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Correlogic Files for Chapter 11 Bankruptcy Protection

The article is updated to clarify the history of the OvaCheck test and changes made to it.

By Tony Fong

NEW YORK (GenomeWeb News) – Correlogic Systems has filed for Chapter 11 reorganization in the hopes of securing funding for its troubled OvaCheck test and eventually obtaining clearance from the US Food and Drug Administration.

The privately held Germantown, Md., firm filed its petition for Chapter 11 protection last week in US Bankruptcy Court in the District of Maryland, and has asked the court to allow it to "reject" licensing agreements with Quest Diagnostics and the Lab Corporation of America.

Correlogic CEO Peter Levine told GenomeWeb Daily News that the firm is seeking to sever the agreements because they had made fundraising difficult. The contracts were forged in 2002 when OvaCheck was still a mass spectrometer-based test. But after the company moved the test to an immunoassay platform "there was ambiguity about the coverage of those contracts, whether they cover the current test or not, and that ambiguity, that confusion actually made it more difficult for us to obtain additional funding," he said. "We found it very difficult on the fundraising side especially to maneuver in between these two giant companies."

He declined to say whether Correlogic had been in negotiations with either Quest or LabCorp to terminate the contracts independent of its court motion. Neither Quest nor LabCorp responded to a request for comment as of the time of publication of this article.

The Chapter 11 filing is the latest action by Correlogic as it attempts to breathe life into its OvaCheck diagnostic test for ovarian cancer. The test originally spun out of research by Emanuel Petricoin and Lance Liotta, who were then with the National Cancer Institute-FDA clinical proteomics program, and used an algorithm developed by Correlogic to interpret data.

The research was initially heralded as a potential game-changer in the diagnosis of ovarian cancer, but soon collided with an array of problems. The methods and study design were questioned, and eventually the results were rejected by many in the scientific community.

The OvaCheck in its current iteration has changed dramatically from its original format, and according to Levine is only "conceptually" related to the original Liotta/Petricoin work.

Along with now being an immunoassay, the OvaCheck uses a set of biomarkers different from those of the original study.

Correlogic originally planned on marketing OvaCheck as a homebrew test, which would have made it subject to CLIA regulations. But in 2004, FDA sent Correlogic a letter saying it might have regulatory purview over OvaCheck and asked for a meeting with the company to discuss the matter.

OvaCheck's future was further muddied when FDA in 2006 determined that in vitro diagnostic multivariate index assays that use algorithms to get results — such as OvaCheck — need the agency's clearance, and not CLIA approval from the Centers for Medicare & Medicaid, in order to be marketed.

In the years since, Correlogic has been in discussions with FDA to figure out a way to get OvaCheck to market, and three years ago, the company moved the test from its mass spec platform to a Luminex bead-based multiplex immunoassay format in the hopes of getting faster FDA clearance.

In December 2008, the company filed a 510(k) application with the agency, but was told by FDA that the patient population used in the clinical trial for the test was not satisfactory. Around April, Correlogic withdrew its application, and the company is currently in the "second arm" of the trial with a different patient population, Levine said. The trial will be conducted in about 20 sites.

Levine added that he anticipates the trial to be completed within six to eight months, and if the firm is satisfied with the results, it will file another 510(k) submission shortly afterward.

OvaCheck received CE marking in June.

The Chapter 11 filing, he said, is not expected to have much of an effect on the day-to-day operations of Correlogic. No layoffs resulted from the move, and none are imminent.

"The plan going forward is to secure the additional financing that we need and to continue getting OvaCheck back to the FDA and out on the market," Levine said.

In its Chapter 11 filing, Correlogic said that it had assets and liabilities each of between $1 million and $10 million, and between one and 49 creditors. Among the creditors holding the 20 largest unsecured claims are Thermo Fisher Scientific, owed $15,089, Ahn-Good Pharmaceuticals, who is owed about $22,890, and several executives and employees of Correlogic, including Levine, who is owed $414,663 in deferred salary, the largest unsecured claim amount.