When inking companion diagnostic deals with drug developers, most test makers are trying to get beyond fee-for-service arrangements and strike more creative agreements with potential for bigger profits over a longer period of time.
But Singapore-based Dx Assays is bucking this trend with the launch of a fee-for-service business through which it will develop companion diagnostics for pharma and biotech partners.
According to Dx Assays, through its service, drug companies can have "maximum ownership and control in [the] development, launch, and marketing" of tests accompanying their drugs.
“The feedback we have had is that pharmaceutical companies are currently feeling they are facing a risk in traditional companion diagnostic co-development deals," Dx Assays CEO John Thornback said in a statement. "Millions of dollars are spent on drug development, but, for successful commercialization, they are fully dependent on an external diagnostic partner for launching and marketing the companion diagnostic," he added. "The Dx Assays model gives the control back to the pharmaceutical companies."
Under the terms of the fee-for-service agreements, Dx Assays gives drug partners exclusive rights to the diagnostics, which means pharma is ultimately responsible for all strategic decision-making from development to commercialization.
"Our model gives the full ownership of the product and full flexibility to our clients," Lisen Sjoberg, a business development executive at Dx Assays, told PGx Reporter. "For a pharmaceutical company this means they are free to go with the final product to any diagnostic distributor or company they want. This in return allows them to reach a much stronger market presence compared to if they were tightly connected to only one diagnostic company."
Dx Assays claims that since its launch in 2008, it has conducted 90 fee-for-service projects in which it has developed biomarker assays, molecular diagnostics, and companion tests for a number of pharma, biotech, and test makers. The company works with its partners to develop assays, and provides support in validating, manufacturing, and getting regulatory approval for the test.
Dx Assays "can develop assays from scratch but we can also start working on established assays like a laboratory-developed test, research-use only or investigational-use only [products,] and take them through full verification, validation and get them prepared for a launch," Sjoberg said.
The company says it can build "a generic assay" for already established biomarkers, such as KRAS, BRAF or EGFR. Dx Assays also develops "non-generic" tests, which it defines as "a companion diagnostic assay that is developed for drugs targeting a new biomarker." Dx Assays doesn't do biomarker discovery work, however.
According to Diaceutics, a consulting firm that advises drug developers on personalized medicine strategies, fee-for-service deals in which pharmas work with test makers to only develop companion diagnostics represent approximately 80 percent of total Rx/Dx deals. In 2012, Diaceutics estimates there will be around 35 partnerships for the development of drug/test combination products.
According to Mollie Roth, chief operating officer at Diaceutics, although most diagnostics firms want more control over certain aspects of their companion diagnostics deals with pharma, they don't yet fully understand how to manage the various regulatory, reimbursement, and logistical hurdles that hinder adoption of personalized medicine products. Meanwhile, managing this uncertainty to smooth the commercialization of a drug/test combination product is where the greatest uncertainty — and the most risk —lies for pharma.
Pfizer's companion diagnostic partnership with Monogram Biosciences for its HIV drug Selzentry is often cited as an example of the pitfalls of poorly executed Rx/Dx deals. Selzentry did not meet Pfizer's sales expectations largely due to difficulties educating and convincing physicians to adopt the test (PGx Reporter 3/3/2010).
Since 2006, Pfizer has had a non-exclusive agreement with Monogram, a subsidiary of the Laboratory Corporation of America, to market and distribute globally its tropism test Trofile (PGx Reporter 12/6/2006). Ahead of administering Selzentry, physicians are required by the drug's label to establish the tropism status of a patient's HIV by "a highly sensitive tropism assay."
"Monogram sold lots of tests and did quite well, but that did not translate into appropriate numbers for the drug," Roth told PGx Reporter over email. "So, while I don’t think [Dx Assays'] concept is a bad one, per se, it's going to take either a very savvy pharma partner or some outside resource that focuses on optimizing companion diagnostic co-development and commercialization to ensure success for this type of venture."
Diaceutics helps pharma companies with build their strategy for the development and commercialization of personalized medicine products. Last year, the company launched a laboratory network service for the European market, called Labceutics. That entity aims to help pharma and diagnostics companies gain access to Europe's lab market and figure out how to use this untapped network to deliver tests to physicians and patients seeking to personalize treatments (PGx Reporter 3/14/2012).
While giving pharma control over the development aspects of the companion test might be a good strategy, giving drug developers control over commercialization may be a responsibility they're not ready to embrace. This would require the drug maker to have a clear sense of how to create a path toward adoption of the test. In Diaceutics' view, the majority of pharma companies don't have much expertise in this regard.
"Most pharma asset teams still don’t know what they need to do to ensure a successful launch and commercialization of the test 'to support the therapy goals.'" Roth said. "It's not necessarily about just selling tests. That’s relatively straightforward. It’s about managing all of the gaps in the myriad details of driving adoption, ensuring physician education and buy-in, connecting to the labs in the EU and the rest of the world — where the therapy goals go missing."
Pharma's mindset is, "What do we need to do to get to launch," Peter Keeling, Diaceutics' CEO, added. From his experience providing guidance to drug developers on a number of Rx/Dx projects, Keeling has noted that when it comes to dealing with aspects of commercializing a test, pharma usually wants someone else to "to take the headache away."
"So, the concept of [giving pharma] control up to that point is a good one, [since it] ensures, for example, the regulatory discussions between Pharma and Dx and US Food and Drug Administration are joined up," Keeling explained. "The concept of control thereafter, for example, the commercialization bit, is a bit more troublesome since pharma does not yet have the blueprint and diagnostics firms invariably do not have the dollars."