Originally published Sept. 13.
By Turna Ray
By making a $25 million strategic debt investment in Crescendo Bioscience, Myriad Genetics could add a rheumatology specialty to its armamentarium, which would fall in line with the company's ongoing efforts to diversify its molecular diagnostics portfolio beyond oncology.
"Myriad is committed to investing for future growth," Myriad CEO Pete Meldrum said in a statement. "As part of this commitment, we have identified Crescendo Bioscience as a franchise with strong potential; one which we believe can transform the management of chronic inflammatory diseases."
The investment in Crescendo Bioscience, announced last week, gives Myriad a three-year, exclusive option to acquire the South San Francisco, Calif.-based molecular diagnostics company if it meets minimum revenue milestones. In this case, the purchase price would be based on a predetermined multiple of revenue based on the growth rate of Crescendo Bioscience at the time of the option exercise. If Crescendo does not attain the revenue milestone during that period, Myriad has the option to buy the firm at a fixed purchase price instead of the formula price. The $25 million loan to Crescendo carries 6 percent interest.
Myriad's investment was in addition to a $31 million round of Series C equity financing that Crescendo disclosed last week.
If Myriad exercises its acquisition option, it would "add a sixth disease specialty, rheumatology, to Myriad's current strategic focus, which includes oncology, preventative care, urology, dermatology, and neuroscience," Myriad said in a statement.
The deal with Crescendo follows the $80 million purchase in May of Rules-Based Medicine, which added molecular diagnostics capabilities in the areas of neuroscience, infectious disease, and inflammatory conditions to Myriad's portfolio and bolstered companion diagnostics relationships with pharma (PGx Reporter 5/4/2011).
Crescendo's most advanced product in the rheumatology space is Vectra DA, a blood-based diagnostic that gauges 12 markers and can provide doctors with greater insight into the nature of the rheumatoid arthritis affecting a patient. With the aid of the test, physicians can better track a patient's disease progression and take the most appropriate medical intervention to manage the disease, according to Crescendo. Vectra DA is not intended to be used to diagnose rheumatoid arthritis.
Vectra DA was launched as a laboratory-developed test in November last year. Tests are performed at Crescendo's CLIA-certified lab in South San Francisco. Vectra DA is currently sold in 49 US states and Crescendo is awaiting a license to sell the test in New York.
At the Annual European Congress of Rheumatology in London in May, Crescendo presented data from multiple clinical investigations showing that Vectra DA's disease activity score can help doctors determine whether patients are suffering from progressive joint damage and if they have co-morbid conditions. Other studies presented at the same conference concluded that the Vectra DA score can help discern which patients have low disease activity and which are in remission. In one trial, involving rheumatoid arthritis patients from Brigham and Women's Rheumatoid Arthritis Sequential Study who were treated with methotrexate or anti-TNF therapy, the Vectra DA score was able to gauge which patients were responding to treatment within two weeks of therapy initiation.
A spokesperson for Myriad told PGx Reporter that since Vectra DA is Crescendo's most advanced diagnostic, Crescendo's revenue milestone obligations under its contract with Myriad will likely be fulfilled through the sales of that test.
Once payors begin reimbursing for the test, Crescendo's revenue prospects will likely improve. A Crescendo spokesperson told PGx Reporter that the company is in the process of seeking reimbursement for Vectra DA. "Our goal is to have contracts with both private insurance companies and government payors," the spokesperson said.
Given the preliminary nature of reimbursement talks with payors, Crescendo didn't provide a specific price for the test. Furthermore, Crescendo also has a dedicated sales force that visits rheumatologists regarding Vectra DA. The company would not disclose the size of the sales force.
In addition to Vectra DA, Crescendo is also developing a predictive diagnostic test for rheumatoid arthritis called Vectra TS. This test, if successfully validated and developed, will also fit Myriad's growing aspirations to become a provider of companion diagnostic tests.
Earlier this year, Crescendo joined a research collaboration with the pharmacy-benefit manager Medco, several drug developers, and academic centers to validate a gene expression signature and discover other markers for predicting which rheumatoid arthritis patients will respond to anti-TNF drugs, a market valued at around $13 billion. The trial, called Biomarkers of Anti-TNF Treatment Efficacy in Rheumatoid Arthritis to Define Unresponse Populations, or BATTER-UP har, will enroll around 1,000 patients being treated by one of several marketed anti-TNF RA drugs: Enbrel (Amgen/Pfizer), Remicade (J&J/Centocor), Humira (Abbott), Simponi (J&J/Centocor), or Cimzia (UCB) (PGx Reporter 11/17/2010).
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