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With Gentris Acquisition, Cancer Genetics Bolsters PGx Analysis Capabilities, Services to Pharma

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Originally published June 24.

NEW YORK (GenomeWeb) – In deciding to acquire pharmacogenetics company Gentris for close to $5 million, Cancer Genetics is hoping to add germline drug toxicity profiling services to its existing tumor analysis offerings to pharmaceutical firms developing molecularly targeted oncologics.

Cancer Genetics this week said it signed a non-binding letter of intent to acquire privately held Gentris for $4.75 million – $3.25 million in cash and $1.5 million in stock. The deal also provides Gentris' owners the opportunity to earn milestones payments of up to $1.5 million. The acquisition is slated to close June 30.

Gentris, since its founding in 2001, has provided pharmacogenomic testing services and study support for more than 1,000 Phase I through Phase IV clinical trials. Gentris provides a variety of genomic testing services, but its expertise is in analyzing germline DNA and predicting patients' toxicities to chemotherapeutic drugs.

"We're very focused on DNA of the tumor systems, looking at how that is going to predict the progress of the patient, the subtyping of their disease, and their potential for therapeutic response," Panna Sharma, Cancer Genetics CEO, told PGx Reporter. "Historically, we've not focused much on the germline, or the inherited DNA, the stuff that doesn't change. That really drives a lot of pharmacogenomics, how you'll respond to certain enzymes, [drug] dosing and toxicities."

Caner Genetics has identified Myriad-Rules Based Medicine, Covance, Expression Analysis, and LabCorp, as companies that compete with Gentris. Having in-house capabilities to analyze both germline and somatic (or tumor) DNA is a major advantage against competitors in the field, Sharma noted. To date, most cancer drugmakers and researchers have focused mostly on somatic DNA alterations in characterizing the patient subsets likely to respond well to a targeted agent.

However, germline mutations play a critical role in the way cancer patients metabolize a drug and in their risks for adverse events. "This is very important in a lot of the small molecule [drugs] that are coming up … and it's really not being addressed all that well by anyone," Sharma said. "A lot of the mTOR inhibitors, aromatase inhibitors, and [histone deacetylase] inhibitors can have quite varying degrees of efficacy in an individual based on metabolism, enzymes, uptake, and this can make a difference between a poor responding set and a good responding set."

Germline mutations also become important when predicting whether patients will experience adverse events or become resistant to kinase inhibitors. With Gentris' capabilities in this regard, alongside Cancer Genetics' existing tumor analysis services, Sharma is hoping to provide a more complete picture of patients' responses to the firms' pharma and research collaborators.

Gentris currently generates annual sales of between $5 million and $6 million, and up to $1.8 million in net losses, according to Cancer Genetics. Meanwhile, last year, Cancer Genetics reported revenues of $6.6 million, a 54 percent increase from the $4.3 million it reported in 2012.

With the Gentris acquisition, Cancer Genetics said it expects to add between $5 million and $6 million to its revenues over the next 12 months. The company is hoping to be able to offer customers the combined services of the two firms by year-end, and begin netting higher value contracts in the first quarter of 2015.

Through this deal, Cancer Genetics will gain Gentris' biorepository, its roster of pharma and biotech clientele; a CLIA-certified lab in Research Triangle Park, NC; a US Food and Drug Administration-compliant satellite laboratory in Zhangjiang Hi-Tech Park in Shanghai, China; and the expertise of a number of pharmacogenomics luminaries.

After the acquisition closes, Gentris Co-founder Michael Murphy, VP of Scientific Operations Scott Clark, and pharmacogenomics expert and board of directors member Howard McLeod will come under Cancer Genetics' aegis. Murphy will serve as general manager at Cancer Genetics and oversee the integration of the two firms. Clark will manage day to day operations, and McLeod, medical director at Moffitt Cancer Center's DeBartolo Family Personalized Medicine Institute, will be a special scientific advisor and serve on Cancer Genetics' scientific advisory board.

Gentris' capabilities will add to Cancer Genetics' growing pipeline of cancer diagnostics. In May, Cancer Genetics launched the MatBA follicular lymphoma and mantle-cell lymphoma tests, which it developed and validated in collaboration with Memorial Sloan-Kettering Cancer Center. The tests identify genomic alterations associated with these hematologic cancers and can assess if a patient is likely to have worse overall survival.

Cancer Genetics also markets FHACT, a non-invasive genomic test that doctors can use to identify lesions caused by persistent HPV and identify patients who might advance to higher grade disease. The company's CALR Mutational Analysis Test identifies patients who have blood cancers and who are at risk of advancing to acute leukemia. The firm is also advancing a kidney cancer test that can diagnose, subtype, and predict outcomes of patients.

According to statements from the company, increasing adoption of Cancer Genetics' tests drove the 54 percent year-over-year revenue jump it saw last year. Pharma collaborations appear to be a key part of Cancer Genetics' future growth strategy, having inked projects with Gilead Sciences, Roche, and AstraZeneca. Through its SelectOne program, Cancer Genetics provides drugmakers access to genomic testing services for oncology trials. In February, the company said it had netted additional pharma contracts for its SelectOne program that it estimates will bring in more than $13 million in the next two years.

"Pharma now is much more sophisticated and involved in requesting biomarker profiles of tumor systems," Sharma said. "They're actually interested in looking at [patients'] unique signatures, whereas before they shied away from it." Today, the pharma company that doesn't want to do more and more comprehensive profiling of patients in their trials is the anomaly, he reflected. "That just wasn't the case three years ago."

In addition to Gentris' lab in North Carolina, Cancer Genetics has its own CLIA lab in Rutherford, NJ. Gentris' Chinese lab facility also fits in nicely with Cancer Genetics' aspirations to establish a global presence. In May, Cancer Genetics purchased Indian genomics and next-generation sequencing services firm BioServe Biotechnologies, which is slated to be renamed Cancer Genetics India.

"If you're really going to be a partner to pharma … you have to do it in a global fashion," Sharma said. Drugmarkers are developing personalized therapies for patient subsets characterized by increasingly rare markers. And so, they must perform trials at multiple sites throughout the world in order to recruit enough patients in to their studies. But varying lab standards — for example, differences in humidity levels that affect cell mitosis — can throw off biomarker analysis in a multi-site trial. "If you have humidity levels in a lab in India and China that's different from labs in Germany or California, you'll end up with different results," he noted.

As such, pharma companies have historically favored working with diagnostics shops that can provide standardized testing on an international scale. According to Sharma, drug developers "increasingly want one group, one protocol, and one set of standards across all their labs."

In terms of international growth, Cancer Genetics has already made some headway. In February, the company expanded an agreement with Roche Servicios to provide cancer diagnostic testing in Central America and the Caribbean, and signed a similar agreement with AstraZeneca earlier this month.

"The US market has a lot of opportunities, but there are significant administrative headwinds, in terms of reimbursement and uptake," Sharma said of the genomics and molecular testing market. "If you have the opportunity to grow in emerging markets, where there are less headwinds, you should do so."

Cancer Genetics is planning to retain Gentris' 45 employees and add three new sales representatives to its existing marketing team. The company said it will provide additional details on the acquisition during an investor day meeting at the end of the summer.

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