Lucigen Takes On Diagnostic Giants With On-the-Spot Pathogen Tests
[Corrected 1/30/14, 8:58 am. See below.] Lucigen’s ambitious plan to challenge big diagnostic firms with its own rapid tests for infections like flu and strep traces its origins to a Yellowstone National Park hot spring dubbed “Octopus Spring.”
That’s where molecular biologists David Mead and colleague Tom Schoenfeld in the early 2000s discovered an enzyme that will now form the key ingredient in their Middleton, WI, company’s planned test for quickly identifying pathogens.
Mead founded Lucigen, a small life sciences supplier, in 1998 because he thought it would be fun to try running a company and get off the bench as a research scientist at Wisconsin companies like Promega and Molecular Biology Resources. He hoped to strike another success like he had as a University of Wisconsin-Madison researcher, where a decade earlier he invented TA cloning, a genetic cloning technique he licensed to Invitrogen, now part of Life Technologies (NASDAQ: LIFE).
Mead and Schoenfeld, a fellow research scientist and Lucigen’s first hire, set out to Yellowstone to find unusual viruses from which they could isolate enzymes that would be superior to the ones that researchers were using at the time for processes like genetic sequencing, Mead said. They found a promising one, a so-called polymerase, but it took several years to figure out their enzyme’s true potential, he said.
Lucigen has since sold the enzyme, which it markets as OmniAmp, to life sciences researchers for use in experiments that require making lots of copies of specific genetic sequences. But Lucigen staff recognized a few years ago that the enzyme wasn’t ideal for research use, since it didn’t allow researchers to copy long enough sequences for many of their studies. They eventually realized, however, that if they used the enzyme in a process called Loop-mediated Isothermal Amplification (LAMP), it could easily handle short sequences that are unique signatures for various viruses and bacteria—and that that would allow for quick detection of a host of pathogens.
“It took us a long time to figure it out. We just kept throwing [ideas] against the wall, and it would fall,” Mead said.
Diagnostics is a new direction for the 16-year-old company and its 55 employees, who primarily supply life sciences researchers with a suite of products that enable genetic cloning and sequencing. It’s also an ambitious one that will pit Lucigen against big diagnostics firms in the race to develop an FDA-approved nucleic acid-based test for quickly detecting infections in patients’ samples right at the point of care in, say, a hospital or doctor’s office.
Why the pivot? Mainly to enter a much larger and faster-growing market. Over the next five years the life sciences research market is projected to at best grow in the low single digits, mainly due to shrinking availability of federal research grants, said Lucigen President Jeff Williams. [An earlier version of this paragraph gave an incorrect estimate of the size of the life sciences research market. We regret the error.]
Meanwhile, getting into point-of-care testing opens up a global market of hundreds of thousands of doctor’s offices, clinics, and eventually pharmacies, Mead said. Global research and consulting firm Frost & Sullivan valued the point-of-care test market at $5.7 billion in 2013, and expects it to exceed $9 billion in 2019. The top three players are Alere, Danaher (NYSE: DHR), and Roche, said Srinivas Sashidhar, Frost & Sullivan’s senior life sciences research analyst.
And Lucigen is also embarking on this effort with an eye toward getting acquired by a bigger player in the market, Mead said. Scooping up smaller companies with promising tests has been part of the strategy for companies like Alere, which this month announced the release of a product in Europe that rapidly tests for the flu (results in 15 minutes) using a process similar to what Lucigen will utilize in its competing product.
The problem such tests are trying to solve is that when a person arrives at a doctor’s office or hospital with an apparent infection, accurately determining its root cause typically requires the doctor to take a sample of blood, saliva, urine, or other biomaterial and ship it to a central lab to be analyzed, which can take days or weeks.
With a point-of-care test like the ones Lucigen is developing, patient samples are analyzed on site in a device roughly the size of a desktop printer and the test result is ready within an hour or so. That means healthcare providers don’t need to track down patients after an appointment, and treatment options can be discussed right away, resulting in faster and potentially less expensive care.
These types of devices are still relative rarities in clinical settings, but the market is heating up and spurring new innovations.
Most current point-of-care tests for viruses and bacteria are based on antibody technology, but Sashidhar of Frost & Sullivan said the next frontier within this fast-diagnosis market is a nucleic acid-based test like the one Lucigen is working on. The technique, which utilizes DNA or RNA amplification to detect pathogens, can more accurately pinpoint the source of an infection and ultimately lead to better treatment, he said.
“Although it’s [in the] early stages and products are just coming out now, this particular market is promising,” Sashidhar said.
Lucigen is spending some millions of dollars to develop its first of these molecular diagnostics, which will test for Clostridium difficile, or C. diff, a bacterial infection that can cause diarrhea and life-threatening inflammation of the colon.
In December, Lucigen’s facility received a key certification that enables the company to develop and manufacture diagnostic products and medical devices—an important step toward submitting a diagnostic test to the FDA, Lucigen said.
Lucigen is partnering with two companies in California that will design and manufacture the machine that would process its tests and the plastic cartridges that would hold patients’ samples; it declined to name these partners.
Lucigen plans to start clinical trials of the C. diff test in late 2014 and hopes to begin marketing the test in 2015. Mead and Williams envision expanding Lucigen’s menu of tests to include influenza, streptococcal infections, and sexually transmitted diseases, among others.
Assuming Lucigen secures the necessary approvals from the FDA and international regulators, the more daunting challenge will be winning against much larger companies that are already established in the point-of-care testing market and have more resources and a global distribution network, Sashidhar said. Besides Alere, Cepheid (NASDAQ: CPHD) and Becton, Dickinson and Company (NYSE: BDX) are among the companies also developing point-of-care tests similar to Lucigen’s, he said.
Mead is fully aware of what his small company is up against, and that’s why selling Lucigen is the ideal end game, he said.
“If you want to be successful fast, you partner with somebody who’s got the right resources and channels and who needs the technology,” Mead said. Though Lucigen might be second to market in the U.S. behind Alere, he said “that’s OK because there’s lots of diagnostic companies who have nothing [in this particular space]. This will be a nice competitive alternative to take up and go to market with.”
Lucigen officials believe that their company’s small size can be an advantage in a still-developing market. It allows Lucigen to have a startup’s mentality of being nimble and innovative, they said—two characteristics that can sometimes get stifled in the bureaucracy of large corporations.
“As a small company, we’re just full of ideas and naïve enough to think we can do things that no one else has,” said Williams, a former vice president of Roche Diagnostics.
Point-of-care testing could eventually make up 90 percent of Lucigen’s revenue if the company gets it right, Mead said. But even if the project fails, it will not spell doom for the firm, which can fall back on its core research products business that is growing revenue at a 20 percent clip annually, Williams said.
“We’re a successful company; we will continue to be successful,” Williams said.