Health care is dying for innovation and IVDiagnostics has no shortage of game–changing ideas to transform medicine and save lives.
"My wife has survived for 22 years with three bouts of cancer, and she is my personal inspiration," says Valparaiso resident and IVDiagnostics CEO Frank Szczepanski.
"If you believe in the current paradigm of using an imaging test to determine if you have a solid tumor, in our opinion, that's too late. Wouldn't you rather find the cancer when it's microscopic?"
IVDiagnostics was formed to develop, test and market more effective diagnostic tools for rare circulating tumor cells (CTC), which find their way to a distant organ to start new cancer growth. CTCs are considered among the major causes for mortality among cancer patients, Szczepanski says.
With this company's technology, doctors will be able to perform a real–time diagnosis of a patient's CTCs without drawing blood.
The company's cofounders are Frank's brother, Tom, of East Chicago, and Wei He, who is a doctor of analytical chemistry and the team's lead scientist. "Our No. 1 goal is to save lives," Frank Szczepanski says.
What's inside
IVDiagnostics is Szczepanski's ninth start–up company. Several years ago, he met Wei He who suggested a tactic of "in vivo," or monitoring blood inside the body. Cells of two to 10 microns can be detected.
About 25 percent of the body's blood can be optically scanned in 30 minutes. The absence of needles is a benefit cancer patients are enthusiastic about, Szczepanski said.
The test, referred to as a liquid biopsy, also is more accurate and sensitive than surgical biopsies. "Once this gets to market there won't be a single doctor who won't want this for a patient," Szczepanski said.
Repeated needle sticks common in intravenous disease treatment causes problems such as hardening of the arteries, bruising and even missed chemotherapy if clinicians can't draw blood on any given day.
The test also doesn't require administering toxic substances into the body such as radioactive materials used in some forms of images. "They have to light you up so they can diagnose and those isotopes stay in the body," he said.
Innovation in medicine
The company also is developing a molecular test for pancreatic cancer, one of the hardest for early detection, which identifies mutations in DNA or deficiencies in certain proteins.
That test could be available in one year and also could be used as a susceptibility test. "Steve Jobs' family should have this test because they are undoubted carrying the mutation," he says. "It's just a matter of who has it. It's scary because mutations can skip generations. If it skips you, good for you, but your children may end up getting it."
Szczepanski says in the future both testing devices will handheld and wireless. "You can imagine the possibilities," he says.
Patients could take the device with them so they could be monitored at home and wouldn't have to wait for routine consultations or follow–up visits.
IVDiagnostics' general target is metastatic cancer such as breast, lung, prostate, melanoma and ovarian. The company is doing live tissue sample testing now and with proper funding the entire portfolio of tests could be available within three years.
Slow burn sustainability
It takes awhile for many young firms to generate cash and survival depends on having an adequate supply of cash on hand to meet expenses.
The company was originally self–funded and in a three–year period received more than $1.5 million in seed capital from two rounds of friends and family funding. It also received $400,000 in federal funding from the National Institutes of Health and the National Cancer Institute.
IVDiagnostics was recently named The Revolutionary Technology Company of the Year by the Indiana Small Business Development Center. "The time it takes to do the research and development before a product can be marketed is hugely important," says Bill Gregory, of the Northwest Indiana SBDC.
"You have to be able to raise all sorts of additional revenue and capital and find skilled people. They've had to do a lot to get where they've gotten. It takes passion, experience, innovation and patience to do work in biomedicine."
In Indiana, fund investments steadily fell from $14.6 million in 2007–08 to just $6.6 million in 2009–10. "That is the legacy of this recession – not one or two missed companies, but a changed capital market," said David Johnson, president and CEO of BioCrossroads, a statewide life sciences organization.
Private venture capital invested in life sciences within Indiana, from 2002–10 was $277 million.
Some of the partners are not taking a salary, but Szczepanski said the company is good at managing its burn rate.
Burn rate refers to the rate at which a company uses up its supply of cash over time and tells investors whether a company is self-sustaining. Companies with high cash burn rates can turn an investment into ashes.
Many other biotechnology firms have a burn rate of about $2 million per year, he said. IVDiagnostics' rate is 25 percent of that or roughly $500,000 annually.
"We have many people on our team that are sacrificing and taking equity instead of cash," said Szczepanski. "But we can do that for only so long."
Looking for angels
The next major round of financing hopes to secure $3 million to $5 million from angel group or venture capitalists to cover the cost of clinical trials and additional research and development.
IVDiagnostics is poised for exponential growth because of the known demand for its testing. A single community hospital has anywhere from 500 to 1,000 new cancer patients yearly and each patient could need monitoring up to five times annually.
Within five years, the company could generate $100 million in revenues. The anticipated cost to patients for the test would be $400 to $800 compared to $5,000 to $8,000 for a CAT scan.
Monitoring patients five times a year with IVDiagnostics technology compared to twice a year for an imaging test would result in annual savings of $12,000 to $15,000 per patient annually.
Worldwide, $300 billion is spent on cancer diagnosis and the United States market alone spends $124 billion. "If we can save half that amount because of better molecular medicine, the savings to the health care industry are huge," Szczepanski says.
Restructuring Indiana's economy
Szczepanski is a leading entrepreneur who has been involved in nine startups in the last 20 years. He looks to the future and considers himself a successful technologist.
"Unless you have the vision, inspiration and perseverance to do something new, you're not an entrepreneur," he said. "Everyone in our company shares a commonality that this is a noble cause."
Indiana's position as a life science leader is clear and has long been thought of as the one of the state's bright economic spots.
It has weathered the recession well but tighter capital markets threaten to starve the risky process of medical innovation. That challenge is predicted to be permanently harder although the industry is still producing jobs.
The Indiana Business Research Center reported life science industry employment grew 2.9 percent between 2001 and 2007 compared to 0.2 percent for total employment and a loss of 1.9 percent for manufacturing.
According to BioCrossroads, total employment in life sciences in Indiana has held steady at around 50,000 jobs since 2007. In 2010, there were 854 establishments generating $4.3 billion in wages. The average Indiana life sciences wage was $86,537 which is more than twice the state's average wage.
The value of Indiana's life science exports totaled $9.0 billion in 2010, up from $5.0 billion in 2006.
Szczepanski sees the life sciences as the changing face of Indiana's economy – from a steelmaker in a hard hat and farmer on a tractor to a scientist in a white lab coat with a microscope.
The most important factors for success is an experienced and educated workforce. The Hoosier state is a major generator of life science graduates, so it has labor pool and an industry that can fight the brain drain of college graduates.
Szczepanski's vision for Northwest Indiana is for the university and medical communities to collaborate and form a center for advanced cancer research to accelerate molecular medicine.
"We're looking at a new form of manufacturing," he says. "The footprint for Northwest Indiana can change its focus on steelmaking and agriculture to nano particle production and biomedical equipment which brings a higher level of jobs. It can be a motivator in our state for a different economic force to switch from raw materials processing to biotech."
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Local biotech company hopes save lives by focusing on microscopic cancer cells
