Lung cancer diagnostic company Integrated Diagnostics launched its first product last fall, and now it has plenty of cash to go out and sell it. The firm, which grew out of Seattle’s Institute for Systems Biology and the California Institute of Technology, said Tuesday it has raised $47 million in equity and debt.
The cash influx, $30.25 million of which is the company’s Series B equity round, would be a sizable second financing for any biotech. For a diagnostics firm, it’s a windfall. But Indi, as it is known, has both a pedigree, being cofounded by biotech pioneer Lee Hood, and a fast start: its blood test Xpresys Lung is already approved in 49 states. The test is a negative predictor; that is, when a scan shows that a person has nodules in his or her lungs, the Xpresys blood test will determine if those nodules are benign, but it will not confirm a diagnosis of cancer.
The test is meant to steer patients clear of invasive biopsies and surgeries. When lung nodules are detected through a CT (computed tomography) scan, their size often dictates the next step. Roughly put, if they’re less than 8 millimeters in diameter, they’re considered likely benign, and the patient comes back in two years. (That part of the protocol is called “watchful waiting.”) If they’re larger than 30 millimeters, the assumption is malignancy. The sizes between, however, which account for 20 percent of all new nodule discoveries in the U.S. per year, are a tough call, and that’s what Xpresys Lung aims to measure.
Indi officials believe that 70 to 80 percent are benign, based on their own clinical studies, but invasive biopsies are often ordered, with an average extra cost in diagnoses of more than $30,000 per patient. Indi argues its test, which measures a blood sample for the levels of 11 proteins related to lung and lung tumor tissue, will prevent many of those unnecessary biopsies and, because biopsies are not always reliable, potentially unnecessary surgeries.
Launching a test and getting people to use it, however, are two different things. Indi CEO Al Luderer (pictured, above) says the firm is working to sign its first insurance company and hopes to announce it later this year. If insurers won’t cover the test, patients aren’t likely to pony up Indi’s asking price of $4,250, although Luderer says the company has payment assistance programs and is willing to take on much of the costs until insurers get on board.
Xpresys Lung is part of a vision espoused by Hood (an Xconomist) and others that clinicians will one day be able to track cancer’s progress through blood samples, in what Luderer calls a “liquid biopsy.” “Proteins are [the product of] the ultimate selective process in the body,” he says. “If a protein’s in the plasma, it’s important.”
In other words, the translation of genetic information into a protein goes through countless checks and balances. The proteins that end up circulating in the blood are either important to the body or have cleverly evaded the checkpoints. In either case, they are “information-rich,” as Luderer puts it.
They’re also deeply complicated to measure, as their structures are under constant modification, can vary from person to person, and don’t have one-to-one correspondence with genes. To filter out some of this proteomic noise, the Indi test uses five keystone proteins related to lung and lung tumor functions, then six more to normalize the results and account for variability across people and tests.
Luderer declined to say which proteins were part of the test; it’s a trade secret at this point, and Indi has filed patents on their use. The company has also filed patents on more than 50 other proteins that were also found to have some relation to lung cancer malignancy but were not included in the test. “Some work better than others when combined together,” said Luderer. “All have relevance and our IP strategy was to insure that all relevant proteins were protected.”
The $30.25 million equity portion of the new financing round was led by Baird Capital and includes existing investors InterWest Partners and the British Wellcome Trust. It brings Indi’s venture total to at least $60 million; it closed a $30 million Series A round in 2012.
Indi added $17 million in debt from Life Sciences Alternative Funding, a New York group affiliated with the investment bank Perella Weinberg. Convincing insurers to cover Xpresys Lung isn’t the only task on Indi’s agenda. The firm has tests related to traumatic brain injury and multiple sclerosis in the pipeline, and CEO Luderer, who talked to Xconomy about a future IPO back in 2012, says the business plan remains aggressive about going public. “We were built to go on two financings and get to profitability by late .”
Luderer is also CEO of a spinout, Indi Molecular, which is designing synthetic peptides to replace antibodies as the reagents of choice in certain diagnostic applications. The spinout raised a seed round late last year.