Selfdiagnostics, a start-up company, is working at a quick diagnostics platform for detecting DNA of various disease agents in body fluids.
Estonian start-up creating a quick diagnostics tool
20th January 2014, 16:33
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The company was launched six years ago as its current CEO and majority holder Marko Lehes, educated in physics and economy, thought to tackle something new with his school buddy, chemistry doctor Indrek Tulp.
«We both had some experience in these fields, so we were searching for opportunities for something fresh and exciting,» explained Mr Lehes. Mr Lehes, mainly involved in IT, and Mr Tulp, coming from medicines development background, opted for quick diagnostics due to demand and development of technology.
«The two of us went through four-five test groups; most of these shut the door to our face, saying they had tried themselves, for decades, and it’s just not possible,» recalls Mr Lehes.
A kindred spirit was discovered in a foreign Estonian Ülo Langel, heading neurochemistry department at Stockholm University. According to Mr Lehes, the man found the «idea so sci-fi that it just had to be tried». Mr Langel, recently elected into the Academy of Europe, holds ten per cent of the company.
Hard start
According to the most optimistic of scenarios, the initial product, a complex venereal disease test InTime may come on sale in two-three years, costing under €30. The innovative diagnostics platform might later be used to create fast tests for other infectious diseases like influenza.
According to the CEO, the scientific development base is strong – in addition to scientists of University of Tartu, Selfdiagnostics has a subsidiary in Leipzig, Germany, with its own laboratories, the main partner there being the Fraunhofer Institute.
«The other issue is financial capacity. Costs of developing medicinal products vary between $5m and $300m per product. In our opinion, it will take $15-20m till the first product is ready,» said Mr Lehes.
The latest large sum was injected by Development Bank of Saxony, by €2.6m; earlier, the shareholders, private investors and Enterprise Estonia invested about one million euros, assistance at bridge financing provided by LHV and Kredex.
Mr Lehes is satisfied that the three founders of Selfdiagnostics, having attracted four million extra euros in addition to sales revenue, remain 80 per cent holders in the company.
«We want to keep our vision. At times, investors would like to take even greater financial risks; they have 10-15 enterprises in their portfolio, wherefore an attitude develops that «let’s see what happens». Therefore, we are always very carefully weighing each offer.» By the next financing, €10m is hoped to be involved; negotiations are underway in Europe and US alike.
«Obviously, a large calibre medicinal product is impossible to launch with Estonian scientific and financial means. Scientific development is quite strong, in Estonia; meanwhile, we lack product development and engineer technical knowhow,» said Mr Lehes.
At the moment, the company employs 12 people; in years ahead, the numbers are supposed to rise to 20 to 30 which, according to Mr Lehes, would be optimal staff.
Competing with giants
The company is rather international – the Leipzig subsidiary has Swiss, German and Serbian specialists, Mexicans have applied.
«One has to pick people all over Europe and compete for them with Johnson & Johnson, Roche and Siemens,» explained Mr Lehes.
While their own product is being developed, the enterprise earns money selling devices by other producers. To large customers like hospitals and defence forces, they are selling glucometers and blood pressure apparatuses; they do also have a web store and, starting the end of last year, they do resale via pharmacies.
Turnover started to become significant last year, sales revenues rising to about €100,000; this year, this is hoped to be multiplied as the company enters foreign markets.
According to Mr Lehes, the main competitors in product development are not the giant groups, rather other small start-ups like Selfdiagnostics.
Large corporations, according to him, do not take too much risk; rather, they observe what is happening and, if needed, will buy up a small company that has launched an innovative product. «In 2016–2017, there may already be several similar products. On the other hand, our platform can be applied so widely that, should a couple of products be waiting us, we will not be shaken,» said Mr Lehes.
Why did they decide to break through in such a complex and high-risk field? «Out of interest to try something totally different. This means making it out of Estonia, with no success story whatsoever in this sector – however hard we have attempted – into a most competitive niche in the world, where over half of the market is under control of very few companies. Financially, in the short term, it would make much more sense for me to work in IT, for instance; even so, for me that would be more boring and less of a challenge,» said Mr Lehes.