QuantRx
Biomedical Adds Up To Exciting Medical Diagnostic Pioneer
With a market size
estimated at $5 billion annually and growing at nearly 15% per year,
point-of-care medical devices facilitate diagnosis principally of medically
relevant conditions through biological samples such as blood, urine, vaginal
fluid, and saliva. The landscape of publicly traded point-of-care
companies was simplistic with small companies that have a limited scope to
their businesses and a few large players.
That was until QuantRx Biomedical Corporation (OTCBB: QTXB) elevated its
standing with a slew of corporate developments.
In a few short months during 2009, the under-funded developer of medical
technologies considerably changed its fate.
First, QuantRx
secured significant new capital through the formation of a joint venture to
bring its products to market at a time when funding for small cap medtech
stocks was unthinkable. Second, it
streamlined its operations to focus on diagnostic medical devices and lower its
cash burn. Third, it acquired a new
technology to combine with its existing lateral flow products that resulted in
a unique point-of-care solution which is the basis for a platform shifting approach
to address large volume test markets and untapped revenues.
Point-of-care
diagnostic products generally use a lateral flow process (where human fluid
flows through a testing strip until it engages with a chemical agent to produce
a “positive/negative” indicator) that is designed to provide testing at home or
as a front-line examination by a healthcare professional in order to ensure
timely diagnosis, more immediate treatment, earlier intervention, limiting of
the spread of a disease (within the patient and to others), and patient
convenience. All of these benefits ultimately lead to a reduction in
medical costs, and improved patient care, that are significant drivers behind
President Obama’s healthcare reform campaign.
Public companies in
the point-of-care space include names such as OraSure Technologies (NASDAQ:OSUR), Trinity Biotech (NASDAQ: TRIB) and Chembio Diagnostics (OTCBB: CEMI),
which are principally focused on HIV test kits, and the $1.9 billion in sales
behemoth of Inverness Medical Innovations (NYSE: IMA), and the consumer
marketing giant Church & Dwight CO., Inc. (NYSE: CHD), which owns significant intellectual
properties for lateral flow technology from which many medical professional and
consumer point-of-care products are derived, such as pregnancy tests.
In an age where
many companies are defined by one product, QuantRx stands apart with an
emphasis on a “Platform” for the development of several unique products, each
with its own indication that represents a large and growing market, driving the
paradigm shift away from formal clinical lab testing. This unique platform technology combines
QuantRx’s highly patented lateral flow technology, RapidSense®, and a “reader”
device incorporating technology acquired earlier in 2009 to deliver laboratory
results to the primary care provider in minutes.
Following several
years of significant research and development spending, QuantRx availed itself
to additional capital that should bring it to the point of commercial launch
for key products. In July 2009 the
Company announced the creation of a joint venture with NuRx Pharmaceuticals,
Inc. (OTCBB: NUXP), availing QuantRx to the collaboration of executive
management and capital in excess of $5 million.
Part of the proceeds was used to finance the acquisition of the
technology that enables an ultra-portable “reader” to complement the Company’s
lateral flow technology.
In November
2009, QuantRx participated in the world’s largest medical trade fair where
almost 138,000 visitors from over 100 countries surpassed the prior year’s
attendance. The event marked the
milestone of debuting the Company’s flagship point-of-care technology that
combines a thyroid function testing kit with its reader device. Like no other product on the market today,
QuantRx’s Q-Reader actually defines the level of metabolic markers as a front
line tool for point-of-care, rather than necessitating the delayed process of
third party clinical laboratory testing.
In a departure from traditional and simplistic positive/negative
point-of-care testing that has become over a billion dollar industry, the
Quantrx system for the first time provides quantified information in a
point-of-care test.
QuantRx has
been developing its point-of-care platform consisting of the Q-Reader™ and a
number of point-of-care tests intended to facilitate diagnosis of critical
metabolic markers, such as those associated with thyroid disease, malignant
cancers, therapeutic drugs and other medically relevant conditions, as part of
its QN Diagnostics initiative.
According to a QuantRx press release, the breadth and depth of
distributors, multinational OEMs, health care professionals and administrators
that visited it at MEDICA 2009 contributed toward creating an exciting ‘buzz’
for the Q-Reader. The Company believes
the Q-Reader is now being considered a true innovation in the paradigm shift to
the use of point-of-care medical devices.
