Hal Stoelzle © News Tom Geimer, chairman, left, and David Howson, president, right, of Accelr8 Technology Corp. in Denver show off the company's lab recently. Accelr8 started out selling Y2K software and now specializes in medical diagnostic technology. Its new lead product diagnoses strains of pneumonia acquired in intensive care units.

New product aims to save lives, slow antibiotic resistance

By Rachel Brand, Rocky Mountain News
March 21, 2005

n New Year's Day 2000, Tom Geimer sat atop $11 million in cash and a market for his Y2K testing tools that had vanished overnight. His publicly traded company, Accelr8 (pronounced ac-SEL-er-at), helped assess the readiness of manufacturing firms, research institutions and the federal government for the year 2000.

Today, Accelr8 has gone from diagnosing hardware to diagnosing diseases. The firm has invested in micro-array technology, glass slides with thousands of spots to test compounds, and is designing a medical diagnostic for an unmet medical need.

Along the way, Accelr8 has operated like a 14-employee startup, not a publicly traded company, -morphing its vision to match opportunities.

"Certainly, in the world of business, one has to be quick on their feet," said Geimer, chief executive officer of the company based in north Denver. "There's all kinds of examples of companies that weren't quick enough in your newspaper. Our primary motivation is to preserve shareholder value."

Accelr8's new lead product is the BACcelr8r (pronounced back-SEL-er-at-er and yes, Geimer says it with a straight face).

It is designed to rapidly diagnose strains of pneumonia people acquire in hospital intensive care units. Current microbiology identifies those strains in 48 hours, and Accelr8 aims to identify them in eight hours, allowing doctors to prescribe the optimal antibiotics. That, the firm expects, will save thousands of lives and help hospitals avoid costly intensive care unit stays.

"We have a real problem in this country: the increasing emergence of antibiotic-resistant bacteria," said Dr. Marin Kollef, who chairs the St. Louis-based Washington University School of Medicine and is a world-renowned expert in hospital- acquired infections.

"Certainly, if we can more rapidly and specifically identify the organisms causing pneumonia . . . it also may minimize the emergence of antibiotic resistance."

The BACcelr8r could be a tremendous boon, Kollef said, if it works. Then "the main hurdle, like everything in medicine, is going to be cost," he said.

The story goes back to an unexpected phone call.

In October 2000, Geimer received a call from a longtime investor, Philip Bradford. Bradford suggested -Geimer investigate DDX, a privately held agricultural technology firm in north Denver.

DDX had invested $6.5 million in a technology to test bacteria in cow's milk but had run out of cash.

Accelr8 had cash but no technology.

DDX's technology relied on a new type of surface chemistry. In general, surface chemistry deals with chemicals that lead to slipperiness or stickiness, such as the properties that allow shampoo to wash out of your hair. In this case, DDX had invested in chemical-coated surfaces that attract some molecules and let others slip away.

The technology seemed promising because it had potential in the field of medical diagnostics.

"We focused on technology that had the potential to be huge," said Geimer.

In January 2001, Accelr8 snapped up the technology for $500,000 in cash and 1.8 million in Accelr8 shares, then valued at $1.375.

The firm also hired David Howson, a former medical device consultant, whose clients included Pfizer and Becton Dickinson, according to Accelr8's filings with the Securities and Exchange Commission.

For the next three years, the company lived on revenue from its software maintenance contracts while investing in surface chemistry research.

Turns out, Accelr8's chemistry provided the ideal coating for diagnostic slides.

On these slides, thousands of genes or bacteria could be sprayed and then run through tests to determine their nature.

Accelr8 at first hoped to license the surface chemistry from Germany's Schott Nexterion, the world's second-largest glass manufacturer. Schott would in turn sell the coated slides to research labs and universities.

But the market hasn't been as large as the firm hoped, in part because the Food and Drug Administration hasn't approved micro-array DNA testing.

So in the past year, the company developed its own product. The BACcelr8r uses the slides and slide-reading technology to help speed the cure of "ventilator-associated pneumonia." That's a general name for more than 50 strains of pneumonia caught when patients are put on a mechanical ventilator to help them breathe.

"Historically, we'd send a culture of material from the trachea to the lab, and that takes about 48 hours," said Dr. Robert Lapidus, a metro-area pulmonologist. "In the meantime, we make our best guess estimate of what the best antibiotic would be.

"We have to use a broad spectrum approach, so we have to give more antibiotics than are actually needed. That can cause problems unto itself," he said.

The problems are myriad. From 10 percent to 25 percent of the time, antibiotics aren't effective. Antibiotic overuse leads to antibiotic resistant strains of bacteria. Overuse can lead to dangerous side effects. Ventilator-associated pneumonia may contribute to as many as 70,000 deaths a year, although the patient's underlying disease may be the actual killer.

Traditional culturing takes a small number of bacteria and grows the cells in a petri dish over 24 hours.

The BACcelr8r spreads those same bacteria over the slide and, by zapping them with electricity, gets the optimal number in an hour.

The BACcelr8r then uses lasers to track the individual bacteria at specific addresses on the slide. It tracks which bacteria have died, how fast others are growing and dividing, and which ones respond to each antibiotic therapy.

"I can tell the doctor at least in an hour what these bugs are like," said Howson, Accelr8's president. "And in a couple of hours, how fast they are growing. Then we see how fast we can kill them. From that, we can tell what the best drug is."

Accelr8 has finished the basic research and is working with engineers to create a lab-ready prototype by the end of the year. Howson believes the firm's remaining $7.5 million in cash should be adequate to fund clinical trials and win FDA approval, if it comes to that.

Many risks remain: Will the prototype work well enough? Are the data detailed enough? What will the FDA do? And finally, will anybody buy it?

If the answer turns out to be no, don't expect the story to finish there.

At each potential ending, Accelr8 seems to find a new beginning.

Accelr8

Technology Corp.

• Symbol: AXK (traded on Amex)

• Address: 7000 N. Broadway, Denver, CO 80221

• President: David Howson

• CEO: Tom Geimer

• Employees: 14

• Products: Chemical coatings, quantitative nanoparticle imaging, micro-array technology

• Revenue (past six months): $262,755

• Earnings (past six months): ($897,244)

Copyright 2005, Rocky Mountain News. All Rights Reserved.