ITHACA, N.Y.—With an aim of pumping up a commercialization pitch for its breakthrough molecular testing platforms Encompass MDx and Encompass Optimum, launching new product development and funding existing business needs, Rheonix Inc. has raised $28.6 million from international and national investors.
With both the Rheonix CARD and Encompass Optimum family of products, Rheonix says it is “well positioned to penetrate key molecular diagnostic market sectors, from reference labs through point of care and everywhere in between.”
The domestic investors for this round of fund-raising included Advantage Capital Partners, Cayuga Venture Fund, Gefinor Capital, Limestone Capital Advisors, Onondaga Venture Capital Fund and Rand Capital Corp.
This new funding, anchored by the international group, adds to the $14 million Rheonix raised in 2013 to complete a manufacturing build out and launch its first commercial product.
“Laboratories across a range of markets, from diagnostics to food and beverage testing, are facing obstacles such as inefficient workflow and a lack of highly trained staff,” according to Greg Galvin, CEO and chairman of Rheonix. “We’re addressing these obstacles with easy-to-use and cost-effective tools capable of high throughput and high complexity in the worldwide sample-to-answer molecular diagnostics market.”
Chris Davis, partner, private equity, Gefinor Capital, states, “This new series of funding recognizes the need that still exists to increase awareness and availability of the Encompass platforms that enable laboratories to build their own assays and greatly simplify the testing process.”
This is crucial, due in part to across-the-board workplace deficiencies, Rheonix stated in a May press release, noting: “Research laboratories in the U.S. and abroad are constrained by a lack of qualified personnel and highly specialized technicians to fill a growing number of professional laboratory positions.” The U.S. Bureau of Labor Statistics reports the number of medical laboratory technologist and technician positions is expected to increase to more than 373,500 by 2020, an increase of 13 percent from 2010. “Many of [those positions] remain unfilled as over half of all laboratories are reporting difficulty hiring laboratory personnel, an issue that is compounded by an aging workforce,” Rheonix notes of the labor data.
The national average age of the laboratory workforce in 2010 was 49.2, compared to 43.6 just four years prior, according to the American Society for Clinical Pathology (ASCP). Additionally, the ASCP reports the number of laboratory training programs decreased by almost 25 percent from 1990 to 2010, while the number of individuals graduating from these programs also declined.
Steve Pemberton, vice president of marketing and sales at Rheonix, says he has already received word that some of the investors are already making wise decisions on this investment deal.
“The proceeds of the sale and issuance of the shares of the Series B Preferred Stock shall be used for funding research and development, sales and marketing, working capital and general corporate purposes,” Pemberton tells DDNews.
The funds will allow Rheonix to “complete product development and regulatory requirements needed to bring the initial in-vitro diagnostic (IVD) offering to market (Encompass MDx & Rheonix STI-Tri Plex Assay); to fund R&D for further assay development in the IVD, applied and NGS sample prep markets; and begin building the commercial infrastructure to start selling Rheonix products,” Pemberton says.
The timing of the fall news release about the raising of funds coincided with the date the Encompass platform and CARD test cartridges were released for sale to customers.
“This will primarily be a capital sale,” according to Pemberton. “In some instances, customers may prefer to lease the Encompass platform, or pay a higher test cartridge price and receive the platform for their use for the contract period.” The current price of the Encompass Optimum is $125,000, he adds.
The options available to laboratories today “focus on either high-multiplex testing, which can detect numerous things, or high throughput, which can test a large number of different samples,” Pemberton notes. “The Encompass platform is the first to focus on both: numerous samples and numerous answers.”
Other platforms are more labor-intensive in order to achieve the same degree of information and throughput that the Encompass Optimum provides, he maintains.
The Encompass Optimum is currently available for research use only, and the EncompassMDx, which is for clinical diagnostic use, is currently in the U.S. Food and Drug Administration approval process.
Rheonix has been developing the Encompass platform over the past several years. The platform was first released in April 2015.
The name Rheonix came from the combining of two companies, Rheology and Kionix, Pemberton said. On Dec. 31, 2008, in Ithaca, N.Y., the two companies joined to develop products that addressed unmet needs of laboratories worldwide.
“This new series of funding reflects the confidence that existing investors have in the Rheonix team and its approach to the molecular diagnostics market,” said Allen “Pete” Grum, president and CEO of Rand Capital. “We are proud to help continue the work the shareholders originally chartered with their initial investments and see the Rheonix vision becoming a market reality.”
Reonix announced on Sept. 15 it was granted patent 9,132,398, “Integrated Microfluidic Device and Methods,” for the Rheonix CARD cartridge, which enables assays to be performed on the company’s EncompassMDx and Encompass Optimum instruments.
The CARD, which stands for “chemistry and reagent device,” will reportedly make molecular diagnostics easier to perform at a fraction of the cost of other options. All assay steps are performed within the fully enclosed cartridge, thus eliminating the potential for contamination, reducing user error and streamlining workflow.