Dr. Greg Galvin is a successful veteran of the MEMS industry. His first company was sold in 2000 to Calient Networks, an optical MEMS switching company in San Jose. The transaction at the time was valued at ~$300 million in cash and stock. Dr. Galvin's second company, Kionix, focuses on the design and fabrication of MEMS inertial sensing devices and was acquired in 2009 by ROHM Co., Ltd. for $233.5 million. Now, Dr. Galvin has launched his third company, Rheonix, that concentrates on molecular diagnostics applications enabled by microfluidic technologies. In this extensive interview, Dr. Galvin discusses opportunities in the molecular diagnostics market, current cost trends and technology developments, and shares the vision for his new company.
MEMS Investor Journal: What does Rheonix do? What is the company’s main product and for which applications?
Dr. Greg Galvin: Rheonix has created a powerful microfluidic platform for the evolving molecular diagnostics industry. Rheonix’s system incorporates low-cost disposable chips that can analyze single or multiple clinical raw samples, such as blood, saliva and vaginal swabs. Current approaches cost $10-$100 per test, whereas Rheonix’s system costs $1-$10 per test -- an order-of-magnitude deduction.
Our disposable chips provide multiplexed endpoint analysis and can be rapidly customized for a wide breadth of diagnostic applications. Those applications include human and veterinary diagnostics, food and water testing as well as defense applications. Although originally developed for molecular diagnostic applications, our technology can also be used in immunoassay formats.
MEMS Investor Journal: Where did the company’s technology come from and what is the company’s history?
Dr. Greg Galvin: The company originally operated as the microfluidics division of Kionix, a global leader in the design and fabrication of high-performance, silicon-micromachined MEMS inertial sensors. It spun out as an independent company in December 2008. Originally intending to exploit the silicon MEMS technology of Kionix, it became clear within about 18 months that the economics of using silicon MEMS in the consumer electronics and automotive industries did not apply to the human diagnostic area, primarily due to the larger "real estate" requirements of the diagnostic devices. Therefore, other substrates were evaluated, with the final disposable chip design employing inexpensive polystyrene plastic.
MEMS Investor Journal: Why did you pick polystyrene?
Dr. Greg Galvin: Since the feature sizes of the polystyrene device are compatible with inexpensive injection-molding methods, the plastic disposable chip design provides significant cost-of-goods advantages. Our systems and chips cost roughly one- tenth of the competitions’ cost. Our tests cost about $1 each as compared to $10 each from the competition, and our equipment costs $10,000 versus $100,000 for competitors’ systems. Also, whereas competing systems require large physical space because they use a number of separate bench-top instruments, we provide a fully integrated single instrument that minimizes space requirements, labor costs and human error.
MEMS Investor Journal: What is your vision for Rheonix? How do you see the company five years from now?
Dr. Greg Galvin: Having successfully built significant shareholder value for its former parent company and providing its shareholders with two separate exits, we plan to utilize a similar approach. By creating multiple strategic partnerships in multiple fields-of-use, we plan to provide at least one significant exit to our shareholders. We envision the value being created on several fronts, including demonstrating the breadth of applications in multiple diagnostic fields of use, building a broad IP portfolio, and making ourselves indispensable to multiple strategic marketing partners.
MEMS Investor Journal: Who do you consider your main competitors? Why? What differentiates Rheonix from these competitors?
Dr. Greg Galvin: We are positioning ourselves in the microfluidic and molecular diagnostic markets. Although several firms such as Fluidigm, Becton Dickinson's HandyLab and Cephied have products in the field, our most significant competitive differentiation is in the cost of goods sold for both the disposable device and the instrumentation. These companies cannot match our costs largely due to the fundamental design of their disposable components; essentially, they have many different discrete components and our chips are completely integrated on one substrate. Having the ability to produce the disposable device by inexpensive plastic injection-molding methods, we plan to offer a wide breadth of products that will have a cost of goods in the sub-US$1 range.
Further differentiation can be found in the broad applicability and flexibility of our platform. Although we primarily focus on molecular diagnostics for human diseases, the system has been demonstrated in environmental applications such as water contamination, food contamination as well as avian flu.
MEMS Investor Journal: Is cost your main advantage?
Dr. Greg Galvin: Another major advantage is that our system is capable of performing all required preparative, analytical and readout functions. For molecular diagnostic tests, these functions typically include the extraction of DNA from raw samples, molecular amplification via PCR, and the readout of visually detectable signals. Our system is compatible with a variety of techniques for the readout. One we particularly like is a reverse dot blot (RDB) technique, essentially a micro-array of targets where various DNA segments bind to specific sub-types of different virus sub-types, for example.
While most of the competitive products have some degree of pre-analytical processing, we are capable of introducing true raw samples and achieving fully automated results, regardless of the assays’ complexity. Once applied to our system, no additional hands-on efforts are required. This not only allows complex assays to be easily and seamlessly performed in an automated fashion, but it also significantly reduces the amount of training required by the analyst. Finally, our robust instrumentation is at least one order of magnitude less expensive than that of our competitors.
