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IQuity Receives $2.35M in Round of Seed Funding, Set to Launch First RNA-Based Diagnostic Test

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NEW YORK (GenomeWeb) – IQuity announced earlier this week that it had raised $2.35 million in a second round of seed financing from investors, which will be used to fund ongoing costs of the company's CLIA-certified laboratory that opened last year.

It is also set to launch its first diagnostic test, IsolateMS, later this month. The test is an RT-PCR-based assay that utilizes the company's IQIsolate technology, a proprietary suite of algorithms that identifies specific RNA expression patterns in blood that signal the presence of specific diseases, such as multiple sclerosis (MS).

The most recent seed funding follows $2 million in seed funding that the company secured last year, alongside a Phase 1 Small Business Innovation Research (SBIR) grant through the National Institutes of Health to investigate the potential to use long noncoding RNAs to diagnose MS. This past January, the firm received a second SBIR grant through the National Institutes of Health to investigate the use of lncRNAs to distinguish fibromyalgia syndrome from rheumatic diseases.

"We've found that in comparison to the protein coding genes or the mRNAs that we've investigated for a long period of time, the lncRNAs exhibit greater differences than anything we've ever seen before," IQuity CEO Chase Spurlock said. According to Spurlock, mRNAs exhibit a twofold difference in expression patterns, while lncRNAs have exhibited an up to eightfold difference across case and control comparisons. "The greater differences in gene expression allow us to be able to carve out algorithms and computational models that can predict presence or absence of the disease with greater confidences," he added.

In light of this discovery, the Nashville-based molecular diagnostic company decided to refocus its test developments efforts using lncRNAs instead of mRNAs, as they had previously planned. The IsolateMS test, developed based on the lncRNA research, will be the first of three tests that the company plans to launch this year. IsolateGI, a test to distinguish between irritable bowel syndrome and inflammatory bowel diseases — such as Crohn's disease and ulcerative colitis — will be released later this summer. Another as yet unnamed test designed to distinguish fibromyalgia from rheumatic diseases will also launch by the end of the year, according to Spurlock.

The company was drawn into developing tests for autoimmune diseases because of the difficulties clinicians often face in making a diagnosis. In many complex autoimmune diseases, patients can wait anywhere between a few months to a few years to receive a diagnosis. "We feel strongly that we can report a result back within a week of receipt of the patient's specimen," Spurlock said.

"This is considerable improvement," Julia Polk, chief strategy officer and CFO, added.  She also noted that based on the firm's pre-launch marketing efforts, its work with autoimmune disease advocacy groups, and its interactions with clinicians at conferences, there has been a positive response to a test that can give clinicians and patients answers much more quickly. "We've got sales folks in [the] market now working with providers, meeting with providers to educate them," Polk said.

Clinicians will be able to order IsolateMS and the other two tests for their patients through the company's CLIA-certified laboratory, also based in Nashville. The company collects blood samples for the test using BD Biosciences-Qiagen PAXgene Blood RNA tubes and ships these tubes to its Nashville lab, where it performs the gene expression analysis. The company is also in the process of receiving COLA accreditation for the laboratory.

Polk noted that while at launch patients will have to pay out of pocket for the test, the company is looking into reimbursement options for patients, largely focused on commercial insurance companies, since most of the patient base for the test does not qualify for Medicare programs.

Spurlock added that while payors have not yet set a price for IsolateMS, the company is committed to making the test available to as many patients as possible and expects that patients could pay as little as $1,250 through participation in its financial assistance programs.

IQuity has plans in place to market the product directly to care providers across the US. While its headquarters are in Nashville, it has sales representatives in Seattle, Boston, and Chicago, Polk said. The team is currently made up of four individuals spread across the different markets, but IQuity plans to hire five or six more sales representatives in 2017 with plans for continued expansion, she added. "We will expand the sales force dramatically over the course of the next 18 to 24 months."

She also noted that the company is investigating the possibility of marketing its tests in Canada and Europe, and said the firm will provide more information on that by the end of the year or in early 2018.

Additionally, IQuity plans to launch its test to diagnose patients with either irritable bowel syndrome, Crohn's disease, or ulcerative colitis — IsolateGI — during the summer of this year. Towards the end of this year, it also hopes to launch a third test using lncRNA-based technology to differentiate fibromyalgia syndrome from rheumatoid arthritis or lupus.

"We are in the early stages of building out a SaaS platform that will allow users spanning academia and industry to easily analyze large datasets without having to invest in the human capital and time to build this infrastructure," Spurlock said. "We will also launch custom consulting projects for assay development — that could lead to companion diagnostic strategies with pharmaceutical companies as one possibility."

The SaaS platform is based on more than 10 years of research expertise into RNA-based diagnostics that the company has acquired, he added. The plan would be to have individual researchers or research institutions send IQuity their data, and for a fee the company would perform analytical services.

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