Egor Melnikov is the Founder And CEO OF ARNA Genomics, an innovative biotechnology company (USA), created to develop fluid biopsy technologies.
Egor is an Economist, an experienced entrepreneur, and a manager. He has participated in startups in different economic sectors in the role of founder, co-founder, and CEO: advertising and production business, international logistics, IT solutions integration for large-scale governmentally owned and private customers.
In an exclusive interview with AsiaTechDaily, Egor says:
For one, we consider it important to look for super correct, super-accurate expertise. Secondly, we try to pick the right team. Not everyone does that. We preach the principle of precise action. Half measures are not appropriate here.
Maybe you don’t need to be motivated every day. Maybe you need to focus on your own internal biological cycles. Sometimes we are up; sometimes we are down. It varies from day to day. The main thing is that it should be in general. A great goal motivates great success.
Read on to know more about Egor Melnikov and his journey.
Please tell me about your personal background and What motivated you to get started with your company?
Egor Melnikov: Before ARNA, I launched several different startups as a founder and co-founder in different fields: international logistics, development, IT integration. I launched my first business in 2000.
Nevertheless, 20 years of my life experience have been connected with the Moscow State University. My parents met while studying at the university’s biological faculty and then moved to live and work in the very first Soviet Institute of biological physics in a renowned Russian science hub – Pushchino. A home town for my family, my friends – most of the ARNA team.
Back in 2013, a friend of mine asked me what my actual motivation was. The answer came easily: “I want to create a company based on my father Anatoly Melnikov’s developments for early cancer detection based on DNA methylation.” That conversation took place on the university’s steps – though I had nothing to do with the faculty at that time: I just lived and worked nearby.
And it’s not just an ambition. It’s a passion to help the lives of others.
Exactly 7 years ago, we created LLC Biomarker-RU together. In 2018, ARNA Genomics US was registered. My best childhood friend, George Nikitin, is now a Co-founder and a Chief Operating Officer of the company.
What is your current main product, and can you share any previous product pivot story to the current product?
Egor Melnikov: The project started after my father’s 10 years of research in such institutes as Chicago, Northwestern University, and Rush University, and private companies. The results of a test system showed no more than 80% accuracy. It’s a fantastic level, even nowadays. But not for him.
Then a new approach and a new idea were formulated. With this new concept, we moved the laboratory to Moscow.
The first idea was to make a universal test, with no localization, no specificity. Simply answering the question – is there an ontology or not. Having received expertise in Skolkovo, we realized that such a product, although interesting, does not answer what to do next? Just go get tested? It is possible, but it is not an option. So we decided to narrow the scope.
We focused on BC because it is a serious need, a serious problem. Breast cancer is a group of diseases. Different, challenging to diagnose. Also, at that time, we had our good collection of plasma and had the basis to work with.
When we made our first genetic protocol internally naming it ARNA 2, we found that it worked well with the biological subtypes of breast cancer Luminal A, Luminal B, and Her2 / neu. Still, we did not work well with triple-negative breast cancer. Based on this, a new task had to be formulated – to develop a separate laboratory protocol that would capture the triple-negative. A new approach was born – the ARNA 3 protein protocol.
How much money have you raised in total so far? When was the recent funding round?
Egor Melnikov: We have raised about $ 5 million in total. This summer, ARNA closed a $3.5 million series A set with the Xploration Capital venture fund as the lead investor. Before that, we attracted and spent about $ 1.5 million in 7 years. At the start, some sums were invested by the founders at the earliest stage, and later money was attracted from the market.
What were the internal decision processes in determining when to begin fundraising, and what were the logistics for this? And how many investors have you met so far, and how did you meet these investors, and which channels worked best for you?
Egor Melnikov: Fundraising in biotech is an ongoing process until the moment of release, until the moment of the IPO or commercialization of the product. Since at the start, we gathered serious business competencies in the project with experience in attracting investments and closed deals, it was quite transparent for us that we had to fundraise constantly. To do this, it is necessary to think directly about the development, the product, its readiness for the market, and marketing. We understood that we must master the first investment phase on our own. Then, when the first test prototype was developed and the first clinical trials needed to be launched, we managed to raise money through public fundraising.
We were continually searching through such platforms as Skolkovo, Demo Days, Investors Days looking for an opportunity to pitch the project. That is an ongoing process: we pitch funds, update presentations, and participate in various competitions. Among the successes in 2019 was that we took part in two competitions and took first place twice. This helped us to attract attention. Still, a serious conversation with investors began after we conducted a proof-of-concept study of the “ARNA Breast” test that showed an accuracy level of more than 90%.
What are the biggest challenges and obstacles that you have faced in the process of fundraising? If you had to start over, what would you do differently?
