This article has been updated to clarify that Anthem is a health insurer within the Blue Cross Blue Shield Association.
NEW YORK (GenomeWeb) – As Sequenom sees revenues from its flagship noninvasive prenatal test, MaterniT21 Plus, decline, it plans to shift its focus to the average risk market and new products in reproductive health and oncology.
During a conference call this week discussing its third quarter 2015 results, CEO Dirk van den Boom said that the number of MaterniT21 Plus tests declined in the third quarter due to an increasing number of labs developing their own tests based on patents licensed from its patent pool agreement with Illumina, as well as increased competition. He also noted that to date the company has not been good at expanding its presence in the average-risk market, despite having a separate test geared toward that population.
By contrast, however, he said uptake of its recently launched MaterniT Genome test — an NGS-based noninvasive karyotyping test that screens for chromosomal abnormalities greater than 7 megabases — has "exceeded expectations." The firm has completed a clinical validation study of MaterniT Genome, which he said would be publicly available "very soon."
In addition, van den Boom reiterated the firm's intent to launch a liquid biopsy test next year, and said that the company plans to run internal clinical studies in the fourth quarter.
The NIPT market has changed dramatically since Sequenom first launched its initial MaterniT21 test in 2011. Although Sequenom initially believed it had a strong intellectual property position, that proved not to be the case, as a broad patent it held in the field was deemed invalid. The company joined forces with Illumina in a patent pool agreement, which ended the litigation between the companies and set up a patent pool through which other labs could license technology to develop their own NIPTs.
Van den Boom said that the creation of the patent pool with Illumina was essentially a "business model shift." Although the patent pool has resulted in fewer tests run, van den Boom said it is "still in the early stages of showing its true strengths."
Currently, 36 laboratories have licenses, but only 12 have developed tests so far.
Aside from providing a revenue source in the form of license fees and royalties, the patent pool also frees up the firm to focus on other products.
In the coming quarters, van den Boom said the firm planned to focus especially on its average-risk NIPT, VisibiliT.
Sequenom primarily markets MaterniT21 Plus to maternal fetal medicine specialists, since women with high-risk pregnancies tend to see these specialists. In addition, the company included on its test requisition form a reason for testing, such as advanced maternal age, to ensure that only women with high-risk pregnancies were ordering the test. The firm believed that was the best way to secure reimbursement.
Recently, however, opinions have started to change. The American College of Obstetricians and Gynecologists and the Society for Maternal-Fetal Medicine stated this summer that although conventional screening is still the "most appropriate choice" for most pregnancies, patients of any risk group should be able to choose NIPT.
Health insurer Anthem, which is in the Blue Cross Blue Shield Association, has updated its medical policy to say that NIPT is considered medically necessary for most pregnancies regardless of risk.
Sequenom has a master business agreement with the BCBS Association, which allows it to negotiate contracts with the independent BCBS companies to offer its testing services. According to a review by investment bank Piper Jaffray, 12 payors now cover average-risk NIPT, many in the BCBS Association. They include Anthem, Florida Blue, Horizon BCBS of New Jersey, BS of California, Regence, Premera, BCBS of South Carolina, BCBS of Arizona, Arkansas BCBS, BCBS of Kansas City, BCBS of Western New York, and Independence Blue Cross.
Despite this change in some payors' reimbursement policies for average-risk pregnancies — payors now cover about 20 percent of the average-risk market — uptake of Sequenom's VisibiliT test has been low, van den Boom said. During the third quarter, only 2 percent of noninvasive prenatal tests run were VisibiliT, van den Boom said.
"We are evaluating our optimal strategy for addressing the average-risk pregnancy population, which we expect will include an enhanced focus on obstetricians," he added.
Focusing on the obstetric market will also have implications for Sequenom's universal carrier screening test. The company launched the universal carrier screening test earlier this year, but van den Boom said it has "not seen the expected adoption."
Van den Boom attributed the lack of adoption of the carrier screening test to the company's focus on the maternal fetal medicine specialist market, which does not typically offer carrier screening to patients. He said as Sequenom transitions to targeting the obstetric market with VisibiliT, there will also be opportunities to better market its carrier screening test.
Aside from its agreement with the Anthem BCBS Association, Sequenom has agreements with Aetna, Cigna, and United Healthcare for over 200 million lives covered under contract, as well as an additional 46 million lives under contract by Medicaid in 22 states.
Van den Boom noted that the company is reimbursed for 70 percent of its tests at an average of $900 per test.
On the opposite end of the NIPT spectrum, Sequenom launched its MaterniT Genome test broadly at the end of August. Van den Boom did not provide specifics on uptake, but said that the company is encouraged by the positive feedback it has received. MaterniT Genome evaluates screens for any chromosomal abnormality larger than 7 megabases, making it comparable to an invasive test in its scope. The test is "able to minimize the false reassurance other NIPTs give as they fail to identify up to 35 percent of abnormalities," van den Boom said.
Finally, van den Boom said that the company is well-positioned to launch a liquid biopsy assay next year, which will be a "high-potential product line in a compelling space."
The company is working with clinical collaborators at the University of California, San Diego; Seoul National University Hospital; the University Medical Center Hamburg-Eppendorf; and the University of Colorado, Denver School of Medicine. Its clinical collaborators are running research studies evaluating the assay's ability to identify appropriate therapies and to monitor therapy response in later-stage cancers.
Sequenom is also running its own internal clinical research studies testing the assay's ability to identify actionable mutations and also to be used as an aid in cancer detection, van den Boom said.
The company is focused on multiple major cancer types, but especially lung and colon cancer, and results from the internal studies will help "inform our commercialization strategy," van den Boom said.