ASU spinout aims to shake up the health care status quo
HealthTell recently completed a $40 million capital campaign. The company, a spinout of ASU’s Biodesign Institute with a nearby manufacturing facility in Chandler, Ariz., is poised to enter the big leagues as “one of the top 5 startups to watch” in the highly competitive health care diagnostics arena. With HealthTell’s funding milestone completed, we’ve taken the opportunity to look back at the high-risk, adventurous beginnings a decade ago within Biodesign, with an eye toward an even brighter future.
The expansion franchise
On November 4, 2001, a seismic shift occurred in the baseball world when the upstart Arizona Diamondbacks became the fastest expansion team in the history of major league sports to win a championship, in just its fourth season. To do so, the Diamondbacks upset the three-time defending champion dynasty, the New York Yankees. Some would argue the Yankees haven’t been quite the same since.
The following summer, on July 1, 2002, President Michael Crow became Arizona State University’s 16th president, ushering in a “New Gold Standard” for academia just as how charismatic Diamondback’s owner Jerry Colangelo had upset the baseball status quo.
Colangelo accomplished his feat by building a state-of-the-art downtown stadium and attracting top free agent talent such as the dynamic pitching duo of Randy Johnson and Curt Shilling, and the acquisition of slugger Luis Gonzalez, who delivered a memorable, walk-off Game Seven hit off unbeatable Yankees closer Mariano Rivera.
And so, when Crow led upstart ASU to launch a new vision of the American research enterprise, he set about constructing a shiny sports stadium for science, a beacon for attracting the best and brightest to build an unparalleled science expansion franchise in the desert.
The idea was simple and bold: throw out the traditional academic silos between disciplines, and bring together under one roof the best minds, biologists, physicists, engineers and computational science experts, to tackle some of the world’s biggest challenges.
As inspiration, they would emulate nature for their discoveries and innovation, in a new kind of research institute emblematic of his vision: The Biodesign Institute.
President Crow remarked during Biodesign’s building B grand opening that: “The culture of this institute will look at nature in a different way, with more respect, with more awe, with more honor, and design from nature the kind of solutions that we need to make our lives better.”
The dynamic duo
In Biodesign’s breakneck expansion years, longtime ASU professor and biochemist Neal Woodbury was among the first recruited to establish one of eight new research centers housed in the 175,000 square foot, gleaming stainless steel and brick Biodesign building, which first opened Dec. 14, 2004.
Back then, Woodbury maintained his fit and trim build and youthful countenance from his daily three-mile jaunts from his home to Biodesign, “It’s where I do my best thinking,” said Woodbury.
Woodbury had been at ASU since 1987, trying to solve how plants split water to create energy by studying the early events of photosynthesis.
“Photosynthesis is the process by which light is used by nature to create chemical energy,” said Woodbury. “The food we eat, the oil we burn, the plastics we make, all came from that process.”
He had seen firsthand the fruits of labor from a big team approach to science, and had long been a champion of multidisciplinary research by leading several National Science Foundation funded interdisciplinary graduate training programs.
One of the first major grants ASU received was in 1988, when the National Science Foundation and the U.S. Departments of Agriculture and Energy funded the creation of ASU’s Center for the Study of Early Events in Photosynthesis.
The center included more than 20 scientists from the departments of chemistry and biochemistry, botany, and teams of graduate and undergraduate students. All contributed brainpower toward unraveling the exact chain of events that occurs in those first trillionths of a second when light powers photosynthesis.
For his next major scientific endeavor at Biodesign, he wanted to contribute to the area of chemical spaces and biological information. “If you look at the chemistry of biological systems, we actually generate a huge amount of diversity in what life can do from a relatively simple group of building block chemicals. They are strung together to make proteins, to make DNA, to give rise to much of the diversity of life.”
Among the new external recruits, another like-minded maverick, Stephen Albert Johnston, came on board Biodesign to establish a new Center for Innovations in Medicine.
A scientific gunslinger (he had co-invented the gene gun and was recruited to ASU from Texas) with the blue-eyed, steely resolve to match Clint Eastwood’s spaghetti western roles, Johnston relishes the outlaw role of the scientific disruptor. Johnston considers himself an innovator, a disrupter by trade who fit in seamlessly to Biodesign’s upstart Wild West scientific culture.
