By Tony Fong
NEW YORK (GenomeWeb News) – In late 2006, Johnson & Johnson unit Veridex entered into a licensing deal with OncoMethylome Sciences for a prostate cancer test. The deal, the Belgian cancer research firm thought, would result in a steady stream of product revenues for years to come.
At the time, OncoMethylome had finished the initial research phase for the three-marker urine-based test, and Veridex planned to finish the research. If all went well, Veridex would commercialize the test.
But after three years, Veridex halted work on the test, and severed its agreement with OncoMethylome, leaving it with a dead-end product.
"This program will never come alive," Jan Groen, the firm's CEO, told GenomeWeb Daily News this week.
It was just one example of OncoMethylome's reliance on other companies for revenue generation. So, in August, in a bid for greater control over its business, OncoMethylome dropped its model as a basic research firm outsourcing its cancer biomarkers. In its place is a company, now named MDxHealth, focusing on developing its own molecular diagnostics tests.
The change, Groen said, was predicated on the company's desire to shed its dependency on partnering firms.
"The problem with [the old business] model is that you don't control your own destiny," he said. "Once you've discovered [the biomarkers] and done some early validation work or feasibility work, you basically are fully dependent on the third party to develop these products and bring them to market."
In its new iteration, MDxHealth will leverage its methylation platform to develop DNA-based assays, which will then be offered through CLIA-certified laboratories in the US. The company is in the process of finding such a facility and next year hopes to make available a test for prostate cancer. The firm has no plans to build its own CLIA lab, Groen said, because it would be too time consuming.
In targeting the MDx space, MDxHealth joins a number of 'omics-related firms that have taken similar turns to try to change their fortunes including Vermillion, Miraculins, and most recently Helicos BioSciences.
But those companies and MDxHealth face significant challenges including developing tests with clinical use, gaining clinical adoption, and convincing patients to pay for their tests and/or insurers to reimburse for them.
According to Groen, though, MDxHealth has a number of factors working in its favor including its focus on DNA methylation, whose alterations have been implicated in a variety of cancers. He added that the number of epigenetic and DNA methylation markers in the literature has "really taken off" in the past few years.
And while a handful of other firms, such as Epigenomics, also are conducting research into DNA methylation, the field is largely unexplored from a commercial standpoint, said Groen.
MDxHealth's technology platform is called MSP, short for methylation-specific PCR, and has the ability to detect a single cancer cell from 10,000 healthy cells in any body fluid or tissue, the company says on its website.
MDxHealth has "a wealth of patent-protected biomarkers," Groen said, and the cancers that MDxHealth are initially targeting — prostate, lung, colorectal, and brain — are a "wide open space today," with high demand for molecular diagnostics tools "in order to provide physicians with better answers to treat their patients."
Turning Around Its Fortunes
Groen also comes to MDxHealth with extensive experience in the clinical diagnostics field, having been president of Agendia. Before that, he was vice president of R&D at Focus Diagnostics, a subsidiary of Quest Diagnostics.
Groen has been on the job only since April, and his task will be to turn around MDxHealth's finances. In 2009, MDxHealth posted revenues of €2.5 million ($3.6 million), down 16 percent from €3 million in 2008, while its net loss widened 40 percent to €14.3 million, €1.08 per share, last year from €10.2 million, €0.77 per share, in 2008.
In August, the company reported that through the first six months of 2010, revenues stayed relatively flat at about €1.3 million, while net loss for H1 2010 shrank to € 5 million, or €0.38 per share, compared to €6.3 million, €0.48, in the first half of 2009.
This week, MDxHealth reported its third-quarter financials. For the three months ended Sept. 30, total revenues rose 16 percent to €669,000 from €557,000 a year ago, while the firm's net loss declined 49 percent to €1.5 million from €2.9 million a year ago.
As of Sept. 30, the company had €11.4 million in cash and cash equivalents.
In late September, the company announced two hires to help it establish a foothold in the US CLIA lab market. Melissa Thompson was named vice president of regulatory affairs and quality assurance, and Christopher Thibodeau was hired as vice president of commercial operations. The company now has 40 employees, down from 65 before the restructuring, though it is looking to hire additional staff, Groen said.
As part of the changes, the company shut down its Netherlands facility, eliminating 15 jobs, and centralized all European lab work at its facility in Liege, Belgium, steps that are expected to reduce costs by about 30 percent, according to Groen, who added that no other facility closures are planned.
MDxHealth also pulled the plug on a colorectal cancer screening test it had been developing and will outsource biomarkers that were developed in the program. The amount of time, effort, and money needed to continue developing the screen, and then to commercialize it could not be justified, Groen said. Even if a product were successfully developed, he added, the company would be "fully reliant on governments implementing screening assays" for colon cancer.
The plan now is to direct its resources on four cancers of interest. In brain cancer, the company's MGMT assay is offered as a service to pharmaceutical companies in MDxHealth's Liege facility, while Laboratory Corporation of America markets the test in the US. The test is anticipated to generate about $1.5 million in revenues in 2010.
The assay also is in a Phase III FDA trial as a companion diagnostic for Merck Serono's drug cilengitide.
Additionally, MDxHealth is developing a test for prostate cancer targeting biopsies for use as a confirmation test for those who have been identified by a PSA test as possibly having the cancer. The launch of that test is planned for 2012, Groen said.
Among other tests under development by the firm is one targeted for the classification of prostate cancer as aggressive or non-aggressive, and another for non-small cell lung cancer confirmation, which is planned for a 2013 launch. MDxHealth also is looking at a colorectal cancer diagnostic for stage 2 disease. It would be for patients who have already been diagnosed with the disease.
"We're going to prognostic biomarkers to identify [whether] you're dealing with an aggressive cancer," and whether a patient needs chemotherapy, Groen said, though he declined to provide a timeline for launch of the test.