Scope Fluidics S.A. operates in the field of life science, developing innovative solutions for the medical diagnostics and healthcare market based on microfluidic technologies. The company develops its projects through dedicated special purpose vehicles which may then be commercialized through partial or full sale of their shares along with the resources held.
Together with its subsidiaries, Scope Fluidics forms a Group of companies while playing a holding role and providing administrative and operational support to its subsidiaries.
The Company aims to have 2-3 projects in its portfolio. In October 2020, the Company’s Management Board decided to select a new project to be developed within the Group.
PCR|ONE (THROUGH CURIOSITY
DIAGNOSTICS SP. Z O.O.)
A device for rapid, real-time gene diagnosis of patients in hospitals, EDs, outpatient clinics and Point- of-Care facilities, which has already obtained CE-IVD certification confirming the precision and effectiveness of panels detecting Staphylococcus aureus bacteria and SARS-CoV-2 virus.
The PCR|ONE system consists of disposable cartridges and a device for their operation. A sample of material taken from the patient is placed in the cartridge which automatically carries out biochemical reactions to isolate the genetic material of pathogens and identify it using a sensitive and reliable real-time PCR technique. The purpose of the system is to identify the cause of a disease affecting a patient by providing a response indicating the presence or absence of specific fragments of the genetic material of bacteria and viruses. Identification of such fragments indicates the presence of specific pathogens and allows selecting an appropriate antibiotic to which the detected bacteria will be sensitive.
BACTEROMIC (THROUGH BACTEROMIC SP. Z O.O.)
The world’s first automated diagnostic system designed to test all clinically relevant antibiotics with a single quantitative test. Its use in dedicated antibiotic therapy will maximise its effectiveness by providing information on the drug susceptibility of the pathogen. The system is fully compatible with traditional workflows in central laboratories and hospital laboratories. Among many potential applications of the system is the ability to assess drug susceptibility of microorganisms in veterinary medicine.
The company has also initiated work connected with preparation of a new project. It will concern needs of the FMCG industry and will also be based on microfluidic technologies, in which the Company specialises.
Its scientific and management capital constitutes a significant competitive advantage for the Group and makes the Company an organisation that successfully combines the flexibility and innovation of start-ups with the professionalism and credibility of mature entities. The Group’s team consists of professionals with many years of scientific and business experience. It is made up of scientists, specialists in their respective industries and qualified managers responsible for business development.
The Company is not a classic incubator or accelerator of start-ups. The projects developed by the Group are its own projects whose entire life cycle – from a concept, to obtaining financing for development, to commercialisation – is carried out using the Group’s own resources. As a rule, the Group itself creates technology, know-how and intellectual property for a given project which is implemented by the Group’s team. However, the Management Board does not rule out the possibility of implementing an idea of a person from outside the Group if such a person would approach Scope Fluidics S.A. with an offer of cooperation.
Project implementation begins with the Company identifying needs in the area of life science that can be addressed using microfluidic technologies. Then, an innovative solution is being developed, which, starting from the decision to launch the project, is subject to constant technological and business verification. The solution is developed by a dedicated team of experts and scientists with expertise in microbiology, biochemistry, manufacturing, physics, computer science and engineering. Solutions can also be consulted with external specialists.
The development of projects takes place within the framework of established special purpose vehicles which are controlled by the Company. The initial concept of a new solution is developed within the Company and then a special purpose vehicle is established for further development and implementation of the new concept. The special purpose vehicle employs the people who worked on the project concept within the Company, and as the project develops, the team is expanded. The continuity of project work is thus maintained. Conceptual work consists primarily in jointly proposing and discussing solutions and jointly resolving issues arising during project development.
Projects are implemented in order to be sold. The target project sale model assumes the sale of all shares of a given SPV together with its resources, in particular intellectual property, certificates and technology. The Company does not prejudge at what stage of project implementation the sale will take place, therefore it also allows for a possibility of commercialisation of projects in stages.
The Company anticipates that each time a project is commercialised, it will result in a payment to its shareholders of at least a half of the funds received by the Company in the relevant financial year as a result of a completed transaction.
