent skillsets,” says Dar­ling. “And it’s unique for such a small team of people to tra­verse such a long way when com­ing off that sci­ence dis­cov­ery base.”

For Dar­ling, the task of bring­ing the Cxblad­der di­ag­nos­tic test to ex­port mar­kets has been a dream job. With a sci­ence, biotech and busi­ness back­ground, he came to Pa­cific Edge af­ter set­ting up a large in­ter­na­tional biotech busi­ness for Fletcher Chal­lenge which taught him a lot about in­ter­na­tional busi­ness. It also in­volved ge­net­ics of the tree va­ri­ety – so, in ef­fect, he went from bat­tling dis­eases of trees to the war against hu­man dis­ease.

Turn­ing point

As with most prod­uct path­ways to mar­ket there are turn­ing points. Dar­ling re­calls one in par­tic­u­lar – a pos­i­tive, and sup­port­ive, meet­ing with Roche Di­ag­nos­tics in San Fran­cisco which trig­gered a change in de­vel­op­ment plans and was a turn­ing point in re­gard to the type of prod­uct Pa­cific Edge would pri­mar­ily pro­duce.

“To­day the cor­ner­stone of our in­tel­lec­tual property for the blad­der cancer prod­uct Cxblad­der, is this ‘buf­fer’ or ‘juice’ that we blend with urine sam­ples to help pro­tect its cancer mes­sage, RNA,” he ex­plains. (RNA, or Ri­bonu­cleic acid, is a ubiq­ui­tous fam­ily of large bi­o­log­i­cal mol­e­cules that per­form mul­ti­ple vi­tal roles in the cod­ing, de­cod­ing, reg­u­la­tion and ex­pres­sion of hu­man genes.)

Dar­ling ex­plains the three in­de­pen­dent, but re­lated, pieces of IP as­so­ci­ated with the Cxblad­der tech­nol­ogy. That ‘juice’ is num­ber one. The sec­ond is an al­go­rithm that com­bines the in­for­ma­tion from the gene ex­pres­sion pat­terns into a sin­gle digit out­put defin­ing the prob­a­bil­ity that the pa­tient has cancer. The third is the patents that de­fine the five genes that “cre­ate the re­la­tion­ship be­tween the dis­ease and the genes”.

Pa­cific Edge has turned its tech­nol­ogy into a fran­chise, cre­at­ing all the pro­to­cols used to run a commercial lab­o­ra­tory for the tech­nol­ogy, and stan­dar­d­is­ing them so they are ‘re­peat­able and re­pro­ducible’. It de­vel­oped its own pro­to­type commercial lab in Dunedin, with the Cxblad­der tech­nol­ogy go­ing ‘live’ in 2012. It has also de­signed, built and com­mis­sioned (in July 2012) a sec­ond state-of-the-art lab in Penn­syl­va­nia, just up road from the coun­try’s largest FedEx hub, cov­er­ing the en­tire US with an an­nual through­out ca­pac­ity of 260,000 tests per year.

Un­der a ‘cen­tralised ser­vice model’ there are two fran­chise part­ner lab­o­ra­to­ries (Aus­tralia and Spain – the coun­try with the high­est in­ci­dence of blad­der cancer in the world). Fran­chise part­ners must have a fo­cus on cancer and the ca­pa­bil­ity for com­mer­cial­is­ing molec­u­lar di­ag­nos­tics for cancer.

A lab is also planned to cover Asia – pos­si­bly in Sin­ga­pore.

The Dunedin and US lab­o­ra­to­ries have CLIA (Clin­i­cal Lab­o­ra­tory Im­prove­ment Amend­ments) ac­cred­i­ta­tion, which for lab­o­ra­to­ries of­fer­ing this sort of tech­nol­ogy is the equiv­a­lent to FDA-ap­proval for a phar­ma­ceu­ti­cal prod­uct. “This achieve­ment is a phenom­e­nal out­come for New Zealand,” says Dar­ling. It also means that if one lab­o­ra­tory goes off­line for what­ever rea­son, there is a backup avail­able.

