Q & A: Diagnostic HYBRIDS will expand through thyroid, HIV tests

David Scholl

ATHENS, Ohio — The respiratory detection kit announced last week is the first in a series of new products Diagnostic HYBRIDS will release in the coming year.

The Athens, Ohio, company hopes to release kits related to Graves Disease and in 2010 an HIV detection kit. It’s also preparing a kit to detect thyroid cancer.

“We’re a very innovative company trying to be a very successful diagnostic company,” President David Scholl said.

The business has grown to about 230 employees, including a 30-member research lab in Cleveland, thanks in large part to acquisitions made in the past five years. Summit Partners invested $10 million into the company in 2004, and Diagnostic HYBRIDS is now using a $5 million grant from the Ohio’s Third Frontier Biomedical Research and Commercialization Program to fuel research into HIV, influenza and hepatitis.

Below, Scholl discusses how it will expand into new markets, its partnerships and what to expect in 2009 and beyond.

Q. How does HIV fit into DIAGNOSTIC Hybrids?
A. It’s a good-sized bet on trying to take the company into a virus that has such a large market opportunity. Rapid growth is not always easy to find. There’s a market there, but we’re without as asset ready for commercialization. We could see early impact in 2010 in terms of job creation and revenue creation.

A successful HIV program would be marketed into the pharmaceutical market and clinical use market.

Q. What’s your opportunity in the market?
A. It’s important to differentiate one type of virus from another and first you have to run the diagnostic before using a therapeutic.

Another positive event heard and read about in the common press is that it looks like there are benefits in getting drug therapy sooner. So additional use of antivirals for HIV cause more enthusiasm to monitor the use of those drugs.

Q. What does 2009 look for you?

A. We’ve budgeted predicting 15 percent growth year over year for 2009. Our goal is to have 15 to 20 percent growth every year.

Q. How important is it to diversify your products?

A. Diversification begins with being honest and knowing there will be some slowed growth in some areas. We’ve got significant innovation in the virology sector. Instead diversifying for diversification’s sake, we’re looking to make virology cost effective.

We’ve got a thyroid product that we hope to announce in April that detects Graves Disease. It’s been submitted for FDA approval. A thyroid cancer test is in the preclinical stages. We used technology licensed two years ago out of Cleveland Clinic, and we’ll advance further on it once we get data from three preclinical trials.

Q. Will you need more funding? How hard is it to get investment today?

A. There could be a point in time where there’s a need for capital. Current investors are one way to look. But you could also look to new investors.

Right now, we aren’t looking for new capital. We’re trying to be as proactive as we can be. There’s no question there’s less money floating around for high-risk investments. But if [investors] find companies operating well and ready for accelerated growth – money for companies like that is still out there.