Business Rx: Diagnostic anSERS

April 21, 2013
The entrepreneur

Sean Virgile is a Ph.D. student with a solution that could help companies detect all kinds of chemical contaminations — for a mere $5 a pop.

Virgile and fellow University of Maryland bioengineering Ph.D. student Eric Hoppmann licensed technology developed in the university’s Fishell Bioengineering Lab to start Diagnostic AnSERS. Their company uses a paper-based test that can be dipped in or swiped across a variety of substances to detect contaminants. The test has big potential for any industry that needs to make sure its products are what they say they are — from food companies, to drugmakers, to chemical suppliers. It also could be a critical tool for law enforcement officials in detecting illegal narcotics or explosives.

The pitch

Virgile

“We produce a one-time-use paper test to detect chemical contaminants. We print the paper strips with a proprietary ink. Customers dip the strip in the substance they want to test, then they use a special laser that can identify all chemical ingredients. Think of our technology as fingerprint powder — if there is anything extra in the substance tested with our strips, the laser will see it.

“We developed this technology because the market needs a much cheaper way to perform chemical identification. Right now, our competitors cost up to $105 a piece per single-use test, and that’s not adequate for the industry. Our $5 solution is better than anything else available on the market now.

“And the market is very large — anyone who needs to test purity or detect chemical threats could use this. Our test provides on-the-spot, lab-quality analysis, without the hassle of testing a substance and shipping samples off to a lab to wait for results.

“Right now, we’re in the final research stage to fully commercialize our product. We already have a customer and distributor lined up. Now, we have to figure out our manufacturing. We are grappling with whether we should line up contract manufacturing, or do it ourselves? We could handle producing our early orders in the lab ourselves, but is that how we should be spending our time? How much should we outsource?

The advice

Harry Geller, entrepreneur-in-residence, the Dingman Center for Entrepreneurship

“In your nascent stage, I would argue that producing the chemical ink and paper sensors yourself is exactly where you need to be spending some of your time.

“Specifically your technology is disruptive in the sense that it costs 1/20th of the price of the current product offerings, is easier to produce and yields equal or better results.

“You already have a customer and distributor lined up, so the most important factor right now is quality control and proving out your model. This is best achieved by Diagnostic AnSERS controlling the first phase of the production. Once you have worked out the bugs in the production process, then will you have the proper specifications to take this out to the manufacturing market for mass production.

“Regarding when to outsource to manufacturers, you can use basic production forecasting methods to determine this, starting with your current capacity to produce these in-house compared to the product forecasts your distributor is giving you. Using a reasonable growth projection plus pipeline sales, you should be able to predict within a few months when you will need to start outsourcing. Then you will have the experience and exact specifications to really drive down costs and produce a great product.”

The reaction

Virgile

“That’s a great way to drive down costs. Initially, we will need to have multiple iterations of our product to nail down the manufacturing process, anyway. Also, it’s cheaper for us to do that rather than outsourcing it. After that, we’ll definitely have to decide whether we want to scale up our own production or outsource it so we can focus on research and development.”

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