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As it Progresses with Celgene Deal, NanoString Eyes CDx as Growth Driver

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NEW YORK (GenomeWeb) – Six months after NanoString Technologies inked its first companion diagnostics agreement, its CEO is bullish that that segment could rapidly drive the company's growth. 

In June, NanoString announced a deal with biopharmaceutical firm Celgene to develop an in vitro diagnostic assay for use on NanoString's nCounter platform to screen patients being enrolled in a Phase III study of Celgene's diffuse large B-cell lymphoma (DLBCL) treatment Revlimid (lenalidomide). Since then, NanoString has successfully met a milestone that resulted in a $5 million milestone payment, and during the company's third quarter earnings conference call in November, its CEO Brad Gray said, "We are increasingly confident that over time companion diagnostic partnerships will become a significant driver of growth and cash flow for our business."

The Seattle-based firm joins a growing number of omics tools and molecular diagnostic firms moving into the CDx space, including Qiagen, Myriad Genetics, Illumina, and Thermo Fisher Scientific's Life Technologies. However, Gray told GenomeWeb that the company's nCounter platform offers advantages over the technologies offered by competitors, and despite being a newcomer to the CDx space, NanoString is not following anyone's lead.

"Our goal … is really to own this segment of companion diagnostics that are based on gene expression signatures in the field of cancer," Gray said.

NanoString's strategy in the CDx space centers on leveraging the nCounter system, an IVD platform cleared by the US Food and Drug Administration for use by decentralized laboratories to measure gene expression signatures from cancer tissue. More than 230 nCounter platforms have been installed to date, and NanoString continues to source the diagnostic content being discovered by researchers using the system, he said.

Because the nCounter platform is designed to provide vast amounts of gene expression data from "tiny cancer biopsies," it is "ideally suited for developing cancer diagnostics." The ability to work with low sample amounts enables the technology to perform a multiplex genomic analysis in a single reaction, Gray said, adding that NanoString can profile up to 800 genes simultaneously, "which is more than enough multiplexing capability for any companion diagnostic I've heard anybody conceive of, and more gene expression information than other technologies can typically provide."

Additionally, Gray said that because the nCounter chemistry is not dependent on enzymes or amplification, the technology is "exquisitely compatible" with formalin-fixed, paraffin-embedded tissue, a commonly used biological sample for cancer diagnostics. As a result, the system works well with degraded RNA from FFPE samples, he said.

Lastly, the system's workflow is simple and robust, allowing it to be used in any pathology laboratory. "And that's critical for companion diagnostics because drugs are obviously commercialized globally and they can't be prescribed unless the test is available locally, so that is a big part of our appeal," Gray said. 

While the CDx space has been in NanoString's sight from the start, its entry into the market was made possible only after it could demonstrate the ability to conduct clinical studies, have the technology clinically validated independently, and establish a successful regulatory approval history.

On the last point, NanoString secured FDA clearance for the Prosigna Breast Cancer Prognostic Gene Signature Assay last year. The test evaluates 58 genes from FFPE in a decentralized setting, making it "probably one of the most complex in vitro diagnostic kits that's ever been cleared by the FDA," according to Gray. "We did that as a small company, and I think we really established credibility with the FDA and a confidence about our technical abilities to that program." 

He also noted that the company has a deep history in cancer and biopharma. Gray held various positions at Genzyme Genetics, now part of Sanofi, before he joined NanoString in 2010. Additionally, CFO James Johnson; Senior VP of Corporate and Business Development David Ghesquiere; and SVP and General Manger of Diagnostics Bruce Seeley also worked in the biopharmaceutical and drug development space prior to NanoString.

"So I think we have a deep personal understanding of the needs of these biopharmaceutical companies that we're working with, and when we meet them, we're simpatico," he said.

While he couldn't put a dollar figure on the potential size of the CDx market for NanoString, he noted that much cancer drug development work is focused on targeted therapeutics and that drug firms are aggressively pursuing strategies that predict patient responses to drugs.

"So I think companion diagnostics are going to become the norm in drug development," Gray said.

Breaking into the CDx space

NanoString's agreement with Celgene results from work done by one of its customers, the National Institutes of Health's Leukemia and Lymphoma Molecular Profiling Project, which was defining subtypes of DLBCL and used NanoString's technology to refine a 20-gene signature for its subtyping work.

At the American Society of Hematology's annual conference in 2013, the NIH researchers presented a diagnostic that they developed for subtyping DLBCL on the nCounter platform, and said that their test could be analytically validated in multiple labs on the system.

Meanwhile, Celgene was preparing for a Phase III study of its drug Revlimid and was interested in gaining access to an IVD to use on patients as part of the study, called ROBUST.

In an email to GenomeWeb, a spokesman for Celgene said that the nCounter "will enable us to identify patients with the activated B-cell subtype, a type of DLBCL that has been historically difficult to treat. In early studies, we discovered that Revlimid has significant activity in this subgroup of patients, and so the phase III study has been based around this population. We will use [gene expression profiling] from NanoString to help us enroll this study."

ROBUST is on track with enrollment, he added. Because it is an event-based study, he said that it was too early to say when it would be completed.

As part of the Celgene deal, NanoString is licensing NIH's subtyping algorithm, while it and Celgene are developing the IVD. The two firms are focused on locking down the assay procedures, the subtyping algorithms, good manufacturing practices for the kits, and getting agreement on the regulatory process for an FDA submission, Gray said.

Meetings with the FDA have begun, which he characterized as being "successful." In the third quarter, NanoString received a $5 million milestone payment from Celgene and by the end of 2014, NanoString anticipates it will achieve three "major" milestones, which would make it eligible for an additional $1 million in milestone payments. Under the terms of the agreement, the company is eligible for a total of $17 million in milestone payments.

"Our goal … is really to own this segment of companion diagnostics that are based on gene expression signatures in the field of cancer," Gray said.

The Celgene agreement is non-exclusive and NanoString is free to develop a subtyping test with other partners for their studies and their drug development efforts, a term that Gray said is "very important actually for lymphoma patients because we want there to be one gold standard test for how you look at [DLBCL], not a series of different tests associated with a different drug."

A patient would be able to get "just the basic test at the time of diagnosis, and that can help with treatment decisions," he said, adding that NanoString has been engaged with "many" other drug firms about use of the company's technology.

NanoString has "multiple different avenues of discussions with biopharma" in the CDx arena, and it has multiple products with utility as companion diagnostics, he said, including the Prosigna breast cancer test, which can subtype the disease and therefore can be used for decisions about therapy choice and new drug development.

Researchers also continue to use the nCounter platform for biomarker studies directed at drug use, providing NanoString another potential avenue for future CDx deals, similar to the Celgene deal.

"So there are a lot of shots on goal that we have for capturing diagnostic content and delivering that into the drug development process," Gray said. "We know that there are unpublished success stories about how our technology is being used to find biomarker panels [to facilitate] drug use, so that provides an avenue to potentially grow those relationships that we already have into companion diagnostic collaborations."

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