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Karius to Widen Adoption, Improve Infectious Dx Technology With $165M Series B Funding

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NEW YORK – Fresh of a $165 million Series B funding round, infectious disease startup Karius aims to expand three major areas, including commercial development, launching clinical studies, and updating its infectious disease diagnostic assays.

The Redwood, California-based firm said that its laboratory-developed tests provide hospitals the opportunity to expedite patient treatment, while curbing the costs of one-off diagnostic tests and medication, and minimizing the length of a patient's stay at the hospital.

The Karius Test diagnoses infectious pathogens by sequencing cell-free microbial DNA in a patient's blood sample. Clinicians who order the test mail a kit containing a patient's 5 ml blood sample to the company's CLIA-certified and CAP-accredited lab, where cell-free DNA is extracted and sequenced using Illumina's instruments.

Applying a set of proprietary methods to remove human sequences from the data, Karius' platform compares the remaining information against a reporting database of 1449 viral, bacterial, fungal, and eukaryotic pathogens.

According to Karius CEO Mickey Kertesz, the firm will use the $165 million in funding to drive investments in three major "buckets" to help save more patients faster, claiming that each bucket "will get us closer to that vision."

First, Karius said it aims to help doctors diagnose infectious diseases by expanding its commercial efforts across the US. While currently testing samples from over 100 US customers (including St. Jude's Hospital in Memphis, Tennessee, Texas Children's Hospital in Houston, and Carle Foundation Hospital in Urbana, Illinois), Kertesz said that the firm will hire an undisclosed amount of sales representatives to its commercial team to work with hospitals to implement the test.

Karius also aims to use the funding to broaden its clinical development through clinical studies. While declining to disclose potential commercial and academic partners, Kertesz said the studies will produce clinical evidence that the firm believes will demonstrate the test's ability to serve as a standard of care assay.

Karius is currently involved in a multicenter prospective study that will evaluate the diagnostic value of the assay for pneumonia in immunocompromised adult patients with hematological cancers. The firm expects to release the results of the study by the end of the year.

In addition, Karius expects to use the Series B funding to fuel the next version of its cell-free infectious disease diagnostic technology. As the firm has collected patient samples over the past few years, Kertesz said that his team has encountered a few undisclosed novel pathogen strains and microbial species that didn't exist in its reporting database. He therefore believes that the recent surge in funding will help Karius to further increase diagnostic coverage of its assay.  

Karius currently offers its test for a list price of $2,000, which Kertesz acknowledged is not cheap for a diagnostic assay. While Karius does not offer discount pricing, Kertesz said that the firm plans to begin discussions with integrated delivery networks and payors to implement the use of the assay across the different systems.

However, Kertesz claims that Karius does not consider the price to be a major issue because of the long-term value the test can offer to its customers. Karius believes the test can save a patient from invasive, expensive, and unneeded biopsy testing, inaccurate drug prescriptions, as well as a lengthy stay at a hospital.

Kertesz explained that the firm is targeting hospital in-patients who fall under the Diagnosis Related Group system, wherein a hospital negotiates with payors on some of an assay's cost based on the condition of the patient it is attempting to diagnose.

"While the hospital can choose how to spend that money however they want … our [return on investment] argument is basically that the hospital should buy the test because they're saving money," Kertesz argued. "Instead of spending [up to] $30,000 on biopsies, they are spending $2,000 on getting the [diagnostic] results the next day."

Customer experience

Amir Khan, an infectious disease physician at the Carle Foundation Hospital said he initially spoke with Karius after attending one of the firm's presentations at Infectious Disease Society America Conference in October 2017. At his facility, Khan typically uses the assay to supplement standard diagnostic tests in about five to six undetermined infectious diseases cases per month.

When trying to figure out if a patient is sick due to infection, Khan explained that his team typically waits up to a week for most culture results. For bacterial or fungal cultures, the team must wait at least six weeks for results.

"Most of the time, we don't have the luxury to figure that out, [so] we guess the clinical cause and start the patient on medications," Khan said. However, "if we send kits to Karius before 5pm, the [firm's lab] can instead send back diagnostic results within 48 to 72 hours."

Khan noted that Karius' test has helped his team diagnose cases of at least six extremely rare infectious pathogens since initially partnering with the firm in early 2018, such as peritoneal tuberculosis, Francisella tularemia, as well as species of Leptospira and Nocardia.

"In Nocardia, Karius even gave the subspecies name, which is important as Nocardia has 15 to 20 subspecies, each with different antibiotic susceptibilities," Khan said. "In routine culture, that would have taken two weeks, followed by [a submission] to Mayo Clinic for further sub-speciation."

After hearing from Karius within 48 hours, Khan and his team immediately altered the patient's antibiotic treatment. He believes that the individual would not have otherwise survived without the specific diagnosis.

Khan also highlighted that the assay could be applied as a last resort in challenging cases, where clinicians have used several diagnostic assays to search for common infectious diseases without finding any definitive results.

"Many people are admitted to our hospital with something like a fever of unknown origin," Khan said. "A negative test result is actually good for us, as we can say the [reason] the patient is ill is most likely non-infectious."

Rather than being used in local hospitals, Khan argued that Karius' test should instead be used by larger medical centers such as Johns Hopkins and the Mayo Clinic, where clinicians are more likely to encounter rare organisms that cannot be detected immediately via cell culture or other standard methods.

Khan also discourages clinicians from using the test for everyday use because of potential inconclusive results and the expensive cost of the assay.

"[The test] can detect 10 copies of this microbe and 15 copies of that microbe," Khan said. "Most of the time, however, interpreting that into clinical context is difficult and doesn't mean anything important."

But if used sensibly and for specific situations, Khan believes that the Karius test can serve as a highly valuable method to diagnose rare infectious conditions.

Meanwhile, Kertesz noted that Karius has begun projects geared toward cutting down the cost of the test but declined to disclose more details. Kertesz also declined to share on any potential plans to seek US Food and Drug Administration 510(k) clearance for the assay.

However, he noted that Karius is currently developing RNA capabilities to help detect RNA viruses such as coronavirus (COVID-19).

"Interestingly, RNA viruses are not a big problem with the population we are helping right now, but being able to see those will help us beyond the current indications we are focusing on," Kertesz said. "The current outbreak [of COVID-19] demonstrates that we as humanity didn't figure out human viruses, and that is a strong signal that there's a lot of work that needs to be done."