The plan is to run six months of internal trials, followed by six months of clinical trials with people using it outside the company, then apply for FDA approval. If the FDA gives it certification, expected in mid-to-late 2010, Advanance would be able to market its test to about 30,000 hospital and healthcare facility labs that don’t currently have the complex equipment and skilled staff now needed to detect MRSA, White says.
Adnavance isn’t the only company that sees opportunity here. Sunnyvale, CA-based Cepheid (NASDAQ: [[ticker:CEPH]]) currently markets an MRSA detection instrument that people without special training can run. It also uses more time-consuming amplification methods, White says. That machine sells for about $60,000, plus consumable chemical reagents for about $60 a test.
Adnavance plans to give its machine away, and make money by committing hospitals to long-term contracts to buy its proprietary chemical reagents to run the machines, White says. The company thinks it can manufacture its machines for about $3,000 each, and make its profits on the recurring revenue of the reagents, which will be priced comparably to its competitors, he says.
This will take capital to get there, which isn’t easy to come by in today’s market. Adnavance raised $3.7 million last December, and plans to raise another $2 million by year-end, which should support operations to next summer, when it plans to raise capital again, White says. Once the company “locks” the device—essentially stops tinkering with it and has a final version it is prepared to take to the FDA—then it can talk with potential partners, he says.
Other applications of the “direct detection” method are on the drawing board, White says. The second test would be for tiny genetic variations, called single nucleotide polymorphisms (SNPs) that can tell a doctor how to adjust the dose of a common anti blood clotting agent, warfarin. A third test could tell doctors whether a woman should receive Merck’s human papillomavirus vaccine, marketed as Gardasil. Another would detect cystic fibrosis, a deadly lung disease.
What really drew White to the company is the chance to bring molecular diagnostic tests to a mainstream audience, he says. “I’ve been in this business 35 years, and the technology is always opening the door to a broader customer base,” he says.
