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Great Basin's Novel, Low-Cost MDx Platform Quickly Taking A Share Of The Infectious Disease Testing Market

GBSN develops, manufactures and markets molecular diagnostic instrumentation and test kits for infectious diseases, with a particular focus in hospital-acquired infections.

Its system uses a unique amplification technology and chip-based detection which afford rapid test turnaround and high sensitivity at a relatively low price point.

These benefits provide what GBSN believes is an attractive value proposition, particularly for its targeted customer base of small- to medium-sized hospitals.

The C. diff test launched in 2012, and its second test in July. Five more tests could launch by 2016.

Customer adoption has been brisk, at the expense of competitors, and we think this results in accelerating revenue growth, particularly going into 2016.

Great Basin Scientific, Inc. (NASDAQ:GBSN), headquartered in Salt Lake City, Utah, develops, manufactures and markets molecular diagnostic instrumentation and test kits for infectious diseases, with a particular focus in hospital-acquired infections. The company's automated molecular diagnostics system uses a unique amplification technology and chip-based detection which afford rapid test turnaround and high sensitivity at a relatively low price point. These benefits provide what GBSN believes is an attractive value proposition, particularly for its targeted customer base of small- to medium-sized hospitals.

Molecular diagnostics (MDx) involves analysis of an individual's specific genetic make-up (i.e., at a molecular level) to determine whether a person is afflicted with or susceptible to a particular illness or condition. While molecular diagnostics has been in existence since the 1970s, it wasn't until the completion of the Human Genome Project in 2003 that interest in this testing platform really began to burgeon.

Molecular diagnostics now makes up approximately 11% of the total worldwide in-vitro diagnostics market, and, per Frost and Sullivan, is expected to grow at about 10% through the year 2018 - about 40% faster than the 7% growth predicted for the entire diagnostics industry. And specific to molecular diagnostics for infectious diseases, which is GBSN's area of focus, Frost & Sullivan notes that this market is growing at better than 15%.

GBSN's Molecular Diagnostics Platform

The GBSN molecular diagnostics platform consists of a benchtop analyzer which incorporates a proprietary amplification method and single-use, self-contained test cartridges. The platform is billed as not only relatively inexpensive, but also user-friendly, requiring minimal touch-points with rapid turnaround time. The on-a-chip detection technology also offers the ability to run both low-plex (i.e., analysis of 1-3 markers) as well as multiplex (analysis of up to 64 markers) tests.

The diagnosis process provides rapid sample-to-results processing, and unlike many competing technologies, typically requires only about three to five sample preparation steps, which take about five minutes to complete. Following receipt of a biological sample, the process involves putting the sample in the disposable cartridge and inserting the cartridge into the analyzer. Results are usually available within 90 minutes (or less) - a significantly shorter time than what is possible with most other molecular diagnostic systems. The system process is automated, with little manual activity involved and no user interpretation of the results required.

Amplification and Detection Methods Provide Sensitivity, Speed and Cost Advantages

Molecular diagnostics requires extensive copying, or target amplification, of DNA to improve sensitivity. To do so, DNA (which is double-stranded) is unwound and the single strands are then annealed (i.e., bound) with DNA primers (i.e., short strands of RNA or DNA that are complementary to the target DNA). DNA targets are "labeled" with certain specific molecules (such as biotin) in order for the primers to correctly identify their corresponding target DNA. The primers then form the basis for a new, identical strand of the DNA target. This process is replicated until billions of copies of the DNA are created.

The most common target DNA amplification method is polymerase chain reaction (PCR), which uses thermal cycling (i.e., alternate cycles of high heat and cooling). High heat is used to unwind the DNA, following which the temperature is lowered for primer annealing, and then the temperature is again cycled higher to allow for synthesis and extension of a new DNA strand. There are certain drawbacks of PCR, including that it requires the use of a large and expensive thermal cycler.

Unlike PCR, helicase-dependent amplification (HDA), does not use high heat, but instead utilizes helicase, an enzyme, to unwind double-stranded DNA. As HDA is accomplished at a constant temperature (i.e., isothermally), it does not require the use of a thermal cycler, and therefore, can be accomplished at lower expense than PCR. However, the drawback with HDA is that it is prone to error if the temperature is too low during primer annealing, which can cause the primer to bind to non-target DNA and result in copies of non-interest DNA and cause loss of diagnostic sensitivity and speed.

In order to avoid this issue, GBSN's technology incorporates bpHDA. The blocked primers block annealing at lower temperatures, thereby avoiding the problem inherent with HDA. As the temperature is increased, the blocked primers become ineffective, allowing for correct hybridization of the DNA primer and affording more stable amplification. Amplification via bpHDA is referred to as "hot start".

