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JP Morgan Healthcare, Day 2: Thermo Fisher, Exact Sciences, Guardant, Hologic, Caris, and More

SAN FRANCISCO (GenomeWeb) - The 37th annual JP Morgan Healthcare Conference kicked off here on Monday with several life science tools and molecular diagnostics companies presenting before thousands of investors. Below are brief reports on the presentations and breakout sessions covered by our team on Tuesday at the conference.

For coverage of the first day of the conference, please see this roundup.

Thermo Fisher Scientific

Thermo Fisher Scientific CEO Marc Casper said that the company plans to focus its R&D in 2019 on electron microscopy, mass spec and chromatography, and clinical sequencing. There is a "great growth opportunity" in structural biology for electron microscopy, Casper said, echoing sentiments the firm expressed earlier this year at the American Society for Mass Spectrometry meeting.

Similarly, Casper said there has been "strong momentum in mass spec and we want to maintain that" in 2019. In order to do that, he said the firm planned to continue to develop the automated mass spec instrument it launched last year, including expanding the menu of applications that could be run on it.

With regards to clinical sequencing, Casper said the focus will be on making its sequencing instruments "more walkaway, more efficient, and with less hands-on time," as well as expanding its targeted sequencing assays in oncology.

Casper said that 2018 revenues were more than $23 billion, with 52 percent coming from consumables, 26 percent from instrument sales, and 22 percent from services. With regards to geographical growth, China "continues to be the fastest growing end market," with sales to that region representing around 10 percent of total revenues. He said that demand from China has not slowed down amidst the trade war between China and the US, adding that because most of Thermo's products are not made in the US, they are not subject to the tariffs.

Exact Sciences

Exact Sciences CEO Kevin Conroy lauded "a landmark year" in 2018 for his firm and its Cologuard test for people at average risk of getting colorectal cancer.

The firm anticipates reporting revenues between $142.5 million and $143.5 million in the fourth quarter of 2018, representing 64 percent growth year over year. Full year 2018 revenues are expected to be between $454 million and $455 million, a growth rate of 71 percent year over year.

In Q4, the firm completed about 292,000 tests, and in full-year 2018 it completed about 934,000 tests, an increase of 64 percent in test volume over 2017, Conroy said.

Despite its rapid adoption, a 115 percent compound annual growth rate from 2014 to 2018, the Cologuard test has penetrated only 4 percent of its total addressable market valued at greater than $14 billion, Conroy said. With plenty of room for growth, the firm is working closely with primary care physicians, gastroenterologists, Ob/Gyns, and other healthcare providers to evangelize the clinical utility of Cologuard, he said.

Conroy said he expects that a partnership inked with Pfizer will help the firm achieve significantly greater adoption of Cologuard. Further, he noted that 94 percent of Cologuard patients have no out-of-pocket costs.

He reiterated previous statements that Exact Sciences aims to seek FDA approval to expand the label for Cologuard testing to include not only people that are between 50 and 85 and at average risk of getting colorectal cancer, but also those aged 45 to 49 who are also at average risk. That would increase the market opportunity for the test by 19 million people, a potential $4 billion, he said.

The Exact Sciences CEO said that the firm is exploring and has identified molecular biomarkers for indications other than colorectal cancer, including liver cancer, and eventually the firm would like to develop a universal cancer panel. Exact Sciences is also exploring the development of tests that use blood for screening in addition to the stool samples already used for Cologuard, he noted.

Guardant Health

Guardant Health launched a research-use-only version of a liquid biopsy test for cancer recurrence, Lunar, and plans to launch a clinical version in the second half of the year, CEO Helmy Eltoukhy said this week. The test, a targeted sequencing-based test of cell-free DNA, builds on its Guardant360 liquid biopsy for tumor mutational profiling, by adding an epigenomic component. That improves the sensitivity, enabling genomic alterations to be detected at frequencies as low as .01 percent.

Eltoukhy noted that the company's 2018 revenues grew by 94 percent over 2017 revenues, driven by its clinical tests as well as partnerships with pharmaceutical companies. As previously reported, the company is developing a second version of the Lunar assay that will be geared toward early detection. For that, it is focusing on breast, colorectal, lung, and pancreatic cancers.

With regards to its Guardant360 assay, Eltoukhy said that the company expects data from its NILE study, a head-to-head comparison of Guardant360 with tissue-based testing as a first-line test in 300 non-small cell lung cancer patients, to be available in the first half of the year. The company expects the study will establish a "blood-first" paradigm. And, following that study, he said he anticipates FDA approval of the assay, followed by pan-cancer coverage for the assay by Medicare. Already, he said, the firm has around 115 million total covered lives for the use of the assay in non-small cell lung cancer.  

Hologic

Hologic CEO Stephen MacMillan said Tuesday that the firm's breast and skeletal products combined with its diagnostics products account for about 77 percent of overall revenue.

Diagnostics brings in about 36 percent of the firm's revenues. Driven by new tests, increased utilization, and international sales growth, the firm's MDx revenue growth accelerated to 12 percent year over year in fiscal year 2017 and 7 percent in 2018, MacMillan said.

Earlier in the week, the firm announced that it expects its fiscal first quarter 2019 revenues to increase 5 percent year over year to $831 million from $791 million, and its diagnostics business revenues to grow to $297 million from $285 million in the year-ago quarter.

For the company to reach its overall objectives, it is looking to grow its diagnostics business in the mid-single digits year over year, MacMillan said.

He noted that the firm's diagnostics businesses have grown over recent years, transforming it from a niche player in sexually transmitted disease testing to a "broad-based MDx leader with strong customer partnerships."

