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DeCode to Accelerate Existing-Product Marketing to MDs, Advance New Tests

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In the coming months, DeCode Genetics plans to intensify its strategy of marketing its tests to US doctors, a demographic the Icelandic company believes will be the bread and butter of its diagnostics business.
 
Presenting the company’s research and development efforts to investors last week, DeCode officials explained that the company will employ an amalgam of commercialization strategies rather than focus on a single marketing approach, specifically direct-to-consumer advertising.
 
According to DeCode CEO Kari Stefánsson, the three main components of a successful diagnostics company are “content, test interpretation, and marketing.” He said that while DeCode dominates in terms of content, taking credit for approximately 60 percent of the gene sequence variant discoveries for common diseases, and has its own laboratory, he conceded that the company has “no record of sales and marketing of diagnostics, or of anything for that matter.”
 
During the two-hour presentation, Stefánsson and other officials outlined an extensive commercialization strategy to make up for its marketing inexperience. In addition to direct-to-physician marketing, DeCode’s commercialization plan for its diagnostics products will involve marketing partnerships with prevention-oriented healthcare firms in the US, growing its sales force, reaching out to physicians at medical conferences, publishing in medical journals, and hiring medical opinion leaders to speak about its products.
 
“We plan to expand our reach to physicians in the third and fourth quarters” of the year, Clyde Shores, DeCode’s VP for diagnostic marketing and sales, noted during the presentation.
 
During the presentation, DeCode officials said that their main marketing focus would be physicians and that the company would not depend solely on DTC promotions. The company’s cautious approach toward DTC advertising is no doubt a result of the warning letter it recently received from the California Department of Public Health, which claims that the company markets DTC genetic tests in the state without a license and directly to the general public through the internet. Marketing of genetic tests is illegal in the state without a doctor’s order.
 
Unlike its personal genomics industry competitors Navigenics and 23andMe, which have received similar letters but have refused to cease marketing their DTC tests, DeCode has denied that it markets its products in the state. Furthermore, DeCode, which sells its DTC genetic tests through its DeCodeMe business, maintains that once it receives the appropriate licensing in the state, it will only market its tests to doctors in California [see PGx Reporter 06-25-2008].  
 
DeCode’s heightened marketing push follows the launch of five tests over the past year, including diagnostics to gauge people’s risk for type 2 diabetes, prostate cancer, myocardial infarction, atrial fibrillation, and exfoliation glaucoma.
 
“In addition to introducing a number of new tests, we’ve established our operations, which will allow us to take advantage of the increasing demand that we’re going to get,” Shores said. “We’ve established a sales and marketing organization, we’ve begun to get reimbursement, we’re addressing many physicians, and we feel very confident about the plan that we have in place.” 
 
DeCode anticipates launching five predictive cancer diagnostics in the coming months, and this growing pipeline gives the company even more reason to organize its marketing strategy, according to officials.
 
Direct-to-Physician
 
The crux of DeCode’s marketing strategy is to convince prevention-minded physicians to change how they manage common conditions like diabetes and cardiovascular disease.
 
Through one-on-one physician marketing the company will try to “make sure [doctors] feel comfortable using the genetic data in this new era,” DeCode Chief Scientific Officer Jeffrey Gulcher said during the presentation. “And we feel that era is now.”
 
To that end, DeCode recently hired 12 contract sales representatives, bringing the total number of reps to 24. In addition to its internal team, the company is also planning to engage marketing agents through co-promotion partnerships. The goal is to have as many as 100 reps pushing DeCode’s products to US physicians by the end of the year, averaging more than 20,000 doctors’ office visits per quarter.
 
Since DeCode sells tests for common diseases, its sales reps will be promoting genetic testing in markets that already have established physician/patient relationships around existing prevention screening strategies.
 
“Markets for cardiovascular and cancer tests fit well-established paradigms,” Gulcher said. For instance, since there are already 30 million lipid [tests] being conducted each year in the US to assess cardiovascular risk, “we don’t need to invent a new patient-physician interaction.” Rather, he said, “we just need to piggyback off that [relationship] and convince physicians to use our genetic tests on top of the conventional risk factors.”
 
Besides direct sales, medical conferences also provide an important venue for DeCode to market its tests. At medical conventions DeCode offers free testing to doctors to familiarize them with its products and establish personal contacts.
 
Medical experts are another important resource. Robert Superko, executive director of the Center for Genomics and Human Health at Saint Joseph´s Translational Research Institute, is a consultant for DeCode, who also speaks about the company’s products at conferences, Shores said.
 
Shores noted that the aim of the company is to make its tests “the standard of care.”
 

Through one-on-one physician marketing the company will try to “make sure [doctors] feel comfortable using the genetic data in this new era,” Gulcher said. “And we feel that era is now.”

DeCode plans to achieve this by targeting employers’ wellness health programs; partnering with preventative medicine and screening companies; establishing relationships with sales and marketing reps in markets outside of the US; working with government agencies to establish coverage for testing; and DTC promotions.
 
In April, DeCode penned an agreement with US Preventative Medicine to provide the genetic tests for the company, which offers a customized prevention plan to lower health risks.
 
Also that month, DeCode established an agreement with Medicomp, a cardiac monitoring service, to promote DeCode’s AF and MI tests to cardiologists.
 
