Made in USA

Scientists are not always the best businesspeople.  They routinely solve enormously complex technical problems but can struggle to commercialize their own research.  As a result, many great ideas in breath research never make it from the lab to the market.  Innovations are not developed commercially and researchers, doctors, and patients miss out on the potential of these ideas.

So what does it take for a discovery, especially of a new breath test, to become a marketable success?  The simple answer: business expertise.

At a lab in the University of Florida ’s Nanoscale Research Facility, Dr. Donn Dennis and Dr. Richard Melker in 2008 discovered that several ingested compounds produced an easily-detectable breath-borne biomarker.  They knew it was a valuable find, but they didn’t know how best to commercialize it.  So they took the critical first step and sought outside guidance from a businessman to lead the operation from lab to market.

Richard Allen had already commercialized technologies and taken companies public when Dr. Dennis and Dr. Melker brought him on as CEO of Xhale, Inc.  He guided the creation of a commercial strategy for the doctors’ research, courted investors, helped build a development team, and navigated complex government regulations.  Seven years later, they’re set to enter the market with a handheld breath test to detect nonadherence and improve the often poor medication adherence in large pharmaceutical trials.

According to Mr. Allen, even the best ideas need a professional executive to get a footing in the market.

“Go find somebody who has a business background and inspire them about your idea,” he advises.  “Find someone who understands the complexities of the market and who brings commercial perspective.”

Most angel investors and venture capitalists will agree that the number one selling point of a prospective startup investment is the track record of the leadership team.  But moreover, an executive will have to answer many questions to successfully commercialize a discovery.  Mr. Allen recalls some the risks he led the team in assessing when given the task to commercialize a breath biomarker:

  • Would this breath test fit within existing reimbursement modalities?
  • How would the stakeholders in entrenched technologies react to a newcomer?
  • What scale of evangelism would it take to change an existing paradigm with pioneering technology?
  • Would the FDA approval path be overly complicated or too lengthy and costly?

To justify these risks and all the other unknowns involved in launching a new company, a new technology must provide a simple, cheap, effective solution to a huge and pressing problem.  Market studies and publications clearly showed that poor medication adherence in large pharmaceutical clinical trials was directly costing the industry as much as $30B per year.  This cost included the unnecessarily-large study enrollments required to maintain study powers while accounting for the uncertainty of adherence, which by some estimates tops 50 percent.  And for pharmaceutical companies that had invested hundreds of millions of dollars in the development of a drug, anything was welcome that could cost-effectively decrease the risk of the drug study failing simply because noncompliance was higher than hoped.

To address this huge need, the newly-formed company envisioned a cheap, simple, handheld device that could identify trial participants who adhered poorly to medication, allowing companies to contact them immediately to increase compliance, and ultimately in the future to omit those who were noncompliant with protocol from the results.  This could tremendously reduce erroneous data and improve study powers.

But that was only the start of the new company’s work.  The biomarker itself, an FDA-approved food additive and excipient, would have to be validated across a diverse population to ensure that just about anybody would metabolize it in a predictable way regardless of age, sex, race, ethnicity, illness, activity level, recent food or drink, and a host of other factors.  Any influence on bioequivalency would have to be determined, along with interference with medications.

To ensure this would all be worthwhile, the company closely scrutinized the competition.  Other market entrants came mainly in the form of smart pill dispensers which would prompt the user to take their medication and record when the dispenser was opened.  Several published studies had shown that these techniques were not effective at improving adherence, making this opportunity essentially free of any real competition.

“We developed the device and evaluated several biomarkers in parallel over about four years, and in 2012 we were ready to begin human trials with our first-generation device.” recalls Mr. Allen.  Over the next two years they collected large amounts of efficacy data from their trials and applied lessons learned to their second-generation device.  In 2014, they began collecting data with this improved device specifically for FDA submission.

Mastery of FDA processes and regulations are a critical part of successfully commercializing a medical device.  The team started with an FDA-approved excipient, and initially was led down a 510(k) regulatory path where they would use devices like the well-known H. Pylori breath test as a potential predicate under the jurisdiction of the Center for Devices and Radiological Health.

But after a year of consideration, the process was upended when the FDA suggested that perhaps what they had was actually a drug and not a device.  This would have mandated a completely different regulatory path governed by the U.S. Center for Drug Evaluation and Research.  Six years and millions of dollars into the regulatory approval process, the path was proving unnervingly unpredictable.

“We did not know if they would treat us as a drug or device, and whether we would need to file an NDA.” explained Mr. Allen.

The FDA new drug application (NDA) is the vehicle through which drug sponsors formally propose that the FDA approve a new pharmaceutical for sale and marketing.  This would nearly guarantee a much more expensive and riskier regulatory pathway.  But by working closely with FDA, the team was able to move along a different, newly-established regulatory pathway for biomarkers under the jurisdiction of the Office of Combination Products.  Their excipient/device combination would be treated as a hybrid device.  Like a diagnostic device, it would have to show efficacy in measuring non-adherence, but unlike a diagnostic device, there would be no actionable medical or pharmacological intervention driven by the results, thereby allowing a much different approval process.  Working constructively with FDA also yielded an unexpected and very welcome benefit:

“We’ve been told by FDA that, contingent upon qualification, they plan to publish the qualification recommendation as an appendix to their guidance on the FDA Guidances (Drugs) website”, adds Mr. Allen.

We asked Mr. Allen what advice he would offer for academic researchers interested in commercializing their technologies.

“Work closely with your university tech transfer and licensing group.  They have many of the connections you will need to either license your technology outright or put you in contact with reputable industry partners.  And in the meantime, aggressively pursue grant funding.  Write as many grants as you possibly can.  One researcher I know wrote 10 to 12 grant applications for every grant he received, and today he has a thriving startup,” advises Mr. Allen.  “And be involved in your local and regional biotech groups.”

Breath science is an emerging field with tremendous potential.  Several breath tests and breath research tools are now on the market, and we expect many more over the next few years. But a lot of breath science technology remains hidden in laboratories, unknown to the medical market.  With the right partnerships between researchers and businesspeople, breath research can produce real products and become a valuable part of the modern medical industry.

Please feel free to contact Mr. Allen directly at with any questions.  And as always, contact us any time we may be of assistance in support of your research.

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