Thanks to the adopted model of action, the developed methods of project implementation may be reused in subsequent initiatives, which translates into increased effectiveness of their implementation. Among other things, it will be possible to implement best practices and solutions increasing the success of new projects.
Scope Fluidics runs the relevant project only at its early stage and only until it is transferred to an SPV. However, the composition of the Management Board remains the same in the company and the SPV. The funds allocated for the development of projects are obtained by the Company (by share issue and debt financing from the European Investment Bank) and by the SPV (in the form of grants and subsidies). The role of the Company is also to attract an investor who will purchase part or all of the shares of the special purpose vehicles. This process also involves persons from the subsidiary company responsible for the implementation of a given project.
One of the advantages of the Company and its Group is the consistent protection of industrial and intellectual property for its projects. Currently, the Company holds a patent for the developed elements of the microfluidic method, as well as four registered trademarks.
In addition, industrial property protection is taken care of separately by subsidiaries. In this respect, Curiosity Diagnostics Sp. z o.o. has 8 patent families which include 12 patents and 6 patent applications. On its part, Bacteromic Sp. z o.o. holds 5 patent families which include 2 granted patents and 10 patent applications, already protecting the companies’ technological solutions.
The company’s one patent family includes separately protected components of an item, e.g., a cartridge or an analyser.
In 2020, the global in-vitro diagnostics market was estimated to be worth USD 83.4 billion, and initial forecasts for 2021 suggested the market would grow to more than USD 91 billion. The COVID-19 pandemic has undoubtedly had a major impact on the industry’s growth, forcing the adaptation of existing solutions for faster, more accurate and more comprehensive diagnosis of those exposed to the virus. Extensive efforts, along with restrictions and regulations to limit the spread of the pandemic, have relied heavily on mass testing, accelerating and increasing the attractiveness of technologies still in the development phase.
The diagnostics industry, which had already been growing in importance, has become one of the few sectors for which the pandemic has become a driver and catalyst for further growth. At the same time, the market is characterized by ever lower barriers to entry for new, smaller players offering cutting-edge diagnostic technologies gaining recognition and interest from market leaders who choose to expand their offerings through acquisitions of smaller, entrant companies. The year 2021 saw a further increase in transaction activity in the medical diagnostics market, with 8 deals closed (compared to 3 in 2020) according to the Healthcare Investments and Exits (Annual 2021) report. At the same time, for the broader category including both diagnostic solutions and companies developing R&D tools, the aggregate value of deals and IPOs exceeded USD 40 billion against USD 27 billion in 2020 and just under USD 9 billion in 2019.
In the near term, the direct share of testing for COVID-19 in the total diagnostics market is expected to decline in line with the increasing number of people vaccinated. However, due to the popularization of medical diagnostics as an increasingly common and regular preventive measure, the market is expected to continue to grow steadily at an annual rate of 4.5% between 2021 and 2027 to a value of approximately USD 114 billion. Future growth drivers will include increasing public awareness about the need to take care of one’s health through prevention, as well as introduction of new types of tests that better meet requirements of patients and healthcare providers. At the same time, the trend of ageing populations is visible in many countries. As the average age increases, the proportion of immunocompromised people, and therefore those with predispositions to various diseases, increases. Consequently, it will be necessary to adapt the range and level of services provided by health systems to cope with future changes in demand from public and private providers alike. Thus, in order to respond to end-users’ expectations, manufacturers of diagnostic systems are already focusing on developing tests for, among others, pneumonia, tuberculosis, sexually transmitted diseases or drug-resistant diseases while increasing the number of targets detected per test and reducing the time needed to obtain a reliable result. Those factors will also drive further market growth by expanding out-of-hospital diagnostics and specialized laboratories in so-called Point-of-Care facilities, such as airports, outpatient clinics, public utility buildings and care homes, making testing more accessible to all citizens.
The diagnostics market can be segmented into molecular, immunological, biochemical and microbiological diagnostics, among others.
