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| Daktari's CD4 system--Courtesy of Daktari |
Daktari Diagnostics is well underway with plans to raise between $25 million and $30 million in Series D financing, money that co-founder and CEO Bill Rodriguez said will help, in part, to expand manufacturing capacity for the company's new HIV test, which starts selling in Africa this quarter.
"It's pretty exciting," Rodriguez told FierceDiagnostics via a telephone interview from London, where he was meeting with potential investors. "It's been 5 years of hard work, and [we have] a really strong team. We have been on this path in a pretty narrowly focused way since day one and haven't swerved at all in any way."
Rodriguez added: "Now that we are here and shifting from research and development to a commercial organization with a global footprint, there are new challenges."
The financing will involve both debt and equity. Rodriguez said the company began meeting with investors in earnest in January and hopes to close a deal between June and September.
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| CEO Bill Rodriguez (right) and co-founder Mehmet Toner--Courtesy of Daktari |
Daktari, which is based in Cambridge, MA, started with some in-kind support and nonequity seed funding in 2008, but it formally launched in 2009. Since its founding, Daktari has raised just under $30 million and has ramped up its employee count to about 55 people today. The company's Daktari CD4 test is battery-powered, combining microfluidic sample processing and electrical impedance detection to stage and monitor patients with HIV. It will debut initially in Kenya and then expand into other African countries through the year. Daktari is aiming to launch its tests to address unmet needs and untapped markets in the developing world, including Africa, Asia and Latin America, Rodriguez told FierceDiagnostics.
Daktari's investors include the Merck Global Health Innovation Fund--drug giant Merck's ($MRK) venture capital arm--and Norwich Investors. Its basic platform uses intellectual property licensed from Massachusetts General Hospital, Purdue University and elsewhere. Rodriguez, an M.D. who taught at Harvard Medical School, himself brings an impressive pedigree to the table, having advised the World Health Organization, the Bill & Melinda Gates Foundation and a number of African and Asian governments on public health issues. He also previously served as chief medical officer for the Clinton Foundation, according to the company's website.
Specifically, plans call for using the money to expand the company's manufacturing capacity to address high demand. Disposable test cartridges are produced in Massachusetts and test instruments that interpret the results are made in Spain. Funds will also help Daktari grow its sales and operations capacity to handle 11 African countries instead of the current four, Rodriguez said. The cash infusion will also help accelerate research and development for future products, including a platform similar to the technology used with the CD4 test that can handle tests for viral load detection for HIV, hepatitis B and C and other diseases.
Rodriguez said his company can make money targeting emerging markets, in part, because it is easy to use and can be sold in large volume.
"That's the whole investment hypothesis," he said. "If you have the right technology that is simple enough it can be used in clinics that don't have the kind of laboratory infrastructure we have here, you unleash a very large volume market," he said. "We're looking at initial product orders in the hundreds of thousands of tests. Ultimately, we will have industry standard margins in a high-volume setting."
Separately, Daktari was one of 33 companies to win a grant from the Massachusetts Life Sciences Center as part of its annual tax incentive program. In return, Daktari committed to bringing 17 new employees into the company, and Rodriguez said they will easily surpass that number in the months ahead. That planned additional capacity builds on manufacturing expansion already set to kick in now, he added.
Rodriguez added that the company is still talking with Scottish officials about building a manufacturing plant there, but nothing is set in stone, contrary to what had been previously reported.