Demonstrating
QuantRx’s ability to create unique and sought after products, in February 2009 the Company entered
into a long term agreement whereby Church & Dwight Co. acquired exclusive
world-wide rights to use certain QuantRx technology related to a jointly
developed at-home diagnostic test for the consumer Over-the-Counter
market. The product was launched under Church & Dwight’s First
Response® brand in mid-2009, resulting in QuantRx now receiving royalties on
net sales of the product among other fees. Additionally, QuantRx is
developing rapid over the counter point-of-care products for oral care for ALT
BioScience. This development agreement grants certain rights related to
manufacturing upon successful development and commercialization of the
products.
According to
QuantRx filings with the SEC, other recent achievements and near term catalysts
include:
Oral
drugs of abuse tests that meet full Substance Abuse and Mental Health Services
Administration (SAMSA) guidelines, which no other competitor has met.
U.S.
Patent and Trademark Office issued another new patent expanding QuantRx’s oral
testing intellectual property suite.
U.S.
Patent and Trademark Office issued a new patent extending QuantRx’s lateral
flow testing intellectual property suite for new protection relating to its
hypersensitive point-of-care lateral flow based system.
The
Company’s FDA-cleared follicle stimulating hormone rapid test was launched into
the U.S.
market in the first quarter of 2009, and will provide a long term royalty
stream.
The
FDA granted the Company 510(k) clearance on its RapidSense drugs-of-abuse
Phencyclidine test.
The
FDA granted the Company 510(k) clearance on its RapidSense drugs-of-abuse
Cocaine test.
The
FDA granted the Company 510(k) clearance on its RapidSense drugs-of-abuse
Methamphetamine test. “Meth” is the most
devastating illegal substance affecting an increasing and alarming number of
adult and school-aged people.
QuantRx has additional RapidSense-InstantLab-based
products in the pipeline, and anticipates launching its first tests following
FDA market clearance in 2010.
Beyond the high growth opportunities in
point-of-care, investors in QuantRx gain access to three other businesses for
an even more compelling sum of the parts value proposition. Miniform PAD products from QuantRx are based
on patented technology that provides for a line of biodegradable and flushable
products that address an array of consumer health and wellness issues,
including temporary relief of hemorrhoid and minor vaginal infection itch and
discomfort, an absorbent device for feminine light urinary incontinence, a
treated external pad for drug delivery, and a device for medical sample
collection and sample transport for diagnostic testing. Among PAD initiatives, the Company signed a
contract with The Procter & Gamble Company, which provides licenses for
patent rights and know-how for certain hemorrhoid treatment pads and related
coatings.
The
Company’s Genomics USA
affiliate develops genomic testing chips that represent the future of
personalized healthcare on a population-scale basis. The first product, in late stage development,
is “The HLA-Chip,” a low cost genomic microarray consisting of 300 Single Nucleotide Polymorphism (SNP)
that, when coupled with customized analytical software, provides the patient’s
Human Lymphocyte Antigen (HLA) type. Development of the critical HLA determinate
test has been primarily funded by a Defense Advanced Research Projects Agency
(DARPA) sponsored Small Business Innovation Research (SBIR) grant of
approximately $3 million, with the focus being to provide the United States
military with information necessary to determine who would benefit from various
vaccines in the event of a biowarfare release.
A prototype of this test is anticipated in the fourth quarter of 2009. The
HLA-Chip is intended to become the replacement for all DNA-based Human
Lymphocyte Antigen (HLA) testing in solid organ and stem cell transplantation.
Finally,
a significant and valuable component of QuantRx is its ownership interest in
FluoroPharma, a developer of sophisticated molecular diagnostic imaging agents
for positron emission tomography (PET).
Following a reduction in ownership in 2009 that no longer required
QuantRx to further fund or consolidate FluoroPharma’s operating results,
QuantRx’ stake is less than 50%.
With far more than
one product addressing a single market, QuantRx has set its sights on multiple,
large addressable markets. The Company
is at the inflection point where years of significant funding and product
development begin to materialize into scaled production and meaningful revenue
generation beginning in 2010.
That’s the long and the small of it for
QuantRx Biomedical Corporation.
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This edition of The Long and the Small of It was written by Jordan Darrow, a
consultant with investor relations boutique Darrow Associates, Inc. With offices in New York
City and Long Island,
NY, Darrow Associates implements
investor relations strategies focused on long term performance for small capitalization
companies in select industries. QuantRx
Biomedical Corporation is a client of Darrow Associates; the firm receives
compensation in the form of a monthly retainer for representation.
