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CardioDx Says $58M Financing Will Support Commercial Expansion Following Medicare Coverage Win

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CardioDx this week completed a $58 million private equity financing round that it will use to support sales of its Corus CAD test and the development of additional diagnostics.

The company said the money will also help support ongoing clinical utility and cost-effectiveness research that it hopes will help persuade private payors to join Medicare contractor Palmetto GBA in covering its coronary artery disease test.

Palmetto announced earlier this month that Corus CAD, launched by CardioDx as a laboratory developed test in 2009, had met its criteria for clinical validity and clinical utility as a reasonable and necessary Medicare benefit. The decision makes the test a covered benefit for more than 40 million Medicare enrollees (PGx Reporter 8/15/2012).

Corus CAD gauges the expression of mRNA by 23 genes via real-time PCR to help physicians exclude obstructive coronary artery disease as the cause of cardiac symptoms in stable non-diabetic patients.

CardioDx CEO David Levison told PGx Reporter that prior to the Medicare coverage decision, the company had intentionally kept its commercial sales force small, but is now planning to use the newly gained financing to support an expansion of its Corus CAD sales team.

"We've had a very limited commercial presence … and that's been an intentional strategy because in advance of reimbursement, running more tests just meant we were spending more dollars," Levison said.

"Now, with the advent of Medicare coverage and more resources, we will work to expand the commercial presence …[We] expect that we will start to expand over the next couple of quarters and then increase the pace of that as we learn more about what the business will look like [after the Medicare decision,]" he said.

Levison said CardioDx expects the new financing will also help the company add to the clout of the Palmetto coverage decision in discussions with private payors by supporting additional studies demonstrating Corus CAD's clinical utility and cost effectiveness.

In addition to the $58 million announced this week, CardioDx also raised $60 million in private financing earlier this year to fund studies to back up the clinical utility of Corus CAD and help private payors understand the circumstances under which they should pay for the test (PGx Reporter 5/18/2011).

Corus CAD has been clinically validated in two prospective, multicenter US trials, PREDICT and COMPASS, while additional studies, like the Investigation of a Molecular Personalized Coronary Gene Expression Test on Cardiology Practice Pattern, or "IMPACT," trial, have demonstrated that the test can change patient management decisions in both primary care and cardiology practices.

According to Levison, while CardioDx believes that publication of its two recent larger trials COMPASS and IMPACT will go a long way to helping make its case to private payors, the company has also been collecting data for two cost-effectiveness studies.

"Just like clinical utility studies, cost-effectiveness [research] will be ongoing" for the company, he said.

Levison said one study is what the firm calls a "budget impact model," and the other is a larger cost-effectiveness model. Both have been developed with outside partners.

Though he did not provide details about the two studies, he said the company is "sharing those with the payor community as we speak."

Finally, Levison said, CardioDx expects that the Medicare coverage achievement and the recent financing gains will also allow the company to begin focusing more on developing additional tests and exploring new diagnostic applications for Corus CAD.

"We think we have some interesting potential extensions still in the coronary disease space, whether in the ER setting, or in the diabetic population, or the surgical signoff to make sure patients are eligible for surgery," he said.

The company is also looking at how it could expand its commercialization of Corus CAD outside the US and is planning to put more focus on its ongoing program in arrhythmia.

"Product one needs to be successful so you can have product two … So with the Medicare decision — and hopefully some commercial payors in the near future — I think we can now look at how we prioritize [these other programs,]" said Levison.

Investors in the latest financing round included Singapore-based investment firm Temasek, as well as existing investors Longitude Capital; Artiman Ventures; Kleiner, Perkins, Caufield & Byers; JP Morgan; Mohr Davidow Ventures; TPG Biotech; Intel Capital; Acadia Woods Partners; Bright Capital; Pappas Ventures; DAG Ventures; Asset Management Group; and GE Capital.

"It was great to have all the existing guys come back in," Levison said. "It shows strong support … and that they think they are going to get a return on their dollars."

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