GBSN owns three method and method/composition patents related to detection and amplification: Methods of isothermal amplification using blocked primers (8,936,921 issued in January 2015), Systems and methods for point-of-care amplification and detection of polynucleotides (8,637,250 issued in January 2014) and Methods and compositions for amplifying a detectable signal (8,574,833 issued in November 2013). The company also has a non-exclusive license with BioHelix for use of that company's patented isothermal amplification method using HDA, as well as a license agreement with Integrated DNA Technologies (IDT) for the use of blocked primers in combination with HAD.

In addition to target DNA amplification, GBSN's diagnostics platform also incorporates signal amplification through a method called acetate modified polymer enhanced detection, or amPED. amPED connects a bridging molecule between the DNA target label (i.e., biotin) to a molecular structure which contains 80 biotins. This amplifies the signal by up to 80 times, further enhancing sensitivity and speed as compared to target amplification alone.

Single-Use Cartridges

Great Basin's disposable diagnostic cartridges are self-contained, with all the reagents included. Lance and stirring devices on the cartridge puncture reagent blister packs and mix the fluids. All of the processes occur within the cartridge, including specimen cleaning, amplification and detection. A silicon chip on the cartridge has on it up to 64 DNA probes, with each probe producing results for a given DNA target, affording significant multiplexing ability. GBSN notes that the chip can be manufactured for approximately $0.09 each.

Source: Great Basin Inc.

Great Basin designed its analyzer to be manufactured largely with off-the-shelf components to keep costs down and for ease of sourcing and production, without compromising on the performance. While much of the system is fairly basic, with few moving parts and utilizing mostly generic components, the heart of the technology (amplification and detection) is novel.

The processing portion of the analyzer includes reagent flow, thermal control and optical imaging. Actuators control the flow of fluid and engage the lance which punctures the blister packs. Motors move the fluids through channels and into reaction chambers, with optical sensors guiding the fluid's movements. Heaters inside the analyzer modify temperature for the respective processing functions. A digital camera records the results, which are interpreted by computer algorithms and displayed electronically and/or printed.

Source: Great Basin Inc.

Assays: C. Diff and Group B Currently Commercialized, 5 Others Expected to Launch By 1H 2016

An assay for C. diff. was the company's first commercialized test. The test is CE-marked and FDA (510K)- cleared, and was launched in Europe and the U.S. in early and late 2012, respectively. In addition, a test for Group B streptococcus (GBS) received FDA 510(k) clearance in April of this year and launched in the U.S. in July. The GBS test is also CE-Marked for sale in Europe. Under development are two other tests which could launch in the near term - those being tests for Staphylococcus (510k filing expected in 2015) and Shiga toxin producing E. coli (clinical trial commenced Q1 2015). In addition, GBSN is also working on a staphyloccocus aureus pre-surgical nasal screen, a food-borne pathogen panel and a panel to test for candida blood infections, all of which the company hopes to have in clinical trials during the current year.

Ø C. Diff: Clostridium difficile is a spore-forming bacteria often found in soil and also present in about 3% of the human population. Human transmission of C. diff is via the fecal-to-oral route. The bacteria is particularly robust, surviving for extended periods in and outside of the body, and able to withstand many hand cleansers, stomach acids and antibiotics. While gut flora (i.e., "good bacteria") in the stomach and digestive system controls or kills C. diff, use of broad-spectrum antibiotics (for unrelated conditions) can compromise gut flora and result in C. diff-related illness. Typical symptoms include diarrhea, fever, weakness and nausea, among others. In severe cases and instances of relapse, C. diff can be fatal, particularly when there is severe inflammation of the colon.

Incidence of C. diff is on the rise, and currently causes about 3M cases of diarrhea and colitis each year in the U.S., resulting in between 14k and 30k deaths annually. The majority of cases occur in hospitals, with (depending on the source) as many as 30% of hospitalized patients becoming afflicted with the illness.

There are several non-molecular methods to test for C. diff., including stool culture, rapid antigen tests and toxin testing using tissue culture and enzyme immunoassay. However, all of these suffer from drawbacks as compared to molecular C. diff. toxin detection.

  • Stool culture: Tests for the C. diff organism. Has been considered the gold standard, but suffers from high rates of false positives, as it can incorrectly flag non-toxic strains as positives. The test also is time-consuming (2-4 days for results) due to the need to culture the sample, and requires highly trained technicians to perform.
  • Rapid antigen: Tests for C. diff antigen. While results are available almost immediately, the tests suffer from relatively low accuracy.
  • Toxin tissue culture: Tests for C. diff toxin A (TcdB). Time-consuming, with results not available for 1-2 days; requires highly trained staff and has relatively lower accuracy than other methods. Toxin culturing is inherently problematic, as the viability of the C. diff. toxin vitiates fairly rapidly when kept at room temperature.
  • Enzyme immunoassay: Tests for both toxin A and toxin B. Results are typically available within one day, which is advantageous to most other methods, but the sensitivity may be lower than tissue culture.

