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Genomadix on path to profitability, biotech firm’s CEO says

September 13, 2024

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Genomadix’s CEO says the Ottawa biotech firm that rose from the ashes of Spartan Bioscience should start turning a profit by next year after recently signing a deal to license some of its IP to a New Brunswick company. Fredericton-based LuminUltra, which specializes in technology that rapidly identifies microbes that can cause legionnaires’ disease and other illnesses, acquired Genomadix’s legionella bacteria testing business earlier this summer. The deal also gives LuminUltra the right to develop and commercialize further tests based on Genomadix’s patented technology that can measure the presence and quantity of legionella with laboratory-grade sensitivity. Genomadix chief executive Steve Edgett says it’s all part of the Ottawa company’s long-term strategy to focus on commercializing “precision medicine” tests for cardiac and stroke patients conducted with its signature product, the Genomadix Cube. The coffee cup-sized lab-in-a-box is engineered to extract, amplify and identify genetic material in about an hour. “They’ll basically pick up the baton where we left off,” Edgett said of LuminUltra, which has committed to developing more tests on Genomadix’s open platform. “We’re just too small to be able to develop all of those different verticals ourselves and develop all the tests. So we wanted to make sure that the technology can be monetized in all of those areas. The best way to do that is to license the technology to strategic partners.” Edgett says he’s hoping the deal with LuminUltra is the first of many such licensing agreements for Genomadix, which is seeking partners to use its platform to create tests tailored to other health-care segments such as animal health, food safety and infectious diseases. Under the agreement with LuminUltra, Genomadix will receive a percentage of the revenues from any new rapid tests the New Brunswick-based company develops using Genomadix’s CubeX open platform. While he expects it will be at least a couple of years before Genomadix sees significant income from the licensing agreement, Edgett predicts that money from partners such as LuminUltra will eventually account for as much as 40 per cent of his company’s annual revenues as more and more new products based on its rapid-testing technology hit the market. “It allows us to generate many more tests in those various markets than we could ever do on our own,” he explained. “We get a smaller piece of a much bigger pie, essentially.” Developed by now-defunct Spartan Bioscience, the hand-held Cube can be adjusted to target different genes in an effort to detect a wide range of pathogens.

Pandemic-fuelled pivot

Before COVID-19, it was used mainly to identify strains of legionella, the bacteria that cause legionnaires’ disease. When the pandemic hit, Spartan pivoted toward engineering its DNA-testing technology to detect the virus that causes COVID-19. However, those efforts were derailed due to several issues, including problems with proprietary testing swabs that forced the company to recall the device. Spartan entered creditor protection in 2021, and its assets and intellectual property were purchased by Ontario-based Casa-Dea Finance later that year. In September 2021, the newly launched Genomadix took control of Spartan’s assets and IP, with Casa-Dea as its main shareholder. Under Edgett’s guidance, the new firm shifted its focus to developing “precision medicine” tests aimed at cardiac and stroke patients. Last year, the U.S. Food and Drug Administration gave Genomadix the green light to sell the rapid-testing device to customers that use it to detect genetic mutations that may cause heart patients to reject commonly prescribed drugs. The company is now working with dozens of health-care organizations south of the border, including the Mayo Clinic and Stanford Medicine, that are using the Cube in real-world environments. Edgett said the results have been encouraging. “The test volumes that we’re seeing far exceeded our expectations,” he said. “It’s exciting for us because it means the revenue is starting to ramp up significantly.” But there have also been bumps in the road. Edgett’s prediction that Genomadix would double its revenues from $2.5 million to $5 million in 2023 did not materialize, and the firm cut its workforce from nearly 50 employees 18 months ago to about 30 today. “We had to make some tough decisions,” Edgett acknowledged. “We had to really focus on just making sure that we had all the resources in the right places and we were managing our costs effectively.” But Genomadix’s CEO seems confident that the firm is gaining momentum again. The company landed $6 million in venture capital last year, money it’s using to accelerate its R&D efforts. Edgett expects sales from its U.S. partners to start flowing soon, and he says if all goes according to plan, Genomadix’s revenues will be “significantly higher” than $5 million in 2025. “Now we’ve kind of turned the corner, and we’re starting to build the team as we actually are seeing traction in the market,” Edgett said. “We’re starting to go back into growth mode. “The ifs are all gone because we know (the Cube) is being used, it’s reliable, people love the test. It’s just a question of … how much time it will take for us to achieve the revenue growth that we’re forecasting. “We’re really excited about what the next six months, year is going to look like for Genomadix. It’s a pretty exciting time. It feels like a different company.”