For Applied DNA, new blood – and a shot in the arm

In the flow: A key acquisition, new blood-analyzing tech and critical Medicare/Medicaid reimbursements for T-cell therapies have Applied DNA Sciences and 2018 spinoff LineaRX pumped up.
By GREGORY ZELLER //

Just 11 months after spinning off from its parent company, a Stony Brook startup with expansion in its DNA has made its first corporate acquisition.

LineaRX, a subsidiary of Applied DNA Sciences, has acquired the physical assets and intellectual property of Vitatex Inc., a private biotech with close ties to Stony Brook University and a patented method of isolating Invasive Circulating Tumor Cells in standard blood samples – spotting metastatic cells before primary tumors are usually visible, allowing for a range of preventative-care options.

Terms of the acquisition – ultimately valued at $1 million – are complicated, including a $300,000 down payment, a series of milestone-based payments and a total “earn-out” equaling $800,000 in LineaRX equity and $200,000 in cash.

However the deal is structured, the neighboring Stony Brook firm’s specific skills are an intriguing addition for LineaRX, which spun off in 2018 from Applied DNA, a molecular-detection supply chain authentication specialist with a wide (and widening) range of international clients.

James Hayward: Buy low, cell high.

LineaRX is focused on a wholly different vertical for Applied DNA, which has emerged as a leader in the large-scale manufacturing of DNA sequences since its 2015 acquisition of West Virginia-based Vandalia Research. The prize of that merger was Vandalia’s core DNA-sequencing technology, which is based on polymerase chain reaction, a molecular-biology technique for generating thousands (even millions) of copies of unique DNA chains.

Combine that with Vitatex’s techno-knack for early iCTC detection – and for gathering other critical, highly individualized metastatic data – and you’re onto something, according to Applied DNA President and CEO James Hayward.

And with the worldwide market for CTC technologies projected to reach $17.6 billion by 2025, you see “why we located our company in Long Island’s DNA corridor,” the CEO told Innovate LI.

“We believe that the sophisticated technology sets us apart and integrates closely with the LineaRx service and technology offerings, broadening our addressable markets and shortening our development cycle,” Hayward added.

LineaRX will have plenty of help integrating Vitatex’s technology into the mix. Two senior members of the Vitatex team – Medical Research Director Qiang Zhao and product-research lead Huan Dong, both veteran Stony Brook University researchers – have joined LineaRX as R&D scientists.

“We are pleased to expand our relationship with one of our community’s most productive and insightful entrepreneurs,” Peter Donnelly, SBU’s associate vice president for technology partnerships, said in a statement. “The management at LineaRx has the experience, technical and compliance insights, and indefatigable drive to bring these technologies to market quickly.”

The acquisition of the circa-2002 biotech was immediately bolstered by further good news for LineaRX: On Aug. 7, the National Centers for Medicare and Medicaid Services approved reimbursements for chimeric antigen receptor T-cell therapies – positioning the Stony Brook DNA manufacturer nicely for a likely rush on nucleic acid-dependent therapies.

“The oncology community has greeted CAR T cell therapy with extraordinary enthusiasm, but the use of these novel therapies to combat cancer has been constrained by pricing and reimbursement,” Hayward said Monday. “With the CMS decision, redirected cell therapies are now a permanent part of the toolbox of modern medicine.”

And that’s huge for LineaRX, which only turns 1 in September but already boasts what Hayward called “a more desirable [DNA-]manufacturing process” that will speed up third-party biotechs’ commercialization efforts, benefiting developers and patients alike.

“With LineaRx’s ability to provide massive ultrapure DNA with shorter lead times than plasmids, its manufacturing technology should enable gene-therapy companies to shorten time-to-market for their therapies, and in a much more cost-efficient manner,” the CEO added. “Patients will also benefit by a more rapid turnaround.”