“Through Biodesign Institute director George Poste’s vision and leadership, we were encouraged to try anything,” said Johnston.
And nowhere was there a greater need for disruption than the U.S. health care system. Almost one out of every five dollars in the U.S. economy is spent on health care.
Despite spending more than any other country, Americans have gotten a poor return on their investment, ranking middle of the pack worldwide for health care metrics such as infant mortality rates and longevity.
When Johnston and Woodbury looked at the rising health care costs, which by 2005, had risen to 17 percent of the GDP, the health care status quo simply could not stand. A fresh take on Benjamin Franklin’s time-worn adage, “an ounce of prevention is worth a pound of cure,” was desperately needed. This would allow health care providers to address problems before serious—perhaps irreversible—damage has occurred, with better outcomes and lower health care costs.
“The idea was to change medicine from post-symptomatic to pre-symptomatic,” said Johnston. “To do that, you have to monitor healthy people and figure out what’s happening early to them.”
High-risk encouraged
And so, the runner and the disruptor found a scientific kinship and galvanized around a goal to turn medicine on its ear; but could they develop a technology that could detect disease at its earliest stages, perhaps even before symptoms ever appeared?
“We spent a long time to try to come up with an invention that could do that sort of thing,” said Johnston. “And it had to be cheap. Because if it’s too expensive, people won’t use it, and people in the developing world would never use it. If you want something for everybody, it’s got to be inexpensive.”
Fueling their ASU discoveries was support from an Arizona voter-approved fund (the Technology and Research Initiative Fund, or TRIF) derived from a percentage of sales tax revenues. Critical to Biodesign’s success has been the use of TRIF support as a seed funding base, to enable its scientists to more rapidly attain substantial research activity.
They had the freedom to perform early-stage, high-risk, high-reward disruptive research, to provide funding for proof-of-concept and validation studies, and to leverage these funds for a larger return-on-investment through federal grants, industry contracts, spinouts and philanthropic support.
Johnston had the initial idea before he came to ASU—but at the time, needed more rigorous manufacturing know-how to make his concept reality.
“We were fortunate because when I got here, ASU gave me quite a bit of start-up funds from TRIF, so I could use that to try these ideas where no one else would fund us,” said Johnston. “It was like the golden age for Biodesign. George Poste said ‘I will give you the money and I will give you five years to do whatever you want—I won’t bug you.’”
They were encouraged by Biodesign director Poste and a can-do culture to try anything. To revolutionize medical testing, all Johnston and Woodbury had to do was create an idea for a brand new technology.
Every picture tells a story
Their idea centered around a huge, untapped natural resource found in every person: the power of billions of tiny sentinels –antibodies– in one’s own immune system to detect disease.
“I finally came upon this really simple concept,” said Johnston. “And that was, you have millions, billions of antibodies in your body. And if those antibodies were always registering your health status, and we had a way to look at that whole repertoire, to get a signature of your antibodies, and do so in a simple way, we might be able to revolutionize diagnostics.”
They knew that some of the leading causes of death—both infectious and chronic diseases like cancer —gave rise to immune responses fairly early on in the course of disease. If their idea was true, by simply taking a snapshot of the immune system, one could get a picture of one’s health.
The technological derring-do would be to measure this antibody diversity in a single drop of blood or in saliva. To do so, they drew inspiration from the computer industry, which uses silicon wafer technology for ever-faster and cheaper computer chips.
“The technical problem was how to make these peptide arrays. We knew that if we could display on a small number of peptides from random space, we could develop what we called an ‘immunosignature’ of disease,” said Johnston.
But they didn’t have the capacity to manufacture anything in house yet. And there was only one company in the world they were willing to place their bets.
For the very first test, in 2006, they contracted with a company called LC Sciences to place 4,000 short pieces of protein, called peptides, and spotted these in rows, like a farmer plants seeds in the ground. But in this case, the seeds were neatly arranged, 10-micron (a millionth on an inch) rows of peptides printed on a thin, microscope slide.
Next, they took blood serum from a test subject and control, and saw some differences between the two. But what exactly did they see?
“I have to be honest, after those first arrays, I didn’t believe much of any of it,” said Woodbury. “I thought: this looks like it could be anything to me. You see a difference in a few peptides out of a thousand, and you say to yourself: I don’t know.”
