F Cubed®, LLC


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February 9, 2015 Issue

The Most Powerful Name In Corporate News and Information


Commercializing Rapid Molecule Detection Technology


Les Ivie



F Cubed®, LLC



Interview conducted by:

Lynn Fosse, Senior Editor, CEOCFO Magazine, Published – February 9, 2015


CEOCFO: Mr. Ivie, what is the concept behind F Cubed®?

Mr. Ivie: F Cubed was founded with the intention of commercializing technology that was developed at the University of Notre Dame for rapid detection of molecules such as DNA and RNA. By rapid detection, the best example to give you would be that typically, if an individual goes into a hospital emergency room to have an abscess tested, that test could take anywhere from eight to thirty six hours. Our device is designed to do the same test with the same accuracy and precision within sixty minutes.


CEOCFO: How are you able to do it?

Mr. Ivie: From a technology point of view, essentially what we do is create a series of carbon nanotube matrices. It is almost like a net built out of carbon nanotubes. Those carbon nanotubes react to the presence of certain target DNA. When DNA from a sample reacts with those carbon nanotubes it gives us an electrical signal that tells us the target is either present or absent. It sounds complicated, but it actually very simple.


CEOCFO: Is the concept commonly accepted today in the medical community?

Mr. Ivie: The idea of molecular detection; that is detection of DNA and RNA by optical or electronic means, is becoming more accepted. In medicine there still is an inclination to prefer to look at actual bacteria; the thing that causes disease and put them on what are known as plates with agar to watch them grow. We actually break those bacteria up and access the very basic molecules that cause that bacteria to exist. There is a process that we have to go through with the Food and Drug Administration to demonstrate that it is equivalent to other methods. However, in other areas that we operate in, such as food safety or environmental applications, there is much less skepticism. That is because we are able to do something that previously could not be done before in the time required.


CEOCFO: How are you approaching the different industries to get your message across and have them start using your system?

Mr. Ivie: It depends on the market segment, which I would really classify as from the least regulated to the most regulated. The least regulated market areas might be things like hydraulic fracking. That is the process of drilling for oil that is becoming very common in the United States. We are involved in that business, which may sound unusual, but actually the reason why we are involved is because the process of fracking results in the need to recycle water. That water often has bacteria in it that is dangerous. We are able to detect that bacteria and then permit the company doing the fracking to clean the water before they reuse it. That is a very unregulated business. It is very Wild West-like. There, the objective is for us to show that we can do it quickly and accurately. Sort of an intermediary area would be food safety in which we are actually working with supermarkets, so that they can test food that has been sent to them by their distributors to make sure that it is safe for consumers to eat, which is much less regulated. The most regulated area is medical applications. That is directly governed by the Food and Drug Administration. In that case it is not just a matter of us marketing it for people to buy. It has to be approved by the federal government and then it is ready for sale. However, even then we have to go through a series of distributors before a hospital can purchase it.


CEOCFO: Where are you now? What is the physical product?

Mr. Ivie: The physical product really consists of two parts. There is an instrument that is the size of a large suitcase that is called NESDEP® IU. That is really contraction for two things; NES is the Hebrew word for miracle and DEP is the process of AC Dielectrophoresis, which is the process we use for detecting DNA and RNA. That is the device that a hospital or food distributor or an environmental company might purchase so they can run tests. We also sell test kits that are disposable. Therefore, each test kit is used once. That test kit contains a biochip assembly that is plugged into the machine. That permits the user to run a test, determine whether DNA or RNA is present and then continue on and run additional tests.


CEOCFO: Would the test strip have an agent that would react?

Mr. Ivie: As I said before, what is in the test kit is essentially a biochip. It is about the size of your smallest fingernail and that biochip contains a microfluidic channel; that is a channel that is so small that even the human eye cannot see it. In that channel we have a series of electrodes and carbon nanotubes. Those carbon nanotubes will essentially react with certain kinds of DNA and RNA, depending on how we characterize and functionalize them.