C. Diff screening moving towards molecular platforms, including GBSN's Portrait

Molecular tests have quickly begun replacing stool culture organism testing and tissue culture toxin testing, which have historically been considered the gold standards in C. diff diagnosis. Molecular tests have shown to have superior sensitivity and specificity to these legacy methods, and can return a result relatively rapidly. In addition, as culturing is not required, degradation of toxins is a non-issue like it is with legacy methods. The main impediment to greater adoption of molecular testing has been cost. However, GBSN, with a business model that provides the analyzer free of charge, addresses much of the cost issue.

And with the advent of the Affordable Care Act, which will penalize hospitals with higher readmission rates, accurate C. diff diagnosis and appropriate treatment should be a high priority for hospital administrators. A recent study by researchers at the Detroit Medical Center found that 30% of patients with C. diff were readmitted to the hospital after 30 days, compared to just 14% of patients discharged for any cause. Authors of the study, which looked at over 51k patient discharges, concluded that, "Reductions in hospital-onset CDI (C. diff infections) and readmission of patients with an index CDI can provide tremendous cost savings to hospitals. This call for better infection control and antibiotic stewardship measures toward CDI management in the hospital and as patients transition to the next level of care."[i]

This follows an unrelated study that showed significantly more efficient treatment, fewer tests ordered and better patient outcomes when a small hospital (GBSN's specific target market) switched from culture-based (enzyme immunoassay) to molecular testing for C. diff.[ii]

Supporting GBSN's FDA submission seeking regulatory clearance for the company's Portrait Toxigenic C. diff assay was a multi-site, 540-stool sample study which compared the assay to culture/cell cytotoxin neutralization assay (considered the gold standard). The samples were also tested by competing molecular diagnostic platforms from Cepheid (NASDAQ:CPHD), Meridian Bioscience (NASDAQ:VIVO) and Becton, Dickinson (NYSE:BDX). Compared to the gold standard, Portrait had a sensitivity and specificity of 98% and 93%, respectively.

Source: Buchanan BW, et al. [iii]

This compared to sensitivities and specificities of 100% / 92% (Ceiphed's Xpert), 93% / 95% (Meridian's Illumigene) and 97% / 99% (Becton's GeneOhm), respectively. Given the on-par performance yet lower cost of Portrait compared to competing molecular diagnostic platforms and inherent advantages of molecular C. diff testing compared to culture-based methods, we think GBSN's technology can be very competitive, particularly with (more budget-conscious) smaller hospitals.

Source: Buchanan BW, et al. [iii]

Ø Group B streptococcus: GBS is a bacteria which colonizes in the vagina, GI tract and respiratory tract. It is present in about 30% of all women, and is usually associated with other illnesses which have compromised the immune system. Pregnant women infected with GBS can transmit it to their child while giving birth, and there is no effective method to prevent this from happening. It is the most common cause of neonatal sepsis, and as a result, routine screening of pregnant women for GBS is done in the U.S. and many countries in Europe.

Testing for GBS involves swabbing the vagina and rectum. The samples are then cultured and analyzed. However, with the advent of molecular testing, this has become an alternative option for GBS screening. The domestic market for GBS screening is represented by the ~4 million annual births in this country.

GBSN received FDA 510(k) clearance in April 2015, and the test is also CE-Marked. The 510(k) application, submitted in November 2014, was supported by results of a 518-sample clinical study collected from multiple hospital laboratories. The test launched in the U.S. in July. GBSN indicated in the press release announcing the launch that the test has already been well received, with two labs already converted to using the test and another 40 sites actively evaluating it. The company also noted that customers are forecasting usage of the GBS test at volumes 50% higher than that of the C. diff test.

Ø Staphylococcus aureus: Staphylococcus aureus (S. aureus) is carried on the skin and in the respiratory tract (commonly the nasal passages). Approximately 20% of the population is estimated to carry the bacteria, which can cause a wide range of ailments - from rather benign, such as pimples, to potentially deadly, such as meningitis and sepsis. Methicillin-resistant staphylococcus aureus, or MRSA, is a particularly difficult strain to combat, as it has become resistant to antibiotics used to treat staph infections. MRSA is typically acquired in hospitals, although it can also spread in a community setting, such as locker rooms where conditions, such as close contact and open wounds, are favorable. Approximately 500k people in the U.S. become infected with S. aureus each year.

Blood culture has been the preferred method of diagnosing S. aureus infections, although molecular diagnosis is making headway here as well, given the relatively long processing time of culturing and other issues, such as risk of contamination. High false positive rates of culturing due to contamination is a widely recognized problem with S. aureus testing, and often results in improper or less effective therapy, higher treatment costs and longer hospital stays.

GBSN's Staphylococcus Identification and Resistance Blood Infection Panel (Staph ID/R) is designed as a multiplex assay capable of identifying and differentiate between seven species of staph infections, including detection of the mecA gene - a marker for antibiotic-resistant strains. Differentiation is important, as it allows more targeted and effective treatment planning, which, in turn, can reduce therapy cost and improve overall patient care. GBSN's panel is expected to...