The initial picture of disease looked like a random bunch of multi-colored, Lite Brite toy dots. One sees different signals with different dots, depending on where the antibodies are binding on the slide. The beauty of the innovation is that there is not a specific antibody for a specific disease, but rather, a whole picture, or signature of disease.
“I give Stephen a huge amount of credit for this. He first thought the signal was real and we should pursue it, and was willing to back it all the way to the bank,” said Woodbury. “Eventually, I agreed with him, but had it just been me, I probably would have said, ‘it’s not enough.’”
In fact, differences between the healthy and control sample in just two spots out of the 4,000 peptides on the array convinced Johnston to forge ahead.
“The key was that peptides were from random space — not disease specific,” said Johnston. “No one thought antibodies would bind to these peptides, let alone be informative.”
Idea to marketplace
Unlike expansion baseball franchises, in science, to have success and go from idea to the marketplace is typically a costly, lengthy twenty-year process. For instance, a single blockbuster drug is often a billion dollar endeavor for the pharmaceutical industry.
Fostering a biotech startup is not for the faint of heart. “We went out and made investments based on our early success that no federal funding agency would have considered,” said Woodbury.
Their boldness and willingness to forge ahead in the face of adversity was recently recognized by National Science Foundation director France A. Córdova, who learned firsthand of their efforts during her visit to ASU last year. She was given a parting gift, an immunosignature array slide.
Cordova highlighted the promise the technology holds for personalized medicine during a recent interview.
“I have in front of me a little peptide array — in plexiglass, so I can’t use it — developed at ASU’s Biodesign Institute. You put different blood drops in and they can read immunosignatures to tell if you have one of five different types of cancer. I asked the lead investigator, “Did you apply to NIH for funding?” They said it was too high‑risk. Instead, we funded it. A lot of what we fund is considered “high‑risk, high-reward”: People don’t know what the outcome will be or where the research will go. But fundamental science enables the kinds of breakthroughs that drive the economy.”
Early stage, high-risk research can be mired with issues of reproducibility and validation, and separating signal from noise in their immunosignature data was a huge challenge to overcome. To mitigate the risk, Woodbury and Johnston assembled an all-star roster for their startup team, including bioinformatics guru Phillip Stafford (who holds a co-patent on the technology for spearheading the interpretation of the data), immunologist Kathryn Sykes, and chemists Bart Legutki, Chris Diehnelt, Zhan-gong Zhao and others.
Each member’s expertise was essential to continuing the momentum of the project, which could have been doomed from any number of missteps as they continued to push and expand on the prognostic power of the technology. They also had to work out the bugs in the chemistry and keep the costs down at the critical peptide array manufacturing stage.
“The early path was complicated,” said Woodbury. “We started trying to make the peptide arrays at the ASU Polytechnic Campus, then we moved the operation to a facility in California for awhile, and finally, we moved to ASU Research Park.”
Just to enter into the highly competitive diagnostics marketplace, they needed to reduce the costs to $100 a test. And to make better disease prognosticators of their slides, they needed to pack more peptides onto ever-denser arrays, first 10,000, then 100,000 to now, 350,000 peptides on a single chip.
“The trick was to splay these peptides out cheaply, so went to an Intel-type of manufacturing,” said Johnston. “We had a number of ideas to work through, and spent about 10 years working on our platform for making the peptide arrays. We had a bunch of inventions that we thought might do it, but failed. They just didn’t go all the way.”
This critical stage, often referred to as the ‘Valley of Death’ for tech startups is the ultimate reckoning point for translational science: leaping from proof-of-concept to spinout, which during one bleak period, even involved dipping into personal savings from the duo.
“We put the money up initially ourselves to start HealthTell,” said Johnston. “We received some good federal contracts with the Department of Defense initially, and then we brought in a CEO, and have steadily grown the company to the point where we are on the brink of commercialization.”
Entrepreneurial acumen
CEO Bill Colston came on board and HealthTell was moved to the Innovation Center in Chandler as its research and development base. The corporate offices were then located in San Ramon CA (convenient to Colston’s hometown).
A Silicon Valley start-up veteran, Colston was attracted to joining HealthTell because of a unique opportunity in the Valley of the Sun. “First off, the genetic space is pretty crowded, with dozens of new DNA testing companies,” said Colston. “And there is only so much information to get from genetics. I’ve been interested in getting closer to where the action is, the immune system. For the first time, we can use millions of years of evolution in the immune system and leverage that biology in a more universal way. I think you are starting to see that shift with cancer.”