CEOCFO: Would there be something specific in those nanochips, depending on what one is testing?

Mr. Ivie: Yes. All of our instrumentation; our test kits, from a mechanical and electrical point of view are always the same. The difference is that we have robotic equipment that it injects a mixture of carbon nanotubes that are specially characterized for certain bacteria. There are test kits that are used for detecting E. coli. There are test kits that are used for detecting something known as MRSA, which is a deadly bacteria that people often contract that is resistant to antibiotics. There are other test kits that we make for detecting such things as salmonella, listeria and other bacteria.


CEOCFO: How do you help with something like salmonella?

Mr. Ivie: I am old enough to remember my parents picking strawberries in the summer and either canning them or freezing them. That does not happen anymore. You can go to the supermarket any time of the year and buy fresh fruit. The problem is that sometimes that fruit is grown in areas where the hygienic practices are not the same as they are here in the United States and that results in contamination with salmonella or listeria if they are not properly processed. That is why distributors and retail grocery stores are becoming concerned. In the last two years there have been at least two outbreaks. Listeria is a bacterium that even one single bacteria can cause someone with a compromised immune system to die. For example, two years ago there were two separate cases; one in Colorado and another in Indiana, in which I believe at least ten people in each stated died from listeria poisoning as the result of eating contaminated cantaloupes. Therefore, what we try and do is work with food processors and retail supermarkets to test food like that to make sure that those bacteria are not present.


CEOCFO: How are you selling to the different industries? Would you, for example, approach a supermarket chain?

Mr. Ivie: It depends on the market segment. First of all, we have not received our FDA clearance. We are in the process of doing that right now. Once that is complete we would have to work with a distributor. Then that distributor would approach hospital chains. Hospitals are very reticent to deal with individual companies, so they usually deal with distributors. On the supermarket side, we actually have pretty strong relationships with a number of supermarket chains. Therefore, we deal with them directly. On the environmental side we will also deal with customers directly; although when it comes to, say, oil field services, such as with the fracking for example; in those cases we will work with environmental companies who will then in turn work with the fracking companies who are extracting oil.


CEOCFO: Is cost a factor or does the speed of the test trump the cost?

Mr. Ivie: Cost is always a factor. However, the advantages that we could offer with our products are a couple of things. One of them that, as I said in the very beginning, we can offer test that can be complete; that is we can take a raw sample from a person, from a lake, from an oil well or from a food sample and you could have a definite answer within sixty minutes, verses other methods that can take anywhere from a few hours to a few days to several weeks. Therefore, we do offer speed. We also offer precision. Our device is able to distinguish bacteria within a two base pairs; that is that we look at the strand of DNA. The chances of us giving an inaccurate answer are very small. Where there are millions and millions of pairs of DNA we can be accurate within two base pairs of DNA. Therefore, we are more expensive; there is no question about that. However, we offer something that adds value to offset that expense.


CEOCFO: How are you able to detect all of the different variations?

Mr. Ivie: As I said earlier, we originally started the company with an exclusive license from the University of Notre Dame. That allowed us to develop the hardware, so to speak, to detect DNA and RNA. We have a separate license with a university in Haifa, Israel, by the name of Technion. That exclusive license essentially gave us a computer program that allows us to tailor make a set of what are known as DNA probes, so that we can quickly identify a target. Let us say that someone comes to us and asks us if we can detect a new species of E. coli. We can enter it in a computer program and it will output the data for us to design the DNA probe and we can have the DNA probe complete in a few days and we can start testing in as little as five days.


CEOCFO: It almost sounds like magic and hard to resist!

Mr. Ivie: In some ways it is magical, but before you get too excited the one thing I have to stress is that if we are talking about something that is, say, more unregulated, such as a bacteria that is used in some industrial production, that quick turnaround is very valuable. If we are talking about something like Ebola virus; we have actually made a presentation to the federal government of our ability to detect Ebola. The problem is that getting approval for something like that is extremely difficult and very time consuming.


