Global Medical Technology Group Strengthened with Acquisition of Diagnostics Company DIAsource [Interview][Transcript]

Dr_Geoff_Cumming_Anteo_DiagnosticsGuest: Dr Geoff Cumming
Presenter: Wayne Bucklar
Guest Bio: Dr Geoff Cumming has over 20 years of experience in the healthcare and biotechnology industries. Dr Cumming has previously served as Managing Director of Roche Diagnostic Systems – Oceania Regional Centre, where he transformed a loss making business to one achieving over 30% compound annual growth and the highest profitability levels in Roche’s global organisation. Geoff was also Managing Director and CEO of Biosceptre International Ltd commercialising a range of products in cancer diagnosis and treatment. Geoff holds a Ph.D. in Biochemistry from Monash University and an MBA from Macquarie University – Graduate School of Business.

Segment overview: In today’s Health Supplier Segment, know more about the great array of products developed by Anteo Diagnostics as we welcome their Managing Director and CEO Dr Geoff Cumming. The Anteo group owns a patented nanoglue technology, which is used by healthcare customers as an addition to their existing tests, to consistently enable laboratory test results that can either be delivered faster, cheaper, or with greater specificity or sensitivity than incumbent tests. In addition, Anteo has just completed its transformational acquisition of the Belgian diagnostics company DIAsource. With a distribution reach into 75 countries across the world, the acquisition of DIAsource will deliver a range of significant benefits to both companies and Anteo shareholders which include strong revenue, revenue growth and EBITDA margin; an experienced and globally-networked team; a broad suite of existing products; a strategic location; and additional differentiators.

Transcription

Health Professional Radio – Anteo Diagnostics

Wayne Bucklar: You’re listening to Health Professional Radio. My name is Wayne Bucklar and my guest today is Geoff Cumming. Geoff is the CEO of Anteo Technologies and joins me from Australia. Geoff welcome to Health Professional Radio.

Geoff Cumming: Wayne, it’s a pleasure to be here.

W: Now Geoff I have to say Anteo Technologies is not a name that immediately tells me what it is you do. Can you fill me in on what it is that you do?

G: Yes. Well Anteo Technologies is a subsidiary company, of an ASX listed company called “Anteo Diagnostics Limited.” Anteo Diagnostics Limited has a technology that is basically a “nanoglue,” a glue that operates on the nanoscale. The inventor of technology is still with the company, a fellow by the name of Joe Maeji and the company was founded early in the 2000’s. Initially the technology is being used in a healthcare environment, and specifically in pathology, pop pathology tests and even more specifically “immunoassays.” Generally with immunoassays you try and bind an antibody to a solid surface. People have been doing this for decades now, but conventionally it’s either passive binding process is used or covalent binding process – we use coordination chemistry and as a result, we tend to be a little more gentle on the antibodies. So conventionally, using covalent chemistry for instance, you might get 1 out of 5 antibodies that remains functional when bound to a solid surface in the creation of an immunoassay, with our process, 5 out of 5 remain functional.

W: So your nanoglue increases the effectiveness of the analysis process, is that the bottom line with it?

G: That’s the bottom line. Because we’ve got 5 out of 5 antibodies versus 1 out of 5 functional, what happens is that we can either increase the sensitivity of the immunoassay if there is a clinical need for the sensitivity to be increased. Most of the immunoassays that are available on the market at the moment have got all the clinical sensitivity that’s needed. If that’s the case, we can produce an immunoassay that has the same level of sensitivity as the existing tests using as much as 90%, 9 0 percent of these antibodies. So it’s either a better test or a less expensive test. But perhaps more importantly, there is a trend in the industry towards “miniaturization” and conventionally in the Australian context, you’d have Sonic or other large pathology labs doing the immunoassays and they’ve got large bench top or even standalone analyzers that crunches through thousands, perhaps even 100’s of thousands of test per day.

W: Yes.

G: There’s an increasing trend towards miniaturization, so that in ambulance or in emergency departments or bed side, doctor’s office or even at home you can perform these immunoassays. With increasing miniaturization it becomes increasingly important for each and every one of those binding interactions to be effective. And so we find ourselves ideally suited for that trend towards miniaturization, because all of our antibodies retain their functionality where that generally is not the case with either passive or covalent coupling.

