CombiMatrix this week announced the creation of a subsidiary to increase its presence in the expanding field of molecular diagnostics.
CombiMatrix Molecular Diagnostics, or CMD, will serve as a testing center for clinicians who wish to use CombiMatrix' array technology in molecular diagnostics, the company said. Company officials told BioArray News this week that the new unit enables CombiMatrix to take advantage of US Food and Drug Administration guidelines that allow the use of home-brew microarrays in creating diagnostics. The company also hopes that the subsidiary will provide a short-term revenue boost.
"This way, our products can get FDA approval as well, but we can generate revenue long before they are approved," said CombiMatrix CEO Amit Kumar of the strategy behind CMD.
Kumar told BioArray News that CombiMatrix would initially pay CMD's expenses while seeking independent investors. Kumar said that as more investors came in, CMD would gradually become more independent from its parent company.
"The plan is to take this company and finance this independently," Kumar said. "As that happens, CombiMatrix' ownership position will get diluted."
Kumar will chair CMD's board of directors.
According to Bret Undem, vice president at the Mulkiteo, Wash.-based company, CMD will initially be a five-man operation based out of Irvine, Calif. CMD's role will be to demonstrate the viability of CombiMatrix' products in molecular diagnostics and to act as a highly-specialized lab for clinicians who cannot get similar tests done by other parties. He also said that CMD's creation would give CombiMatrix a jump on competitors who are bringing their microarray technology through the FDA approval process.
According to Undem, CMD's initial focus will be on developing cancer diagnostics, using the company's Desk Top Synthesizer, which allows researchers to build their own chips in the lab.
Undem said that he saw cost as another factor that will help CombiMatrix stake its claim in the molecular diagnostics market, which global consultants like Frost & Sullivan estimate will soon reach approximately $5 billion annually.
Another asset that CombiMatrix hopes will make CMD competitive is its administrative team. The company appointed Matthew Watson as CEO of CMD and David Baunoch as president and chief operating officer. Watson served previously as vice president of laboratory operations and Baunoch as vice president of R&D at US Labs, which was recently acquired by Laboratory Corporation of America.
Undem noted that Watson helped revenues at US Labs increase from $16 million to $73 million over three years during his tenure, and that he guided the company's acquisition by Lab Corp.
Kumar declined to make any financial projections for the new company, and Undem declined to make Baunoch or Watson available for further comment.