IPDx Live Q&A with Funderbeam

On Tuesday, November 22nd, 2016 we hosted a live Q&A with early stage Type II Diabetes (T2D) biomarker discoverer, Dr. Toomas Neuman. The aim of the discussion was to answer questions or about the medical science behind IPDx and why they are raising funds. Below is the full transcript of the call.

If you have any further questions for Dr. Neuman, Mr. Aljand, or Urmas Peiker please reach out to hello@funderbeam.com with full details.

For reference purposes, you may visit IPDx’s syndicate page or watch this short video before beginning.

Urmas Peiker, Cofounder of Funderbeam: My name is Urmas and I’m one of the founders of Funderbeam. Sitting next to me, are IPDx Lead Scientist and CEO, Dr. Toomas Neuman and their CFO, Henry Aljand. Today you can ask questions about IPDx and both Toomas and Henry will directly answer them. There is no need to be timid, there is no subject off limits. Also if you have any questions about Funderbeam I will gladly answer them. So, let’s get to it. Would you firstly like a brief introduction from the IPDx people or do you already have some understanding about the company?

I think it would be a good idea to have an introduction because I haven’t really done any background research.

Urmas: Very well, let’s do it like that then, I’ll give the floor over to them.

Henry Aljand, CFO of IPDx: Hello, my name is Henry. I’m one of the founders of IPDx and next to me is Toomas. He is the main person when we talk about the science and founding of it all. What is IPDx? Why it exists? What do we do? IPDx is a company founded in Germany. Why there? Because Germany sponsors the development of technology in German companies, especially those in Eastern Germany. IPDx has received a grant worth €1.8 million of which €1.2 million is covered by Germany through various European programs. Thanks to this grant, we are developing complex tests for two cancers (breast cancer and cervix cancer). It’s biologically and technically innovative, and in about 3–5 years when the test is ready it will be patented by IPDx. That’s all about the German company and why it was founded. Now back to the main point: What are these tests that IPDx will be selling in the future? The easiest way to explain it biologically would be this: When a person gets sick (either by catching a virus or some other illness) the body reacts and this reaction, is a defensive reaction (an immunological defence mechanism) which is also visible in human blood. Some corresponding changes in blood take place. Let’s call these biomarkers. These biomarkers are the basis of how it is possible to discover diseases and diagnose an illness that already exists or that is going to exist. IPDx’s parent company, Protobios has done the research and development to find these specific biomarkers. Now IPDx, (which is an implementing agency) will put these biomarkers on a physical device, this is what we call “the test.” It will be sold in drugstores, at a family doctor, or a clinic will use it to identify or predict the beginning of a disease. We can talk about four diseases that we are developing test for: we will soon have tests for narcolepsy, type 2 diabetes, and like I said in the future for breast and cervical cancer. One might ask, why are we doing this? The reason is very simple, many people get sick and die because these diseases are detected too late. For example, a half a million people a year die because of breast cancer, many of them could be saved if the detection of the disease happened sooner. This is the main problem we are addressing through our diagnostic tests. So, a short overview of the market itself. Who should be tested for type 2 diabetes for example? The answer is: everyone who is obese. Currently 600 million adults are obese in the world (this number is growing daily) and 14–15 percent of that number live in Europe. These numbers only reflect adults but there are also obese children. According to World Health Organization one should test for diabetes at least once every three years, so this makes 200 million tests a year (plus children, etc). And concerning narcolepsy (the test which we are also planning to have a finished product of at the end of next year), there are 3 million people who have been diagnosed with the disease and according to specialists this is only one quarter of the real number, plus there are people who may have it and should be tested. So this is our second test that should be finished next year. Now one might ask, how big is the competition? People always ask what happens after you finish the product can you start selling it and what about the price and competition. We can say that basically there is no alternative to our product for both of the tests. There are no tests to determine narcolepsy, at the moment it is determined by observing sleep disorders and by performing other examinations. Also, an early test to determine diabetes does not exist. There have been attempts to make a test but no one has succeeded. So we have a unique situation with both of our products. This basically concludes the introduction, maybe you want to add something Toomas?

