By Turna Ray
Keeping its sights on securing a leadership presence in companion diagnostics, Qiagen has strategically decided to not get caught up in the excitement surrounding next-generation sequencing.
Given the growing power and plummeting costs of whole-genome sequencing technologies — and with platform providers like Life Technologies and Illumina looking to migrate their systems from the research space to the commercial diagnostics arena — it might be tempting for Qiagen to jump on the next-gen sequencing bandwagon, but the firm has decided to hold off for the time being since the technology is "not yet ready for prime-time clinical use."
In a recent interview, Qiagen CEO Peer Schatz admitted that the company's position might appear "terribly technophobic," but noted that interactions with drug developers have shown that biopharmaceutical firms aren't ready to use these advanced platforms as the basis for commercially available companion diagnostics.
Next-generation sequencing "is a great discovery tool," in Schatz's view, but "if you talk about next-gen sequencing as a companion diagnostic, you'll scare the hell out of pharmaceutical executives who will see that as increasing their [drug development] costs."
He added that while the technology shows great promise, "it's still not in a position to provide sufficient clinical value" — particularly in light of the significant regulatory, reimbursement, and workflow questions it raises for pharmaceutical firms.
"There's a big difference between discovery and routine clinical diagnostics," he said.
Strategy to Fit the Times
Schatz said that the company currently generates around $70 million annually from companion diagnostic sales. While that represents only 6 percent of its total 2010 revenues of $1.09 billion, Schatz said that companion diagnostics is growing at around 40 percent annually and the company believes that business could grow five- to ten-fold over the next several years.
After its acquisition of DxS in 2009, Qiagen began bolstering its presence in companion diagnostics, focused mainly on PCR-based platforms. The company touts more than 15 collaborations with drug developers — such as Amgen, AstraZeneca, Boehringer-Ingelheim, Bristol-Myers Squibb, and Merck — for which it is developing companion diagnostics that will identify best responders to various drugs.
In its interactions with pharma, Qiagen has gauged that while some drugmakers are using whole-genome sequencing in the discovery of biomarkers, they are not ready to apply this technology to develop clinical diagnostics that will accompany their personalized medicine products.
Recent comments from several pharma officials corroborated Qiagen's strategy.
"We're focused on personalized healthcare that will include … but is not dependent on the development of biomarkers," Glenn Miller, VP and head of personalized medicine at AstraZeneca, said during a panel discussion hosted by NGS Leaders in May on the application of whole-genome sequencing in companion diagnostics. "Things like whole-genome sequencing are great discovery tools [for addressing the needs] of rare patients … who have fallen through the cracks and there is a clinician out there pounding away at what's wrong with this individual because they don't fit into the box."
Sequencing "is a nice tool right now to try to figure out what that patient is all about, but it's not the savior," Miller added. "It's just another tool."
Likewise, Dominic Spinella, head of translational and molecular medicine at Pfizer's biotherapeutics division, recently told PGx Reporter sister publication Clinical Sequencing News that he believes next-gen sequencing will remain a discovery tool within pharma.
"I draw a distinction between a technology that is used for research purposes, where I don't know what the predictors are and I'm going to try and find them out, … and a diagnostic, [in which] case, I already know what the predictor is, what the stratifier is, and I'm going to analyze it," Spinella said. "I don't see whole-genome sequencing as ever becoming a diagnostic."
Qiagen's Schatz noted that all biomarkers used in US drug trials must be clinically validated, which would make it prohibitively expensive for sponsors to conduct the necessary validation trials for sequencing-based biomarker panels that would yield hundreds to thousands of markers of interest. The "multifactorial analyses" that would be required for such biomarker panels would demand an unreasonable increase in the number of participants, thereby increasing the time and costs, he explained.
Qiagen has made investments in pyrosequencing and does provide some DNA sequencing services, but the company markets these capabilities mainly for research purposes. For example, although the company has developed a pyrosequencing-based KRAS test, which runs on the PyroMark Q24 platform, it is currently taking a PCR-based KRAS mutation test through the US Food and Drug Administration and in collaboration with pharma partners Amgen and Bristol-Myers Squibb.
The company's conservative approach to whole-genome sequencing makes sense in light of the current regulatory and reimbursement environment, which is in a state of flux as regulators and payors grapple with rapid advances in molecular diagnostics.
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Both the FDA and the Centers for Medicare and Medicaid Services are in the process of resolving a number of complex issues related to relatively simple molecular diagnostic platforms, and neither have signaled that they are ready to tackle whole-genome sequencing any time soon.
CMS is mulling a set of new molecular pathology codes proposed by the American Medical Association, but has said it will not instate new payment policies for certain genetic tests until 2013 at the earliest (see related story, in this issue). Furthermore, the proposed AMA codes do not address multiplex genetic tests or whole-genome sequencing, so it's likely that reimbursement issues for such tests will not be resolved for several years.
The FDA, meantime, recently issued draft guidelines on the marketing of tests labeled research-use-only and another draft document outlining regulatory considerations when developing companion diagnostics (PGx Reporter 06/08/2011; 07/13/2011). Additionally, the agency plans to release three guidance documents explaining its regulatory plans for laboratory-developed tests (see related story, in this issue).
