November 1, 2012 (Vol. 32, No. 19)

Companion diagnostics, like the therapeutics they support, are pioneering personalized medicine. These early forays are at the vanguard of a disruptive and game-changing approach to medicine as genomics is used to match therapies to patients who can benefit, predict prognosis, and pinpoint diagnoses down to the subtype of some conditions.

With companion diagnostics available for only one percent of all marketed drugs, sales figures are low. But, as new compounds enter clinical trials, the numbers recommending companion diagnostics are increasing.

Visiongain estimated the global companion diagnostics market at $1.3 billion in 2010 and predicts it will reach $3.45 billion by 2015, representing a 21.6% compounded annual growth rate. Likewise, the global genetic testing market is forecast to grow at a compounded annual growth rate of approximately 26% between 2012 and 2015, according to a new study from global analyst RNCOS, “Global Genetic Testing Market Forecast to 2015.”

The broader category of molecular diagnostics, of which both companion diagnostics and genetic testing are a subset, “is growing 15 to 20 percent annually,” says Brian Weinstein, research analyst at William Blair & Co.

This potential for growth is attracting interest. “The beauty of diagnostics is that it’s a repeatable business that grows. It’s not dependent upon new products or grants, and has a relatively predictable revenue stream,” points out David O’Bryan, president, Boston Biomedical Consultants. “Margins tend to be less than pharmaceuticals but, at about 80 percent, are in the range of disposables.”

“The biggest market is for cancer, with assays becoming easier to use and more widely available. New markets also are emerging for sexually transmitted diseases and to assure the blood supply,” O’Bryan says.

He expects molecular testing to largely replace antibody-based testing. And, he adds, “Algorithm testing is coming,” in which a single assay performs expression tests for multiple genes and can predict a condition’s rate of recurrence or prognosis


Of the scores of companies working in this space, analysts most often mention Abbott Molecular and Qiagen. Genomic Health and Foundation Medicine also are standouts in the companion diagnostic field.

“All four are leading-edge companies,” according to Ed Abrahams, Ph.D., president of the Personalized Medicine Coalition (PMC). Life Technologies is a new entrant.

Abbott Molecular was a pioneer in companion diagnostics with its PathVysion® Her2 DNA Probe Kit. Last spring, it announced a collaboration with Merck to evaluate the use of a FISH-based companion diagnostic to spot the TP53 gene in cancer patients, thereby identifying those most likely to benefit from Merck’s therapeutic still in development.

Abbott has additional personalized medicine collaborations in place with Pfizer and GlaxoSmithKline (GSK), and has exclusively licensed biomarkers from Stanford University to help develop a test to distinguish between aggressive and nonaggressive prostate cancer.

Molecular tests are in the pipeline to determine the prognosis for leukemia and non-small-cell lung cancer patients, and to select therapies for patients with lung cancer and other conditions.

Diagnostics Facts

Qiagen gained approval for its companion diagnostic for Erbitux and Vectibix (a therascreen® KRAS genetic test) in July, making it reportedly the only FDA-approved KRAS test for use in metastatic colorectal cancer patients.

According to Weinstein, “Qiagen is getting in front of the curve. It’s partnered with approximately 20 companies and has one of the largest programs, with a focus on oncology.”

It acquired Intelligent Bio-Systems recently, Cellestis in 2011, and a significant portion of Ipsogen. The company also has long-established relationships with research labs that help it tailor solutions to specific needs. Those many partnerships also protect Qiagen from being an acquisition target, Weinstein says.

“There’s no independent diagnostic company with the breadth and depth of Qiagen,” Weinstein continues. By leveraging its position in genetic testing sample preparation, it stabilizes cash flow, which enables it to target higher risks and rewards.

He expects companion diagnostics to contribute approximately $100 million this year to the company’s $1 billion revenues. Its diagnostics revenues are likely to be divided evenly among research use only, contract research revenues, and CE Mark sales. In the second quarter of 2012, Qiagen reported a 9% increase in sales from the same period one year ago. Weinstein estimates Qiagen will generate adjusted earnings per share of $1.14 in 2012.