Dr. Toomas Neuman, Lead Scientist and Founder of IPDx: What more can I add?… Maybe only that the technology we are using to detect these biomarkers is quite unique. We are observing how the immune system reacts to whatever changes may occur in the body. We are looking at 10–100 million biomarkers at a time. Because this requires big data analysis, all of this, up to the point when we start doing real tests, is done with big computers. This was also the reason why we are trying to separate these things, the research and development, the scientific research, development, and the commercialization. The German company was made because of the commercializing. So, one of the reasons was what Henry also mentioned, the grants. Grants are always good and are easier to get if the business is incorporated in the country awarding them. The other reason is that Germany has a strong biomedical industry base. Starting from diagnostics and drug development, it has a very highly qualified network where you can always get help, advice, and exchange experience. What more can I say? I hope that the uniqueness in the way we identify biomarkers combined with German precision are what will be the basis of our success.

Henry: One thing I would like to add is that when you as investors are assessing risks you take into account the competitors, how big the market is, and that when IPDx has finished and the test have been validated then the tests will be patented by IPDx, meaning they will be protected by a patent.
Urmas: I think that an important thing (that we also have in our profile) is the trust in the company. Toomas you have some experience with successful exits and spin offs already.

Toomas: Yes, well it’s a matter of opinion what is considered successful and what is not. If you earn millions and billions then yes, you are very successful but if you earn something then you can say that you are also successful. I have experience in different fields. I have been in the United States for 16 years working in the biotechnology sector, been a part of building up three companies and a fairly successful exit. I have also been active in Scandinavia and Germany. But yes I feel that the years in the States and the overall (almost) 30 years in the field have given me the experience and ability to assess situations objectively and help to plan things better.

Urmas: Maybe someone has some questions they would like to ask?
Yes. Maybe you could elaborate on the subject of competition?

Urmas: You said that there is basically no competition but something is being done.

Henry: Well if we look at narcolepsy and type 2 diabetes then there are no tests for narcolepsy at the moment.

Toomas: Well you can’t say that there are no tests.

Henry: Yes we can’t say no tests but what is being done at the moment is done by the measurement of sleep and things like that. Our test will be simple and easy to use for the basic consumer as well. Our final result (when talking about diabetes and narcolepsy) will be something similar to the home pregnancy test where you buy the test, take a piece of blood from your finger (with a standard needle), put it on a piece of paper and either take it to you doctor or look up the result by yourself and then think about you next steps. At the moment there is nothing like that on the market. This is an important fact to remember when talking about competitors. And when talking about long term plans then breast and cervix cancer have different testing solutions but they are complex and require a lot of expensive machinery, for example here in Estonia we have buses that drive around breast cancer testing but these buses cost millions and you have to go there to be tested. You can take our test even in the forest (providing there is a post office near you), put it in an envelope, send it to your specialist doctor and wait for what the doctor has to say about your results. This is the major difference. Maybe in Estonia people are not aware of this that much but in some bigger countries like France it is a big problem. In some towns they don’t even have family doctors anymore and getting to see one requires a lot of effort and costs a lot of money.

Toomas: We talk about the concepts like personalized medicine, home tests, and point of care (procedures done in a doctor’s office) more and more, in a perfect world they should eventually end up as a cloud service. This is also being developed in Estonia and is called e-Health. This is also being done in other countries. We want to get a hold of a new segment of the market, tests taken at home. We have made an app where you can send the test results to the cloud and get the results back on your phone. But right now they are far from clinical medicine, they are more like home tests or lifestyle tests. With the type 2 diabetes test we can’t make a diagnoses, we can warn people that if they continue doing nothing then the illness will develop, that they better go and see a doctor and together with him think how to improve their health. The main direction we are focused on is personalized medicine and that people can test by themselves or in the doctor’s office and not wait in long queues (because the tests are not sent to central laboratories). We want to bring medicine closer to the people. In 2017, we would like to launch our point of care product.

Urmas: Let’s talk about the launch, how do you see it happening?

Henry: When we have finished with the external validation then we want to apply for the C-mark that will let us market the product in Europe and after that we want to take it to global distributors. Of course we want to start from Estonia and also Germany (where we will make the first validations as IPDx is a German company after all and Germany is a big enough country to create a revenue stream).

