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ChroMedX CEO Wayne Maddever talks to Cantech Letter

ChroMedX
ChroMedX
ChroMedX CEO Wayne Maddever: “Although we are a grassroots Company, the core of our technology allows for a very aggressive development process. I see this not so much as a medical development project but as an engineering integration project because all of the core technologies are well defined in other fields and applications. “

The razor/razor blade model has been successful across numerous business verticals and for many well-known companies, not the least of which is Gillette, for whom it is named. The basic premise is that much of the intellectual product is in the “software” part of the business, and that customers are more likely to try and continue to use a product that they can get their hands on cheaply.

ChroMedX (ChroMedX Stock Quote, Chart, News: CSE:CHX), a recently listed life sciences company, features deep industry experience and a business model that is easy to understand.

The company’s HemoPalm is a blood analysis system consisting of a handheld analyzer and a suite of disposable single use cartridges. It uses a combination of spectroscopy (light analysis) and electrochemical measurements and replaces the traditional method of blood sampling, which involves taking an arterial sample taken with a syringe. This simple but effective innovation means blood analysis can be taken outside the lab, performed by first responders and used safely and swiftly in disaster relief situations and in places where a clinical setting simply isn’t an option.

The company believes HemoPalm could be generating revenue by the end of 2015, as the regulatory barriers for the Class 2 medical device could be cleared swiftly. Cantech Letter talked to ChroMedX CEO Wayne Maddever about the company’s plans.

Wayne, can you tell us how ChroMedX got started?

ChroMedX was the brain child of Dr. James Samsoondar, our Chief Science Officer. Based on experience with other POCT companies and as a clinical biochemist at a major hospital, Dr. Samsoondar recognized the need for applications served by our technologies. James’ specialty is practical innovation and his background in mechanical design has enabled him to formulate these ideas in an exceptional manner. James has had success developing and commercializing his technologies as an individual consultant and recognized the opportunity a larger team and access to the public market could provide. James and the Board of Directors brought me in to manage the build out and commercialization process of the technologies on a broader scale. We listed ChroMedX in early July but due to regulatory issues were not able to change the name of the public entity until last week and we are looking forward to taking full advantage of the added value public distribution can provide.

What is HemoPalm and what gap in the market does it fill?

The HemoPalm is a blood analysis system consisting of a handheld analyser and a suite of disposable single use cartridges. It replaces the blood analysis currently done in central laboratories with bench top units because the HemoPalm uses a combination of spectroscopy (light analysis) and electrochemical measurements, similar to bench top units, to provide a complete assessment of blood oxygenation and acid-base status. In addition the blood sample collection may optionally be taken from a finger prick, as an alternative to an arterial sample taken with a syringe, which makes the technology applicable in the markets outside of a clinical setting. This opens the field of use greatly to include first responders, military, emerging economies and disaster relief. These are all areas where central labs are simply not available. In the hospital setting it allows rapid patient analysis in situations like emergency department triage. Other important applications are long term care facilities, nursing homes and home respiratory therapy. In all cases the HemoPalm allows detailed analysis to be collected by regular caregivers and forwarded to physicians without the need for hospital visits by patients.

hemopalm2

Why is the measurement technique used by the HemoPalm superior to the methods used by competitive devices like the i-Stat from Abbott?

As I mentioned before, the HemoPalm uses a combination of spectroscopy and electrochemical measurements to provide a complete assessment of blood oxygenation and acid-base status. The i-Stat uses only electrochemical measurements which in certain medical conditions can produce analytical errors. It is important to note that spectroscopic measurements are the gold standard for blood hemoglobin analysis, known as CO-oximetry and are used by virtually all bench top units in central laboratories. The HemoPalm will be the only handheld device capable of providing full CO-oximetry as well as blood gases and electrolytes— all critical blood measurements.

I have seen the oxygen measuring devices that are put on a finger. Why is the HemoPalm better?

These are pulse oximeters which only measure the hemoglobin oxygen saturation, with the assumption that no abnormal hemoglobin species like Carboxy-Hb exists in the patient’s blood. For example, in cases like carbon monoxide poisoning, in which the carbon monoxide is replacing oxygen in the hemoglobin, there can be significant errors in the measurement of the patient’s condition. In addition the HemoPalm will measure blood gases (pH, PO2, PCO2) as well as electrolytes (Sodium, potassium, chloride) giving a full analysis compared to the pulse oximeter which only measures hemoglobin oxygen saturation, with potential for errors as I mentioned.