MEMS Investor Journal: Who are your typical customers?
Dr. Greg Galvin: Central diagnostic labs and hospitals; perhaps, in the future, doctors’ offices and other point-of-care locations. However, we would not be selling directly to them, but through partnerships with one or more of the major diagnostic companies such as BD, Abbott, Roche or Qiagen.
MEMS Investor Journal: Many companies are currently pursuing biomedical applications with technologies based on microfluidics. What does Rheonix bring to the marketplace that is truly unique? What are the main upcoming milestones on your technology roadmap?
Dr. Greg Galvin: Rheonix brings several competitive advantages to the field of microfluidics. Our patented lamination methods allow us to create all needed pumps, valves, channels, reservoirs and reaction chambers on a single disposable device. In addition, the bi-directional flow capabilities of our microfluidic networks allow us to move fluids in forward and reverse directions. Unlike any of our competitors, we can exploit this unique capability for several features. For example, by flowing fluids in a back-and-forth manner, we can achieve efficient and more rapid cell lysis. We can also achieve more effective and rapid mixing of reagents, thereby assuring the homogeneity of subsequent onboard reactions.
MEMS Investor Journal: Could you please expand on this. Are you saying that other companies cannot put pumps, valves, channels and reservoirs on the same device because they don’t apply proper bonding and/or lamination methods?
Dr. Greg Galvin: We create all of the components on the chip. There is no assembly of discrete components such as channels, pumps, heaters and reservoirs. Additionally, we use plastic because silicon is too expensive and glass is too hard to manipulate. Our competitors, such as BD’s HandyLab, do what would be considered an electronic equivalent of PCB assembly. Whereas, we have the equivalent of a "microfluidic integrated circuit."
Finally, our competitors don’t have bi-directional flow capabilities; they have only one-directional and continual flow. Our unique three-layer device structure and pneumatic actuation enable our bi-directional flow functionality.
MEMS Investor Journal: Overall, how have your competitors been doing in the market place?
Dr. Greg Galvin: Most, if not all, microfluidic technologies have failed in the marketplace because they have been too expensive for any widespread commercial use. Rheonix’s unique differentiation is a very cost-effective technology both in manufacture and in use that, for the first time, places a microfluidic-based technology squarely in the price point sought by the marketplace.
MEMS Investor Journal: What about BD’s HandyLab? Are you saying that their system has failed and that it is too expensive?
Dr. Greg Galvin: BD's HandyLab system was only recently introduced to market. My understanding is that HandyLab has not sold any equipment to date. They are fighting market inertia (namely, resistance to change) and price points. And, of course, with clinical testing, there are medical malpractice concerns. The bottom line is that we have not yet seen widespread commercial adoption for microfluidic-based molecular diagnostic systems.
MEMS Investor Journal: How do you see your international business development?
Dr. Greg Galvin: We are actively looking at China where diagnostic testing is nonexistent for most patients. Here, low-cost systems can enable health assessments that, heretofore, were not in place. In some respects, such markets are easier to penetrate because we would not be replacing an existing infrastructure, as would be the case in the US and other developed markets such as Europe. At the same time, the North American market is very important because much of the wealth, and resulting medical advancement, is still concentrated here.
MEMS Investor Journal: Which application are you targeting first? Why this application? What are the other applications that you eventually plan to enter with Rheonix' technology and products?
Dr. Greg Galvin: Several applications are currently being targeted with our own internal funding or with external federal funding. Our internal funding has focused on two main areas.
We are currently pursuing registration in China for an HPV test that is capable of simultaneously detecting up to 20 clinically relevant subtypes of this virus. We are also planning to initiate clinical studies in the United States by third quarter 2011 that will allow us to submit a 510(k) for a molecular test capable of determining the genotypes associated with increased sensitivity to the blood-thinning drug warfarin (Coumadin).
Using federal funding (NIAID/NIH), we are currently developing a multiplex test for the detection of sexually-transmitted diseases and for urinary tract infections. We are also using federal funding sources, such as the EPA, to develop a rapid on-site test for Cryptosporidium parvum in drinking water treatment plants.
Finally, the National Science Foundation is funding a major effort to develop a rapid point-of-use test to monitor recreational beach waters for microbial safety. Current tests take several days to complete and the US EPA is currently under a court order to reduce the time of testing to same day. We can achieve results in approximately three hours.
MEMS Investor Journal: What do you see as the top three trends right now with biomedical technologies based on microfluidics?
Dr. Greg Galvin: Higher speed, better integration, and random access. At Rheonix, we are speeding up the testing process by a factor of two over our competitors’ non-integrated systems. And, our technology enables random-access testing, namely the ability to perform difference tests at the same time. In all cases, we are meeting or exceeding current expectations.
