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Sunday, 02 August 2015 22:00

Armune BioScience seeks capital to grow, continue developing diagnostic test

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The developers of the Apifiny prostate cancer diagnostic test plan to use additional capital to research how to apply the test to diagnose other forms of cancer. The developers of the Apifiny prostate cancer diagnostic test plan to use additional capital to research how to apply the test to diagnose other forms of cancer. COURTESY PHOTO

With the additional $20 million it seeks to raise, Armune BioScience Inc. hopes to drive growth as well as research new applications for the blood test it developed to diagnose prostate cancer.

The Kalamazoo-based startup is now working to complete a $7.5 million Series A capital raise and will then solicit investors for Series B capital that will be needed to scale the business for growth. The funds will also go to extend R&D to further develop the technology behind the Apifiny diagnostic test for use with breast and lung cancers.

“We see significant opportunities in both of those areas,” said David Esposito, the CEO of Armune BioScience who moved into the role in February after joining the company in April 2014 as chief operating officer.

“We’re just focusing right now on growing the business and getting a little more capital to fuel the growth, and hopefully we’ll have some large growth,” Esposito said.

Formed in 2008, Armune moved into the marketplace with the mid-April opening of a diagnostic lab in Ann Arbor to test patient blood samples submitted from physicians.

Using technology licensed from the University of Michigan, the Apifiny blood test checks for biomarkers that indicate the presence of prostate cancer in a patient. The test works by detecting the antibodies produced when the body’s immune system recognizes a cancer antigen.

Armune initially worked with the Michigan Institute of Urology, a large urology medical group in the Detroit area, for a pilot project to test market Apifiny. About 20 physicians with the urology group now use Apifiny to check their patients for prostate cancer. Blood samples taken from patients are sent overnight to Armune’s lab via a pre-paid Federal Express mailer.

About 50 physicians in 10 states now use Apifiny and the Armune lab. As of mid-July, the facility had performed about 500 tests since opening and exceeded projected volume as the company ramps up commercialization of the product.

“We’ve seen a broad uptick in the marketplace,” Esposito said. “We are far above our volume expectations with regard to the technology. It seems to be very well received.”

Armune projects “pretty rapid” growth in the next year and a half, Esposito said. Executives expect that the diagnostic lab will perform 1,000 tests per month by the end of 2015.

“We definitely see 10,000 tests a month within the next 18 months,” Esposito said.

The company projects to exceed $10 million in annualized sales within 18 months of its launch.

The growth comes from Apifiny offering an alternative to a PSA blood test. The PSA test “creates a fair amount of false positives and false alarms … in assessing prostate cancer risks over the years,” Esposito said.

“What we’ve seen is that physicians are clamoring for additional biological information to better assess prostate cancer risk,” he said.

BUILDING ON PAST SUCCESSES

Armune BioScience’s progress toward accessing the marketplace represents one of the latest success stories emanating from the life sciences cluster in Kalamazoo.

Another is Ablative Solutions Inc., a startup company developing a method to treat severe hypertension in patients who are resistant to medication. The process works by deactivating nerves surrounding the renal artery. Ablative Solutions in May received the CE Certificate of Conformity in Europe indicating that its device conforms to European requirements. That allows Ablative Solutions to apply for approval to use its Peregrine System Infusion Catheter in Europe.

Jon Hoem, European president for Ablative Solutions, called receipt of the certificate “a major milestone” for the company.

Ablative Solutions planned to enroll patients in the European program to confirm the safety and the benefits of the Peregrine device. The company, which has been backed by venture capital, also plans to conduct a randomized clinical trial in the U.S.

Upstart companies such as Armune and Ablative represent the growing life science industry in the Kalamazoo-area, but a proposal to have the Homer Stryker M.D. School of Medicine acquire the assets of the Southwest Michigan Innovation Center has the potential to create a pipeline for technology transfer from the school into the private sector. Officials also hope the move will help build additional startups locally.

Bob Miller, associate vice president for community outreach at Western Michigan University, said the school’s specialty as a research institution isn’t in inventing things but rather in supporting research and transferring innovations.

“We figure out a way that it can be put into the private sector environment where it can become functional,” Miller said. “I think there is the opportunity for additional tech transfer, disclosures and patent filings. A little bit of this is still unknown, but having said that, (stakeholders) have already talked about how to collaborate before the concept of the Innovation Center becoming part of the med school was even contemplated.”

DESTINATION: IPO?

At Armune BioScience, a recent study conducted with Michigan Urology Institute affirmed that a blood sample taken with a finger stick on a patient generates results similar to venous blood draws done by a phlebotomist. The finding removes one potential hindrance to urologists and primary care doctors drawing blood in their office.

“It’s just another level of convenience that we’re providing,” Esposito said.

Armune started out by raising close to $7 million in the first couple of years through grants and convertible notes.

In seeking additional capital, Armune looks to raise the final $200,000 of the $2.5 million Series A round from investors this summer, then move into the $20 million Series B round “relatively soon” afterward, Esposito said. The company is “making the rounds somewhat already” to prospective investors, and Esposito is optimistic it can raise the Series B capital.

To that end, Eli Thomssen, Armune’s chief business officer, cites last month’s closing of an initial public offering by ProNAI Therapeutics Inc. that netted $158.4 million.

“That generates a tremendous amount of interest” in the industry, Thomssen said.

ProNAI, which develops oncology drugs, was formerly based in Kalamazoo and Plymouth. The company in June moved its corporate office to Vancouver, Canada.

Pursuing an IPO is also a potential long-term future option for Armune, Esposito said.

“It’s certainly in the cards,” he said. “A few years down the road, given the growth we expect, an IPO is certainly a potential.”

So, too, is a partnership or sale involving a large player in the medical diagnostics industry.  Success of the Apifiny test ultimately will open the company’s future opportunities, Esposito said.

Interest in the test could come from the significant cost implications for health care. Armune sells the test to physicians for $500 to $600, far cheaper than the $2,100 to $2,500 for a biopsy in men suspected of having prostate cancer.

“If we’re growing as well as we think we can, there will probably be a lot of options for that,” he said. “There’s a lot of interest with the large strategic players and diagnostic players in the world in a technology like ours.”

Staff Writer Nick Manes contributed to this story.

Read 3107 times Last modified on Sunday, 09 August 2015 09:38
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