Most biotech firms toil as obscure private companies for years to prove their ideas work in the clinic. They have to hustle non-stop for venture capital to keep the doors open just long enough to someday cash out with an IPO.
Steven Quay is betting he’s found a shortcut.
Quay, the veteran Seattle biotech CEO, is trying to cut straight to the IPO chase with his new gig. He’s the CEO and founder of Seattle-based Atossa Genetics, with his own patented invention and his own seed capital, which he’s now hoping to parlay into a $15 million initial public offering. If Quay can raise that money, Atossa will be able to start selling an FDA-approved diagnostic test which could be used along with mammograms to predict a woman’s future risk of getting breast cancer.
Atossa described its unusual origins in a March 30 investor prospectus that I, and pretty much everybody else in the media that I can see, missed. But Atossa’s IPO paperwork is clear that it is seeking to sell 5 million shares at $3 each. The filing doesn’t list any underwriters, although Quay says he is in discussions with several. It has a law firm (Cassidy & Associates of Newport Beach, CA) that I haven’t heard of, and an accounting firm, KCCW Accountancy, that also doesn’t ring any bells. Atossa plans to trade as an over-the-counter stock, which I must say isn’t the place most people look to find the next Genentech.
That said, Quay is a well-known character in the Seattle biotech scene and on the NASDAQ circuit. He was previously the CEO of Bothell, WA-based Sonus Pharmaceuticals in the 1990s, and was CEO of Bothell, WA-based Nastech Pharmaceutical (now MDRNA) for most of the last decade. Both of those companies made a lot of shareholders unhappy. Sonus flamed out under Quay’s successor a couple years ago, and was later absorbed by OncoGenex Pharmaceuticals (NASDAQ: [[ticker:OGXI]]). MDRNA is still alive, but has limited cash reserves, and a market capitalization of less than $50 million. Quay left that company in the fall of 2008 with a severance package worth $1.7 million.
The roots of Atossa Genetics go back to the late ’90s, during an interim stint Quay had between Sonus and Nastech. In 2000, Quay invented a technology which he says can be used to screen millions of women early for their future breast cancer risk, potentially saving lives, like the Pap Smear test has done for cervical cancer. Pap smears have helped bring the annual death rate from cervical cancer down by 90 percent over the past 50 years, and the same potential exists for early breast cancer screening today, Quay says. About 192,000 women in the U.S. are diagnosed with breast cancer every year, and about 40,000 die from it annually, according to the American Cancer Society.
“While we have this conversation, women are dying every minute from breast cancer,” Quay says.
The technology has had quite a few commercial twists and turns. Atossa’s test is designed to analyze nipple aspirate fluid, a sample of fluid from the milk ducts in the breast that’s filled with cells and molecular markers that are thought to be early signs of cancer. The technology was obtained by Nastech when Quay became CEO of the company in 2000. But it didn’t really go very far there. While at Nastech, Quay championed a strategy of creating nasal-spray delivery formulations of drugs which received support at various times from partners like Procter & Gamble, Novo Nordisk, and Merck. Those partnerships eventually dried up, and Nastech reinvented itself as a developer of RNA interference technology, and renamed itself MDRNA.
While most investors weren’t watching, the breast cancer diagnostic won FDA approval in 2003. The commercial rights were later held by Cytyc and Hologic, who did some patent and development work, but handed the product back under license terms to MDRNA in 2008, Quay says. While it’s been cleared for sale by the FDA for seven years, the test hasn’t yet been marketed.
Why didn’t those other companies commercialize the technology? One potential reason
