February 15, 2012 (Vol. 32, No. 4)

While molecular diagnostics may never completely replace “turn and cough,” it continues to gain prominence—from the companion diagnostics used to separate out potential responders to a specialty drug, to establishing a faster, more sensitive test for something as prevalent as tuberculosis. Opportunities for all stakeholders abound in developed and developing countries alike, as do the pitfalls associated with trying to take advantage of them. New markets emerge, regulations evolve, and technologies try to keep pace—sometimes by becoming less intense.

CHI’s “Molecular Med Tri-Con 2012” conference will provide the opportunity for players to discuss the issues and garner insights from one another.

Many drugs are coming through the pipeline paired with biomarkers. As these come to fruition over the next few years, drug companies need ways of testing for these markers—whether it’s by organically growing or acquiring a diagnostics arm, or by forming collaborations or partnerships with a diagnostics firm interested in creating a companion diagnostic.

“People need these drugs, and pharma is not going to walk away from millions or billions of dollars in investments because they can’t figure out an assay,” says Mya Thomae, CEO of Myraqa, a California-based consultancy.

While diagnostics companies may have great technology, they may not have ever had to go through an FDA clearance or approval. Companion diagnostics tends to be held to a higher level of regulatory scrutiny than other types of assays.

They need to be able to put their best foot forward to show that they’re up to the task—“they have a plan for quality systems, they’re putting in the right infrastructure to support a regulated product,” Thomae points out. “So they can show a pharma company when they come in to do their due diligence on the partnership that they’re ready to go.”

Part of this is realizing that the drug company will be aiming for a particular FDA approval date, and that the diagnostic company has to be prepared to file its application alongside the drug’s application and be ready when the drug is ready for approval. They need to be “working in lock-step, to make sure the assay is correct, it’s ready in time for clinical trials, and the other regulatory work they need to do is ready to go,” she warns. Otherwise, they could delay the drug getting to market.

Companies also need to realize that while it’s in pharma’s interest to have tests as widely available and inexpensive as possible—especially if they’re required for treatment to be prescribed—that is generally not the case for the diagnostics companies.

A drug company may help support development and clinical testing, but it will be up to the diagnostics company to make sure they’re doing things efficiently from a cost-of-goods perspective so that the test is profitable, explains Thomae. “This is a fundamental challenge, and one of the reasons that companion diagnostics have taken a while to make it to market.”

A New Paradigm

It’s not just reimbursement issues that separate drug manufacturers from diagnostics companies. The advent of targeted therapeutics is a “direct challenge to the business models” of these two players, says Joseph Ferrara of Boston Healthcare Associates.

“Innovators need to address a complex mix of value perspectives from stakeholders”—including patients, hospitals and physicians, regulators, and payers—and he is eager to facilitate a dialogue that may ultimately answer how the new personalized medicine paradigm will change companies’ approaches to innovation and commercialization.

Assuming that they have already examined alignment of product development and manufacturing (as they normally would), Ferrara proposed that innovators consider five core commercialization factors. These, he says, are what BHA would ask clients when helping them develop their business model approach.

First, what evidence might be needed beyond regulatory approval requirements and launch to achieve market acceptance? Demonstrating quality of the testing, and showing that the test could be conducted with minimal lab-to-lab variability, for example, could have an impact on the utility of the drug.

Second is the logistics of distribution. Is the aim for the drug and test to be globally available, with multiple labs in each country? Or, if there will only be a small number of tests conducted, can a single lab do them all? Local regulatory requirements, too, need to be taken into consideration—for example, does a given country allow export of tissue samples?

Third, because the test is in essence a gatekeeper for the drug’s acceptance, what pathways and policy restrictions to test access are payers likely to impose?

The fourth factor centers around questions of financial risk for optimizing access to the drug, and what the likely payment outcomes might be. Take the case of a test costing twice as much to run (or that a lab is willing to accept) than what a payer is willing to reimburse under the current system, yet that test is essential for prescribing a treatment regimen. “Who makes up that difference?” asks Ferrara, “and what do the stakeholders need to do about it to address that gap?”

His fifth and overarching theme involves innovator company organization and infrastructure: “Do the players have the people, the content, and the resources needed to optimize a very targeted medicine?” The answer remains to be seen, he says, explaining that the factors involved in this nascent field are just beginning to emerge.

