DUBLIN, Ireland  Belfast-based diagnostics firm Diagnology Ltd. plans to raise #2.5 million (US$4.1 million) in its third financing round. The company will use the cash to fund a launch campaign in the U.S. for a point-of-care rapid test for herpes simplex virus 2, the causative agent of genital herpes, which affects 45 million Americans. It submitted a test to the FDA under 510(k) rules at the end of October. CEO Peter Keeling said the company hopes to launch the product in the U.S. in the second quarter. ¿It¿s the culmination of three years of work, really, to try to get to this point.¿

Diagnology, originally known as Molecules to Market, also has programs in the areas of allergic asthma and abdominal pain and a longer-term effort in diabetes. (See BioWorld International, Oct. 23, 1996, p. 1.)

It raised an aggregate #2.8 million in its first two financing rounds, both of which were led by London-based 3i through its Edinburgh office. Belfast-based Enterprise Equity, the venture capital arm of the International Fund for Ireland, and Friends Ivory & Sime, of Edinburgh, also participated in the second round, which was completed in March 1998.

Diagnology is applying pharmaceutical marketing practices to the sale of diagnostic products. The physician¿s office constitutes its target market, not central testing labs. The rapid test industry thus far ¿has failed to deliver on its promise,¿ Keeling said, because the companies involved have sold purely on price and on the technical attributes of their respective products. ¿You have a spiral towards commoditization,¿ he said.

Diagnology Employs Two-Punch Plan

Diagnology is adopting a dual strategy for pushing its rapid test for herpes, called the POCkit rapid test for herpes simplex virus 2 (HSV2), into the physician¿s market in the U.S. It is negotiating a marketing agreement with what Keeling termed a ¿small- to medium-sized¿ pharmaceutical company that is active in the sexually transmitted diseases arena. It also plans to establish a direct sales force to target certain territories. It is engaging with opinion leaders in the HSV2 arena in an effort to influence clinical practice in the treatment of genital herpes. ¿This is a disease you can treat, but you cannot diagnose it,¿ Keeling said.

The tests currently used in the laboratory setting, he said, have come under attack from the Atlanta-based Centers for Disease Control and Prevention, among others, because of their poor accuracy. The tests have between 38 percent and 50 percent accuracy rates, he said. Diagnology claims 95 percent accuracy for its product, which is based on the glycoprotein g2 antigen. Keeling declined to reveal the identity of the organization from which Diagnology has licensed the marker, although an HSV2 research group at Washington State University participated in its development, he revealed.

In the abdominal pain area, Diagnology is among the first three companies entering the Japanese market with a point-of-care rapid test for detection of Helicobacter pylori. Japanese health authorities had not acknowledged the link between H. pylori infection and gastrointestinal ulcer, according to Keeling, but this situation is about to change. Diagnology filed its rapid test with Japan¿s drug administration four months ago. The registration process has another five months to run. The company does not plan to enter other markets with its H. pylori test, however, because they are already served, Keeling said.

Diagnology is cooperating with several organizations, including the Atlanta Allergy and Asthma Clinic, in the development of a multimarker diagnostic kit for monitoring and predicting asthma attacks in children. Its diabetes program is based on the measurement of glycated hemoglobin in the blood of diabetics. n

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