Another technology ChroMedX owns is Automated Ultra Filtration. Can you tell us a bit about that and how it relates to HemoPalm?

The main relationship to the HemoPalm is that both came from the creative mind of James Samsoondar. The device relates to an entirely different field of In Vitro Diagnostics (IVD) and that is the analysis of the non-protein bound (referred to as “free”) hormones and therapeutic drugs in the blood stream, usually by testing systems known as immunoassays.

What does the AUF provide to the medical community? Why is it needed?

In the blood stream, specifically in the plasma, there are proteins. Hormones and therapeutic drugs tend to bind to these proteins and therefore become inactive. Only the “free” hormones and therapeutic drugs are biologically active. A good example, in the case of males, is the measurement of free and total testosterone. The immunoanalyser cannot determine the difference so the current practice is to centrifuge the sample for 30-60 minutes, a manual operation, to remove the proteins and then the liquid that is left contains only the free hormones or therapeutic drugs. The AUF will use membrane ultrafiltration technology, to effectively remove proteins in a matter of minutes as part of an automated sample preparation system which will be integrated into the immunoanalyzer robotics.

Is your business model a razor/razor blade model? If so, what are the margins on the hardware and “software” components of it?

We are absolutely razor/razorblade. The HemoPalm technology consists of a handheld analyser and single use disposable cartridges. The analyzer should sell between $8 and $15k per device but the important revenue generation is the single use disposable cartridges used per patient sample which should sell in the $20 range. Typically in the medical industry we would expect margins in excess of 50% and comparable companies in the space are producing hundreds of thousands of cartridges a day to service the industry.

Will you be looking to introduce other technologies or more intellectual property to the company in the near future?

As we advance the development process for the HemoPalm Technology we continue to develop other cartridges for additional POCT tests. The next cartridge in the development queue right now will include lactate, which is an indicator for sepsis or blood poisoning. We will also pursue other potential opportunities that are in the IVD – POCT space and complement our existing catalogue. Some of these technologies will come from James Samsoondar but we are also open to other early stage medical technologies ready for commercialisation. In addition to new technologies, we are constantly looking at ways to improve our existing technologies, and we will protect these improvements by filing new patent applications. These new patent applications will effectively extend the life of existing patents, and provide opportunities for international patent protection.

When do you think ChroMedX will be profitable?

Our expectation is that we can bring the HemoPalm technology to market in approximately 18 months, meaning we could be generating revenue by the end of 2015. We have maintained overheads at an exceptionally low level and believe that this should translate into profitability by mid-2016 if not earlier.

What milestones should investors look for over the next 12-18 months?

Although we are a grassroots Company, the core of our technology allows for a very aggressive development process. I see this not so much as a medical development project but as an engineering integration project because all of the core technologies are well defined in other fields and applications. We expect to have a working prototype of HemoPalm cartridges by the end Q1 2015, and HemoPalm prototype, clinical testing and approvals within the next 18 months. The HemoPalm is a class 2 medical device and therefore only requires FDA 510(k) approval which is essentially a test of equivalence to existing approved equipment. Unlike drug testing which is lengthy and with numerous pitfalls in the various phases of testing, the 510(k) can be completed in about 6 months. We will also continue to develop new cartridges for the device and seek new opportunities in this and similar fields. We have exclusive options on other technologies that are close to market and we hope to take advantage of these now that we are trading and taking advantage of the increased visibility of the public listing. In the case of the AUF, we expect to complete prototype fabrication and generate preliminary data for presentation to in vitro diagnostic companies and other interested parties.

Disclosure: ChroMedX is an annual sponsor of Cantech Letter. Cantech Letter’s Nick Waddell purchased 100,000 shares of the company’s stock in the open market in September, 2014.

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About The Author /

Nick Waddell
Cantech Letter founder and editor Nick Waddell has lived in five Canadian provinces and is proud of his country's often overlooked contributions to the world of science and technology. Waddell takes a regular shift on the Canadian media circuit, making appearances on CTV, CBC and BNN, and contributing to publications such as Canadian Business and Business Insider.

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