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General
A long, hard road to success

Pacific Edge is a Dunedin cancer diagnostics company chasing a huge global opportunity with its novel gene test for the detection and management of bladder cancer. CEO David Darling spoke to Exporter editor Glenn Baker.

It’s a fact that all companies start with a catalyst. For Pacific Edge it was the death of a young girl from complications caused by cancer and the resolve of her parents to find a better way of detecting cancer tumours earlier. This was the catalyst for a series of discussions with researchers at the University of Otago which, explains Pacific Edge CEO David Darling, became the genesis of the company thanks to the hard work of a number of people including the five founding scientists.
Pacific Edge began life in 2001 and was listed just a year later after a US fund injection into a New Zealand seed fund failed to eventuate and capital was urgently required to move forward. Fourteen years ago the sharemarket was a common way for Australasian biotech companies to raise funds – due to the fact that it required many months, even years, of capital-intensive R&D to produce a commercial product.
Darling, who joined Pacific Edge pretty much from day one, explained to me how professor Parry Guilford, principal investigator at the university’s Cancer Genetics Lab, became the company’s chief scientific officer, and the next three years were spent building a ‘gene expression database’ across five cancers – gastric, bladder, melanoma, colorectal and endometrial (originally based on the hypothesis that developing tumours have different gene expression patterns from normal cells).
You don’t have to be a science nut to be utterly fascinated by the story behind the development of this database and the Cxbladder diagnostic tool eventually born as a result. It is a story of ambition, determination, persistence, as well as sheer brilliance in the laboratory.
But it wasn’t enough that the Dunedin-based research team produced world-leading prototype technology, with the intention of licensing it to blue chip biotech firms around the world for commercialising. Any intentions of just living off royalties were scuppered when those firms suggested Pacific Edge keep going and “come back when you have a commercial product”.
The directors informed their loyal, and patient, shareholders that they would have to fund yet another step up in the value chain.
Funding took place through the public listing process, which regularly requires Pacific Edge to disclose their progress, direction and strategies which, as Darling points out, is risky because it allows potential competitors to keep track of what they are doing
On the subject of competitors, he says there were US ventures starting out the same time as them. However, these “gene jockeys”, as he calls them, were using very different, less robust, gene discovery processes. By exercising tighter controls and consistent processes, Pacific Edge simply stole the edge on their American counterparts. “We were out of the blocks early and able to get a good position in the market by filing these genes and their relationship to the cancers as part of our IP,” recalls Darling.
“IP is not just patents; it’s also the art of how you do what you do,” he continues. “We’ve learnt how to go from discovery phase all the way through to the validation of the prototype; to the building, then validation, of a commercial product; through to clinical testing and the final commercial output taken to market. It’s a long process requiring different skillsets,” says Darling. “And it’s unique for such a small team of people to traverse such a long way when coming off that science discovery base.”
For Darling, the task of bringing the Cxbladder diagnostic test to export markets has been a dream job. With a science, biotech and business background, he came to Pacific Edge after setting up a large international biotech business for Fletcher Challenge which taught him a lot about international business. It also involved genetics of the tree variety – so, in effect, he went from battling diseases of trees to the war against human disease.

