Rheonix to Use $14M Financing to Support Life Tech Food Testing Pact, Build Own MDx Test Menu

With $14 MILLION in debt and equity financing in hand, molecular diagnostics firm Rheonix is planning to expand both its physical footprint and molecular testing product portfolio in the coming year, company president Tony Eisenhut said this week.

First, Rheonix is already in the process of building out new manufacturing facilities just down the street from its current Ithaca, NY, headquarters, primarily to enable it to produce consumables and systems to fulfill its joint development agreement with Life Technologies.

Announced this past summer, that agreement will see Rheonix develop a version of its fully automated, sample-toanswer, molecular testing platform for Life Tech to commercialize in applied markets such as food safety testing.

“We’re moving about a quarter mile up the road, and we’ve taken our old facility … and it’s getting converted into manufacturing, clean room, and automation,” Eisenhut told PCR Insider.

“We are adding manufacturing capabilities and personnel, continuing to expand with the quality team we have now, and adding a couple of [test] menu development resources, a cross between microbiologists and engineers who understand fluidics,” he added. The company currently employs around 45 people and expects to increase this number to the “mid 50s or mid 60s” by the middle of 2014, Eisenhut said.

Besides supporting the Life Tech deal, this build-out will also allow Rheonix to ready its platform — the Encompass MDx system running the Chemistry and Reagent Device (CARD) consumable — for the clinical testing market, with an anticipated submission to the US Food and Drug Administration in the second half of 2014, and a parallel European commercialization timeline, Eisenhut told PCR Insider.

The CARD consumable is a disposable cartridge the size of a credit card that is inserted into the Encompass MDx system to run multiple samples through nucleic acid extraction and purification, amplification, and array-based endpoint detection with no user intervention.

The CARD can handle liquid volumes of between 5 µl and 5 ml and tissue mass up to 20 mg, and is compatible with a broad range of sample types including fresh tissue, FFPE tissue, whole blood, serum, saliva, and swabs.

Currently, each CARD can run four assays simultaneously, with each assay capable of detecting up to 48 targets, and Rheonix plans to use this capability to offer a number of socalled “syndromic” panels to help diagnose any number of infectious agents that could be causing a patient’s symptoms.

“We understand that clinicians are going to, for a whole host of reasons, have less time to spend with patients, and with the new [test] reimbursement world that’s emerging … getting answers to patient symptoms in a more expedient and cost-effective manner is really what we’re looking to bring forward,” Eisenhut said. “These syndromic panels with 10, 15, 25 targets will allow a clinician to understand in a costeffective way what is going on with the patient, not one target at a time, but multiple pathogens at a time, if there is a co-infection, for example.”

The company had previously suggested that its first test would be a sexually transmitted infection panel, and Eisenhut confirmed that tack this week, but he hinted that the Encompass MDx system would enable something a bit more comprehensive than a standard STI panel.

“We’re not going to get into specific targets now, but there is an STI panel,” he said. “But we’re really looking at these syndromic panels in the women’s health area [in general], and an STI panel … is only really a portion of ultimately what we’ll be bringing forward.”

Molecular testing for women’s health has in recent months become an extremely crowded market, with companies such as Roche, Hologic, Cepheid, Becton Dickinson, Abbott, and Qiagen competing heavily for market share in areas like human papillomavirus and chlamydia/gonorrhea testing. Eisenhut acknowledged the challenges of wresting market share from these stalwarts, but said he believes Rheonix will be able to compete on pricing, at least, and also noted that it was not a coincidence that so many companies are competing in the space.

“There are multiple drivers to that … [and one major reason] is that there is clarity around reimbursement, at least some of it,” he said. “That clarity helps make the business case. The interesting thing is that reimbursement is a very dynamic place right now and will continue to change. People are making decisions based on the market that exists. And we feel that market dynamic is going to change, and if you don’t have the right cost structure, you’re going to be challenged in the future, because we only see that pressure growing.”

But Rheonix is also looking to move beyond the women’s health market, having previously indicated that it is also eyeing the hospital-acquired infection, respiratory, and gastrointestinal markets. Amassing a menu of such comprehensive molecular testing panels would put it squarely in competition with industry players such as Luminex, BioFire Diagnostics (now part of BioMérieux), Nanosphere, and GenMark Diagnostics, to name a few.

Rheonix is developing some of these assays in house, but will not go it alone. Eisenhut noted that the company has been “developing some relationships with content providers, so we are going to be able to offer more of a menu in a shorter period of time.” He declined to elaborate, however, noting that several of these relationships are still in the works.

The $14 million financing announced this week was led by existing investors Cayuga Venture Fund and Rand Capital SBIC, a subsidiary of Rand Capital. In terms of other revenue sources, the company has scored a few government grants over the past few years — most recently a $500,000 Phase IIB Small Business Innovation Research grant from the National Science Foundation to expand the capabilities of its platform to pathogen detection in food and beverages, which will help support the Life Tech partnership.

The Life Tech product development timeline “is on schedule and moving forward well,” Eisenhut said, noting that Rheonix plans to realize revenues from the partnership in 2014