Epigenomics Scales Back Workforce and R&D to Focus on Commercialization

Company is restructuring to concentrate more on the U.S. market for its cancer tests.

Cancer molecular diagnostics firm Epigenomics plans to restructure its organization to increase its focus on the U.S. market. Early-stage product and technology research will be discontinued and clinical research scaled down. The firm expects to reduce its workforce by approximately 39 employees targeting a company size of 45 employees by year-end.

Its second-generation blood test for colorectal cancer (CRC) detection, Epi proColon® 2.0, reportedly remains on track to be submitted to the FDA for PMA in the fourth quarter of this year. The company’s restructuring plans have been put in place to ramp up commercialization efforts for this test.

Epigenomics will relocate its U.S. headquarters from Seattle, WA, to the east coast in 2012. Going forward, European commercialization will be mainly focused on the firm’s key accounts, as uptake has been slower than expected in the European market.

“Given the significant opportunity with the improved test, our efforts are now focused squarely on the approval and launch of our second-generation Epi proColon product, particularly in the U.S.,” says Geert Nygaard, CEO. “As a result, we have brought forward the necessary operational changes to prepare for our U.S. product launch and focus the resources of the company on this key goal.”

The company further explains that remaining R&D resources will be concentrated on second-generation product development and support of existing products. Biomarker discovery and development capabilities will be maintained for collaborations with pharmaceutical companies in the area of personalized medicine.

Further cost savings will be realized through scaling down administration and management in proportion to new company structure. These measures are expected to be fully implemented by the end of 2011 and to be mainly reflected in the annual accounts of 2011.

Going forward Epigenomics expects to realize annual savings on a comparable operational cost basis of approximately €3.5–4.0 million. One-time restructuring costs are expected to be in the range of €3 million, of which approximately €700,000 will not affect liquidity.

Epigenomics notes that measures in connection with the restructuring plan will accelerate cash outflows in 2011 and that it expects to end the year with around €13 million in liquid assets. However, net cash outflows in 2012 will decrease accordingly. The management estimates that the existing liquid assets will fund the company’s operations into 2013. 

Epi proColon 2.0 is designed to show improved clinical performance, simplified handling, and better automation capabilities compared to the currently marketed version of the product. Prototypes have demonstrated higher test sensitivity at comparable specificity compared to earlier versions.
Revenue for the first half year of 2011 was €990,000, or about $1.41 million, compared to €0.97 million for the same period last year. The money was generated through outlicensing and partnering activity as well as product sales. Costs of sales amounted to €250,000, or roughly $360,000, up from €310,000 a year ago.

For Epi proColon 2.0, the company has planned two studies: a case-control study with about 200 patient samples for CE-marking of the product in Europe followed by the pivotal clinical trial for FDA approval with prospectively collected blood samples of a screening cohort of about 8,000 subjects.

In the European market Epi proColon 2.0 is being validated for use with the Roche LightCycler® 480 and Life Technologies’ AB 7500 Fast real-time PCR systems. For the U.S. market, Epi proColon 2.0 is designed for use with Life Technologies’ AB7500 Fast Dx real-time PCR instrument.

European sales in the self-payer segment are ramping up more slowly than expected, the company says. It will thus adapt its marketing and sales strategy to a key account approach. The company will mainly target payers and large institutional customers with deep reach into the healthcare system in select markets in Europe and beyond.