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iKaryos Diagnostics: The Rocky Road from Concept to Startup

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biotechnology management case

Anne S. York
College of Business, Creighton University

Summary and key issue/decision: iKaryos was the brainchild of Dr. Jill Hagenkord, a cancer researcher who brought her lab and grants to Creighton University to begin developing a diagnostic-based business around the concept of virtual karyotyping. The procedure designed by Hagenkord, based on trade secrets, has been able to identify aggressive vs. non-aggressive cancers 80% more accurately than existing karyotyping processes. While the concept of virtual karyotyping had been widely written about in the scientific literature, only one other lab in the country had commercialized the concept, although for use in the developmental diagnostic market, rather than for cancer applications. Unfortunately, Hagenkord and her partners had little training in business or technology commercialization, nor did they have contacts in the industry to help them develop a company and market their product. This case follows Hagenkord and her iKaryos team.s decisions to incorporate, seek equity financing for their new company, develop a viable organization structure, and ultimately market their product before their competition beat them to it.

Companies/institutions: iKaryos, Creighton University

Technology: Recently, platforms for generating high-resolution karyotypes in silico from disrupted DNA have emerged, such as array comparative genomic hybridization (arrayCGH) and SNP arrays. Conceptually, the arrays are composed of hundreds to millions of probes which are complementary to a region of interest in the genome. The disrupted DNA from the test sample is fragmented, labeled, and hybridized to the array. The hybridization signal intensities for each probe are used by specialized software to generate a log2 ratio of test/normal for each probe on the array. Knowing the address of each probe on the array and the address of each probe in the genome, the software lines up the probes in chromosomal order and reconstructs the genome in silico (Fig 2 and 3). Virtual karyotypes have dramatically higher resolution than conventional cytogenetics, currently up to a 1000-fold greater resolution than karyotypes obtained from conventional cytogenetics.

Stage of development at time of issue/decision: The process of conducting virtual karyotyping is based on trade secret IP, because the concept itself is not patentable. At the time of the case, iKaryos was performing diagnostics for a small but growing group of customers from a functioning, CLIA certified lab. However, current capacity was limited and competitors in other virtual karyotyping niches were moving into the cancer domain. Brand recognition and customer relationship development are important in gaining first to market advantage, which is why the firm needed to move quickly to gain equity for expansion and market penetration.

Indication/therapeutic area: cancer tumor classification, although other applications are possible, including developmental diagnostics Geography: US

Keywords: virtual karyotyping, cancer diagnostics, venture team formation, early stage valuation, first to market strategy

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