Genomic Health has a pipeline tightly focused around oncology. Tests already are commercialized for breast and colon cancer, and assays for additional markers involved in those diseases are in development. They include assays to validate mismatch repair status and to identify targeted therapy benefits in colon cancer; to determine the relative benefit of chemotherapy administered with various therapies for breast cancer; and to estimate the post-surgical recurrence risk for renal cancer.

An assay to guide the choice among active surveillance, radiation, or surgery for early-stage prostate cancer is at the clinical validation stage. Assays for melanoma and for non-small-cell lung cancer are in early development.

Product revenue for the six months ended June 30, 2012, was $115.1 million, compared with $100 million for the six months ended June 30, 2011, an increase of 15%. The financial guidance for the full year ending December 31, 2012, projects total revenue between $230 and $240 million and net income between $5 and $8 million before losses.

Foundation Medicine also is centered around cancer diagnostics. In August it announced a collaboration with Clovis Oncology to develop an in vitro diagnostic assay to identify biomarkers to identify the ovarian cancer patients most likely to benefit from rucaparib, Clovis’ poly ADP-ribose polymerase inhibitor now in Phase I/II development.

The goal of the collaboration is to expand the known mutations that are associated with defective DNA repair and thus identify appropriate tumor targets. Foundation Medicine also is working with the Worldwide Innovative Networking Consortium and with Novartis to provide broad genomic information for clinical programs.

Life Technologies is also entering the companion diagnostics space. As O’Bryan says, “Life Technologies has taken initiative to convert its technology for clinical testing.”

It also is beginning to develop genetic assays, acquiring Navigenics and Pinpoint Genetics in the past year. The plan, O’Bryan says, is to validate Life’s products into FDA-approved diagnostic kits.

Life also is working with GSK to develop a qPCR-based molecular diagnostic assay for GSK’s MAGE-A3 cancer immunotherapy candidate—currently in late-stage trials—to identify patients likely to benefit.

“Recently, Life talked about taking technologies into CLIA labs, and has approached Quest Diagnostics and LabCorp,” O’Bryan adds.

Overall, Life Technologies reported a 1% growth for the second quarter of 2012, compared to the same period one year ago. Revenue from its genetic analysis business was $353 million, down 6% from the second quarter of 2011 as customers transitioned between instrument platforms. Excluding their impact, genetic analysis revenues increased 5%.

Roche Molecular Diagnostics also has “an enormous diagnostic franchise in-house,” Weinstein adds. Other companies with smaller initiatives include GenMark Diagnostics, Nanosphere, Novartis and perhaps 100 others.

Qiagen has a large companion diagnostic program. The company recently gained approval for its CDx for Erbitux and Vectibix.


Regulation, reimbursement, and reluctance are slowing the transition to personalized medicine. “Physicians and medical societies tend to be conservative, unwilling to change absent conclusive evidence that change leads to better outcomes,” says Dr. Abrahams. “Although scientific advancements occur daily, medical practice evolves slowly.”

When companion diagnostics are embraced, they often are reimbursed using out-dated and inaccurate CPT codes that may not cover the full cost of the test.

Additionally, Weinstein says the therapeutic developers themselves also are sometimes hesitant to embrace personalized medicine for fear of decreasing their revenues and because of a lack of clarity regarding regulation and reimbursement.

Meanwhile regulatory authority is split between the FDA, which regulates diagnostic kits, and CLIA, which regulates lab-developed tests. “There are some advantages to having lab dev tests enter the market quickly and inexpensively, and some to the FDA route. The FDA is seriously looking at the issue,” according to Weinstein.

The developmental timeframe is another concern. “FDA wants to see diagnostics predefined and developed with the drug, not as an afterthought,” he continues, “so assays are part of the clinical trials.”

That’s also been a recurring desire among diagnostics companies. Yet, before that can happen routinely, agency guidance is needed.

“The FDA plans to issue multiple guidances to move the field forward and to clarify regulations governing the co-development of drugs and diagnostics, notes Dr. Abrahams. Last year it issued a draft guidance for the development of in vitro companion diagnostics. “Some 400 NDAs include biomarker data now, which is unprecedented,” points out Dr. Abrahams.

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