Race for mental illness test on -Austin (TX) American-Statesman

By Lilly Rockwell- August 11, 2008

Ever since the recent discovery that schizophrenia can be diagnosed using blood analyses instead of traditional psychiatric methods, companies have rushed to find a way to bring such a test to market.

Smack in the middle of this effort is Austin-based Rules-Based Medicine, which has partnered with a British company, Psynova Neurotech.

The test could revolutionize the way schizophrenia is diagnosed and treated, with earlier and easier detection. And it could open up an important new revenue stream for Rules-Based Medicine.

"Schizophrenia is an extremely large market, and one that currently lacks the availability of any real or accurate blood tests," said Craig Benson, chief executive of the company.

Diagnosing schizophrenia early on can make a big difference in the progression of the disorder, said Sabine Bahn, a co-founder of Psynova and a professor at Cambridge University in England. Her research team discovered biomarkers that can detect schizophrenia.

"If you treat them early on in the disease, you improve the outcome," Bahn said.

Rules-Based Medicine, created in 2002, has just 85 employees: 50 in Austin and the rest in New York and Germany. But it has been profitable since 2004 and is an important player in Austin's biotech community.

Last year, it raised $25 million in venture backing from investors, including a firm tied to billionaire Sam Zell. It is using the money to pay down debt, fund an acquisition and expand its diagnostics division.

It develops tests that allow doctors or drug companies to quickly check both people and animals for dozens, even hundreds, of biomarkers using tiny samples of blood or other body fluids. A biomarker is a chemical clue that can indicate the presence of disease or the body's response to certain drugs. Glucose, for example, is a biomarker for diabetes.

The underlying technology was created by Luminex Corp., from which RBM was spun off in 2002.

The applications for RBM's tests are broad. Its customers include pharmaceutical companies, which use the tests to detect possible drug side effects earlier than is possible with traditional methods. And drug companies make up the bread and butter of Rules-Based Medicine's business.

But in the last 18 months, the Austin company has focused on expanding its diagnostic division, developing tests for neonatal sepsis, a potentially fatal infection in newborns. It also is working on tests for ovarian cancer and Alzheimer's disease, which now can be accurately diagnosed only by studying patients' brains after they die. A diagnostic test would allow doctors to determine whether patients have Alzheimer's or other problems and thus improve treatment.

RBM's systems are far more efficient than conventional methods, Benson said.

"Two of the most important things are the small sample size and the cost-effectiveness of our service," Benson said. "With conventional testing and competing technologies, it requires so much more blood and fluid to run the test."

Benson said the company began as a Luminex unit in the late 1990s, when attention was focused on genetics, as scientists began to decode the human genome.

"Everyone was saying decoding the human genome was going to solve all of our problems," Benson said. "That's when we started developing comprehensive protein panels."

Researchers had studied those proteins, or biomarkers, before but lacked the ability to study multiple biomarkers at once with small samples.

"You couldn't look at many proteins at the same time because the technology required too much sampling and it was too expensive," Benson said.

RBM began offering drug companies a panel of 300 biomarkers.

"Oftentimes, early in the drug development process and up through the Phase I human clinical trial, they will use the whole panel or a big part of it to look very comprehensively at a particular drug candidate to see if they can tell what are the good and not-so-good effects of that drug," Benson said.

It recently launched a new test, developed with pharmaceutical giant Novartis, that checks kidney function in rats used in drug development.

Kidneys often are the first organs to fail when exposed to toxic compounds, and the test allows drug companies to determine drug safety sooner than with conventional methods. Benson said the test is so promising that the Food and Drug Administration wants to encourage all drug companies to use it before starting clinical trials on humans.

The first generation of biological markers appeared between the late 1950s and 1970s as a result of large-scale studies. In the past 10 to 15 years, there has been a rapid expansion in the number of biomarkers discovered, said David Wholley, the director of the Biomarkers Consortium at the Foundation of the National Institutes of Health.

Biomarkers "have been progressively refined and tested and at times debated in the biomedical and scientific community," Wholley said. "As medicine has moved from being an empirical-based science, where you are looking at external systems, to a more molecular-based system, this has resulted in a natural explosion of biomarker testing."

Pharmaceutical companies can now test new drugs against hundreds of biomarkers at once, determining early on whether the drugs are effective or have dangerous side effects.

"It's important if there is going to be a problem later on, the earlier they can find it in drug development," Benson said. "They would have spent that extra (money) taking it all the way through clinical trials."

The hard part is to persuade pharmaceutical companies, which make up the bulk of Rules-Based Medicine's customers, to outsource their testing instead of doing it in-house.

Rules-Based Medicine would be the exclusive worldwide seller if a test for schizophrenia can be developed and approved. "I could very easily see a time in three to five years where our diagnostic initiatives will be the biggest part of our business," Benson said. Currently, most of its revenue comes from drug companies.

"Using our approach and our proprietary technology to help solve some of these complex diseases ... is a really tremendous tool," Benson said. "Diagnostics will be our biggest growth area in the future."

lrockwell@statesman.com; 445-3819