NEW YORK (GenomeWeb) – Foundation Medicine is planning a range of new initiatives and tests to further differentiate itself in the growing market of pan-cancer genomic analysis, management said this week.
Despite seeing its revenues and testing volumes rise in the first quarter of this year compared to last year, CEO Michael Pellini acknowledged that new market entrants have impacted sales of its FoundationOne and FoundationOne Heme tests to physicians and oncologists.
During a conference call discussing its first quarter 2015 results, Foundation Medicine management discussed the firm's new commercial initiatives and investments, its reimbursement progress, and its partnership with Roche.
In addition, the company has now moved into its new laboratory where it plans to develop products for US Food and Drug Administration approval under QSR-compliant conditions. Those products will "support targeted therapies from Clovis, Roche, and other biopharma partners," COO Steven Kafka said during the call.
The firm has also begun construction on a laboratory specifically to support development of liquid biopsy-based products, Kafka added. As previously reported, Foundation Medicine plans to launch a liquid biopsy product for its biopharma customers this year and as a clinical test in the first half of 2016.
Also during the quarter, Foundation Medicine completed validation work and reported results from its first samples processed in China in collaboration with WuXi PharmaTech. Foundation signed a licensing agreement with WuXi last year, enabling WuXi to offer its genomic profiling technology to companies conducting clinical trials in China. The Wuxi collaboration is a "key component of our China-based strategy," Kafka said, and could provide opportunities to increase the biopharma business as pharmaceutical companies look to China for clinical trial recruitment.
New initiatives, collaborating with Roche
Dave Daly, Foundation Medicine's chief commercial officer, who joined the company last December, said that the company plans to hire 30 commercial professionals throughout the year "to drive market adoption and enhance customer experience."
The firm is also focusing on two key technology initiatives. It is working toward integrating its testing with electronic medical records to make it easier for physicians to order its tests and to enhance its results reporting, Daly said. Second, it will continue to push and support the deployment of version two of its Interactive Cancer Explorer (ICE 2).
Foundation Medicine launched ICE 2 a few months ago. One of ICE 2's distinguishing features is the "patient match" application where physicians can query the entire knowledgebase network, FoundationCore, for other patients with a similar cancer genomic profile. Kafka said that the FoundationCore network has now grown to 43,000 clinical cases. In addition, migration from ICE 1 to ICE 2 is "on track with expectations."
Foundation Medicine shareholders also recently approved Roche's offer to acquire a majority stake in the company. Kafka said that Foundation Medicine is already supporting a number of Roche's clinical programs, evidenced by Roche's announcement last week that it is using the FoundationOne test in its Phase III clinical trial for a PD-L1 inhibitor across multiple tumor types. In addition, teams from both companies are working on "product development efforts for ctDNA, companion diagnostic programs, and a new immuno-oncology testing platform," Kafka said.
In the second half of the year, Roche and Foundation Medicine plan to launch a US-focused medical education campaign, and the companies are also beginning a one-year long business planning process for the international market.
Kafka re-affirmed that Foundation's relationship with Roche has not negatively impacted its ability to forge partnerships with other pharmaceutical companies — the number of biopharma partners has in fact grown since Roche acquired a stake in Foundation Medicine, he said. "The level of interest has only increased," he said, from pharmaceutical companies looking to leverage Foundation's platform, particularly as the company looks to bring it through FDA clearance.
One area that has been somewhat of a struggle for Foundation Medicine is reimbursement. Average per-test reimbursement for the quarter was $3,400, down sequentially from $3,600, but on par with the year ago quarter.
Last year, the company saw significant milestones in the reimbursement arena. Grand Rapids, Mich.-based Priority Health announced it would cover Foundation Medicine's genomic profiling services for cancer, Google said that its employees would have access to its tests, Foundation Medicine received unique Z-code identifiers for its tests through the McKesson Diagnostics Exchange, and the National Comprehensive Cancer Network endorsed broad genomic testing for non-small cell lung cancer.
In addition, earlier this year, Palmetto issued a draft local coverage determination proposing coverage for genomic profiling of advanced NSCLC patients whose tumors are negative for EGFR mutations.
Jason Ryan, Foundation's CFO, said the draft LCD was an important step because it specifically relates to comprehensive genomic profiling and sets a high standard for validation. "We anticipate that this first coverage determination will lead to broader coverage over time, both among lung cancer and in additional clinical indications," he said.
Nonetheless, Ryan said the lack of broad coverage policies by many payors is impacting physicians' ordering decisions. "We've seen examples of patients successfully directed to targeted therapies but whose insurance companies won't cover the cost," Ryan said. "This can have an impact on a physician's ability to order the test for their next patient, not because the physician questions the clinical need, but because the payor does."
Pellini added that reimbursement is coming in a step-wise fashion. Due to the NCCN guidelines and Palmetto's draft LCD, non-small cell lung cancer is one indication where "there's a preponderance of information" supporting reimbursement.
The next indication that he thinks will see broader coverage support is for tumors of unknown primary origin. The workup for those patients just to figure out the site of the tumor origin can be expensive — $10,000 to $25,000 — and is often not even helpful, Pellini said. Payors are incurring significant expense for these patients and Foundation Medicine has recently published data supporting the use of its test for tumors of unknown primary origin, he added. Coverage for pediatric cancers will likely be next, followed by rare and uncommon cancers, Pellini added.