It was around 2018 when Kevin Lawson, Lakshmanan Suresh and Long Shen were approached by Empire Genomics, a Western New York company that was looking to spin off the laboratory testing part of its business.
“They said they’re going to shut down the lab unless somebody comes in to manage it or help out,” recalled Lawson.
The three partners, all Western New Yorkers who are experienced in laboratory medicine, didn’t want to see that happen.
And so KSL Diagnostics was born, launched by diving into a business that another company was ready to shut down.
KSL Diagnostics has grown steadily since then: A company that had eight employees after taking over Empire Genomics’ clinical lab more than five years ago now employs more than 100 people worldwide, including about 60 in Western New York.
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The company, headquartered near Buffalo Niagara International Airport in Cheektowaga, is at least partially fueled by an underlying desire to preserve and bolster the region’s clinical laboratory medicine industry.
The specialized laboratory company provides testing services for infectious diseases, hematology/oncology, molecular pathology, immunogenetics, dermatology, rheumatology, gastroenterology and newborn screening. The company also develops new technologies and novel tests, with more than 500 tests currently listed on KSL’s test menu online.
A UB lab will share a $20 million infusion to identify more Covid-19 variants as part of a partnership between the state and five specialized labs across New York.
If you’ve heard of the company, it likely stems from when KSL temporarily pivoted its focus during the Covid-19 pandemic. With clinical studies essentially shut down during part of the pandemic, KSL decided to make good use of its time and resources by developing and processing Covid-19 tests and opening collection sites across the area.
“We are a laboratory that works very collaboratively,” said Lawson, KSL Diagnostics’ CEO. “We’re problem solvers.”
Most recently, KSL opened a transplant immunology laboratory and became the exclusive transplant testing provider for Erie County Medical Center. It is a relationship that means KSL now plays a critical role in the transplant cases performed in Western New York.
Expect KSL to chase more local partnerships such as this moving forward. While the company also strives to innovate and develop technologies with appeal far beyond Western New York, KSL wants to become embedded in its home base and help keep local talent from leaving the area.
“KSL becomes a merging of the mission and the values of the company to be able to preserve those jobs and address national needs,” Lawson said.
“There aren’t too many labs that are local that are addressing national and international needs and doing technology development,” he added. “We’re doing all of those things.”
Preserving a local industry
When the three partners were approached by Empire Genomics all those years ago, they thought about the consolidation they had long seen in laboratory medicine.
All had experience in clinical laboratories. Lawson’s background is in regulatory and business development; Suresh’s is in pathology; and Shen’s is in translational medicine.
And during that time, they watched small, local labs get gobbled up by massive companies such as Labcorp and Quest Diagnostics – which Lawson refers to as “the McDonald’s and Burger King of laboratories in the U.S.”
Often, the small labs performed high-quality testing, but struggled to be as efficient with billing services, marketing and information technology integrations as the national labs.
“So when we were approached by Empire, we said, ‘Yes,’” Lawson said. “We’re committed to being able to see these labs survive and thrive in the area and not see brain drain go out of the area.”
That has become a kind of motto for KSL Diagnostics, which has acquired other small, struggling labs with rich histories in Western New York.
That included acquiring Beutner Laboratories, which was founded by Dr. Ernst Beutner, a pioneer in immunodermatology.
KSL also brought the Robert Guthrie Laboratory under its umbrella. Dr. Robert Guthrie, more than six decades ago as a University at Buffalo faculty member and physician at what we now know as Oishei Children’s Hospital, developed a blood spot test to screen newborns for a genetic disorder called phenylketonuria, or PKU.
“Both of those were similarly in danger of being shut down and going out of business,” Lawson said.
‘In transplant, time matters’
KSL ended up submitting the winning bid to become the transplant testing provider for ECMC, which does about 140 kidney and pancreas transplants a year.
“When an organ is offered to a patient, we need to make sure it’s a good match,” said Dr. Liise Kayler, program director of the Regional Transplantation and Kidney Care Center of Excellence at ECMC. “They do the test that allows us to know if the match is good. And often, that test has to be done quickly and at any time of the day or night, and so their responsiveness is important.”
KSL’s lab also does testing after the transplant, Kayler explained, that mostly looks for antibodies that the organ recipient could form that would indicate rejection. This monitoring, she said, is important to ensure the health of the transplant.
While most of the testing KSL offers is performed for national providers, Lawson explained “the need is very local” in transplant testing.
KSL’s local presence certainly helps, with its headquarters a 15-minute drive from ECMC and just a few miles from ConnectLife, a Western New York nonprofit organ procurement organization.
“Being here and having the support of KSL, it’s allowed us to have a better working relationship with the hospital because we can devote a lot more resources into additional testing, and really starting to add things to the test menu that weren’t always an option in the past,” said Carey Killion, transplant immunology laboratory supervisor at KSL.
It goes back to KSL’s focus on being a close collaborator with its clients and developing tests to address particular needs.
While the needs were well-defined at ECMC, Kayler said the hospital knew it would “get a more tailored experience with KSL,” as compared with a larger corporation that may not be as responsive.
“In transplant, time matters,” Kayler said. “We do need timely results in order to help patients get kidney transplants and have good outcomes after the transplant. We do a lot of transplants with short waiting times, and in order to make that happen, the whole system has to work efficiently, and they’re a big part of that.”
The path ahead
Before becoming the transplant testing provider for ECMC, Lawson said KSL had very little interaction with Western New York’s hospital systems.
Moving forward, the company will look to build more local connections.
“It would be great if we were doing more with partners in Western New York,” Lawson said. “We’re hopeful for that.”
KSL has grown quite a bit to this point: In addition to its Cheektowaga headquarters, the company also has a location in Canada and a site in China, Lawson said.
Annual revenue grew to more than $20 million during the Covid-19 pandemic. While that figure is lower now, KSL is working to replace all Covid-19-related revenue with non-Covid-19 revenue over an 18-month period, Lawson said.
And by this time next year, Lawson said KSL should add another $4 million to $5 million in annualized revenue through work it is doing for national laboratories such as Labcorp.
The company’s big opportunity is developing technology with international appeal, something that also would go a long way in its bid to continue growing the clinical laboratory medicine industry in Western New York.
Lawson mentions how New York has the highest laboratory accreditation standards and how graduates that emerge from places such as the University at Buffalo quickly get scooped up by employers in California or in the Research Triangle of North Carolina.
“We’d love to be able to see big growth in laboratory services here, rather than just see it bleed into other areas around the country,” he said. “And I think that we can, as long as everybody knows that we’re working toward the same goal.”
Jon Harris can be reached at 716-849-3482 or jharris@buffnews.com. Follow him on Twitter at @ByJonHarris.