At A Glance
1975 — MD, University of Tennessee, Memphis
1969-1972 — Accelerated undergraduate program, University of Tennessee, Knoxville and Emory University (Atlanta).
Charlie Barnett gave up 22 years of practicing internal medicine in Knoxville, Tenn., to see if he could create a company around a diagnostic biochip technology licensed from Oak Ridge National Laboratory.
Barnett, a speaker with the wide vowels of the American South evident in his phoneside manner, says he knows the risks, and the rewards, of entrepreneurship, and he is fully engaged in his 2,200 square-foot office and lab in suburban Knoxville, just off of the intersection of I-75 and I-40 in the heart of the Smoky Mountains. But, he says, since his birthday and the discovery day of DNA are only separated by two years — he’s 52 — his mission is somehow preordained.
Today, Barnett’s company, Healthspex, is days away from producing a prototype biochip. The Healthspex biochip is an ultrasensitive integrated optical sensor that detects DNA material via fluorescent probes and a chemistry based on fluorescence resonance energy transfer (FRET). Each probe in the array is labeled with a fluorescent molecule that is in a quenched conformation in the absence of target DNA (it looks like a loop of DNA). If the sample contains a complementary sequence (target DNA), hybridization occurs, causing the probes to become unquenched (unlooped) and emit fluorescent light that is dectectable by the biochip system.
BioArray News recently spoke with Barnett to learn about his plans for this technology.
Why did you leave a well-established medical practice to create a biochip startup?
Medicine is not now what it was when I went into it. It was time for me to do something else. We had started the company about three years before, and it was time to either do it, or get off the pot. So far, it has been an absolute blast. I have learned so much. When I was in med school, we knew that there was DNA in the nucleus, it made RNA and it went out there somewhere and made a protein, and that was pretty much biochemistry 101. The stuff we have learned since then has been phenomenal.
What changed in medicine?
What used to be important was the product, that is, the patient. Now what’s important is the process: Did you document everything? Have you followed all the HIPAA rules? Did you prepare the bill correctly? Just on and on. … The patient is secondary.
How did you get up to speed?
I took an afternoon class, audited at UT-Knoxville. It was medical genetics, with more of a bent to the biochemistry than the actual Mendelian genetics. I started reading trade magazines on the side and started picking it up. I had some elementary knowledge, but no more than a college student because it was so old. What medical education helped me do was to be able read something and say hey, if we can do that over here in E coli, we can do that in the human. Or if E. coli does this, that means it is doing this in the human and we need to look for that to help us diagnose or treat a disease. Making a practical application out of this is what my medical education helped to accomplish.
How did you learn about this technology?
About seven years ago, I read on a clipping service that the price of technicium in this country was going up 40 percent. Technicium is the major radioisotope we use in human diagnostics. It was going to go up because it all comes out of Canada, from a company called Nordion. They were making it by a reactor fission process, and there was a lot of waste and they wanted to dispose of this waste and they wanted to build a new reactor. So, to raise the money, they raised the price of technicium. I said, “You know, we could probably do that here.” So, I called the tech transfer office at Oak Ridge to see if there was room on the reactor to make [it]. They said yes, but not only that, but there is a new process that they had patented to make Technicium. I found an independent fellow in Knoxville with some money and we put together a company to finish that technology. Now, now it’s before the FDA for approval as a radioisotope generator.
After I did that, I knew the folks at [Oak Ridge] tech transfer, and whenever a new technology was either publicly announced or had a patent applied for, which meant it became public, they would let me know, and I would read the patent applications. The patent application for this [biochip] came out and I read it, and thought, ‘God this would be wonderful, it would be so neat.’ I bought the license to it, put together a company and I’m here today. The patent application came out in November of 1997, and we got the technology in 1998, and put the company together about 1999. The patent was 6,197,503 and the second is 6,448,064. We have about five more pending.
How many employees do you have?
Six employees including myself. We have a biochemist, a microbiologist, a mechanical engineer, an electrical engineer that does chip design, and a machinist.
Are you funding this out of pocket?
I don’t have near that much money. I have an angel investor, somebody from out of town — an individual who is retired and wants to remain in the background. We are burning about $80,000 a month.
How does your biochip work?
Our prototype should be finished in about a week. It looks like a big box about half the size of a desktop computer. On the back will be either a USB or serial port to take it out to the result display. On the front, there is a drawer like a CD-ROM cassette, where you place the glass slide that has the hybridization slide. Inside, is the laser and the chip, and the controlling hardware and software. Right now, it looks like something the military would love. When we finally get a commercial model, it will be a little bigger than a laptop and it will be very, very simple. It will have a place to connect 110 power, a USB port, and a tray to receive the slide.
We’re looking for a catchy name. Right now, it’s called the radiant detection system. But I don’t like that. If we had a partner, I’d like for them to do that stuff. I’m not a marketing guru, or anything like that. If they can hit on the hot button, it would be fine with me.
