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Norwegian MDx Firm DiaGenic Raises $12.1M While Refocusing Business on Neuro Market

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By Ben Butkus

Fledgling Norwegian molecular diagnostic firm DiaGenic, which has developed quantitative real-time PCR-based blood tests for Alzheimer's disease and breast cancer, said today that it has raised NOK 70 million ($12.1 million) in a private placement.

In a statement, the company, which trades publicly on the Oslo Stock Exchange, said that the primary purpose of the fundraising is to "finance operating costs" and "secure the financial strength to achieve key milestones" toward the cash-flow break-even point, which is expected in the second half of 2012.

In an interview today with PCR Insider, DiaGenic Chairman Henrik Lund further detailed the company's plans for the newly raised cash.

According to Lund, DiaGenic has "set a new strategy" and "refocused" its business primarily on its neuroscience-related molecular tests as opposed to its oncology tests.

Lund, who joined DiaGenic earlier this year from a role as global vice president of clinical development at AstraZeneca, said that he "immediately saw the potential" of DiaGenic's testing platform in the neuroscience area as being "much more rich" than in the oncology area.

DiaGenic's tests, called ADTect and BCtect, examine a panel of what it considers to be 96 of the most important genes from a group of several hundred that cover a wide array of biological processes and change in response to the early stages of Alzheimer's or breast cancer. The tests are performed using Life Technologies' Applied Biosystems qPCR microfluidic cards run on an ABI 7900 HT system.

Lund said that DiaGenic "is basically creating a one-to-one companion diagnostic approach toward high-end imaging companies that diagnose Alzheimer's disease through the amyloid detection pathway." DiaGenic will also start targeting its ADTect test at big pharma, "who are trying to seek support for clinical development phases, because they have had some spectacular failures in Phase III [trials]; but are also trying to identify [disease] progression markers," Lund said.

Besides the ADTect test, DiaGenic also has in its pipeline tests for mild cognitive impairment due to Alzheimer's disease; and Parkinson's disease.

DiaGenic has refocused its strategy because the company has been "largely unsuccessful" in commercializing its diagnostic tests on its own, despite early promising data and the fact that both ADTect and BCTect have received the CE Mark for in vitro diagnostics.

At the TATAA Biocenter qPCR symposium in June in Göteborg, Sweden, Anders Lönneborg, DiaGenic's research director, presented results of a recent study of more than 420 patient samples across eight clinical sites in Europe for ADtect; and 550 samples across five clinical sites in the EU and US for BCtect (PCR Insider, 6/3/2010).

Both tests demonstrated 73 percent accuracy in detecting disease from blood samples — a number that the company was at first displeased with, as Lönneborg explained at the time, until it realized that the estimated accuracy of current, slower diagnostic methods for Alzheimer's disease was around 80 percent.

"The company is very early stage, and when you have an R&D platform in diagnostic it is challenging to pave the way to market penetration alone," Lund said.

"This is why the new strategy will benefit from being a little more hand-in-hand with industry players that actually set the scene for how diagnostics and therapeutics will be developed for Alzheimer's," he added. Lund also said that DiaGenic has already had "intense interest" from diagnostic players in the area of Alzheimer's and mild cognitive impairment, though he declined to identify specific potential partners.

The company's recent private placement, then, "will carry us forward to deliver on these milestones … and you will see that DiaGenic will now try to liaise [and] partner in different constructions with these industry players," Lund said.

DnB NOR Markets acted as financial advisor in connection with DiaGenic's equity financing, which included existing and new undisclosed investors. The NOK 70 million placement was subscribed approximately 1.4 times, DiaGenic said.

The company added that the shares allocated in the placement will constitute approximately 67 percent of the outstanding shares in DiaGenic after registration of a capital increase. Following this registration, then total amount of shares in DiaGenic will increase from about 70.2 million to 210.2 million, each with a nominal value of NOK 0.05.

In addition, DiaGenic said that it has decided to propose a subsequent repair offering directed at existing shareholders of the company that did not participate in the private placement. DiaGenic is proposing to issue up to 60 million shares at NOK 0.50 per share as part of this subsequent offering, and will call for an extraordinary general meeting on Oct. 29 to resolve both the private placement and subsequent offering.

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