Hologic has placed about 1,500 of its Panther molecular diagnostic systems globally, with 60 percent in the US. Its MDx business outside the US has grown at a double-digit rate for the past 10 quarters, MacMillan noted.

The firm has an expanding menu of assays, MacMillan noted, in women's health, viral, and respiratory testing applications. And each of the company's Panther molecular diagnostic systems gets it an average of $225,000 in annual consumables revenue.

The firm's next-generation Panther Fusion platform, which launched in 2017, provides labs with opportunities to consolidate testing and offers open-channel capabilities that permits running lab-developed tests alongside the firm's FDA-cleared tests. Further, Panther Fusion adds the capacity to run PCR assays that are performed on the base Panther system.

McMillan noted that the firm continues to place Panther systems in the US and internationally. As customers become more experienced with the systems, they tend to purchase additional assays, he said, adding that future incremental growth should come from some mid-size labs "that have not been fully tapped" and from international customers running additional tests that receive regulatory clearances in different countries.

Large customers such as Quest Diagnostics and Laboratory Corporation of America, with whom Hologic recently renewed customer contracts, "see what we have done to help drive their business" and profitability, MacMillan said.

Caris Life Sciences

Tumor profiling company Caris Life Sciences plans to upgrade its targeted sequencing and proteomics tests to exome and transcriptome sequencing as well as complete proteome profile this year, David Spetzler, the firm's president and chief scientific officer, told investors. In addition, he said, the company is expanding from solid tumors and into the hematological malignancy space.

Currently, Caris offers a 592-gene sequencing panel, as well as a 53-gene fusion panel, and customized protein tests depending on the specific cancer lineage. It has analyzed more than 150,000 patient cases since it launched in 2009 and has more than 80,000 banked tissue samples and 20,000 tumor profiles with matched molecular and clinical outcomes data. Caris has also built a network of 25 institutions called the Precision Oncology Alliance in order to aggregate clinical outcome data.

Brian Brille, the company's vice chairman, said that its current tests are covered by Medicare through a local MAC and have 32 contracts with private payors covering 170 million lives. Notably, he said, it has a contract with Humana that is exclusive — the payor will only reimburse for Caris' pan-cancer profiling assays and not those offered by other firms.

In 2018, the firm profiled close to 30,000 patient tumors and its revenues grew to around $100 million from $68 million in 2017.

Agilent

Agilent CEO Mike McMullen said that the company anticipates total revenues to grow between 5 percent and 5.5 percent to a range of $5.13 billion to $5.17 billion in fiscal year 2019, with EPS between $3.00 and $3.05. Looking forward, he said that Agilent's market opportunity is $52 billion, including $16 billion in the pharmaceutical market, $4 billion in chemical and energy, $11 billion in chemical and diagnostics, $11 billion in academic and government, $5 billion in food safety testing products, and $5 billion in environmental monitoring and testing. In order to expand its position in that market, he said that the firm plans to invest more than $1 billion over the next three years in R&D.

Notably, McMullen said that the firm has already invested $185 million in building a new oligo manufacturing plant. Sam Raha, Agilent's president of the diagnostics and genomics group, said that the new plant, which will open later this year, could lead to a potential doubling of revenues of that business.

Mergers and acquisitions have also been a key part of Agilent's strategy over the last several years, McMullen said, citing the acquisitions of Advanced Analytical Technologies, next-generation sequencing firm Lasergen, cloud-based software company Genohm, and cell analysis firm Acea Biosciences. In total, the firm bought seven companies in 2018.

With regards to the Lasergen acquisition, Raha noted that although Agilent is "not looking to be a sequencing company," Lasergen does have a "robust chemistry" and "foundational platform," which he said could be combined with Agilent's oncology franchise.

Agilent, like other firms in the space, also sees a huge growth opportunity in China, and McMullen said the company would continue to explore how it could expand there, including by investing in Chinese firms.

Mayo Clinic

Mayo Clinic Ventures, the commercial arm of Mayo, is investing heavily in the digital health space, Clark Otley, Mayo's medical director, said in a presentation. He highlighted a number of the firms and technologies Mayo is working with, including AliveCor and Eko, two companies focused on using machine learning and artificial intelligence within the cardiology space to predict the early stages of heart failure.

AliveCor is a mobile app that Otley described as a "bloodless blood draw" that is able to determine whether a patient has a salt imbalance, an indication of atrial fibrillation, allowing patients to monitor for themselves and notify their doctor when something is amiss. Similarly, Eko is akin to a digital stethoscope that analyzes sounds to predict if someone is entering the early stages of heart failure.

In addition, Mayo has invested in Vyriad, a Rochester, Minnesota-based startup that is repurposing viruses to target cancer antigens. And as previously noted, Mayo has invested in Qrativ, which aims to harness genomic and other clinical data to repurpose drugs.

In general, Mayo has a "strong focus" on artificial intelligence and big data, Otley said, and sees a "humongous opportunity in this area" to use Mayo Clinic's curated big data and apply artificial intelligence and machine learning to it.

On the lab testing side, Otley said that Mayo Clinic Laboratories ran 25.5 million tests in 2018. In total, Mayo Clinic recognized $12.5 billion in 2018 full-year revenues.

Beginning in January this year, Gianrico Farrugia took over as CEO of Mayo Clinic following the retirement of John Noseworthy, who had held the position since 2009. Farrugia was previously CEO of Mayo Clinic Florida, and prior to that served as the director of Mayo's Center for Individualized Medicine.

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