Curiosity Diagnostics business segment (PCR|ONE)
Molecular diagnostics is one of the key segments that has been significantly impacted by the COVID-19 pandemic, with transactions in the market totaling more than $5 billion over the past dozen or so months. The acquired entities offered solutions in the area of molecular diagnostics, and the acquirers included global leaders such as Roche Diagnostics, ThermoFisher Scientific, Qiagen, Hologic, and DiaSorin. These transactions confirm the business potential of the PCR|ONE project and the growing demand for similar solutions around the world – those based on fast and advanced testing, with high precision analysis and the ability to identify as many pathogens as possible. Naturally, this is due both to the demand from the medical sector and to the constantly evolving diagnostic technology which provides more and more information within ever shorter time [“Point-of-Need Testing: application of microfluidic technologies”]. It is this gap that represents the main opportunity and target for the development of the Company’s scientific projects and business activities.
As recently as in early 2021, estimates put the value of the molecular diagnostics segment in 2020 at around $21 billion, although revised forecasts suggest the value could be as high as $37 billion in 2021 and reach nearly $50 billion in 2028 at an average annual growth rate of around 3.9%.
Molecular diagnostics is carried out using various technologies. The key method on which the PCR|ONE system is based is PCR, or polymerase chain reaction. In 2020, it accounted for over 83% of the revenue generated within the overall segment. In contrast, the size of the global market based on “point-of-need”/”point-of-care” tests (related to commonly available diagnostic devices), and thus the part of the molecular diagnostics market particularly close to Scope Fluidics’ projects, was estimated in 2019 at USD 3.2 billion [“Point-of-Care Infectious Disease Diagnostics Market”] or USD 4.8 billion [“Point-of-Need Testing: application of microfluidic technologies”].
This market is also characterized by dynamic growth and considerable diversification of its main players. In 2019, the main players were: Abbott Laboratories (21%), Cepheid (18%), bioMérieux SA (15%) and Roche Diagnostics (11%) [“Point-of-Need Testing: application of microfluidic technologies”]. This proves that the market is dominated by large players, often taking over the solutions developed by smaller players just entering the market. Similarly to the general molecular diagnostics market, the market is characterized by dynamic growth, at the level of approx. 13% annually – in 2025 its size is expected to reach approx. USD 10 billion [“Point-of-Need Testing: application of microfluidic technologies”] or approx. 16% per annum and USD 8,900,000,000.00 in 2025 [“Point-of-Care Infectious Disease Diagnostics Market”].
BacterOMIC business segment
Antibiotic resistance will be one of the significant challenges facing the health care system in the near future – according to WHO estimates, this problem could contribute to up to 10 million deaths per year by 2050. Due to insufficient possibilities for rapid and accurate diagnosis in this area, the health of patients is primarily at risk, which also has its financial consequences for institutions in the field of healthcare. As a result of inaccurate diagnoses and the use of inappropriate antibiotics, the problem is growing and the hospitalization of patients with drug-resistant bacterial infections can be prolonged by up to several weeks.
The COVID-19 pandemic has only highlighted the scale of this challenge with the increased use of antibiotics – often ineffective – and the increasing number of hospitalized patients especially in the most severe months of the pandemic. The overuse of antibiotics, as well as the mismatch between therapy and infection, leads to further development of increasingly resistant pathogens. Other factors include increasing population movements, tourism, intensive trade or climate change – all of which have significant consequences not only in clinical terms, but also in microbiological, epidemiological, economic, and psychological ones as well [Antibiotic resistance: causes and consequences, B. Mazińska, W. Hryniewicz].
It is currently estimated, according to Grand View Research, that the global microbiology diagnostics market reached the value of approximately USD 5.7 billion in 2020. According to another report, although indicating a lower value of the market, the growth rate of this segment alone is estimated at around 9% y/y over the next 5 years. Thus, this is another area of broadly defined in-vitro diagnostics within which the Company sees future business opportunities with the development of the BacterOMIC project. This system is an answer to one of the key challenges facing the healthcare sector in the coming decades and will ultimately enable fast, cheap and comprehensive diagnosis in order to select the most optimal therapy for future patients.