6 Questions: One-on-One with Jim Pelot, CFO, Arctic DX

Arctic DX has big plans to freeze out blindness.

The career transition from telecommunications marketing to bio-medical pioneer was surprisingly swift for Jim Pelot. After 14 years in the telecom business, Pelot was looking for a more sustainable field after the industry crashed and burned in 2001-02. Sensing opportunity in bio-medicine (the human genome had just been fully mapped) he joined a company called Tm Bioscience before striking off with Tm CEO Greg Hines in 2007 to launch Arctic Diagnostics Inc. (or Arctic DX). Operating out of Toronto’s MaRS Discovery Centre, Arctic DX’s seven employees take existing research on genetic markers and develop diagnostic tests for disease. The company’s first product, Macula-Risk, was released last year as a test for age-related macular degeneration, the leading cause of adult blindness. It’s been sold to more than 15 of the United States’ 75 retinal surgery labs, where it’s now used in 3,000 tests a year to determine which patients are most likely to require treatment. The product is available in Canada, but only on a patient-pay model due to bureaucratic issues with individual provincial health ministries, according to Pelot. The privately-owned company is also developing a test for colorectal cancer that’s currently in the trial phase.

What is the greatest challenge currently facing ArcticDX and what are you doing about it?
Our greatest challenge is balancing our sense of urgency in growing the business with our wish to maintain tight control over its growth. There are a very small number of doctors who need to be convinced to buy the test, and we’ve forecast $8 million in revenue, with 125 doctors ordering three tests a week. The cost of getting that done is $2 million. So we’re constantly weighing: should we try to get more cash or continue the bootstrapping operation? We’re in no one’s sweet spot. We’re too big for an angel investor, and too small and not willing to give up control for investment from the venture capital community.

Who else — person or company — do you feel is doing innovative work and in what way?
One very interesting company is called DNA Genotek in Ottawa, and they have some intellectual property in around packaging sample collection devices with a DNA stabilization liquid in it. It’s that sort of technology that’s really brought direct consumer genetics to the forefront, especially in the U.S. It’s a real enabler in the growth and use of genetic testing and even the democratization of health care as it relates to genetics.

How would you describe your leadership approach/style?
We have a very consensus-oriented model here. I mean, there are three principals and four employees, so decisions are sort of made by speaking softly across the office. Important decisions are easily discussed and consensus is really the approach.

As of right now, the MaRS Phase II development is still on hold. How is that affecting the climate for bio-medical innovation in Toronto and in Canada?
I think we were all disappointed to see the new building stop where it did. There were some consequential tenants that would have added to the intellectual pool here in a big way. There weren’t any direct implications for us, but it was a blow in general. I believe Ontario’s health labs were to occupy a larger chunk of that tower.

As someone involved in the business of innovation, how closely have you been following the various techniques being proposed to clean up the Gulf oil spill? Hair mats, bacterial decomposition, a centrifuge to separate oil and water, etc. Is technological development and innovation a positive side effect after a disaster like this?
I’m a lay person on this, but what astounds me about this spill is that the Army Corps of Engineers and every oil company on the face of the earth aren’t in Louisiana trying to figure out how to stop this thing. It astounds me that no one has been able to figure it out yet, or that more resources haven’t been brought to bear. And I think it’s dreadful that we might need catastrophes of this magnitude to occur to validate some technologies that might otherwise have been unfunded or sat languishing on a shelf somewhere.

You’re a cyclist, a runner, and a skier. If you had to give up all but one, which would you choose?
Oh, I would hang on to my bike ’til the bitter end. There is something uniquely fantastic and beautiful in the efficiency of that machine and the speeds that it can go under human power. It’s just a remarkable piece of machinery. I used to love cycling through Caledon and the Halton Hills, and the Kitchener area when I lived out there. Now I cycle in the city or on the Martin Goodman trail, or I load up and head back to the Kitchener area.