Tar­get mar­ket

The prospects for the Cxblad­der molec­u­lar di­ag­nos­tic tech­nol­ogy are ex­cit­ing – it’s a test sys­tem that will quickly find favour with GPs, urol­o­gists and health­care pro­fes­sion­als be­cause of its non-in­va­sive na­ture, quick turn­around, and abil­ity to im­pact on the length of pa­tient queues. Com­pared with in­va­sive tests, Cxblad­der is an easy to use, cost ef­fec­tive and high ac­cu­rate, cancer de­tec­tion tech­nol­ogy, en­cour­ag­ing in­creased pa­tient com­pli­ance. DIY urine sam­ple sys­tems (U.S.S) as part of the test can be pur­chased on­line for collection of the urine sam­ple at home.. The test and test re­sults must be car­ried out in con­junc­tion with the pa­tient’s med­i­cal pro­fes­sional.

With the preva­lence of blad­der cancer in to­day’s so­ci­ety (due largely to the in­creased amount of tox­ins people ab­sorb) and the pro­gres­sive, recurring na­ture of the dis­ease, it’s not sur­pris­ing that health of­fi­cials world­wide are open to new ways of com­bat­ing its rise. Non­in­va­sive Cxblad­der test­ing also im­pacts on the over­all cost of the mon­i­tor­ing regime as­so­ci­ated with blad­der cancer – which in­evitably in­volves ex­pen­sive, and re­peated, cys­toscopy pro­ce­dures over many years.

Blad­der cancer has the high­est to­tal med­i­cal costs of any cancer, from de­tec­tion to death, ap­proach­ing US$220,000 per pa­tient. Make no mis­take, this tech­nol­ogy makes a sig­nif­i­cant dif­fer­ence.

Dar­ling also points out that al­though their di­ag­nos­tic tech­nol­ogy was de­vel­oped for blad­der cancer, it has sur­passed the de­sign ex­pec­ta­tions and has now been val­i­dated for any urothe­lial car­ci­no­mas, right up to the kid­ney. “To our de­light we dis­cov­ered in our study that the tech­nol­ogy also sees 100 per­cent of the up­per uri­nary tract can­cers,” he says, “which fur­ther en­hances the re­source avail­able to urol­o­gists.”

Fol­low­ing on from their Cxblad­der De­tect prod­uct, Pa­cific Edge is now build­ing a suite of blad­der cancer tests, with the next one, Cxblad­der Triage, planned for launch later this year. “We’re ef­fec­tively build­ing a one-stop shop for urol­o­gists and GPs,” says Dar­ling, “to pro­vide them with an even greater per­spec­tive of what’s hap­pen­ing in the blad­der.”

It’s ev­i­dent how big this op­por­tu­nity is for Pa­cific Edge. As they have al­ready pub­licly stated – the tar­get for the US mar­ket, the world’s largest and ar­guably most com­plex health mar­ket, is $100 mil­lion in gross rev­enues by 2019.

Lessons, ad­vice and sup­port

Pa­tience and prepa­ra­tion has been the key to Pa­cific Edge’s suc­cess­ful US launch. “We had to learn ev­ery­thing about the reg­u­la­tory, re­im­burse­ment and med­i­cal en­vi­ron­ments there,” ex­plains Dar­ling, “And which strat­egy to de­ploy on each.”

He says no­body knew any­thing about CLIA when they started out, and the con­cept of cen­tralised ser­vice lab­o­ra­to­ries was still be­ing pi­o­neered. He also ac­knowl­edges the “tremen­dous sup­port” they re­ceived from NZTE and MBIE on both fa­cil­i­ta­tion and fund­ing. “NZTE is a great group of people and we tend to utilise them as part of our busi­ness de­vel­op­ment team. Un­der­stand­ably if you in­volve people and prime them with all the cor­rect in­for­ma­tion, they can be ex­tremely help­ful.

“If you want to take on ex­port mar­kets, get in­volved with these sup­port agencies early on and take the learn­ing,” he ad­vises.

Dar­ling re­calls a small $20,000 grant they re­ceived early on from NZTE that en­abled them to ob­tain an in­de­pen­dent third party eval­u­a­tion of what their tech­nol­ogy would do when it got to mar­ket in the US. It proved to be a timely and in­sight­ful piece of re­search that val­i­dated their ‘step-change’ tech­nol­ogy.

“Twenty thou­sand doesn’t sound much, but at the time we were a small com­pany, and when you’re liv­ing from meal to meal that amount of money is vi­tal,” he says. “That eval­u­a­tion proved to be a key piece in our de­vel­op­ment cy­cle.”

Glenn Baker is edi­tor of Ex­porter.

David Dar­ling

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