W: Geoff it sounds like a technology that I should have heard of as an Australian product and I confess, I haven’t. But thank you for sharing that with us because it is an explanation that makes perfect sense. I’ve read your website and read some of the technical specs, and “nanoglue” is exactly the description I needed for my non-clinical head.

G: Very good. Well because it is a nanoglue, the background of virtually everybody within the company is healthcare. So our first foray, commercial foray, has been into the healthcare space specifically the immunoassays. But there are broader applications for that technology within healthcare such as bioseparation where you’re trying to separate let’s say antibodies from plasma or blood to purify antibody. Or even in medical devices where you want to bind things to one another and it’s not always easy. What we say is that we can give you the surface that you want with the surface that you have. So we have an almost infinite ability to transform hydrophobic surfaces into hydrophilic surfaces, well hydrophilic surfaces into hydrophobic surfaces and everything in between. So that means that depending on what the need is for immunoassays or bioseparations or medical devices – we can provide what’s best suited to the particular application. But again because of the nanoglue and the need for glues as ubiquitous, we’ve got the capabilities outside of healthcare as well and in fact earlier this year we filed a patent that applies our technology to the field of batteries.

W: I see. So it’s moving beyond healthcare.

G: It has that capability and it will indeed in the future, although I have to say that our key focus for the moment remains in healthcare.

W: Now Geoff I noticed in the media recently you’ve been making some announcements about an acquisition, can you share any of that with us?

G: Yes, in August we announced, because we are a publicly enlisted company we need to adhere to continuous disclosure, that it was our intention to purchase Belgian based in-vitro diagnostic company. So that is a Belgian based company that makes pathology tests that they will sell to pathology companies. So in the Australian context the company that we’re looking to buy, DIAsource, would sell to the likes of Sonic. When your blood goes to Sonic, Sonic will buy a range of tests to perform on your blood, and those tests could come from Roche or Abbot or Bateman or indeed DIAsource being the company that we’re looking to acquire. The logic of the acquisition from our perspective is that we have an enabling technology that allows DIAsource to produce more sensitive tests or produce tests that cost less. So that’s the logic for the deal. Yesterday we announced to the market how we intended to fund that, and the acquisition let’s say €15.4 million acquisition in the first instance and we’ve announced that we have signed a term sheet with a company that will provide a €10 million convertible note and yesterday we announced that we would open an entitlement issue or rights issue for shareholders to raise up to $12 Million. So from the notion of both debt and equity, we’ll raise the capital that will allow us to complete the acquisition of DIAsource. We expect that the rights issue will close on Monday 21st of December (extended from 16th of December) and we would hope that the acquisition is completed before the end of this calendar year.

W: It sounds like a perfect match almost between the Mix & Go technology that you have and a provider like DIAsource who’s providing those diagnostic tools.

G: Well that’s why we entered into this in the first instance. But as we’ve immersed ourselves further into the due diligence, we’ve found that there are a variety of other benefits to both parties in fact that make it even more sensible. So for instance, our technology can allow for better or less expensive immunoassays to be produced.

W: Yes.

G: But we’ve been looking around the world to find people that would do very specific manufacturing on our behalf. And DIAsource is operating at about 60% capacity in its manufacturing plant and they will be able to uptake that manufacturing on our behalf. In addition, they’re growing very rapidly in the Asian region and we’re well placed to support their efforts in that region just because of our geography. Similarly many of our most advanced projects are on foot in Europe and for us to have a foothold in Europe, will certainly improve outcomes from our perspective. So there are a variety of additional things that I guess we hadn’t anticipated when we first indicated our interest in DIAsource.

W: Now Geoff, a lot of our listeners in fact about 95% of them are clinicians of one kind or another, mainly in acute settings in hospitals or in aged care and if you imagine them standing around the nurse’s station at the end of shift writing up notes and charts and having a listen to the radio as they’re doing it, what’s the take away message for them today?

