DxTerity Diagnostics Inc.

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January 27, 2014 Issue

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Simple Molecular Detection through DxDirect

AboutDxTerity Diagnostics Inc.
www.dxterity.com

DxTerity's innovative DxDirect™ technology allows for quantitative analysis of multiple genomic biomarkers in a single tube that can accurately measure the progress and state of disease using a very small sample input. Through the elimination of cumbersome sample preparation steps, DxDirect enables "direct from sample" measurement of genomic biomarkers ushering in a new world of high volume and low cost clinical diagnostics.

James (Jim) B. Healy
CFO & COO


Jim has over 25 years of operations and financial leadership in high technology, software and semiconductor companies, including Cadence Design Systems, Magnify360, JTA Research, and Hughes Electronics. In addition to operational and business development expertise, Jim has strong experience in venture capital funding, mergers and acquisitions, and extensive experience in managing large government contracts. As CFO of Hughes Communication Products' Advanced Technology Group, he led the growth of government and commercial programs, which won over $250 million of new business and the acquisition of Magnavox Radio division adding another $100 million in revenue. As CFO and SVP of Business Development for Internet advertising start-up Magnify360, he raised capital from seed-stage through growth-phase and led business development activities for strategic accounts including Intuit, Seagate, ServiceMagic, and Autobytel leading to Top 10 List in Marketing Automation from Frost and Sullivan.

“With DxDirect, DxTerity makes the testing process simpler, faster and more affordable than competing technologies in the market today. We see these benefits as knocking down the cost barriers to esoteric molecular testing to fulfill our company’s mission of ‘bringing genomics to everyday care.’” - James (Jim) B. Healy


DxTerity Diagnostics Inc.
19500 S.Rancho Way Suite 116
Rancho Dominguez, CA 90220

310.537.7857

www.dxterity.com



 

 

Interview conducted by: Lynn Fosse, Senior Editor, CEOCFO Magazine, Published - January 27, 2014

 

CEOCFO: Mr. Healy, what is the concept at DxTerity Diagnostics?

Mr. Healy: DxTerity has invented a method of molecular detection known as DxDirect that allows testing straight from a small blood sample. Invented by Dr. Robert Terbrueggen, DxDirect is based on chemical ligation dependent probe amplification and allows processing of genomic targets without traditional sample preparation. With DxDirect, DxTerity makes the testing process simpler, faster and more affordable than competing technologies in the market today. We see these benefits as knocking down the cost barriers to esoteric molecular testing to fulfill our company’s mission of “bringing genomics to everyday care.”

 

CEOCFO: What is the science?

Mr. Healy: The science behind DxDirect involves allowing two complementary genomic probes that match specific regions of a given gene transcript. The probes are designed to line up on the transcript adjacent to one another in a very specific manner. When the probes line up, a chemical reaction occurs creating a unified product which gives us a very specific target to measure. Without those probes being adjacent to each other, the chemical reaction does not occur. In that way, we can be very accurate in terms of its placement or identification of a particular biomarker.

 

CEOCFO: What are you working on specifically today?

Mr. Healy: In 2010, DxTerity began a collaboration with Duke University and University of Arizona that resulted in the awarding of a very large federal contract through the Biological Advanced Research Development Agency (BARDA) to solve a unique national security problem. The challenge we were given was to design and develop a test that could estimate an individual’s exposure quickly in a large number of people potentially exposed to ionizing radiation in a nuclear disaster. This particular application has allowed us to refine our technology while building our first clinical test over the past few years. We have named the test REDI-Dx™ for Radiation Exposure Dosimetry Index. Today, we are working with our collaborators to develop REDI-Dx test for regulatory submission.

 

In addition, there are three other applications that we are currently working on. First, we are developing a rheumatoid arthritis monitoring application to measure disease activity in patients to measure the effectiveness of their therapies. That application is commencing with clinical trials in the first quarter of 2014. Secondly, we are developing a blood-based colon cancer-screening test, and we are talking with strategic partners now on further development and commercialization. Third, we are developing a radiation toxicity predictor to identify patients who are hypersensitive to radiation prior to undergoing treatment with radiotherapies.


CEOCFO: Why did you make the decision to go into the various areas that you have?

Mr. Healy: The primary focus of our commercial strategy is blood-based testing so we are pursuing genomic targets widely available in blood. The second focus is high volume testing, where the economics of the lower priced allows broader acceptance in the marketplace. Take colorectal screening as an example, while early detection of colorectal cancer dramatically improves survival most patients avoid screening due to the fear and cost of colonoscopies and the inconvenience of fecal tests. Introducing, a low cost, blood-based screening test would fundamentally change the compliance rate where a patient can be regularly tested alongside other routine blood tests. Such a test would be a more affordable way to monitor a patient population for the development of cancer.

