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DCN Dx Expanding Through Acquisitions, Internal Investments


NEW YORK — DCN Dx is expanding its business in anticipation of a surge in demand for its rapid diagnostic test development and production services.

The Carlsbad, California-based company is expanding through acquisition and internal investment following its own purchase last November for an undisclosed amount by private equity investor Martis Capital.

The company anticipates an uptick in demand for its services driven in part by the growing interest in point-of-care diagnostics during the COVID-19 pandemic, said Charlie Mamrak, the firm's CEO, who joined the diagnostic company following its acquisition by Martis Capital.

DCN's scientists and engineers develop and integrate assay systems, including binding reactions, cassettes, sample handling devices, and reader systems, and the company provides training and consulting services for lateral flow test developers and manufacturers.

The firm performs contract development and manufacturing for other companies developing and manufacturing test kits, including the development of advanced labels, such as colloidal gold and cellulose nanobeads, for lateral flow kits.

Around mid-June, DCN announced that it had acquired Moorestown, New Jersey-based PortaScience, a point-of-care diagnostics company focused on dry chemistry technology, saying the acquisition expands its product portfolio and point-of-care diagnostic development services.

At the end of June, it announced that it had acquired Carlsbad-based IVD Vision, a developer of custom diagnostic instruments and software, for an undisclosed amount, adding that the transaction will help it expand its portfolio of point-of-care testing products and diagnostic development services for analytical instruments.

"The investment thesis for DCN centers around establishing an end-to-end [contract development and manufacturing organization] for rapid diagnostics," Mamrak said. "DCN was attractive to Martis because it is a premier developer and manufacturer of lateral flow point-of-care diagnostic tests, a technology that makes up a good chunk for the point-of-care testing market."

Mamrak had joined Martis as an advisor in 2019 with an aim of finding suitable businesses in the diagnostics testing market, and more specifically point-of-care testing. He transitioned to CEO of DCN Dx upon its acquisition by Martis, a spinoff of Capricorn Investments founded by Jeff Skoll, former president of San Jose, California-based eBay

DCN's core business activities have been augmented by PortaScience, which has similar offerings for clinical chemistry testing, a new testing modality for DCN, Mamrak said.

IVD Vision, which is also based in Carlsbad, further adds to DCN's product portfolio. It manufactures colorimetric point-of-care readers for lateral flow tests and, like DCN, provides services to help firms develop IVD tests and other products.

"We believe assay development is now well covered by both DCN and PortaScience," Mamrak said. "However, we expect our overall diagnostics strategy to incorporate the full diagnostics value chain from assay development to supporting clinical research and clinical trials, and providing engineering services, consumables, data, instrumentation, and then finally contract manufacturing."

Another dimension of DCN's current strategy involves building competencies around the various rapid diagnostic testing technologies, he added.

To meet its overall strategic objectives, DCN is "building an internal clinical research team that will help run clinical trials for customers, and we will continue to fill out other components, including potentially adding molecular testing, through organic investments, and M&A," Mamrak said.

Its activities during the COVID-19 pandemic involved engaging with nonprofit organizations to expand access to testing. Last week, Geneva-based FIND and Unitaid announced that they will use funds under the Access to COVID-19 Tools Accelerator program to support the creation of a Center of Excellence at the DCN Dx facility in Carlsbad, and to enable technology transfer to Brazil-based Wama Diagnóstica and supply Latin America and the Caribbean with 2 million tests per month.

The firm has been careful with allocating resources during the pandemic, Brendan O'Farrell, DCN president and cofounder, said in an interview.

"We have an established customer base to support with contract development and manufacturing," including activities not associated with COVID-19, O'Farrell said. "Therefore, we identified a limited number of contract development programs that we knew could be impactful, and worked closely with NGOs, including the Bill & Melinda Gates Foundation and FIND, to develop products that could be transferred to low- and middle-income countries and manufactured locally at low cost."

O'Farrell cofounded DCN Dx in 2005 as a contract development company focused on lateral flow technology for testing at the point of care.

"At that time, we were aware that lateral flow technology was vastly underused and had a bad reputation as a cheap solution to easy problems," O'Farrell said. "However, we felt that lateral flow had far greater potential than its reputation reflected, and a lot of industry education was needed to show that was the case."

Lateral flow testing-related education and training became one of DCN's service offerings alongside contract development and manufacturing.

Since its founding, the company has operated in many industries involving lateral flow testing, including clinical, veterinary, biodefense, industrial health and safety, and companion diagnostic testing, and over the years it has trained around 400 companies in lateral flow test development, using many different types of samples, O'Farrell said.

Education and training for diagnostic testing manufacturing is a growing part of DCN's business, he said.

With pressure on manufacturing capacities during the pandemic, DCN has seen increasing demand for its "gap manufacturing" service, designed to enable customers to build an internal manufacturing infrastructure or transfer to an external organization, such as DCN, to help it scale up production, O'Farrell said.

"As companies start to move away from COVID testing, [they] need to capitalize on the deployed base of readers, and begin to enter new markets in home and pharmacy testing, [and] we see significant opportunities for new product development and that companies are already moving in that direction," O'Farrell said.

Finding trained personnel to set up manufacturing systems for new tests, fabricate tests, and ensure manufacturing lines continue to run efficiently has emerged as another obstacle during the pandemic, O'Farrell said, adding, "It's one thing to get production lines up and quite another to keep them running."

DCN, he said, has trained about 200 companies since the beginning of this year using a virtual training platform to which it transitioned with the onset of the pandemic.

Because it helps customers develop new tests, the company also sees emerging trends that are affecting the diagnostics industry, Mamrak said. With the attention given to point-of-care testing during the pandemic, post-COVID he anticipates accelerated growth in the development, manufacturing, and use of testing in urgent care centers, pharmacies, and the home. DCN expects that infectious disease testing, in general, and sexually transmitted disease testing, in particular, could experience a spike in demand at the point of care, Mamrak added.