Low(er) Tech

Sometimes molecular diagnostics doesn’t have to involve highly complex assays or sophisticated instrumentation.

Timothy Stenzel, M.D., Ph.D., CSO of Quidel, discussed his company’s collaboration with BioHelix to develop isothermal amplification tests using the latter’s helicase-dependent amplification (HDA).

With this technology, designed for resource-poor areas in the developing world, or simply where capital expense budgets are low or being slashed (even in the U.S.), “you don’t need a thermocycler, just a heat block,” he says.

“I think there are untapped markets out there,” Dr. Stenzel confided. “It’s our understanding that there are nonmolecular labs that can’t afford to get into molecular diagnostics, because they either can’t afford to hire the personnel, set up a high-complexity lab, or buy the current integrated systems right now. If there were a lower cost option where they didn’t have to make a capital outlay, they would get into molecular now.”

In the developing world, right now molecular testing is a challenge. And because it’s mainly done in centralized locations, the turnaround to get results back to patients can be months, and many patients are lost to follow-up as a result.

The Quidel-BioHelix system makes use of capillary flow on nitrocellulose membranes, similar to that of over-the-counter home pregnancy tests. It’s easy to use, high performing, and uses a visual read: you see a line develop and the target is there; you don’t see a line and it’s not there. Because this type of technology is less prone to inhibition, it’s often not necessary to perform an up-front nucleic acid extraction (or to make the large capital expense for an extractor).

Another attractive thing is that the technology can be multiplexed—even allowing for an internal control to be placed in the same tube with the target—he noted, but it won’t be as highly multiplexed as arrays.

The first menu is in the area of infectious disease, offering up some fairly obvious targets that labs are expecting, Dr. Stenzel said. One of the top priority targets is C. difficile testing, especially in U.S. where it is an important pathogen for hospitals to get control of. “The whole area of hospital-acquired infections is still growing and is very interesting.”

Dr. Stenzel predicts that much of the C. difficile testing currently being done by EIA “will move to molecular as soon as labs can get up and going with a method that works for them.”

Quidel has developed lower cost technologies, including AmpliVue, a handheld disposable molecular device, for labs that have low capital expense budgets.

MDx in ROW

Cepheid is collaborating with the Foundation for Innovative Diagnostics to bring molecular diagnostic capabilities to those parts of the world where most of the tuberculosis deaths are occurring—the high burden developing countries (HBDCs).

“With our Cepheid Cares program, we have partnered with key nonprofit organizations to provide special programs and pricing to the HBDC’s where it is needed most,” says Russel Enns, Ph.D., the company’s senior vp and chief regulatory officer. The automated MTB/RIF test allows for detection of Mycobacterium tuberculosis and resistance to rifampin using Cepheid’s GeneXpert platform. The only manual step for this assay is mixing sputum with buffer before transferring it to a consumable plastic cartridge.

Diagnosing tuberculosis using traditional culture techniques can take one or two months, and finding a drug resistance pattern may take a few more weeks beyond that, while the PCR-based MTB/RIF test can give an answer within a couple of hours.

“The difference is that kids can be kept at the clinic to make sure they get the drugs down, or sent home from the clinic with the right treatment,” Dr. Enns explains.

Cepheid wants to bring tuberculosis-focused molecular diagnostic capabilities to countries where the greatest number of TB-related deaths are occurring.

China on the Move

Some countries that are lumped into the category of the developing world in in vitro diagnostics may catch up with the U.S. and Europe more quickly than we think.

Min Cui, Ph.D., investment partner at Bay City Capital, talked about market opportunities and characteristics for investment in China. He sees the world’s second largest economy as still in its infancy in terms of molecular diagnostics and point-of-care diagnostics.

Yet “because it’s in its infant stage, you’re going to see explosive growth in this area—China will pick up very quickly,” he predicts.

When it does, China will probably go to the best technology available. For example, “you’re going to see next-generation sequencing technology applied to diagnostics in China probably as early as the U.S. adopts it. There’s a tremendous opportunity in my view,” Dr. Cui says.

Similarly, he thinks fully integrated, fully automatic PCR systems and other new technologies are likely to be adopted very quickly in China: “It will probably take a couple of years.”

Because medical products operate in a “highly regulated space,” in which SFDA approval is needed, IP protection in China in the medical product space is far better than its maligned reputation, he notes. As with doing business anywhere, you have to choose a good partner, and do your homework.

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