Ambry Genetics Corp. is in a hot segment: specialized diagnostic testing.
The company provides genetic tests for cystic fibrosis, pancreatitis and colon cancer.
“The way I look at science, I just want to be able to put useful things out there for the doctors so that they can do whatever they need to do,” said Charles Dunlop, the Irvine-based testing company’s founder and chief executive.
One of the bigger deals in Orange County last year involved a specialized testing company: Irvine-based US Labs Inc., which sold to Laboratory Corporation of America Holdings of Burlington, N.C., for $155 million.
US Labs does cancer testing for doctors and hospitals.
Laboratory deals “ac-celerated quite a bit last year and will continue to accelerate,” said Michael Ellington, managing partner of Strategic Equity Group, a Santa Ana-based valuation advisory services company.
Ambry isn’t at the level US Labs was at when it was bought in December. Ambry, which is privately held, projects sales of $4 million to $6 million this year. Unlike US Labs, Ambry hasn’t raised any venture capital.
“We don’t seek (outside) financing,” Dunlop said.
“Friends and family around town” are among Ambry’s original investors, he said.
Ambry does share a link to Laboratory Corporation of America, the second largest medical testing company after New Jersey’s Quest Diagnostics Inc.
James Thompson, LabCorp’s senior medical director locally, is Ambry’s medical director (see related item, page 11).
Ambry’s main test uses gene scanning and sequencing to spot mutations that can lead to diseases. The company fell into cystic fibrosis testing “semi-accidentally,” Dunlop said.
The company found there “was nobody out there sequencing” genes that cause cystic fibrosis, he said.
Cystic fibrosis is an inherited disease that causes respiratory and digestive problems, and mainly is found in people of European descent.
Ambry’s customers are university hospitals and children’s hospitals, followed by pathologists. The company does some testing for Children’s Hospital of Orange County, though Dunlop said it isn’t a big client.
The company hopes to grow with new products and by seeking out government research grants, according to Dunlop. Ambry spends about 40% of its revenue on research and development, he said.
Most companies in Ambry’s field of molecular genetics have received money from government sources, Dunlop said.
In an example, Ambry could use grant money to find out if the company’s sequencing technology can determine whether a certain gene is related to asthma, he said.
Besides running tests for hospitals and doctors, Ambry also does genetic studies for drug makers with products undergoing Food and Drug Administration approval.
Ambry might look at whether a drug is effective at treating a patient with cystic fibrosis, Dunlop said. The company employs around 30 people in its Technology Drive office in Irvine. Dunlop, who is 33 and has a background in physics, founded Ambry in 2000 after getting a taste of working with other genetic-related entities, such as the Scripps Research Institute in La Jolla.
Ambry competes with specialized arms of the big testing companies, including Quest’s Nichols Institute near San Juan Capistrano.
But Dunlop said he doesn’t see a direct competitor in Ambry’s cystic fibrosis niche. He said he does see some trading of clients with Genzyme Corp., a Cambridge, Mass.-based biotechnology company with a diagnostics unit.
Genzyme does more screening to see if parents may pass on the cystic fibrosis gene, he said. Ambry runs tests to see if people actually have the condition.
On the question of going public or being bought: “It’s the kind of thing where, I guess, every company has its price,” Dunlop said. “But it’s kind of hard to imagine selling.”
Even so, Dunlop said he’s realistic.
“I know it’s in the cards,we need to find an exit mechanism for our people,” he said. “It’s something that’s sort of sitting out there. We’re not going towards it.”