Toomas: I would like to add that that as we are in the field of medicine then authority is a very important thing. It is impossible to market something in a field without authority. What we want to do, and what we have already started doing, is performing the studies and validations with key opinion leaders. So, that they can express their opinions, using the results of the research already at conferences and other events before we start selling our product. This is important because one segment we are trying to sell our product to are doctors and because they need to know the treatment guidelines in advance and how they can use these tests. The clinical market (bigger market) will take some time to reach. The home market, has two pieces of advice given to them: go to see a doctor and do more medical examinations (tests). They should be reached in the very beginning. The reason is that we are talking about early diagnostic tests but usually people don’t visit the doctor until they have complaints. And when their body mass index is around 30 they probably won’t want to go and see a doctor. But when they can do the test at home then they can take it and if it says that something is wrong they start to think and probably go and see the doctor. Maybe it will make people think more about their health and prevent the big type 2 diabetes pandemic. It may not be such a big issue in Estonia but it is in Asia (especially India and also in China) and of course in the United States. It is a disease that is connected with the living standards, the better the standards the more people have diabetes.

Urmas: You have been talking about how to sell your product at the European market but what if you were taking the product to the US market, would you be starting from scratch or is it just a continuation of your current process?

Toomas: In some aspects it is a continuation process, but there are two different regulation processes: in Europe everything goes through the European Medicines Agency where you have to get a special mark for clinical diagnostic tests and the US there is another organization (FDA). Basically what you get from both of these places is a selling license, that gives you the right to be able to sell your products on the territory they administer (so in Europe or in the US). And both of them require you to have good enough clinical data and that your product actually works. The peculiarity regarding the States is that it the data has to be done for the US population, taking into account that the population of the US has many different races (Whites, African-Americans, Mexicans, Asians, and so on). The European regulation is more general but some countries, before they let the product enter their market, demand some kind of a study to be done in their country. For example, France and Switzerland don’t care about what the results say about Germany, they want to see the result about their own population.

Urmas: So to enter the US market you have to gather clinical data about the US population?

Toomas: Exactly, but if you already have good data from Europe or some other places then it won’t require a lot of new surveys.

Urmas: So are we talking about a half a year or two years?

Toomas: The thing is that with correct preparations we can carry our the studies relatively quickly, one thing is if we have already gathered the bloods with the intention of carrying out the tests in the US but another thing is the FDA, their process takes up to 180 days, which means the clock starts when you send your things there and stops when they send their answer. So, it depends on how well the FDA has built up their communication with you. But it’s an easy test, nothing life endangering so there are no special regulations.

Henry: Yes, you don’t have to put anything in your body, it’s extracorporeal. Unlike when you want to launch new drugs on the market, then people have to take in the medications and no one knows how the body will react. We only take a piece of blood and then test it.

Urmas: So I have another question what is the probability that these opinion leaders who look at the data results of your clinical studies will get different results from the result you already have? You already have take more than 1,000 samples and analyzed them as I understand.

Toomas: We don’t have 1,000 results from disease, we have a big database yes… The statistics of the population have to be taken into account. And our tests are based on an immunological results, the immunological result depends on the genotype of a person. So, some people have very different genotypes, or sets of genes. It is known how different gene sets have been distributed across Europe so we have to take into account all the different gene sets and not neglect any groups of people so we can can get a better picture when making the diagnoses.

Urmas: Maybe you all have some questions now?

I would like to know how much this test will cost?

Urmas: You mean if it was in pharmacies?


Toomas: It depends on how many units we can make. If we were to produce 1 or 10 then it would cost a lot but if me made ten million then it would cost less. What we have taken into account is that the price for a regular buyer would be not more than €10–20, maybe even less.

Henry: Like always when talking about the price we have to take into consideration how much people are willing to pay for it. The price can’t be so high that it would become an obstacle. A person, when he feels like he needs the test, should be able to buy it. In our business model the price of one test is €25. But the market will determine what the price range is. It also depends upon the country as well. In America, if you have to buy a medical product for 100 dollars then it’s like getting it for free. Seeing you family doctor alone costs 200 USD.

