Mr Nick Gatsios, CEO & MD, HealthLinx, Australia

Aug 2010: Governments, private sectors and academia—all talk about commercialization. Though their definitions vary, the end objectives are the same; the translation of a technology that has been validated beyond the academic environment and presents a strong commercial opportunity. Any company operating in the biotechnology space is faced with enormous opportunities but to capitalize on these opportunities, it must overcome significant hurdles including regulatory, technical, market and/or resources. These hurdles are greater for companies dealing in the development of therapeutics, given that investment to get a drug from bench to market averages $1 billion and a span of 12-15 years. On the other hand, developing diagnostics for the market will usually take 5-7 years to go from bench to markets and investment is less than $20 million.

A critical strategic decision that must be made early in the company’s development in the diagnostic space is: What indication will it target? To optimize success, the answer must always be to target unmet market needs. Although one of the most difficult diseases to work with, HealthLinx decided to target ovarian cancer. The company set its strategic direction and maintained its focus.

When the company first started down the path of developing OvPlex, no reliable diagnostic for ovarian cancer existed. The gold standard biomarker for assisting the medical professional in diagnosing ovarian cancer is CA125, which has 60 percent reliability. CA125 is used for confirming the diagnosis of late stage ovarian cancer, monitoring treatment efficacy and the detection of disease recurrence. CA125, however, does not display adequate sensitivity or specificity (<60 percent) to be of use as a primary diagnostic of ovarian cancer at any stage of disease progression (i.e., early or late stage ovarian cancer). Global sales of CA125 are estimated to be $250 million per annum and are growing at an estimated five percent per annum.

The combined worldwide market for diagnostic imaging equipment and in vitro diagnostic products totaled about $66 billion in 2005, with imaging products accounting for 56 percent of the total. The balance relates to diagnostic test and include gene array tests and immuno assays. This market is now growing higher than 10 percent annually and is being driven by governments or regulators and HMO’s who have recognized that therapeutics will not treat each patient successfully and new tools are required to prove efficacy and treatment benefit. Hence why you now have regulators, in particular the FDA, insisting that any therapeutic in-clinic requires biomarkers to prove efficacy.

In 2004, Burrill & Co discussed the importance of biomarkers and diagnostics and suggested that the future is towards personalized medicine. Biomarkers that are unique to a disease guide the development of targeted therapies to treat the disease, thereby leading to a "theranostics" platform. This in turn requires companies to develop business models that will meet this growing demand.

Most women are diagnosed with ovarian cancer when it is too late to be treated. One of medical science’s goals is to detect disease at an early stage, OvPlex would effectively allow health providers to develop intervention strategies and or prescribe the appropriate drugs to address the disease, effectively reducing the cost to any healthcare system and increasing patient quality of life.

A number of pharmaceutical companies involved in developing new anti-cancer drugs have now adopted a strategy that requires identification of a molecular target for a new drug before they will commit to initiating a development program. An essential element of a targeted drug strategy is to develop or gain access to high-quality molecular diagnostic tests to identify those patients with the marker. The move towards targeted therapy in cancer has consequently created an opportunity for the development of new diagnostic tests.

HealthLinx, with its core technology and multiplex experience, is poised to capitalize on the market opportunity for early diagnosis of cancers by in-licensing IP that presents predictive diagnostic attributes and, with further development, build serum/plasma-based diagnostics for the target indication. The company has constructed a business model for commercialization of OvPlex based on niche requirements of the diagnostic and biotechnology markets.

The specific business model is to:

• In-license the IP and value-add by developing diagnostic applications.

• On nearing completion of a phase II biomarker trial, you seek to partner with a major industry group to co-fund the FDA trials required to obtain registration. While adopting an ex-US strategy that will allow the product to be sold in other jurisdictions effectively obtaining a foot print for the product.

• The aim is to realize: Upfront fees from the partner for securing the IP (for manufacture and distribution) on an exclusive basis; milestone payments; and backend royalties.

• Obtain third party validation of data to assist in supporting internal interpretations.

• Seek the support of globally-recognized oncologists for products developed. This will involve recruiting such experts for involvement and buy-in at early-stage development.

• Develop multi-variate software to be used with diagnostics.

• Devote significant attention towards selecting appropriate interest groups and strategic partnerships for product distribution.

• All diagnostic and biomarker programs will target disease indications that have unmet market needs.

• All diagnostics and biomarkers will be targeted for partnerships when they enter phase II biomarker trials.

• Collaborate with universities, hospitals (medical practitioners) and research institutes to recruit subjects and collect material to undertake biomarker discovery research.

• Collaborate with hospitals to establish joint ethic submissions to increase our bio-bank for phase II biomarker trials, discovery and validation of putative biomarkers.

  The vital need of any strategy is to ensure that the Board of Directors and the company staff are in harmony with the strategic direction. This will ensure that the message being communicated into the market is the same and that each person involved with the company is clear on what needs to be done to succeed. This is what exists within HealthLinx and has driven the success of the company to date.

  Mr Nick Gatsios is a co-founder of HealthLinx, spinning the technology out of a leading Melbourne hospital in 2003. The company was privately funded for three years until Nick negotiated a reverse acquisition of an ASX-listed company in late 2005. Mr Gatsios was also co-founder of Teraform Advisory that was established in early 2001 to advise on the commercialization of intellectual property emanating from universities and research institutes in Australia. He has spent the past five years building strong international networks and relationships where technology can be partnered to and developed through to product and market. Nick has been successful in securing over $60 million in grants and funding.