NEW YORK – Medigoo, a Finnish diagnostics company that sells a menu of at-home tests, is seeking to crowdraise €2 million ($2.3 million) via a Series A round to fund further European expansion.
CEO Mika Karilahti said the Espoo-based firm aims to raise the money by June to support making its offering available in multiple new markets.
Most of the company's tests rely on lateral flow assays, but Medigoo (pronounced "medi-go") also offers a variety of real-time PCR-based genetic assays to its customers. While it continues to seek investments, the firm is also making preparations for an initial public offering on the Nasdaq First North exchange in Helsinki.
It's part of a transitional period for the firm, which currently employs around 20 people in Finland and Ukraine. Whereas customers were initially skeptical of its offerings when it began introducing tests in February 2015, test volumes have spiked in recent quarters, and Karilahti said that by the end of February, it will have sold 20,000 units to date. Most of the tests are lateral flow, in vitro diagnostics for numerous indications related to allergy, nutrition, pregnancy and fertility, and sexual transmitted diseases, among others.
The company also offers a slew of genetic tests to assess alcohol tolerance, Alzheimer's disease risk, type 2 diabetes risk, celiac disease risk, caffeine tolerance, lactose intolerance, melanoma risk, arthritis risk, osteoporosis risk, as well as assays related to weight management, nutrition, sports and fitness, cardiovascular risk, and a newer assay for alcohol dependency risk. The company also subcontracts out paternity testing.
Of Medigoo's genetic risk tests, Karilahti said the Alzheimer's test has been the most popular. The test retails for €89 ($100) on the firm's website and relies on a buccal swab, which is mailed to Medigoo's laboratory in Finland for analysis. Of all its tests, Medigoo's STD and drugs of abuse tests have been the firm's best-selling. Karilahti acknowledged that due to the new In Vitro Diagnostic Regulation in Europe, some of Medigoo's tests might require regulatory approval by the time the IVDR enters into force in 2022, but he declined to further discuss the firm's strategy.
All of the genetic tests are run using Agilent Technologies' AriaMx real-time PCR system, and the firm is scaling up to meet expected demand from new markets. "This is not a small business anymore," said Karilahti. "We have the capability to deliver bigger volumes and we have experience in delivering them."
While Karilahti's immediate background is not in the healthcare market, he is prepared in some ways for such an undertaking. He previously worked at Nokia and Samsung in manufacturing, logistics and sales, experience that will come in handy in the nascent at-home testing market.
"We shipped billions of low-cost phones around the world," he noted. Having the skill set to deftly handle the back end of such a business is one thing, but convincing a market accustomed to ordering tests through a primary care physician is another. While the firm's volumes have improved since it launched in 2015, it is reaching more customers that remains a challenge.
"We have to change the mindset of consumers that you can test yourself," said Karilahti. "You don't have to go to any physician or center, be it public or private," he said. "Changing people's attitudes toward testing themselves, that is what takes time," he added.
It's a situation that is facing companies that sell at-home tests globally. While companies continue to launch new tests and raise funds — LetsGetChecked raised $30 million in May 2019, for instance — they are still working to win over customers based on affordability and accuracy.
There are also regional nuances, and Medigoo is trying to feel its way forward. While it has had some success in its home market of Finland, British or Spanish customers don't necessarily want the same tests that Finnish customers do. In fact, Karilahti characterized the firm's ventures into the UK, Spain, and Germany via an online store presence as "test marketing" to gauge demand.
"We are trying to figure out which products will move in which markets," noted Karilahti. "Totally different products have sold on the UK market versus the Finnish market," he said. "That was a surprise to us. We understand that each market is very unique and different."
According to Karilahti, Medigoo began its foray into markets beyond Finland in early 2018. This process is ongoing and the company is now planning an expansion to the Netherlands while other expansion plans are underway. Being a smaller company entering larger markets though takes time, especially when large distributors often turn away newcomers who lack the sales volume to pique their interests.
"The biggest challenge is that the business is not big in any country, but the potential is there," said Karilahti. "We have had to work with third-tier distributors, which is comfortable for us, as we can grow together. First-tier distributors are not really interested in this business yet."
While it expands its business, the company is also growing internationally. Roughly half its workforce is now based in Ukraine. According to Karilahti, Medigoo's Ukrainian staff are mostly involved in programming and test development. He said the firm decided to set up operations in Ukraine because it is in the same time zone as Finland, two hours ahead of Greenwich Mean Time, making it easier to collaborate compared to Vietnam, which was another location considered for expansion.
While he noted some challenges — Russian remains the main language of business, as opposed to English in Northern Europe — he characterized the expansion as successful and said that Medigoo now does extensive testing through its Ukrainian network.
"It wasn't easy at first," he said, "but we have managed and it's been worth it."
The company continues to hire, he said, and is seeking a content manager to improve web traffic to its site, while it might add some managerial or supervisory personnel to the Ukrainian team.