When the Elucigene brand was purchased from a large MedTech company, they had six months to establish a Manchester manufacturing facility for their genetic testing kits before their stock ran out. CEO Mark Street-Docherty tells Suzy Jackson how they diffused the bomb.
Please, do just let me know if I lose you!” Mark’s voice is warm and friendly, which is a comfort when it’s not immediately obvious how to pronounce the name of his business (it’s e-lusa-jean), much less for a layperson to understand what they do. “My whole team, and most people I deal with, are scientifically trained in genetics so we’re quite comfortable talking about it – but I appreciate your readers aren’t all going to be geneticists!”
He helps to break it down. Cystic fibrosis (CF) is a genetic condition affecting 1 in 2,000 people in Europe. It’s a life-limiting illness, for which there is no known cure, but early diagnosis is improving the prognosis of patients. Elucigene produces the only commercially available pan-European testing kit, designed specifically to address the most common genetic mutations found across populations of European origin. Taking existing technologies and using them in a new way allows patients to receive a timelier diagnosis, earlier treatment, at both a reduced cost and effort to the international healthcare community.
“Our whole business is based on innovation,” Mark says. “Our product development puts overcoming unmet clinical and technical challenges at its heart. It is these innovations that differentiate our products from our competition. We focus on creating products that simplify the problems our customers had in the medical diagnostics industry. When you look at the genetics of CF, if you imagine there are around 2,500 different things that can go wrong in the gene, there’s a small subset of those per ethnic background that would cause an individual to have CF.
“In the UK, there are about 20 of those that affect the population. So instead of having one product that tries to look at all 2,000 mutations with less accuracy, we’ve gone market by market, so if you’re from a Spanish, French, German, or British ethnic background, for example, what is the best panel for a clinician to have to test against?”
Elucigene has become a flagship leader in the CF market, which accounts for more than half of their revenue. “We’ve taken on some big international diagnostic companies doing that,” Mark says. “It’s given us around a 45% market share, but within central Europe we have between 80-100% share, depending on the market.”
They’re big players in a big marketplace, despite being a relatively small firm based at CityLabs in Manchester city centre.
“One of the strengths in our success is the strength of our technology, but the fact we are a small and dynamic business has meant we’ve been able to respond to micro-climate changes in what needs are for customers.
“So, for bigger companies that we’ve been competing against, they’d find it difficult to take the approach we can take in the marketplace, which is that we’re not diagnosing CF in a general way. We’re looking at the incidents of disease in different populations, and then designing our products to enable clinicians to diagnose individuals in their markets.”
The Elucigene brand has been around since about 1994. It was originally owned by larger pharmaceuticals including ICI and AstraZeneca, and it went through several purchases over a 15-year period. In 2013, development stopped and the team working on the products were effectively made redundant. They went out and sought backing from venture capitalists, to purchase the brand and its product.
“Scott Higgins and Mike Webb, who’ve both since moved on, were responsible for bringing Elucigene out on it’s own. They took the backing of Percipient Capital, in London, who remain our main backer today.”
“The rest of us joined the business in 2013, buying the Elucigene brand and the key products that had been developed. We took a small number of international customers, and just six months’ worth of the existing products. So as soon as they signed the agreement, the firm became a ticking time bomb.”
Six months of stock might sound like a lot in the context of some industries, but what they had to do was establish a manufacturing facility from scratch, and get it accredited to produce these products. “We work in one of the more highly regulated industries, and it did take most of that six-month period to start producing stock under an accredited system.”
He describes them ending up in Manchester as ‘serendipitous’. “The Elucigene brand was based in Abingdon, in Oxfordshire for a long time, and moved to Manchester as part of a 2010 acquisition. The two directors moved with it, and several of the staff too. They looked at a few places… but staying within Manchester has been a really good long-term decision because of the facilities.
“We also had the choice of looking at CityLabs or the Alderley Edge site, but we wanted to be in the city centre for transport links, because we travel a lot nationally and internationally, but one of the things we needed to develop a strong business was the ability to recruit good candidates.
“Most of our team are either from the nearby university systems – Manchester, Sheffield, Liverpool all have a strong life sciences reputation. It can be difficult to get good staff, and staff that are available to come and work for you.” Now some 30-strong, the team are deeply rooted in the North West.