From those humble beginnings, HealthTell now employs about 35 people in Chandler, Arizona (in the very first Intel building). Initially, it relied on critical government contracts to fund manufacturing of the chips locally.
Since then, Colston has been raising additional capital for HealthTell, and after a $14 million A series round of investment in February of 2014, and a $26 million series B round of funding just completed, has expanded the valuation and financial reserves of the company. HealthTell plans to grow the number of employees to 70 and release their first product by 2017.
Today, all of the peptides are synthesized directly on silicon wafers, using standard photolithography that Intel uses, but instead of making integrated circuits, they use batch peptide chemistry. From an 8-inch wafer, 312 peptide arrays are made, cut out onto slides with 24 arrays on each one, 24 assays per slide, with each array holding 130,000 peptides in it—which may represent the sweet spot between having an informative test while keeping the costs to consumers affordable.
Only a single microliter, or 1/20th of a single drop of blood is needed. This is spotted onto a piece of filter paper and dropped off in the mail. At HealthTell, the blood is diluted and put on one of these surfaces—a slide, a piece of a silicon wafer.
“The chip is agnostic,” said Johnston. “It just binds to any antibody. Any antibody you put on there will have its own distinctive pattern.”
The technology is unique in that the same chip can be used for all diseases in all species. It detects any type of antibody. There is no sample preparation. You can use samples up to 20 years old. And it is 10-100 times more sensitive than standard tests on the market, such as ELISA.
“When they hear about the technology, most people have the same response,” said Johnston. “This can’t be true. It’s too simple to be true. But I assure you it’s true. The signature is reproducible and informative.”
To date they have been able to identify Valley Fever and outperform the best diagnostic test on the market. They can distinguish between 15 different diseases simultaneously, including Alzheimer’s disease, and have tested it on more than 1,500 individuals with 95 percent accuracy.
Arizonans and beyond poised to benefit
For the past several years, the majority of HealthTell’s efforts have been on improving the performance and reproducibility of the chips. Now, those years of toil and sweat have left HealthTell on the brink of some major league discoveries.
“We are getting great results,” said Colston. “We have two major business lines, a pipeline for pharmaceutical customers that pay us for developing tests for them to make drugs more effective and the second is a diagnostic program in partnership with physicians for the early detection of infectious disease, cancer and autoimmune disorders.”
The pharmaceutical services are designed to fill in the gap in the early years of HealthTell as the future of their commercial diagnostics marketplace takes shape.
They have been working on testing a new class of cancer drugs to manipulate the immune system, called immunotherapy, that turn off pieces of immune system inhibitors known as checkpoint inhibitors. “These are very effective but only work on 20 percent of the patients,” said Colston. “One of the clinical trials better informs physicians on how the drugs are working, and we have several more underway.”
One goal is to set up a central lab within HealthTell to handle processing of samples mailed in from consumers. One of the first areas for consumer diagnostics testing will be for better detection of autoimmune disorders like lupus and rheumatoid arthritis.
HealthTell has garnered its fair share of attention. It was named the Arizona Governor’s Celebration of Innovation as “Start-up of the Year” in 2012, and more recently by Silicon Valley, as one of the “top 5 startups to watch.”
“It’s taken a long time, but it’s getting there. There is really no other technology like this out there,” said Johnston.
Colston also believes their expansion team is uniquely poised to make their mark. “For 80 percent of the commercial tools that are out there, they are not generating anything truly unique—they’re like cover bands while we are making new music. We are uncovering information that no one has seen before, and once we get up to a few million patients tested, the implications are profound.”
And they believe that ultimately putting the tests, information and choice into the hands of consumers is the best way to upend the health care status quo.
Said Woodbury: “We need this technology now. It’s time to start putting some of those diseases in the rear view mirror. We would really like to put cancer in the rear view mirror or get it to where it’s manageable. The best way to get it to where it’s manageable is to see it earlier.”
Editor’s note: More than 80 companies have launched based on ASU innovations, and have attracted more than $500 million in external funding, including $40 million in FY2015.
Written by: Joe Caspermeyer, ASU Biodesign
– See the original story and HealthTell’s history in photos at: https://biodesign.asu.edu/news/asu-spinout-aims-shake-health-care-status-quo