01/18/2007– [Orange County Register] Diabetes Test Adds To 'Arsenal'; Irvine Company's Once-A-Month Device Appeals To Doctors, Patients.
Publication: Orange County Register
It all started at the El Torito restaurant in Buena Park. A local immunologist and his biomedical engineer friend were eating there one day and agonizing over ideas they hoped would lead to a blockbuster business plan.
"We were sitting there, banging our heads," recalls Henry Smith, the immunologist. "We said, 'We have to come up with something earth-shattering.' "
Smith and his friend, biomedical engineer Asad Zaidi, had just formed Epinex Diagnostics with Zaidi's wife, Azra Zaidi. Their goal was to profit from their years of experience in quick-turnaround medical tests. They wanted to invent new tests for hepatitis, HIV and other infectious diseases.
But they rejected all those suggestions at that 2003 dinner meeting because each one would face too much competition, Smith says. The tests would help medically, but the finances wouldn't work. Each man went home frustrated.
Then came the late-night phone call. It was Asad Zaidi calling Smith with another idea that had just come to him.
"I think I have something for you," he said. "Albumin."
"You know, I was thinking the same thing myself," Smith said.
That phone call set Irvine-based Epinex on the road to developing a once-a-month home monitoring device for Type 2 diabetes, which the company hopes can substitute for common glucose tests that require pinprick blood samples many times a day. The Epinex test measures how much of the body's albumin protein has been damaged by excessive sugar in the blood.
Because a once-a-month schedule would be convenient for consumers, the three cofounders believed the test would be popular with diabetes sufferers, useful to doctors and attractive to investors. So far, they've been proven partly right.
Based on their work, including Smith's efforts as chief technical officer and Azra Zaidi's efforts as director of research, Epinex has won some support from all three groups, although would-be investors included people who wanted control of the company.
RADICAL OR MODEST GAIN
The Epinex G1A test, which the company has demonstrated in the laboratory, still needs to undergo clinical trials and win approval from the U.S. Food and Drug Administration.
For Epinex, the G1A test has "the potential to revolutionize the diabetes monitoring market" because it could drastically reduce the number of times diabetes patients need to prick their fingers for tests to determine whether the ailment was under control or worsening.
With a G1A device requiring only one pinprick per month instead several each day, fewer diabetics would be tempted to skip the test, says Asad Zaidi, the company's president and chief executive.
But Dr. Ping Wang, director of UCI's Joslin Diabetes Center, says FDA approval of G1A wouldn't end daily glucose tests, but would add a valuable tool to doctors' arsenal.
"When I go to war, I want to have a machine gun, a cannon, a pistol and a rifle," Wang says.
The "gold standard" diabetes measurement is the A1C test for glucose-modified hemoglobin, a lab test that can be repeated every three to six months. The combination of daily glucose monitoring at home plus the A1C test gives doctors the tools they need in most cases, Wang says.
With those two, he says, doctors at the Joslin center and their patients succeed in keeping average A1C test results at or below the level the American Diabetes Association recommends. They accomplish that through a combination of diet, exercise and medication.
"But the Epinex test still can be valuable for certain patients," he says.
Epinex faces an expanding number of competitors that make diabetes tests. These include the GlycoMark test for dangerously high levels of blood sugar after meals, made by the BioMarker Group of Kannapolis, N.C., and continuous glucose-monitoring devices made by DexCom of San Diego and Medtronix of Minneapolis, Minn.
FOOTBALL AND FINANCES
The company needed $5 million to perfect the G1A test and make a prototype. Prospective investors were willing to supply the money in exchange for control of the company.
Smith and the Zaidis balked. For help, they turned to Jeff Byrd, a Stanford University graduate and former football all-star at Rancho Alamitos High School.
He checked out Epinex with fellow alumni, then in early 2003 agreed to become vice president for corporate finance – basically the guy on the prowl for money.
"I figured I could get them $5 million without them giving up substantial equity," Byrd says.
Even before he had an office, he started calling wealthy individuals by cell phone from his bedroom and now has raised $4 million of his $5 million goal.
In exchange for that, the new shareholders will control only 16.7 percent of Epinex.
The company still needs $10 million to create a production-model G1A for the FDA to approve, so it hired investment bank CB Capital Partners of Newport Beach.
But with the boost that Byrd gave them, the cofounders are sure that the need for $10 million won't force them to give up control of what started with a late-night phone call in 2003.
"That's not bad at all," says Byrd.