On the sequencing front, the agency recently held a one-day workshop to discuss next-generation sequencing in clinical diagnostic applications, but has set no timeline for when — or whether — it intends to issue guidance on the matter (CSN 6/29/2011).
The recent FDA guidances stand to impact Qiagen's molecular diagnostics business, as well as its collaborations with pharma. Moreover, while FDA solidifies its regulatory policies on LDTs, there are limited market advantages for companies such as Qiagen that have invested in getting FDA regulatory approval for their tests.
For example, the agency has not yet approved Qiagen's KRAS test, which is meant to accompany the colorectal cancer drugs Erbitux and Vectibix. In the meantime, a number of laboratories are marketing KRAS tests that have not been cleared through the agency. Following the release of the draft companion diagnostics guidance, an FDA spokesperson said the agency is exercising "enforcement discretion" over LDTs, including those that gauge SNPs in the KRAS gene, and that "this practice will likely continue with LDTs for KRAS even when we have an approved test, until the agency outlines its framework for LDTs."
Despite shifting regulatory tides, Qiagen's Schatz believe the company is on solid ground with its companion diagnostics business since it has worked so closely with the FDA to advance its diagnostics through the regulatory process and essentially paved the way for other companies entering the space.
“The recently released FDA in vitro companion diagnostic draft guidance reiterates a viewpoint that the agency has consistently expressed over the last few years … that the FDA encourages the development of personalized medicines, which depend upon the use of approved or cleared companion diagnostic devices but wishes to ensure that information derived from such devices is both analytically and clinically valid," Qiagen told PGx Reporter in a statement. "This view is completely in line with Qiagen's approach to companion diagnostics development, which is based on forming partnerships with the pharmaceutical industry to ensure that both the drug and the companion diagnostics are developed to the most exacting analytical and clinical standards."
It's Not About the Platform
"Instead of looking at silos," Schatz explained that Qiagen's companion diagnostics strategy has been to build a bridge for drug developers from biomarker discovery to commercial test development, and the company's M&A activities reflect this.
The acquisition of SABiosciences in 2009 came in the same year the company acquired DxS. SABiosciences brought to Qiagen around 100 disease- and pathway-focused real-time PCR array panels. As reported in PGx Reporter sister publication BioInform, the company acquired the two firms to meet needs at both ends of “the pharmaceutical drug discovery and development pipeline.”
Furthermore, in January Qiagen took a minority stake in Alacris Theranostics, a firm that uses whole-genome sequence analysis to develop individualized cancer therapies. Under the deal, Qiagen has an exclusive option to license all biomarkers identified by Alacris, which can inform the company's PCR-based molecular diagnostic, theranostic assays, and research collaborations (PGx Reporter 01/12/2011).
More recently, the company announced in April that it planned to acquire Cellestis for its infectious disease testing portfolio and last month said that it plans to acquire Ipsogen, which will give it a number of CE-IVD marked PCR tests, as well as a microarray test that can guide treatment for breast cancer patients. Qiagen is also eyeing the point-of-care testing market. With its acquisition of ESE last year, Qiagen gained access to a handheld molecular diagnostics platform that can be used to run its molecular tests in the hospital setting.
While Qiagen's decision to avoid a heavy investment in whole-genome sequencing primarily reflects its strategic plan to focus on building its companion diagnostic portfolio, it is also attuned to the pervasive cost-conscious mood in the healthcare sector. It's a bad time for biopharma to be betting on risky, emerging technologies. According to figures from Thomson Reuters' CMR International, the pharmaceutical industry cut its research and development budget last year by three percent — a drop of $68 million from the $70 billion in 2009 and 2008. In the coming years, R&D budgets will likely get even leaner with pharma behemoths such as Pfizer planning to shave around 25 percent off its spending over the next 24 months.
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Meanwhile, drug developers' earlier R&D investments haven't paid out so far in terms of new drugs that can make up for the more than $100 billion in revenues that companies stand to lose this year from generic competition. In 2010, the FDA granted marketing approval for 21 new molecular entities, compared to 26 in 2009. Meanwhile, drug developers nixed 55 investigational drugs in Phase III development between 2008 and 2010, which is more than double the number of late-stage failures from 2005 to 2007, according to CMR International figures.
The application of pharmacogenomics has been touted by personalized medicine advocates as a strategy that could help ease some of pharma's financial woes, by allowing drug developers to gain earlier insights into which treatments would work in which patients, and whether these drug candidates cause serious side effects.
There are a few signs that drug developers have embraced PGx strategies to personalize drugs more than they did a few years ago. For example, the Tufts Center for the Study of Drug Development recently interviewed 20 employees at 13 drug firms and reported that between 12 percent and 50 percent of those surveyed were using personalized medicine strategies in their clinical development pipelines. The survey revealed that all the companies were using biomarkers in discovery research, but a companion test or biomarker strategy was not a requirement at most firms for moving treatments to late-stage clinical development (PGx Reporter 11/21/2010).
Schatz noted that unlike large diagnostic firms like Roche or Abbott, which house both drug and diagnostics capabilities, Qiagen can offer pharma partners independence. This allows it to work with competing drug developers without the fear of potential conflicts of interest with internal drug programs, Schatz said.
What Schatz hopes will ultimately set Qiagen apart from competitors is "not the platform, but the content," he said.
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