When BG Medicine (NSDQ:BGMD) took itself public last month, three years after first announcing (then scuttling) its first initial public offering, investors seemed to like what they saw. Sure, the company cut its share price in half just ahead of the $7-per-share offering Feb. 11, but shares have averaged nearly $8.41 since then — a 20.1 percent increase.*
Investors must like what they know of Waltham, Mass.-based BG and its galectin-3 diagnostic test for heart failure. The test detects the galectin-3 protein, which president and CEO Dr. Pieter Muntendam says is both a biomarker and the cause of a form of heart failure in which the heart muscle gradually stiffens.
But when we sat down with Muntendam earlier in March, he told us that the company’s greatest innovation may not be its first diagnostic but its business model, which turns the traditional path for getting a test to market on its head.
Instead of just running the clinical studies needed to validate the galectin-3 test and handing it off to one of the industry’s larger players to take it to market, BG took the test from the clinical stage, through 510(k) clearance from the FDA and CE Mark approval in the European Union, and on to the market. Muntendam said the key challenge was convincing the larger players — BG has deals with Abbott (NYSE:ABT), Siemens (NYSE:SI), Alere (NYSE:ALR) and BioMérieux (EPA:BIM) — that the model would work. They’d have to buy into the idea that developing a test for their high-throughput devices would be a money-maker.
"Probably the most significant re-engineering we did was the re-engineering of the business model. The old business model was, an academic center finds something, they go to an Abbott or a Siemens or whatever, and do an exclusive deal. So [the inventors] don’t develop it," he explained. "We said, ‘No, no, no, we’re turning this into a full product.’ Now I’ve paved the way for automated versions to follow."
Galectin-3 is just the beginning, Muntendam added. The company is working on a project to develop a test for the type "vulnerable plaque" he said is implicated in deadly first-time heart attacks, again with the help of deep-pocketed corporate partners — Astra Zeneca (NYSE:AZN), Takeda Pharmaceutical (PINK:TKPYY), Merck (NYSE:MRK), Philips (NYSE:PHG) and GE (NYSE:GE) — and with the Framingham Heart Study. He’s also got his sights set on multiple sclerosis, he said.
"The key thing for us is to finish galectin-3 and get it out there. We’ll do the same, I predict, for heart attacks, and do the next one," Muntendam said. "We can do this many, many times over. There are so many unmet needs left."