 

CEOCFO: You said might. Who would not elect to have a blood test as opposed to a colonoscopy?

Mr. Healy: That is what our belief is. Colonoscopies are medically very effective and 95 percent sensitive. In other words, it identifies 95 percent of the time the existence of a cancerous polyp. The advantage of the colonoscopy is that it then allows a surgical procedure to be done simultaneously with the diagnostic. But in the case of monitoring, you have compliance issues where a lot of people choose not to undergo the procedure. A low cost, blood-based screening test would present a more affordable way to gain compliance of people in the age class who are at risk for colon cancer. It may not be as accurate as a colonoscopy, but it would give you a very good indication. We are very excited about this opportunity.

 

CEOCFO: Are you funded for the various development efforts that you are making or will you be seeking funding or partnerships?

Mr. Healy: Yes, I would say that the BARDA collaboration has enabled us to refine the technology through our work on the REDI-Dx Test without having to seek much additional financing.

 

Independent of the BARDA contract, we have closed several rounds of early investment in the past. We are now actively looking for scaled venture investments to build-out our commercial operation and to support efforts on other applications. We are doing this through both traditional investment deals as well as corporate strategic partnerships. There is a two-pronged approach, and we are hopeful that 2014 will present a more desirable investment environment, which has been challenging in the last few years for our space.

 

CEOCFO: In addition to that, the interest of the investment population tends to cyclical with different conditions or different segments in and out of favor. Is the area that you are in of general interest to the investment community these days?

Mr. Healy: It is, and the challenge is there have been two fundamental shifts that have caused some trepidation in the market. First is the intellectual property climate, where the recent Supreme Court decision on AMP v. Myriad Genetics prevents you from patenting genes. This creates a challenging environment for companies doing research where there is not intellectual protection for discovering genomic biomarkers. In essence, the ruling creates an open source-like environment where those targets can be more commercially available. From an investment standpoint, that has slowed investment in the space.

 

Second is in the area of complex genomic tests. There are only a handful of approved FDA tests in “multivariate” genomic testing. This has created a difficult regulatory environment, which also discouraged investment in our space. While the science and validity of our technology continues to prove valuable in the healthcare industry, the regulatory, investment, and intellectual property issues present some challenging hurdles. However, I would point to recent successes in the IPO space by Foundation Medicine, Exact Science and NanoString as examples that the market is now shifting again back in favor of molecular diagnostics.

 

CEOCFO: How has your personal background in other ventures been helpful at DxTerity?

Mr. Healy: My background was not traditionally in medical technology. I had a lot of semi-conductor and software background. But, I would say that after experiencing and starting multiple companies that, while there is a learning curve, the experience is transferrable. The skills I have learned in my other endeavors with other technologies have allowed me to navigate this type of company very successfully.

 

CEOCFO: It has been about a year since you opened your new facility. What has changed since that has been available for you?

Mr. Healy: We have just begun what we call our clinical laboratory offering and begun market-facing activity with that. The challenges of marketing the product are really front and center for us now. We have a lot of disciplined product development going on which enables us to attack the challenges of building a molecular diagnostic product. There are very rigorous development and quality processes that must be implemented in order to be successful.

 

CEOCFO: DxTerity recently received an award at the CBRNe. Would you tell us about the conference and the recognition?

Mr. Healy: NCT CBRNe is an international gathering of government and military professionals involved in chemical, biological, radiological, and nuclear (CBRN) response geared around interdicting to both environmental hazards and intentional threats. The meeting was held in Asia and attended by all major Asian and European countries – France, Germany, The Netherlands, Taiwan, Japan, Singapore, and others. We were awarded “Product of the Year” for our radiation exposure test because this is a unique, groundbreaking product entering the CBRN marketplace. While there are diagnostic tests for chemical and biological agents, this is the first test for radiation. There are really no solutions today that can meet a large-scale triage problem in radiation, so we represent a completely new product class.

 

CEOCFO: Why should DxTerity Diagnostics stand out?

Mr. Healy: DxTerity brings the simplicity of clinical chemistry to molecular esoteric testing. We will be able to bring these valuable tests to market a very economical price point that allows them to expand commercially where traditionally they have been held captive in smaller volumes markets. By lowering the barrier to access, DxTerity is bringing genomics to everyday care.

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