CEOCFO: Are you focusing more on the low hanging fruit, as there is so much?

Mr. Ivie: Yes. We are small company. We are a private company supported by private accredited investors. Therefore, we definitely focus on the low hanging fruit. There is no question.


CEOCFO: Just because you have to jump through hoops with the medical community does not mean that it is still not an amazing concept or an amazing system that you have there!

Mr. Ivie: No, it certainly does not. Our company management--that is our board of directors-- consists of people that can help us solve our distribution problems and jump through those hoops. Our board of directors is listed on our website: they include a former head of the Food and Drug Administration division that is responsible for approval of medical and radiological devices and the former Chairman and CEO of a very large publicly listed corporation based in Cleveland, Ohio. These are people that are not only members of our board, but that are active in advising me and my staff on almost a daily basis.


CEOCFO: Would you tell us about the new building?

Mr. Ivie: When we first started the company we were very fortunate that we had a small set of offices in the incubator building on the campus of the University of Notre Dame. After we outgrew that we then moved into a high school. There was a catholic high school in South Bend that had just been vacated and Notre Dame had purchased it, so we moved into the high school, which is where we are now. A few years ago a private company announced the intention to turn the old Studebaker Motors assembly plant into an office park. We got very interested in that. They have since demolished Studebaker’s old assembly plant which had been vacant for forty years, I think. We broke ground on December 10th on a new facility for F Cubed that will basically allow us to do all of our administration, our research and development, the assembly of both our instruments and our consumable biochip test kits and shipping and receiving and all of that in one place. Over the last few years we have probably done the reverse of many companies. We have actually in sourced almost all of our supply and manufacturing to Indiana. For example, we brought all of our plastic molds that we were manufacturing from China back to the United States. We are now doing that in Indiana. We do all of the assembly of our larger parts in our own facility now.


CEOCFO: Why that decision?

Mr. Ivie: Primarily financial and management. One thing is that prior to starting this company I had been with a much larger company, Honeywell International, where I spent a good deal of my time doing the exact opposite; that is moving manufacturing and research and development out of the United States, into places like China, South Korea, Japan and places like that. The problem is that if you are small company managing suppliers that are five thousand miles away is very difficult. The second thing is that as the US economy has restructured, costs here in the United States have actually dropped to the point where they are either the same as the average company in China or even lower. Therefore, I had an opportunity where I was actually able to dramatically reduce my cost by moving product from China to Indiana, but also improve my management of the product. This is because my supplier is only fifteen miles away. Therefore, it really gave our company a huge opportunity to really improve our processes.


CEOCFO: Are you funded for the push or will you be seeking additional investment?

Mr. Ivie: I doubt if we will be seeking additional investment. If we do our current investors are interested in funding anything that we might need. We are approaching a point now where we are breaking even. We are self funded. Really, our objective over the next couple of years is to decide what the next strategic step is. Do we align ourselves with a much larger partner who can distribute our product or do we do something else, for example, go public or whatever those options turn out to be.


CEOCFO: Why F Cubed noteworthy?

Mr. Ivie: First of all, F Cubed is an example of what can be done with the technology that is being developed in the United States. There is a great deal of technology that is the result of both private and governmental investment into universities. Unfortunately, much of that investment and much of that research really never gets commercialized. I think we are an example of something that has been commercialized successfully. The second thing is that we are able to offer something that other companies in the United States and certainly companies overseas, have not yet have been able to offer, and that is a solution for a variety of industries that are interested in detecting bacteria quickly and fixing the problem; whether that problem is solving a health problem in human beings or something that is so absolutely different, such as cleaning up water that is used for drilling for oil.


“F Cubed is an example of what can be done with the technology that is being developed in the United States.” - Les Ivie


F Cubed®, LLC




Leslie T. Ivie








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