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Pathwork Dx Defunct; Future of Tissue of Origin Test Unclear

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Pathwork Diagnostics has gone out of business as of April 2, PGx Reporter has learned.

The company has "entered into a general assignment for the benefit of creditors," a message informs those who call Pathwork's offices. The company plans to issue an official notice in the next 30 days regarding "general assignment," the company states in the message.

Privately held Pathwork was launched in 2006 when Predicant Biosciences acquired San Jose-based Pathwork Informatics and named the merged entity Pathwork Diagnostics. The company was based in Redwood City, Calif., and marketed a microarray-based gene expression diagnostic, called the Tissue of Origin test. Using proprietary algorithms, the test measures the gene expression levels of 2,000 genes, in order to help doctors determine the type of cancer a patient has in difficult-to treat cases.

It's unclear how much funding Pathwork had garnered over the years. A number of investment firms had funded the company, including Alta Partners, Abingworth Management, Advent Venture Partners, Novus Ventures, Prospect Venture Partners, Venrock and Versant Ventures. Since its launch seven years ago, the company had publicly disclosed raising a total of $61 million in three private funding rounds.

Although Pathwork is now defunct, the company had been taking steps to drive adoption and establish reimbursement of its test, which addresses an unmet medical need. Pathwork launched the Tissue of Origin test in an effort to help doctors gain more insights into the disease affecting approximately 150,000 newly diagnosed cancer patients each year for whom they can provide no definitive diagnosis.

The test was twice cleared by the US Food and Drug Administration, once in 2008 for use with frozen tissue samples (PGx Reporter 8/06/2008) and then in 2010 for use with formalin-fixed, paraffin-embedded samples. The company's laboratory was CLIA certified and CAP accredited.

Pathwork had evaluated the Tissue of Origin test in studies involving more than 1,100 patient specimens and had published two large validation studies in the Journal of Clinical Oncology and the Journal of Molecular Diagnostics. As of last year, the company was continuing to conduct studies to further establish the validity and utility of its test, and at the 2012 annual meeting of the American Society of Clinical Oncology, Pathwork presented data from three studies further evaluating the ability of its test to help doctors diagnose challenging cancer cases.

In addition, Medicare issued a positive coverage decision for the Tissue of Origin test in 2011. The company even conducted a health economics analysis looking retrospectively at clinical trial and registry data on more than 100 patients tested with the Tissue of Origin test and found that when the test was used to guide treatment for patients with cancer of unknown origin they lived longer, resulting in a cost per quality-adjusted life year of around $47,000 (PGx Reporter 1/18/2012).

The company was planning to use the data from this cost-effectiveness study to garner reimbursement for the Tissue of Origin test. It's unclear how successful Pathwork had been in this regard. The company hadn't announced any new coverage decisions on its website in recent months. In August last year, Tufts Health Plan said it would begin covering the Tissue of Origin test as of Oct. 1. Then, in March this year, Pathwork announced its first international distribution deal with Kindstar Global to offer the Tissue of Origin test in China.

Inconsistent or low reimbursement for the Tissue of Origin test may have been a negative pressure for Pathwork. A report released last year by the Office of the Inspector General tracked the variability in payment rates between state Medicaid and federal employee health benefit programs for several genetic tests, including Pathwork's Tissue of Origin test, and reported that the test was reimbursed at above $900 by Iowa's Medicaid program, but among FEHB plans the reimbursement varied from $5 to $38 (PGx Reporter 6/20/2012).

Launching a molecular test on the market – by first conducting the validation studies, garnering FDA's blessing, and then convincing payors to reimburse for the test – is a long and expensive prospect that defeats some companies before they get as far as Pathwork has. For example, in 2010, Correlogic Systems filed for Chapter 11 reorganization hoping to secure additional funding and FDA approval for its OvaCheck ovarian cancer diagnostic. Before bankruptcy, Correlogic had weathered regulatory pressure from the FDA for marketing its test as a lab-developed test and without the agency's clearance. Diagnostics firm Vermillion eventually purchased much of Correlogic's assets in November 2011.

Despite a number of attempts, PGx Reporter was unable to contact Pathwork for comment ahead of press time.

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