MEMS Investor Journal: What's your advice for venture capitalists investing in MEMS technology companies? What should they look out for?
Dr. Greg Galvin: The criteria for investing in MEMS companies are largely no different from those employed in making any venture investment. The key factors to be considered are management track record, completeness of the technology, a viable commercial plan including pricing, differentiation over competing technologies, and a plausible exit plan. Perhaps the one distinction for MEMS these days is that there have been so many prior investments in this sector that one has to carefully consider the intellectual property position associated with the proposed investment and the company's freedom to operate.
MEMS Investor Journal: What advice do you have for emerging MEMS companies and their founders?
Dr. Greg Galvin: Plan for lots of time and money. MEMS technologies are expensive to bring to commercial fruition and the markets are difficult to penetrate. You will need to move from inception to significant scale in both sales and manufacturing. All of this will require far more time and capital than expected. One must be truly honest with oneself as to what your competitive advantage is and if it is sustainable in the real-world market. Competition in all industries, MEMS is no different, is fierce and getting more so. Focus less on technology and more on customers and cost effectiveness.
MEMS Investor Journal: What are the top three reasons why MEMS companies fail?
Dr. Greg Galvin: Lack of focus, lack of adequate funding and not understanding the market needs of their customer base.
MEMS Investor Journal: What was your biggest failure in your professional career and what were the key lessons learned?
Dr. Greg Galvin: Naïve understanding of what it took to succeed in the marketplace. Lessons learned: Focus less on technology and more on the customers and their specific needs; get product to the market sooner rather than later even if it is not perfect; invest in the sales organization sooner rather than later; and never underestimate the competition.
MEMS Investor Journal: What are the top three MEMS startup companies that you believe have the highest chances of success?
Dr. Greg Galvin: Obviously, I believe Rheonix has the highest chance of success of any MEMS start-up company that I know of. I do not spend a lot of time looking at MEMS start-ups as I am not an active investor in start-up companies other than my own. MEMS technologies that I believe are poised for commercial success are RF MEMS devices (although fraught with difficulties, which may preclude success in the end), MEMS oscillators (although there are a number of entrants there already), and microfluidic medical device MEMS (although most are pursuing technologies that will never be cost competitive in the market).
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Dr. Gregory J. Galvin founded Kionix in 1993 to commercialize a novel micromechanical technology pioneered by researchers at Cornell University. From 1993 to 2000, Kionix grew from its two founders to over 40 employees and developed products in inertial sensors, microfluidics, data storage, micro-relays, and micro-optics. Late in 2000, Kionix was acquired for its optical switching technology by Calient Networks of San Jose, CA and renamed Calient Optical Components. Just prior to the acquisition, a new company was spun out to the then Kionix shareholders to pursue inertial sensor, microfluidics, and data storage markets. This company regained the Kionix name post acquisition. From the acquisition until June 2002, Dr. Galvin served as President and CEO of Calient Optical Components and on the boards of both Calient Networks and the new Kionix. In July 2002, he returned full time to Kionix as President and CEO and advanced the Company to its 2009 acquisition as a wholly owned subsidiary by ROHM Co., Ltd. of Japan. In addition to continuing service as Kionix’s President and CEO, Dr. Galvin also serves as CEO and Chairman of Rheonix, Inc., a corporate entity established in December 2008 to commercialize a unique polymer chip microfluidic technology developed by Kionix scientists.
Dr. Galvin has a B.S. from the California Institute of Technology in Electrical Engineering and a Ph.D. in Materials Science and M.B.A. from Cornell University. Dr. Galvin served for over five years as the Deputy Director of the Cornell Nanofabrication Facility (CNF) in which the Cornell micromechanical research was conducted. Prior to founding Kionix, he was employed by Cornell University as Director of Corporate Research Relations, focusing on transferring technology from the university to industry. Dr. Galvin's graduate research was in the areas of thermodynamics of silicon under ultrafast melting, ion beam analysis, and thin film technologies. He is a member of several scientific societies, has published over 20 technical papers, and holds 58 patents. Dr. Galvin is a founding member, and former chairman, of the Finger Lakes Entrepreneurs Forum. On July 1, he will begin a four-year term on the Cornell University Board of Trustees. He is a member of the Cornell University Council, Advisory Council of the Cornell Engineering College, and serves as a Director of the Boyce Thompson Institute for Plant Research, Tompkins County Area Development, Inc., the Kensa Group, the El Portal de Belén Foundation, and Ithaca’s Sciencenter. In June 2010, Dr. Galvin was named a regional winner of the Ernst & Young Entrepreneur Of The Year® award. A leading authority on MEMS product innovation, Dr. Galvin is frequently invited to speak at meetings and conferences in the United States, Europe, and Asia.
Copyright 2011 MEMS Investor Journal, Inc.
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