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Raising $26.9M in Public Offering, Nanosphere Anticipates Growing Dx Portfolio

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Nanosphere has raised $26.9 million in a public offering that it expects will see it through the regulatory approval of its infectious disease test pipeline and support additional commercial development to bring the firm to the break-even point.

After raising the funds last week, Nanosphere's Chief Financial Officer Roger Moody told BioArray News that the financing doesn't change Nanosphere's product development strategy, but that it does "secure [the company's] future."

Moody said the company feels it reached an important "inflection point" with the US Food and Drug Administration's de novo clearance, this June, of its blood culture gram positive test.

"The infectious disease assays we have in development alone, we believe will get us to profitability," he said. "This [money] funds us through the completion of that menu build-out and the commercial ramp-up necessary to get to the break-even level."

In addition to the recently cleared BC-GP assay, Nanosphere offers a respiratory virus panel that has been cleared by the US Food and Drug Administration. Both tests run on its Verigene SP system, a sample-to-result benchtop workstation that uses gold nanoparticle technology to detect nucleic acid and protein targets of interest for a variety of applications.

Three additional infectious disease tests — for gram negative blood cultures, Clostridium difficile, and enteric pathogens in stool samples — are in the works.

Moody said that the June clearance of the gram positive blood culture test was a "significant catalyst" for the firm in that "there is not test in the market today to deal with bloodstream infections that can give the physician a specific answer on what bacteria and pathogen they are dealing with and what that bug might be resistant to in the time our test can do it."

"We give an answer in 2.5 hours whereas today's methods require two to three days."

Researchers from the company and the Medical College of Wisconsin presented data at the Interscience Conference on Antimicrobial Agents and Chemotherapy in Chicago last fall showing that the gram positive blood culture assay showed 98 percent sensitivity in identifying bacterial targets and 100 percent sensitivity and specificity in recognizing antibiotic-resistant bacteria (BAN 10/4/2011).

Moody said the company has seen an increase in customer growth that began in the fourth quarter of last year. These customers have been coming for the respiratory virus test, he said, but Nanosphere believes many of them may be "anticipating the follow-on blood culture test."

"We ended the second quarter with 166 customers [and] most of those have expressed interest in our gram positive test," he said. "We started to see an increase in our customer base starting in the fourth quarter of last year where we rose from single-digit [placements] per quarter to 30 and then 35 in the first quarter, and then another 25 in the second."

In a May 1 conference call discussing the company's first-quarter earnings, Moody said that Nanosphere expects to break even at somewhere around $70 million to $80 million annualized revenue. To achieve that revenue point, he said the firm would need about 400 customers spending $200,000 per year on average.

Nanosphere's three additional infectious disease tests are in various stages of development, but Moody said it plans to submit two of them to the FDA this year.

He said the company anticipates filing an application for approval of its C. difficile test with the FDA later this quarter.

The company's enteric pathogen test is undergoing clinical trials, he said, and Nanosphere plans to submit it for FDA approval near the end of the year.

For a third test — for gram negative blood cultures — the company is taking a slightly different strategy, seeking a CE-IVD mark in Europe first and then planning to file with the FDA next year.

"For the gram negative, we hope to get cleared in Europe first. There is actually more demand for gram negative [testing] in Europe because there are some antibiotics available over there that aren’t available over here," Moody said.

Though Moody said Nanosphere believes its infectious disease pipeline alone will be able to bring the company to profitability, the company is also working toward approval of several tests in the cardiovascular area as well.

He said the company's CYP2C19 test, for Plavix metabolism, is currently under review by the FDA pending 510(k) clearance. "We hope to get that into the market late this year, [but] we still need to respond to the FDA on some additional requests they’ve made," he said.

Nanosphere has two other pharmacogenomic assays that are already FDA cleared — one for genes associated with warfarin metabolism, and the other a hypercoagulation test targeting F5 , F2 , and
MTHFR.

Additionally, Nanosphere is pursuing both diagnostic and monitoring applications for its cardiac Troponin test. The test was initially developed for early detection of cardiac disease, Moody, said. But recent studies by the company suggest it could also be used to monitor progression of chronic heart failure.

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