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After IPO, Co-Diagnostics Prepares Infectious Disease Tests for High-Burden Settings


NEW YORK (360Dx) – Co-Diagnostics, fresh off its IPO last week that raised $7.1 million in gross proceeds, is eyeing the developing markets for its technologies, and it expects to begin manufacturing and launching infectious disease diagnostics tests soon from a manufacturing facility in India, the company's CEO Dwight Egan said in an interview.

The firm is allocating about $500,000 from the IPO proceeds to fund its share of an India manufacturing facility, with plans to begin manufacturing tests in November, and to ship them to "many areas in the developing world," Egan said.

In India, Co-Diagnostics has established a joint venture, called Cosara, with Synbiotics, a manufacturing and distribution entity. The diagnostics company also has a manufacturing facility in Bountiful, Utah, where it engineers, validates, and manufactures products, but the relationship with Synbiotics will give it "more capability and capacity," Egan said.

The firm has been active in India for several years, he noted, getting ready for a product launch. By collaborating with Synbiotics, it has a local marketing and manufacturing partner that understands customers in the region and its regulatory environment, he added.

The decision to sell its tests in Indian and other resource-limited regions is based largely on an established market need for infectious disease testing, he said. In 2015, the World Health Organization estimated that India had 2.2 million cases of tuberculosis out of a global incidence of 9.6 million. Six countries accounted for 60 percent of the new cases — India, Indonesia, China, Nigeria, Pakistan, and South Africa.

Also in 2015, there were an estimated 480,000 new cases of multidrug-resistant TB, with India, China, and the Russian Federation accounting for 45 percent of the combined total of 580,000, according to WHO.

A tuberculosis assay that detects multiple drug resistance is among the first for which Co-Diagnostics has launch plans.

Egan noted that it has a broad menu of tests in the pipeline that it expects to launch within the next eight months to developing countries.

Apart from an assay that tests for multiple drug-resistant tuberculosis, the company also has near-term plans to launch tests for Zika, hepatitis C, hepatitis B, HIV, malaria, STIs, human papilloma virus, and dengue. Longer term, over the next two years or so, the firm should have about two dozen tests on the market, Egan said.

The firm has set aside $1.5 million of the IPO's proceeds to boost the firm's sales and marketing capabilities in preparation for the launch of multiple assays.

About $1.25 million is being allocated to expand the availability of PCR machines in developing nations under a reagent rental program, Egan said, adding that the firm wants to make sure that it has enough inventory available to enable quick installations in laboratories as needed.

The firm has also earmarked about $2.5 million for the ongoing development of tests, expansion of its diagnostic laboratory facilities, and clinical validations for regulatory filings. And it will use about $750,000 for general corporate purposes and working capital. Thanks to the IPO, the firm has also eliminated several million dollars of debt, Egan said.

"We are enthusiastic to have the resources now to step up to the plate and swing for the fences," he said. "We obtained this financing so that we could aggressively enter the marketplace, and we have been doing significant preparation for some time."

Egan noted that the firm's intellectual property is at the core of its push for success.

Its Founder and Chief Science Officer Brent Satterfield developed Co-Diagnostics' foundational technology. The firm has five patents that have either been issued or are pending. Its flagship patent is centered on technology that it calls Co-Primers, which the firm demonstrated in a study published in 2014 within the Journal of Molecular Diagnostics.

In the paper, Satterfield described a new class of primer technology that reduces a problem in PCR detection, called primer-dimer propagation. He reported a 2.5 million-fold reduction in nonspecific amplification errors.

During PCR, when short DNA segments, or primers, anneal to a target nucleic acid segment and are extended by the polymerase, amplifying the DNA, the primers "often anneal to and amplify each other in an unpredictable manner, forming primer-dimers," Satterfield wrote.

The problem is compounded in multiplexed tests, where the problem of many primers increases the probability of primer-dimer formation, Egan said, and added that primer-dimers can result in signal dampening, false-negatives, or false-positives.

Writing a commentary in the Journal of Molecular Diagnostics, Mark Poritz and Kirk Ririe, executives at BioMérieux's BioFire Diagnostics, wrote that when Satterfield used both standard and reverse phosphoramidites as primers to synthesize novel oligonucleotides, these molecules had "the striking ability to suppress primer-dimer amplification." They noted that it is "an important technical contribution to nucleic acid amplification technology that also hints that oligonucleotides synthesized with different polarities will find more general use in molecular biology and molecular diagnostics."

Although the journal articles were published a few years ago, Co-Diagnostics believes that it is poised now to reap commercial rewards from its technology, Egan said.

Managing primer-dimer formation has enabled the firm to create tests with very positive attributes that show up in several different ways, he said.

For example, because it has resolved the primer-dimer challenge, the firm avoids the need to incorporate "hot starts" into PCR testing, and therefore reduces costs, Egan said. It can also do "massive multiplexing" of tests without concern of interference from primer dimers, and its tests have greater specificity than other technologies, partly because it doesn't need to optimize primers each time a new set of targets is being tested, Egan said.

The company's business model consists of a two-pronged approach to obtaining revenue that includes not only developing and marketing its own tests, but also licensing its technology.

The firm uses a mathematical process developed by Satterfield and incorporated into software, called CO-DX, that enables it to develop, manufacture, and validate tests within weeks or months when it could normally take far longer, Egan said.

He noted that Co-Diagnostics used the process to develop, manufacture, and validate an assay for nine strains of Zika at Utah State University Antiviral Research Institute in mid-April 2016. The firm had first learned about the impending threat of the virus and began work on a test in February of the same year.

Among the company's commercial goals is persuading labs doing research and development on new tests to replace existing PCR technologies with its primer-dimer free technology, Egan said.

The firm anticipates that laboratories developing tests will replace older, less robust PCR technologies with its co-primer-based technology, because of its ability to create massively multiplexed assays without requiring primer optimization or needing a hot start for DNA testing, and because its results are, therefore, more specific, Egan said.

In targeting low-resource countries, Co-Diagnostics will face stiff competition from other players that are deploying, or plan to make available, tests for the clinic and point-of-care applications.

OraSure Technologies, for example, expects to deploy more than 2 million HIV self-tests during the next two years in Africa. It has already sold 750,000 of these tests during phase one of an existing program, in countries such as Malawi, Zambia, and Zimbabwe.

Additionally, Alere has launched a new lateral flow immunoassay for malaria developed with support from the Bill and Melinda Gates Foundation, PATH, and the Foundation for Innovative New Diagnostics, and plans to make the test available in low-resource settings for a price of $1 per test.

The firm has also been developing both qualitative and quantitative HIV tests on its Alere q platform, which is designed to enable rapid testing in low-resource settings.

A qualitative assay, called the Alere q HIV-1/2 Detect, received CE marking in 2015, and the company is developing a quantitative test for whole blood.

Both OraSure and Cepheid have point-of-care hepatitis C tests that are being deployed in resource-constrained countries.

In a recent research note, Canaccord Genuity research analyst Mark Massaro said that more than 50 countries have national hepatitis plans, implying a major opportunity.

Malaria testing in low-resource settings is also receiving attention from established organizations. GE, the Global Good Fund, and Access Bio announced a licensing agreement to manufacture and distribute diagnostic technologies aimed at rapidly identifying asymptomatic malaria in low-resource nations. The new diagnostics technologies were codeveloped by scientists and engineers at GE's Global Research Center and Global Good.

Co-Diagnostics plans to take its menu of infectious disease tests through CE marking, and it is currently preparing some of them for that process. It will also carefully select tests that it would put through US Food and Drug Administration regulatory clearance, Egan said.