SAN FRANCISCO (GenomeWeb News) – The 32nd Annual JP Morgan Healthcare Conference kicked off here Monday with several life science tools and diagnostic firms making presentations to investors and other attendees.
The following are capsules from the presentations and breakout sessions of Thermo Fisher, Agilent, Qiagen, Genomic Health, Myriad, and SomaLogic.
Thermo Fisher Scientific
As Thermo Fisher awaits final regulatory approval of its acquisition of Life Technologies, company CEO Marc Casper said that the firm is in the final stages of the deal's completion and reiterated that it remains on track to close early this year.
The deal is valued at $15.8 billion, which includes the $13.6 billion purchase price and $2.2 billion in assumed debt. Thermo Fisher has received $13.6 billion in financing for the acquisition and issued $2.9 billion in equity, down from as much as $4 billion that it had estimated in April, when the deal was announced.
Casper also said that in the 12 months after the close of the deal, it will be accretive to the company by at least $1.00, compared to an original accretion estimate of between $.90 and $1.00.
He did not provide an update on his firm's plans for Life Tech's Ion Torrent business, but perhaps to quell continuing chatter that the next-generation sequencing business may not be a good fit for Thermo Fisher, Casper said that both firms are excited about the deal and see great potential for Ion Torrent as a financial driver.
Casper added that integrating Life Tech into the Thermo Fisher fold to deliver synergies and EPS accretion will be a major goal for 2014, along with using free cash flow to pay down debt and returning capital to shareholders via dividends.
Casper also said 2013 was a standout year for the firm's mass spec business as it continued to leverage its Orbitrap technology. He called the American Society for Mass Spectrometry annual conference held in the spring one of the best ASMS conferences for the firm in its history, and added that mass specs, particularly the high end instruments, were among the fastest growing products in the company's portfolio last year.
It is "very clear" that Thermo Fisher has taken "substantial market" share from competitors in mass spec, he said.
Agilent CEO Bill Sullivan said that the life sciences portion of the firm is focused on driving return on invested capital in its Dako and Varian businesses. Dako, which the firm acquired in June 2012 for $2.2 billion, is a key part of Agilent's growing diagnostics business and has provided it with a core in pathology.
But, Sullivan noted, when the firm looks at holes in its portfolio, particularly in regards to its life science and diagnostic business, the one key technology that stands out is DNA sequencing. Agilent participates in the sequencing space through its sample prep technologies, but it doesn't offer a sequencing instrument. Sullivan said the question for Agilent is whether it will become more involved in the sequencing space, suggesting that that may happen in "gen three or four" of the development of sequencing technologies. And while he noted that sequencing is expected to be used more and more in pathology, he believes Dako's tissue testing business will continue to be an important part of its diagnostic business.
Sullivan also highlighted the firm's growing companion diagnostic investments. Agilent has signed recent CDx deals with Pfizer and Merck, and he said the company can now be considered "very credible as a partner" in the CDx space.
Agilent announced this past September that it would split into two, independent, publicly traded companies. The life sciences and diagnostics businesses are retaining the Agilent name, while the electronic measurement group will operate under a different name. The split is expected to be completed in November 2014.
Qiagen CEO Peer Schatz focused much of his comments at the conference on the firm's Quantiferon TB test growth, its growing companion diagnostics business, and the upcoming launch of its highly anticipated GeneReader sequencing platform.
Schatz said that its Quantiferon-TB Gold test, which unlike other TB tests is designed to identify latent infections of tuberculosis, could surpass $100 million in revenues in 2014. The test currently represents around 6 percent of the firm's total revenues and has plenty of room to grow, according to Schatz. He said market adoption is still in the single digits, but the test could potentially reach 70 to 80 percent adoption in the US market over the next decade. In addition, the Quantiferon test will soon launch in China, a key market for the test, and the firm expects to provide an update on the next-gen version of the test in the next several months.
Schatz said Qiagen has more than 15 companion diagnostic deals in place with pharma partners, and it expects to partner on prenatal testing. He also said the company currently has developed around 10 next-gen sequencing-based panels, but that will expand to around 20 after it launches the GeneReader platform.