Urmas: When looking at your growth plan, the number of workers seems to be growing steadily. Where do you think the main focus will be? Will it be on the sales or people with special skills?

Toomas: We basically have a prototype of the test. We have a tentative agreement with a manufacturer who will manufacturer our products. The maximum capacity is a few million a year. It is a medium sized German company that handles the manufacturing of these kind of tests. And why we need people on the development side is that we want to cover more and more diseases and that means there has to be a lot of development going on. The development of one test equals to one or two years of work for three to four people. But more people are needed for the marketing and regulations.

Henry: Right now we can’t say for certain but some things need to be done by our workers and others have to be done by outsourcing. For example, we don’t know a lot about the Turkish or Ukrainian market so we have to outsource and find people who know that market well. The numbers may seem big but if we take into consideration that there are more 50 countries in Europe and if there is a person per country then it already makes 55 people. But it all depends how much money we will get, then we can expand accordingly.

Toomas: And also we are not against a decent acquisition or merger that will benefit everyone.

Henry: Or against a big cash injection. And when talking about scaling if there is a VC who wants to scale quickly and is willing to put in money then we welcome it with open arms.

Toomas: And one exit strategy is of course selling.

Urmas: Any more questions?

What can we look forward to in the near future from Funderbeam? What’s in the pipeline? Will there be a lot more companies or… Because the software is really good. Will there be any development concerning the platform itself?

Urmas: Our ambition is to grow as fast as possible and to be as international as possible. We have different cooperation agreements. Actually, I just came back from India, and we signed a contract with a group that has a network of investors not only in India but also in many countries in Europe as well, in North America in Canada, Singapore (those guys are Cross Border Angles).

And also we have established a collaboration with the Zagreb Stock Exchange. We want to introduce our model around the world and the feedback has been very positive. We have found different companies that will raise money and become tradable. At the beginning of next year we will have Croatian companies join us as well. We actually hoped that we could make it happen this year already but in my opinion that would have been rushing things a bit if we opened them before Christmas. We already have two strong candidates and I feel that it will happen in mid January, I can’t promise that but it is very probable. We are getting applications from all over the world. Our problem is that the investor base can’t keep up at the moment. Companies are looking for funding and that won’t change. Our hypothesis, when we started Funderbeam was also that companies will always need funding. At the moment, we have over 10,000 users but we would like to have 100,000 or a why not 1,000,000 users that are looking at companies. And we want like minded investors to invest in the companies that they are interested in not taking into account where the companies and investors are located. We started our first fund with Startup Wise Guys. We have also wanted to bring bonds to the market but I think this will also happen in the beginning of the year. We are keeping our options open. The platform is capable of making wider range of products and instruments. We want to choose the companies we let join our platform because we want them to be tradable in a few years too (we can’t guarantee that of course). We are looking for something long term not just a successful campaign. This is also a factor that affects our growth. We are a bit careful and conservative and hope to establish long term trust with our platform. That was a long answer, but yeah.

That was a really good answer, thank you.

Urmas: We don’t only want to only collect our fee but also help entrepreneurs and investors. So, investors could invest in companies that interest them and that they can go to the market and make an early exit if they want, or wait until a big event like a buying of a company happens. We want to help entrepreneurs to make their ideas a reality. We want to cater to everybody’s needs.

Is it possible to link an investment account to Funderbeam?

Urmas: Theoretically, it could be possible. Now the question is that does this notated status mean that it has to have a exchange license or will the tax office accept that a company is tradable. We are under financial supervision but at the moment we don’t have a license yet. We have to carefully abide by the rules when it comes to everything that has to do with public bidding and requirements (because the Financial Service is keeping a close eye on us).

Urmas: Seems as though there are no more questions, so any should arise you can also contact me directly if you have any questions about Funderbeam and if you have any about IPDx then you can leave them on the Q&A sheet (comments below). That is all, thank you and we’ll see you on the Funderbeam platform.


If you have any further questions for Dr. Neuman, Mr. Aljand, or Urmas Peiker please reach out to hello@funderbeam.com with full details.