G: Well I guess what we have is an ability to develop or assist in the develop more sensitive immunoassays for many of those clinicians that are your listeners, they’d be familiar with troponin for instance and the desire to have a more sensitive troponin test for the early detection of heart attack – well our technology allows that and we believe and we’re dealing with many of these large players in the market now, with the view to improving outcomes with the likes of our troponin, now I used that as an example. There are many other assays that could benefit from greater sensitivity. There are many very, what might be considered to be important biomarkers that are perhaps fragile, the antibodies don’t lend themselves to inclusion in immunoassay. Given this general ability binding that we have, we have the potential to develop assays using some of these more fragile biomarkers. So the message for your listeners is that we have an ability to produce very sensitive tests and perhaps in addition, the cost could be reduced as a result of the inclusion of as much as 90% less antibody. And I guess from your users’ perspective, they would want to know what the tests are – there’s no issue in relation to stability or any the other performance issues. And of course that is not a concern because before any of these are tested in the market, they need to go through the normal regulatory process. So whilst it’s a different process, it must – before it hits the market – be demonstrated to be stable and if you like the equivalent or better of anything that’s on the market at the moment.

W: Yes. And I didn’t ask the question about whether you’ve been through this certification process. I just made the assumption that you had.

G: No, in fact it won’t be us that does it. It will be the manufacturers of the tests that will be responsible for those regulatory approvals. However if we are incorporating Mix & Go which is the name of the glue into tests that are manufactured by DIAsource, we would be going through those regulatory processes in our own right.

W: Now Geoff my favorite question in every interview is about misconceptions. And in everyone’s life and in every aspect of work that we do, there are misconceptions. Amongst in your case I guess scientists, and clients, and customers, and maybe even patients – what’s the biggest misconception about Anteo that drives you nuts and keeps you awake at night?

G: I guess there are two. When we first started out, we’d send out our glue to people that were developing immunoassays and it would often work and often work very well, but sometimes it wouldn’t. And generally the reasons for that failure was that the people who were doing the development didn’t follow our instructions. As a result of that we’ve now started to produce kits and through selling kits, we find that we’re more routinely get the outcomes that we’re looking for. So number 1 is “follow the instructions” and finding new and better ways to get people to follow the instructions that would be one of that things keeps me awake at night. And in addition, because it is a different approach to binding as I said, the most conventional approaches would be either passive binding or covalent, there is a concern that there might not be the same level of stability as with using coordination chemistry as it exists with covalent. And I guess we’ve shown many times that it is an extremely stable approach to binding. And in fact because of the ability, it’s a bit like Velcro. Any one of the bones that is very weak that may break, and they reform, and when you sit in a comfortable chair it molds around the folds and curves of your backside well that’s a bit the way our glue binds to antibodies. Now antibodies are fragile biomolecules that can be damaged very easily. This new binding process actually lends itself well but because it’s new and of course because potentially lives are at stake, there’s a degree of caution and reluctance to adopt the new technology. And so what keeps me awake at night is that trying to find ways, undertake tests to demonstrate to conclusively to any naysayers as be their needs of concern. And I think that those concerns of mind will be addressed as more and more people adopt it and becomes general practice.

W: Well Geoff I can’t help with the first concern you have, reading the manual is something I’m afraid you just never get men to do. You’ll only manage that if you manage to get all women working in the testing environment because men have just for thousands of years not read the instructions. As for the other one, we can probably help a little bit of that. Some of our audience today listening with a little bit of luck will have heard you speak and will be saying “Oh that’s interesting, I’d love to find out more” that leads me nicely to the website. The website is www.anteodx.com that is spelled A N T E O T E C dot com. That’s also available on our website – the transcript if you’ve missed it here, and that’s where you can get in touch with my guest today and find out all about the Mix & Go glue that we’ve been discussing. Now Geoff Cumming, thank you for your time. Geoff is the Managing Director and CEO of Anteo Technologies. I do appreciate your making yourself available today Geoff.

G: Wayne, it’s been a pleasure. And I’ll be happy to field any questions that might be prompted by what I’ve had to say.

W: Thank you very much for that. If you’ve missed the conversation I’ve been having with Geoff Cumming, the good news is there is a transcript on our website at www.hpr.fm. And also links to an audio archives of the interview which is on both YouTube and SoundCloud. You’ve been listening to Health Professional, my name is Wayne Bucklar.