Schatz reiterated previous comments that Qiagen will commercialize the GeneReader this year, though he didn't provide a specific timeline, nor would he provide expected revenues for the new platform. He said the focus would be on selling assays and interpretation first, but customers would have the option of buying a GeneReader instrument. However, Schatz noted that its tests would still be able to run on other NGS platforms.
He also said that some of the headwinds the firm faced in 2013 weren't likely to continue in 2014. Specifically, he expects its personalized healthcare business to rebound, as well as a likely boost in NIH funding, following the negative effects of sequestration over the past year. However, Qiagen's HPV test business is expected to continue to face competition from newer molecular assays, such as those offered by Roche and Hologic's Gen-Probe.
In answer to lingering questions that Genomic Health has been asked about the market penetration potential for its Oncotype DX breast cancer assay, CEO Kim Popovits stated that the company believes it can surpass a 60 penetration rate, and that in some regions the test, which this month marks its 10th year on the market, has about a 90 percent penetration rate.
In 2013, Genomic Health started a program to raise the profile of the test, and now the focus will be to "activate patients" to ask clinicians for the test, Popovits said.
New markets that the firm is targeting include the ductal carcinoma in situ space, where Genomic Health has penetrated about 3 percent of the market; prostate cancer, in which the company launched its Onctotype Dx test during the middle of 2013 and for which Genomic Health is enrolling patients for a decision impact study; and the international market.
Popovits said the international market represents a $2 billion opportunity. The firm has a direct presence in several countries, including Canada, France, Germany, Italy, the UK, and others. Genomic Health intends to continue investments in order to drive adoption of its breast cancer test in Western Europe, which by itself represents a more than $400 million market opportunity.
Lastly, Genomic Health is developing technology for non-invasive testing based on urine to quantify the presence and burden of cancer and sensitivity to certain drugs. The company declined to provide further details about the technology being developed.
Myriad Genetics faced several setbacks in 2013, including the US Supreme Court ruling against certain claims it had around the BRCA1 and BRCA2 genes and, most recently, a decision by the Centers for Medicare and Medicaid Services that drastically reduced the Medicare reimbursement rate for the firm's BRACAnalysis test.
In addressing concerns created by the CMS decision and the possibility that private payors would follow the agency's lead and slash their reimbursement rates, CEO Peter Meldrum said that data has proven the superiority of its BRACAnalysis test and Myriad anticipates the private market will not duplicate CMS' cut for BRACAnalysis.
Late in 2013, the company introduced its 25-gene MyRisk panel, and Meldrum reiterated Myriad's plans to phase out the BRACAnalysis test in favor of MyRisk by 2015. He added that the company will eventually not sell any single-gene tests that haven't been approved by the US Food and Drug Administration as companion diagnostics.
In addition to MyRisk, Myriad in 2013 launched the MyPath Melanoma 23-gene panel and the MyPlan Lung Cancer assay, a 46-gene expression signature. MyPath's global market opportunity is about $1 billion, Meldrum said, while MyPlan's is about $200 million globally.
Also, Myriad has the option to purchase Crescendo Biosciences as a result of a $25 million investment Myriad made into the autoimmune disease diagnostic firm in 2011. It informed Crescendo of its interest in acquiring the company in November, and today, Meldrum said that by the end of June, which is the end of Myriad's Fiscal Year 2014, it will decide whether to make a purchase.
SomaLogic's newly minted CEO Byron Hewett laid out a broad roadmap for the firm's growth in 2014, when the company anticipates moving into the life science tools and kits space. He added that SomaLogic plans to place its SOMAscan assays in core labs as part of a partnership with Agilent Technologies. In 2015, the firm will market its SOMAscan platform as a single diagnostic platform for multiple diseases.
Assays in the pipeline include a cardiovascular disease panel to match patients with appropriate treatments based on a patient's risk level. The test, Hewett said, has the potential to change patient behavior and to lower healthcare costs.
A lung cancer panel is in development, as well, to prevent "futile" and expensive procedures in a large proportion of patients who receive false positive CT results. The test would detect squamous cell cancers between CE screening scans and lead to economic benefits, Hewett said.
The privately held Boulder, Colo.-based firm currently has 100 employees and has raised $200 million in financing in its history.