Skyline Diagnostics said this week that it has raised €5 million ($7.2 million) in a Series B private equity round.
The round was led by Luxembourg-based Vesalius Biocapital, a new investor, and joined by existing investors Erasmus MC Biomedical Fund and Life Sciences Partners, both of the Netherlands.
The molecular diagnostics company, based in Rotterdam, the Netherlands, said it will use the proceeds to fund additional validation studies of its Affymetrix-manufactured test for acute myeloid leukemia, as well as to flesh out its business-development team as it ramps up for an eventual US launch.
Skyline's first test, called AMLProfiler, allows users to classify patients with acute myeloid leukemia into a number of subtypes by profiling gene expression. It also tests for the presence of particular chromosomal aberrations and gene mutations. The assay has been available for research use since January 2009 (see BAN 12/2/2008).
CEO Henk Viëtor told BioArray News this week that Skyline received a CE Mark for its flagship test, which is called AMLProfiler, on Dec. 31, 2009. While the firm conducted validation studies to register the test with Dutch authorities for clinical use in the European Union, more studies are needed to prepare the test for a submission to the US Food and Drug Administration, he said.
"We are in a pre-market approval FDA process for our first product, so we hope to finish that study successfully so we can be active in the US market," Viëtor said. According to Viëtor, Skyline plans to commence the study in March at three centers in Europe and one in the US. He declined to name the centers.
The validation studies are expected to take about a year, and Skyline "has priority with the FDA," Viëtor said. If the results of the trials are positive, the firm anticipates that it can begin offering AMLProfiler to US-based clinicians by the middle of 2011. He added that Skyline may not require further rounds of financing. "We anticipate that this will enable us to become cash-flow-positive within three years," he said.
While the planned validation studies are "primarily for FDA registration," Viëtor said that the studies will also allow Skyline to work with "four of the most respected groups that are involved in AML research," so it could also serve as a route to marketing the test, which the company intends to offer both as a kit for labs with an Affy GeneChip Scanner 3000, as well as a service via its lab in Rotterdam.
"We don't expect significant revenues from this exercise, but we want to keep in contact with our customers, to see how the test performs, so that we can anticipate problems that exist so we keep close to the product we are developing," Viëtor said. "Our business model is to sell it as a kit.
"This is our first product but we are already working on new developments for an AMLProfiler version two and we need to stay in close contact with customers to know their needs and demands," he said. "You could call it post-market surveillance."
To sell both the kits and the service, Skyline needs to set up a sales and marketing team. "Obviously, until now, we have been pretty much in the development phase," Viëtor said.
He said the firm hopes to grow its business-development and sales and marketing teams to support AMLProfiler and the eventual launch of several other assays, including those for multiple myeloma, acute lymphatic leukemia, and brain tumors.
Outside of Europe, the "most logical approach" for Skyline will be to partner with companies to provide marketing and distribution for its tests. "I don't think we'll have an independent sales force," Viëtor said. "I think we'll have people that aid the sales teams of our partners, but not an independent sales force in the US."
While Skyline hopes its tests will make it cash-flow positive within a few years, Viëtor admitted that the market for AMLProfiler is "pretty small." According to the American Cancer Society, a little over 12,000 people were diagnosed with AML in the US last year. Still, Skyline believes that its test will be more readily adapted by clinicians than some other molecular diagnostics for larger disease areas.
"From a market perspective, it's a small opportunity, but the acceptance for these kinds of tests in the hematological fields is high, so one can argue that the potential market for lung cancer is huge, but hematologists are better adopted to advanced molecular testing," Viëtor said.
"The advantage of testing for leukemia is that there are a lot of different markers known that are associated with progression of disease, but that also makes it very complex," he said. "It involves a lot of different approaches such as gene expression and mutation analysis. We have combined all these techniques on one chip."