Turning point
As with most product pathways to market there are turning points. Darling recalls one in particular – a positive, and supportive, meeting with Roche Diagnostics in San Francisco which triggered a change in development plans and was a turning point in regard to the type of product Pacific Edge would primarily produce.
“Today the cornerstone of our intellectual property for the bladder cancer product Cxbladder, is this ‘buffer’ or ‘juice’ that we blend with urine samples to help protect its cancer message, RNA,” he explains. (RNA, or Ribonucleic acid, is a ubiquitous family of large biological molecules that perform multiple vital roles in the coding, decoding, regulation and expression of human genes.)
Darling explains the three independent, but related, pieces of IP associated with the Cxbladder technology. That ‘juice’ is number one. The second is an algorithm that combines the information from the gene expression patterns into a single digit output defining the probability that the patient has cancer. The third is the patents that define the five genes that “create the relationship between the disease and the genes”.
Pacific Edge has turned its technology into a franchise, creating all the protocols used to run a commercial laboratory for the technology, and standardising them so they are ‘repeatable and reproducible’. It developed its own prototype commercial lab in Dunedin, with the Cxbladder technology going ‘live’ in 2012. It has also designed, built and commissioned (in July 2012) a second state-of-the-art lab in Pennsylvania, just up road from the country’s largest FedEx hub, covering the entire US with an annual throughout capacity of 260,000 tests per year.
Under a ‘centralised service model’ there are two franchise partner laboratories (Australia and Spain – the country with the highest incidence of bladder cancer in the world). Franchise partners must have a focus on cancer and the capability for commercialising molecular diagnostics for cancer.
A lab is also planned to cover Asia – possibly in Singapore.
The Dunedin and US laboratories have CLIA (Clinical Laboratory Improvement Amendments) accreditation, which for laboratories offering this sort of technology is the equivalent to FDA-approval for a pharmaceutical product. “This achievement is a phenomenal outcome for New Zealand,” says Darling. It also means that if one laboratory goes offline for whatever reason, there is a backup available.

Target market
The prospects for the Cxbladder molecular diagnostic technology are exciting – it’s a test system that will quickly find favour with GPs, urologists and healthcare professionals because of its non-invasive nature, quick turnaround, and ability to impact on the length of patient queues. Compared with invasive tests, Cxbladder is an easy to use, cost effective and high accurate, cancer detection technology, encouraging increased patient compliance. DIY urine sample systems (U.S.S) as part of the test can be purchased online for collection of the urine sample at home.. The test and test results must be carried out in conjunction with the patient’s medical professional.
With the prevalence of bladder cancer in today’s society (due largely to the increased amount of toxins people absorb) and the progressive, recurring nature of the disease, it’s not surprising that health officials worldwide are open to new ways of combating its rise. Non- invasive Cxbladder testing also impacts on the overall cost of the monitoring regime associated with bladder cancer – which inevitably involves expensive, and repeated, cystoscopy procedures over many years.
Bladder cancer has the highest total medical costs of any cancer, from detection to death, approaching US$220,000 per patient. Make no mistake, this technology makes a significant difference.
Darling also points out that although their diagnostic technology was developed for bladder cancer, it has surpassed the design expectations and has now been validated for any urothelial carcinomas, right up to the kidney. “To our delight we discovered in our study that the technology also sees 100 percent of the upper urinary tract cancers,” he says, “which further enhances the resource available to urologists.”
Following on from their Cxbladder Detect product, Pacific Edge is now building a suite of bladder cancer tests, with the next one, Cxbladder Triage, planned for launch later this year. “We’re effectively building a one-stop shop for urologists and GPs,” says Darling, “to provide them with an even greater perspective of what’s happening in the bladder.”
It’s evident how big this opportunity is for Pacific Edge. As they have already publicly stated – the target for the US market, the world’s largest and arguably most complex health market, is $100 million in gross revenues by 2019.

Lessons, advice and support
Patience and preparation has been the key to Pacific Edge’s successful US launch. “We had to learn everything about the regulatory, reimbursement and medical environments there,” explains Darling, “And which strategy to deploy on each.”
He says nobody knew anything about CLIA when they started out, and the concept of centralised service laboratories was still being pioneered. He also acknowledges the “tremendous support” they received from NZTE and MBIE on both facilitation and funding. “NZTE is a great group of people and we tend to utilise them as part of our business development team. Understandably if you involve people and prime them with all the correct information, they can be extremely helpful.
“If you want to take on export markets, get involved with these support agencies early on and take the learning,” he advises.
Darling recalls a small $20,000 grant they received early on from NZTE that enabled them to obtain an independent third party evaluation of what their technology would do when it got to market in the US. It proved to be a timely and insightful piece of research that validated their ‘step-change’ technology.
“Twenty thousand doesn’t sound much, but at the time we were a small company, and when you’re living from meal to meal that amount of money is vital,” he says. “That evaluation proved to be a key piece in our development cycle.”

Glenn Baker is editor of Exporter.

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