We have an array of 25 photo diodes, each addressable by software, so each will report a quantitative signal. We have two unique properties. You don’t throw away our silicon, you throw away the glass slide with attached probes. The silicon is embedded in the detector and is reusable an infinite number of times. We are using some unique electrical circuitry to develop a photodiode that has extreme sensitivity so that we don’t have to do sample amplification like PCR. We do some sample prep: We heat it, and extract the DNA. The system uses a quenching mechanism that is the intellectual property of Biosearch, out of northern San Francisco. In the unhybridized state, the fluorophore is unable to emit light when you expose it to a laser. The quencher absorbs this light, and emits that energy as heat, so that when you hybridize, when that loop straightens out and meets its DNA mate, there is a physical separation between the quencher and fluorophore, so now the fluorophore can emit its light. That’s what we detect. Affymetrix, Nanogen, they attach their fluorophore reporting group during PCR to the target. Ours is on the probe, which helps us get around some patents.
How many lawyers do you have involved?
We’ve got four lawyer groups, we’re using one lawyer as our intellectual property overseer. The chip itself, that patent was applied for by [a firm] out of Miami. The probe sequences that we are going to patent are done by [a firm] out of Madison, Wisc., that did the stem cell work. The FDA representation is [a firm] out of San Diego. So, we have patent lawyers, and lawyers of lawyers, out the wazoo.
How do you describe yourself now? What is your role?
Exhausted. My main function is to raise the money and pay the bills. My secondary function is to make sure we have a test that is technically sophisticated but user-very-easy, so that we can approach a market and go look for these markets that need a technology.
Do you have the funds to see this to commercialization?
It’s a difficult problem. It turns out that the FDA modified or clarified the rules [Feb. 26, 2003, on http://www.fda.gov/cdrh/oivd/guidance/1205.pdf] and regulations defining a device, the approval process, and application of analyte specific reagents (ASRs). A device and an ASR are not approved but they are registered with the FDA. You can sell the device separate from the reagent, which would be our glass slide, to high-complexity labs. They can put the two devices together to make a home brew test. Home brew tests have an exclusive position with the FDA in that the manufacturer doesn’t have to do clinical studies or provide data supporting that test; the high-complexity lab does. So, we have a device and an ASR that will take three months for approval, and we can have an FDA registered test. We are looking at low-hanging fruit markets, like looking for the cystic fibrosis carrier as a diagnostic. We have enough money to carry this technology that far.
We don’t have enough money to hire a sales force and go out and sell it and support it and maintain it. The best thing would be if we could find a strategic partner that has all that infrastructure in place and give them the device and let them just add it to their sales portfolio and call on high-complexity labs — there are some 6,000 or 8,000 of them in the country. If we don’t do that, we are going to try to find a strategic partner that would like to purchase either the technology or a license to the technology and then they would develop the test appropriate to what they think the market would be, and take it from there. And we would be an innovation company. There are three or more technologies over at Oak Ridge that would be wonderful to get out there.
How has the fund-raising process been?
I take a trip a month, mostly to present to potential investors, or visiting with lawyers, or attending a conference. I went to Boston two years ago to call on one of the more well-off biotechs and I got the usual, “You’re from Tennessee? You have to be stupid. You got shoes on?”
Our reception in the intellectual community is not very warm. We’re from the South; entrepreneurs in North Carolina and Atlanta, they hear the same thing. This is a true story, believe it or not. Someone read our executive summary, and he was interested. It was a VC on Wall Street who called me to talk about it. He said, ‘You are designing the chips in Tennessee? Isn’t that difficult?’ I said, no, we have engineers and physicists from Rensselaer and Purdue, good schools, it’s not a problem, they like living here. He said, ‘that’s not what I meant, doesn’t your power go off at night?’ I’d spell TVA [Tennessee Valley Authority] for him, but it might be too difficult [for him to understand].
Good thing there are angels.
Ann Eskesen helped write the first SBIR legislation and has kept up with it. She has a consulting company in Boston and we hired her for a day to help us get started writing SBIR grant proposals. She said the average price paid in the year 2001 for a startup company using a technology that either came out of a university or a national lab that had grown using SBIR funds was $400 million. That’s what our angel is looking for and that’s what I would love to provide him. That may be crazy, that may be dreaming, but I think we can get there.
What keeps you up at night?
I spend a lot of time worrying about how to make the presentations better. If I call on a potential investor or partner, and I don’t make the sale, then it boils down to it’s my fault. As a doctor, you are captain of the ship, and it’s your fault. The great line in the movie Apollo 13 is failure is not an option. I don’t go there. I may fail and may go broke, and have to wear a sign that says “Will doctor for money.” But, I don’t let my mind go there.