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SQI Receives Licenses to Sell RA Test in Canada; Expects FDA Clearance in 2009

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SQI Diagnostics, a Toronto-based developer of microarray-based tests, last week announced that Health Canada has granted it a license to begin selling an array-based panel for diagnosing and monitoring rheumatoid arthritis in Canada.
 
The license will enable SQI to ramp up plans to sell the array, called the QuantiSpot RA, together with its SQiDworks platform to Canadian reference labs that specialize in RA testing. The firm will continue talking with the US Food and Drug Administration about the product, which it hopes to begin selling in the US sometime next year.
SQI, which submitted the RA assay for 510(k) clearance in October, has met its goal, outlined in December 2007, to file the 510(k) documents in 2008 (see BAN 12/18/2007). 
 
The eventual goal is to win approval from the FDA to sell the test as an in vitro diagnostic to be used in US reference labs, said Andrew Morris, SQI’s chief financial officer, of the Health Canada licenses.
 
In Canada, “We got approval for both the platform and the RA assay,” he told BioArray News last week. “That gives us the ability to market and sell the platform and test in Canada to reference and diagnostic labs.”
 
SQI’s platform consists of its internally developed SQiDworks workstation and QuantiSpot, a 96-well microarray consumable. Workstation users can typically process multiplexed assays to quantify serum concentrations of up to 12 individual biomarkers, or qualitatively detect up to 24 biomarkers per patient, according to the firm.
 
The RA test combines enzyme-linked immunosorbent assays previously available for rheumatoid factors IgG, IgA, and IgM with anti-cyclic citrullinated peptide antibodies into one multiplexed, automated assay that can help diagnose and monitor RA in patients.
 
Morris said that SQI submitted the RA test together with the SQiDworks platform to the FDA on Oct. 29. He said that the company has not yet heard back from the agency, but said it “expects to get some questions that we will be prepared to respond to.”
 
Morris said the agency classified the test as a class II device, which will require special controls, as opposed to a class III device, which must endure a lengthier pre-market approval process. Morris declined to speculate on when the assay could receive clearance for sale in the US, but said that class II devices typically take six months to a year to gain clearance, so barring significant challenges, the test should become available to US customers sometime next year.
 
To support its US regulatory efforts, SQI has partnered with the Cleveland Clinic in Ohio and Mount Sinai Hospital in Toronto to assess how the assay performs on the SQiDworks platform. In September, the company published some results of that evaluation on its website. Morris said that SQI is now looking to publish the outcome of the study in a peer-reviewed journal, and is “also doing some follow-on work in terms of getting a better assay in the RA space.”
 
‘Aggregation Model’
 
In both Canada and the US, SQI will try to reach customers by employing what Morris calls an “aggregation model” in which the company will target reference labs that focus on autoimmune diseases like RA. SQI also aims to profit by adding tests to menu.
 
By comparison, other array-based diagnostic shops, such as Sunnyvale, Calif.-based Pathwork Diagnostics, offer their tests as a service through a Clinical Laboratory Improvement Act-compliant lab, in addition to providing a kitted product.
 
“We don’t have a service business ourselves, so the strategy is to sell it to reference labs,” Morris said. “It’s an aggregation model. We will target labs that focus on autoimmune diseases,” he said. “Within these points they will want to use the equipment for other tests.”
 

“We don’t have a service business ourselves, so the strategy is to sell it to reference labs.”

Morris said that SQI will charge less than $250,000 for the SQiDworks platform. The firm will market its test as an alternative to ELISA-based assays, such as Axis-Shield’s DIASTAT Anti-CCP test, which is sold in Europe and the US, on the basis of its automated format and multiplexing capabilities.
 
Morris estimated that, to start, SQI will target between 12 and 20 reference labs in Canada that specialize in RA testing. To strengthen its sales and marketing efforts, SQI in October named Thomas O’Connor as vice president of sales and marketing. O’Connor previously held senior sales positions at Beckman Coulter and Luminex.
 
O’Connor “is going to be leading the growth in the near term of a small, direct sales force,” Morris said. “Over the next few months he will grow that to an appropriate size, focusing first on Canada and getting things ready to launch in the US.”
 
Morris said that, once the firm creates a sales force capable of selling the RA test in North America, it will add personnel as it adds new tests to its menu and if its existing diagnostics are successful. He did not elaborate.
 
To support these commercialization goals, the publicly traded firm in June raised C$3.66 million ($2.96 million) in a private stock placement managed by Toronto-based Kingsdale Capital Holdings. SQI trades on the Toronto Stock Exchange under the ticker symbol SQD, and is listed in its TSX Ventures index.  
 
Morris said the company used the proceeds from that offering to “complete commercialization of the SQiDworks platform and RA assay.” He said that the company is open to raising additional capital to help support its test-development efforts.
 
“We are currently not in the market looking for money, but if [the market] becomes more positive it is reasonable to expect that we will raise a bit more money,” Morris said. “The use of those funds would be to build out an autoimmune menu.”
 
Last year, Morris told BioArray News that SQI’s pipeline of tests includes autoimmune disorders like Crohn’s disease and lupus; vascular diseases; hepatitis; and sexually transmitted diseases (see BAN 12/18/2007). Morris said last week that the company remains committed to building that menu.
 
“We targeted autoimmune disease because it is a market that exists, is large, is growing, and this fit well with technology of multiplexed array that we have,” Morris said. “We decided that this was the best market to target in terms of utilizing benefit of technology. It is also a lower risk from a regulatory perspective.
 
“In the future we also hope to develop tests in the infectious disease and allergen spaces,” he added.
 
Morris said that in the future SQI “will add content to platform” but will stick with its existing platform. “We don’t expect changes to [the] platform itself; we hope to just add additional content so that customer can better utilize from the system,” he said.

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