Mayo Clinic acquires equity stake in rapid COVID test-maker Genomadix

Genomadix Cube
Genomadix Cube

An Ottawa biotech startup awaiting regulatory approval for a rapid COVID-testing device has forged a partnership with a world-renowned U.S. medical research facility to help further develop its technology.

Genomadix said this week the multi-year deal with the Mayo Clinic will see the non-profit Minnesota-based organization gain an ownership stake in the local firm. 

Under the agreement, Genomadix engineers will work with infectious disease and point-of-care specialists at the Mayo Clinic to brainstorm new testing technologies and map out a plan to best commercialize the Ottawa company’s products.

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“I think the really exciting thing for us is that this provides access to some of the top clinicians in the world in a number of areas,” Genomadix chief executive Steve Edgett told Techopia on Tuesday.

Edgett said the deal will help the fledgling firm zero in on which fields of medicine its devices are best-suited to address.

“They have their finger on the pulse of all the different technologies in the marketplace,” he said of the Mayo Clinic, which employs more than 4,500 physicians and scientists at its headquarters in Rochester, Minn., and other satellite campuses in the United States.

World-leading IP

Edgett said the agreement could also fast-track Genomadix’s bid to find new applications for its technology. 

He noted that the Mayo Clinic – a non-profit organization that generated revenues of more than US$15 billion last year – has already designed cutting-edge laboratory tests for a range of illnesses, including influenza, COVID and other respiratory diseases as well as sexually transmitted infections and children’s diseases.

Tapping into that intellectual property could give Genomadix a “significant head start” to bringing new testing devices to market, Edgett said.

In addition, researchers at the Mayo Clinic are spearheading efforts to make traditional PCR tests – considered the “gold standard” for detecting COVID – faster and more efficient. Edgett said Genomadix is hoping to license some of those advancements and integrate them into its own platforms.

“A combination of those different things will come together during this partnership, and I think will really help stack the deck for success for us as we undertake new R&D or new product development efforts,” he added.

Equity stake

The Ottawa firm will pay the Mayo Clinic royalties for using the research facility’s IP. But instead of charging Genomadix a service fee, the clinic has agreed to take an equity stake in the one-year-old biotech venture instead.

“We’ve been told it’s pretty rare for Mayo to do that,” Edgett said. “That gives us confidence that Mayo believes in our technology, believes in our company.”

Genomadix hopes the new deal is a giant step towards generating meaningful cash flow and becoming a viable business following the demise of its predecessor, once-promising Ottawa biotech firm Spartan Bioscience.

Genomadix was launched last September after one of its main shareholders acquired the assets and intellectual property of now-defunct Spartan out of creditor protection.

Spartan stormed out of the gate early in the pandemic with its portable COVID test-in-a-box, dubbed the Spartan Cube. The company quickly received hundreds of millions of dollars worth of advance orders for its coffee-cup-sized device, which promised to deliver highly accurate COVID test results in about an hour.

But various problems soon derailed the project. 

Health Canada revoked its initial approval of the Spartan Cube after concerns were raised about the effectiveness of its proprietary cheek swab. Spartan engineers fixed the swabs before the test was resubmitted to Health Canada, which re-approved the device in early 2021. 

But another issue that saw up to 30 per cent of tests get spoiled due to an adverse chemical reaction between the swab storage solution and the foil that sealed the plastic storage containers ultimately led to Spartan’s collapse. 

The company owed more than $70 million to various creditors, including Casa-Dea, the Business Development Bank of Canada and Health Canada, after failing to deliver on major deals for the Spartan Cube – including a $160-million contract with the federal government.

Last month, Edgett told Techopia the issues that plagued the device, now rebranded the Genomadix Cube, have been rectified. 

Genomadix, which has grown from 32 to 53 employees since its launch, has been testing the re-engineered device at four sites in the U.S. The company has submitted the results to regulators in Canada and the U.S. and is now waiting for Health Canada and the U.S. Food and Drug Administration to give it the green light to resume production.

Edgett said he’s confident the revamped Genomadix Cube will be ready for market later this fall.

“It’s a little bit outside of our control at this point,” he said. “It’s a bureaucratic process with the health regulators. But we’ve crossed the finish line with all of our clinical trials and work like that.”

The device has also been adapted for other applications, including testing for bacteria that causes legionnaire’s disease and detecting genetic mutations that may cause cardiac patients to reject a commonly prescribed blood-thinner.

Edgett said the new agreement with the Mayo Clinic sends a strong message to investors that their faith in Genomadix is justified.

“There were a lot of question marks after Spartan on whether or not the technology was really sound and whether it actually had a right to win in the (market),” he said. 

“I think that having not just a partnership, but having equity investment from an organization like Mayo Clinic, I think puts a lot of those doubts to bed.”

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