CityLabs was set up by the Manchester Science Partnership and Elucigene were the first ones into the building, so they could choose where to position themselves. That, Mark says, was the predominant use of the cash from investors. “We spent about £1m on developing a state-of-the-art facility for manufacturing the products we had, alongside a new product portfolio, and all of the innovations we’re done since.
“CityLabs is located on the edge of the biggest hospital in Manchester, so we’ve been able to bring NHS experience into the company as well as academic experience. The Manchester corridor is becoming quite rich with life sciences business and we’re all able to feed off each other to find opportunities for international growth.”
In their new home, Elucigene became a completely self-sufficient company; they have different elements internally from manufacturing, through research and development, quality management and regulation, and a growing sales team. Mark himself joined the team as sales manager for Northern Europe originally, and worked his way up.
With their CF testing kits continuing to be a resounding success, the firm set its sights on other, new, forms of innovation.
“We’re moving on into other disease areas,” he says. “Our key areas are around single gene disorders, common genetic problems, and infertility is a big growth area for us. One of our first products dealt with common male infertility, looking at rarer but still significant causes at a DNA level which cause a man to be infertile. We also have kits coming to market for women, which we expect to be a big growth area for the next four to five years.”
Another key benefit of their Manchester location is the industry support infrastructure they’re benefitting from. “We’ve spent time working with chambers of commerce, the Growth Hub, MIDAS and DIT, who all helped to accelerate our growth into international markets faster than we would have had elsewhere.”
But even with that support, there’s a limit to how much the firm can protect their key products. “It’s extremely difficult to protect our intellectual property. All our products are protected by know-how, and there are two other firms internationally who use a similar technique who don’t do it quite as well, but because it’s based on technical know-how it’s not patentable. We do work in highly regulated industries around life science technology, and it’s been the cause of the demise of some of our competitors.
“From a business development point of view, we’ve looked at 12-15 different brand-new products to bring to market in the next three years, and of those, four projects were halted purely because of the risk of infringing someone else’s IP. It’s an increasing problem for small industry, and to some extent large industry.”
Elucigene are clear on their Brexit position; they would have preferred to have stayed in Europe: “The current trade agreements really help us as a business,” he says. “We’ll be looking to get the best possible deals, and if the worst happens, we’ll have to set up a base in Europe to support our European distribution. About 65% of our revenue comes from Europe just now.”
Their major clients are the genetics labs within either nationalised or privatised hospitals, and they estimate around 500 customers use their products. “We have accelerated relatively quickly. Last year, and the year before, we focussed on growing the network whilst we grew our product portfolio invisibly in the background, but we’ve been growing our market with existing products.
“It’s allowed us to establish the Elucigene brand as a name to those labs. We’re in the situation now where we have such good relationships with them that they have become product development partners in a lot of cases – making our lives simpler overall.”
And they spend a lot of time in-market; with the customers themselves, or with the key distribution partners. “A lot of time it’s not about current products, but about answering unanswered questions. What will they need over the next five or six years to improve diagnostics?”
The government’s R&D tax credit scheme is something that’s made a significant difference to Elucigene’s ability to innovate. “Last year, we claimed £200,000, and this year it’s likely to be closer to £250,000, which is being used to develop brand new innovations, where there’s not even a competitor in the marketplace yet.
“We’ve also had two Eurostars grants, for several million pounds split across the UK and our partners in the Netherlands, in brand new diagnostic areas.” Part of the risk of a company like this is that their larger competitors have millions of pounds available to spend on products that might not go anywhere.
“As a start-up,” Mark points out, “it wasn’t going to be possible for us to fund projects like that initially. These grants and tax breaks allow us to work on more high-risk projects, where there’s either a strong academic component at the start of the project, or the project is likely to change as it goes on, so it de-risks it for us as a manufacturer.”
On the back of a huge 2017, where the company grew to turn over £3.6m, 2018 is about getting another six products out to market internationally. “The big thing for us is taking the business from being able to operate in Europe, Canada, and Australia as the strong markets, and adding North and South America and the pan-Asian markets.
“The focus is on not just developing a US partnership, but also on preparing the business to be FDA compliant. It’s the gold standard and if we can achieve that, it’s a game changer.”