An Ottawa startup that’s attempting to rise from the ashes of Spartan Bioscience and manufacture a device that can deliver highly accurate COVID tests in an hour has secured millions of dollars in fresh funding as it awaits final trial results on the revamped technology.
Genomadix – which was launched less than a year ago after one of its main shareholders acquired Spartan’s assets and intellectual property out of creditor protection – said this week it has raised $7.5 million in an oversubscribed funding round led by Ontario-based Casa-Dea Finance and ICW Healthcare Ventures, a New York-based fund that focuses on health-care startups.
Genomadix CEO Steve Edgett said the funding should carry the young firm through the next couple of years as it looks to get Spartan’s COVID-19 testing technology back on track after the device gained and then lost Health Canada approval over concerns about the effectiveness of its proprietary cheek swab.
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“Just having that life sciences strategic investor that’s an activist shareholder is proving to be really strategic,” Edgett said of ICW’s decision to invest in the fledgling firm. “I think it’s a big win for us.”
A handful of former Spartan shareholders are also part of the funding round, which comes about 16 months after the now-defunct company filed for creditor protection.
Spartan 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 its COVID-19 rapid testing device – including a $160-million contract with the federal government.
On Thursday, Edgett told OBJ the problems that plagued the portable lab-in-a-box – formerly known as the Spartan Cube and now rebranded as the Genomadix Cube – are behind it.
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 took longer to rectify and has finally been resolved, Edgett said.
“That essentially killed Spartan,” he said, explaining that the foil seal has been replaced with a screw-cap lid.
The re-engineered Genomadix Cube is currently undergoing testing at four sites in the U.S. Edgett said the firm expects to submit the results to regulators in Canada and the U.S. within the next 30 days, adding that if all goes well, the Genomadix Cube will be cleared for widespread use on both sides of the border by this fall.
Edgett, who previously served as a vice-president at Spartan, concedes the last couple of years haven’t been easy as the groundbreaking Ottawa biotech firm’s employees and shareholders watched hundreds of millions of dollars in potential contracts go up in smoke.
But he says Genomadix is now primed to succeed where its predecessor failed.
The need for highly accurate polymerase chain reaction technology – considered the “gold standard” of COVID testing – isn’t going away any time soon, Edgett said, as highly contagious subvariants of the virus continue to emerge.
The Genomadix Cube can deliver results in about an hour using the PCR method without requiring test samples to be sent to centralized labs. Edgett sees massive market potential in taking PCR tests directly to where they’re needed most, such as offices, schools and medical clinics in remote areas.
“There’s no question that we’re very, very late to the party. But what we’re seeing is that there’s still a very underserved market for a PCR, lab-sensitive test.”
“There’s no question that we’re very, very late to the party,” Edgett said. “But what we’re seeing is that there’s still a very underserved market for a PCR, lab-sensitive test.
“We’re not looking at positioning ourselves as a rapid test. The way that we’re positioning this is really a decentralized, laboratory-quality test. It’ll position us very well in the market compared to all other point-of-care tests.”
But Edgett says meeting the ongoing need for COVID tests is just one part of Genomadix’s multi-pronged long-term growth strategy.
For example, the company sees huge upside in the DNA-testing cube’s ability to detect the deadly bacteria that causes legionnaire’s disease. The portable lab is already used by real estate firms, professional sports teams and other customers such as data centres to do on-site testing for legionella.
“We continue to have some great momentum, and we’ve kind of doubled down on what we’re doing with legionella,” Edgett said, adding the firm expects to release an updated version of the product early in 2023.
And after years of clinical testing, the device has also shown great promise to help doctors determine if cardiac patients will reject a commonly prescribed blood-thinner called clopidogrel, which is sold under the trade name Plavix and others, due to a genetic mutation – a situation that occurs in 30 per cent of caucasian and about half of Asian patients.
Meanwhile, the technology is being used in clinical trials to quickly screen stroke victims and assess what type of anti-platelet drugs patients should be administered based on their genetic profiles. Edgett says that could cut a process that now often takes days down to just hours.
Alzheimer’s research tool
Finally, Genomadix is gaining a growing fan base as a research tool to help scientists identify genetic variations that could be early indicators of Alzheimer’s disease. Edgett says Alzheimer researchers now form a significant chunk of the company’s growing income stream.
“We’re on track with our plan,” he said. “Our revenues are growing; our bottom line is exactly where we forecast it to be.”
Clearly, Edgett anticipates big things to come for Genomadix in the months and years ahead. The company has brought its production in-house in anticipation of a flood of orders once regulators give its COVID-testing technology the green light, securing a facility on Legget Drive in Kanata with the capacity to churn out 200,000 test cartridges a week.
Meanwhile, Genomadix is on the verge of finalizing a partnership with a world-renowned U.S. research facility that will see the two organizations team up to develop next-generation medical devices and products.
“It’s another great strategic win for us,” Edgett said.
The veteran biotech executive knows some of the company’s investors have heard similar bold market prognostications in the past, only to be burned. But he’s confident things will be different this time around.
“We’ve got an established demand for those products already,” Edgett said. “We haven’t hit a home run, but we’ve definitely made it to first base. Now, we’re looking to go forward.”