GRAND RAPIDS — As health care shifts from treatment of diseases to prevention, physicians will need more tools to determine patients’ predispositions toward diseases.
Luckily, billions of dollars worth of scientific research sits on researchers’ shelves ready to be put to use. It just needs a company to take it to commercialization.
One company that recently set up shop in Grand Rapids is set to do just that.
Molecular diagnostic company ArticAx US Ltd., an offshoot of Toronto-based ArticDx Inc., commercializes genetic markers for the testing of diseases. The company’s latest venture includes exclusive IP rights to genetic markers for age-related macular degeneration (AMD) — the leading cause of vision loss in people over 50.
The challenge for ArticAx now is getting the health care system to align with the ability of its product. Right now the health care system in the U.S. focuses on treatment and not wellness, said Jim Pelot, CFO for ArticDx.
While ArticAx has the ability to determine which patients have a predisposition to macular degeneration, most health insurance providers do not cover those kinds of tests. Essentially, a patient has to show signs of a disease before the health insurance kicks in. At that point, learning a patient has a predisposition for a disease is almost irrelevant because in some cases the window for preventative action is closed.
“These tests need to be primary care tools. Our whole focus has been to empower primary care physicians to identify the disease early and develop referral structures from primary care to specialist,” Pelot said. “We’re very oriented to changing the patient management protocol.”
The company is currently in the build-out process of a new $1.9 million testing lab for its Macula Risk product. The project is expected to create 28 new jobs at the American Seating Business Park and received a $220,000 Business Development Program incentive from the Michigan Economic Development Corp. in July.
Given the markets for molecular diagnostic testing run primarily through the U.S. and Europe, the Canadian-based ArticDx wanted to establish a U.S. base of operations as it moved toward commercializing its latest test for macular degeneration.
ArticAx chose Grand Rapids over locations in New York, Florida and Colorado because of the city’s strong base of molecular diagnostic knowledge and proximity to a growing health care hub, Pelot said. He said the company contracted with a local research scientist based at the Michigan State University College of Human Medicine in Grand Rapids to develop the latest version of the company’s test.
Originally, ArticDx made its mark commercializing a test for colon cancer treatment.
“While working on the product, our chief medical officer started hearing about all these incredibly compelling genetics for macular degeneration,” Pelot said. “The work of his peers at other universities started to accelerate and about five years later the genetic framework for the disease fell into place. The universities came up with pieces of the puzzle. Then we went and rounded up a set of IP from the universities.”
Pelot said it took about three years to collect all the property to create the first test. The company contracted McMaster University in Toronto to make the test.
The earliest patents for the macular degeneration test on some of the genetic markers — essentially a gene or DNA sequence with a known location on a chromosome — came from Cambridge University, with the final few marker discoveries coming late last year from the University of Michigan.
When the complete Human Genome was released in 2000, genetics-based commercial ventures in health care took advantage of available funds for research, a source familiar with the subject said. However, as economies shifted and the diagnostic testing market developed over the last decade, companies with fewer resources started focusing on just one or two of their more promising products.
“You really have to know what you’re looking for,” Pelot said. “You have to have the expertise. IP is boundary-less. There is valuable, unused research sitting in tech transfer offices all over the world.”
Companies cannot just license one marker and expect to draw some value from it, Pelot said. Creating a reliable diagnostic test takes several markers, and each marker represents about $10 million in primary research done by universities and other institutions. ArticAx’s AMD test is comprised of 11 markers, he added. The more markers in a test, the better the test.
Alan Mack, a locally based molecular diagnostics consultant who is helping Pelot set up and organize the new lab operation, said U.S. patent laws are absolutely critical to the industry. Currently, companies who register a patent are limited to 20 years of exclusive rights on a particular test or product. Once that 20-year period of exclusivity expires, anyone has access to the design.
“Between the time you file a patent and the time you start commercializing it, that’s five to seven years in diagnostics, even longer in therapeutics,” Mack said. “So you’ve already chewed up one third of the 20 years before you even hit the market.”
Many in the business use the idea of building a better mousetrap as a metaphor for how innovation happens in the IP market.
“The advantage a company has in the market will go away someday, then they have to compete on prices, quality and service,” said Steven Underwood, a patent attorney with Price Heneveld LLP, an intellectual property law firm in Grand Rapids. “There will always be a motivated competitor out there free to design around the current patent, and they are encouraged to design around it. That’s how things get cheaper, better, faster.”
He said IP products like those of ArticAx are justified in the marketplace by their ability to do good things and how they can enhance the industries they’re in.
Billions of dollars worth of untapped IP sits on shelves in tech transfer offices across the world, Pelot said. Once a company obtains the rights to use it, the research doesn’t need to be done again before taking it to commercialization. It’s not a capital-intensive process when you do it right, he explained.
Right now, there are only 1,600 genetic tests like the one ArticAx created available for doctors to use, Mack said. Many in the health care field acknowledge that genetics is the tool of the future as the practice of medicine becomes more tailored to the individual. Molecular diagnostic testing in the health sciences and the growing intellectual property market has many companies digging through university technology transfer offices looking for promising research to commercialize.
“Intellectual property doesn’t really have a border. Funds for research come from all places,” Pelot said. “The difficulty is finding something worthwhile, protecting it and generating income from those inventions.”
The Grand Rapids lab opened Sept. 1, with testing starting later this year.