Egor Melnikov: It isn’t easy. How to go through technological due Diligence with the involvement of third-party experts? On the one hand, it is giving a certain level of comfort and understanding of our development and technology; on the other hand, without revealing the key IP until we have protected it. This is the most challenging question in biotech. How to present a project without revealing your know-how?
What are your milestones for the next round? And what are your goals for the future?
Egor Melnikov: With the money raised, we are going to collect samples in clinical trials to show our effectiveness on a more significant sample in terms of biostatistics.
Secondly, we will file and apply for new patents related to our fundamental new discoveries. We believe that we have discovered a new class of proteins.
We are also planning, together with professionals, to develop an IP protection strategy.
We are also planning a partial robotization of the entire laboratory protocol in the most routine part, where errors are possible due to the human factor. Robotization is necessary for further implementation, market penetration, and further global expansion.
How have you attracted users, and with what strategy have you grown your company from the start to now?
Egor Melnikov: We have a slightly special situation, different from other business startups. We are positioned in the Вlue Оcean market. We have no competitors in breast cancer detection by liquid biopsy method. We understand very well that this is the technology of the future—a vast new emerging market. Since we believe that we are one of the first to move in this direction, our marketing strategy is to create partnerships with professional players in the DNA diagnostics market.
Our model is commercialization. In general, we are primarily a scientific company, the purpose of which is the development of innovative products, research, and proof of effectiveness. Our model is interaction and creation of VCs with regional or local market players. Either from the field of diagnostics (network clinics) or interaction at the state level to launch regional pilot projects with the aim of being included in state-covered insurance programs.
In our case, users are not customers or final recipients of the service. We sell our project to doctors and experts: physicians, geneticists, or molecular biologists. We have two tracks – Registration studies to obtain a marketing authorization, which gives the right to sell a product in certain countries.
On the other hand, we work with top opinion leaders, doctors, experts. They need large-scale clinical trials with subsequent publications that will prove the effectiveness of our test in comparison with existing analogs and existing technologies. We were guided and looking for the right niche in working with doctors.
Which has been the best marketing software tool for the growth of your startup, and why?
Egor Melnikov: The expert community is interested in the most valid date in studies that produce this data. We are growing our startup towards a Quality Management System and ISO 13485. We are now developing our own LIMS software to manage patient data and our laboratory’s measurement data. Of course, it’s all anonymized.
What do most startups get wrong about marketing in general?
Egor Melnikov: For one, we consider it important to look for super correct, super-accurate expertise. Secondly, we try to pick the right team. Not everyone does that. We preach the principle of precise action. Half measures are not appropriate here.
How do you plan to expand globally?
Egor Melnikov: ARNA initially outlined the sphere of interest when we applied for the first patent in 2016. Our goal is to pass through the national phase and enter the following markets: Europe, CIS, USA, China, India, South Korea, Israel. FDA approval and Europe CE Mark is one of the prior aims we are working on. First expansion plans include Germany, France, UK.
After obtaining registration certificates from those regulators, it will be easier to enter China, India, Brazil. We will validate clinical trials in the local markets with the chosen Partners.
What are the most common mistakes companies make with global expansion?
Egor Melnikov: I can’t speak for everyone. Perhaps some make the mistake of trying to cover a too vast area and want to embrace everything at once. My advice is first to evaluate the actual opportunities.
How do you handle this COVID-19 outbreak situation for your company’s survival in the future?
Egor Melnikov: We are doing well. Observing safety measures, listening to the general recommendations. Our international activities are now temporarily closed, so we have slightly changed priorities. Now we are doing large-scale research here in Russia. We file patents and communicate with our foreign colleagues. We all can be in touch with our colleagues from a distance.
What’s the best advice you’ve ever received? And What advice do you have for someone who is interested in doing similar things like yours or in a similar direction?
Egor Melnikov: My best advice is not to do all of this because it’s a one thousand shoot. And if you do, then believe and persist to the end. At the same time, always question everything that can be questioned and checked. The best advice I have received is that if our product can be killed, that should be done as quickly as possible. Always test. But if it withstands all this scrutiny and testing, it is worth being on the market.
How do you keep yourself motivated every day?
Egor Melnikov: Maybe you don’t need to be motivated every day. Maybe you need to focus on your own internal biological cycles. Sometimes we are up; sometimes we are down. It varies from day to day. The main thing is that it should be in general. A great goal motivates great success.
What are the top three life lessons that you want your (future) sons and daughters to know?
Egor Melnikov: We must work honestly and humanly. You have to work smart and cunning. You have to work with your head.
What would you like to be remembered for?
Egor Melnikov: For being able to grow a company that has grown into Unicorn. Despite the situation with investments in the Russian Federation. We broke through and did a great job.
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