Two months later, DeCode penned a deal with CardioRisk, another company that assesses people’s cardiovascular risk, to begin a pilot program to promote DeCode’s tests to prevention-oriented primary care physicians.
 
“Notice we are not dependent on direct-to-consumer as a channel,” Gulcher said. “Most of our business is coming through these other channels that I mentioned, that are not dependent on somebody trying to find us online or being restricted from using our services because of certain state laws in the US.”
 
He was referring to the recent warning letters that California health regulators have sent to DeCode and 12 other firms, asking the companies to cease-and-desist directly marketing genetic tests to consumers in the state [see PGx Reporter 06-25-2008].  
 
In response to CDPH’s regulatory action, DeCode claimed that it is not selling its tests directly to consumers in California, New York, or Maryland, where the company is awaiting state licenses. In the meantime, Lenetix, a US commercial laboratory that is licensed in these states, may sell DeCode’s tests in these regions through a sublicensing agreement (see related story, in this issue).
 
DeCode has international distribution agreements in the UK and in the Middle East. Distribution contracts are pending in Australia, Germany, Hong Kong, Japan, Korea, Portugal, Singapore, and Spain.
 
“Very soon we expect to have broad distribution of our tests all over the world,” Shores said.
 
Current Pipeline
 
“Many genetic tests are useless because they don’t rise to a risk that’s useful, or that risk is so rare clinically that it’s not useful to screen in the general population,” Gulcher said. “But for the tests we’ve launched and are about to launch we think there already exists a clinical utility and a market for it.”
 
For instance, DeCode’s type 2 diabetes test detects the gene variant TCF7L2, which confers a 50-percent to 70-percent risk for pre-diabetic patients to convert to type 2 diabetes. However, these TCF7L2 patients are as likely as those without the gene variant to benefit from lifestyle changes or treatment with metformin, DeCode found.
 
DeCode’s test will be clinically useful if the genetic risk information encourages a patient to make a lifestyle change or help his or her physician develop a personalized treatment regimen, Gulcher said. However, compliance for lifestyle change recommendations is “very low,” at around 5 percent, he noted.
 
The diabetes test gauges therapeutic response to sulfonylureas, however DeCode plans to add to the test seven more genetic variants, some of which gauge patients’ therapeutic response to other diabetes drugs.
 
Meantime, DeCode’s test for atrial fibrillation determines a patient’s risk of developing the dangerous arrhythmia, based on two markers in the PITX2 gene. By testing patients with the AF assay, the company hopes to prevent the 15 percent to 20 percent of strokes caused by undiagnosed intermittent AF.
 
DeCode is currently validating the utility of the AF test in cardiac heart failure patients and in cardiac surgery. According to Gulcher, CHF patients who test positive for AF may have between 80 percent and 90 percent risk of developing the condition, and therefore may benefit from anticoagulation treatment to prevent stroke. Furthermore, patients who are positive for AF may have the best risk-benefit ratio for cardiac surgery, which in turn lowers the risk of death in the post-operative period.
 
DeCode’s myocardial infarction assay, meantime, measures two SNPs in the 9p21 gene for early-onset MI. These variants, which are independent of currently measured risk factors, exist in 21 percent of the general population, and may help identify patients who are at high risk for MI despite having been found to be at low or intermediate risk based on conventional screening methods. Patients who test positive for DeCode MI have a 1.6-fold greater risk for developing MI, compared to the general population.
 
DeCode’s prostate cancer test, on the other hand, combines eight different SNP markers to determine a patient’s genetic risk of developing the disease. The test could lead to earlier and more frequent diagnostic screening for those at  greatest risk: Patients who test positive for the eight markers have a two-fold greater risk than in the overall population for developing prostate cancer, and carry a 32-percent life-time risk of being diagnosed with the disease, which is twice the risk for the average white man of European ancestry.
 
Finally, DeCode’s glaucoma test detects which existing glaucoma patients are at risk of early exfoliation glaucoma, which carries with it a poorer prognosis, including a higher rate of cataract extraction and resistance to certain treatments. The test can also help patients without glaucoma who might be at greater risk for exfoliation glaucoma by encouraging them to undergo earlier ophthalmologic exams.
 
According to DeCode, the combined US demographic for these tests comprises 300,000 stroke sufferers, 3 million congestive heart failure patients, and 500,000 cardiac surgery patients annually for the AF test; 54 million pre-diabetics and 20 million type 2 diabetics for DeCode T2; 3 million glaucoma patients for the exfoliation glaucoma test; 30 million lipid panel patients for the MI test; and 40 million people who get annual prostate cancer screening for the prostate cancer test (see chart for more detail).
 
DeCode’s near-term diagnostic launches include predictive tests for melanoma and basal-cell carcinoma, and for cancers of the breast, bladder, and lung.
 
The breast cancer test, which combines eight SNPs to determine women’s risk for developing estrogen-positive breast cancer, and whether they will benefit from tamoxifen therapy, is slated for launch in the fourth quarter. According to Gulcher, patients who test positive for the eight variants could have as much as a 48-percent lifetime risk for developing breast cancer.
 
“This is approaching the lifetime risk of the BRCA1 and BRCA2 risk variants,” Gulcher noted. However, he noted that DeCode’s test would have a much broader market than Myriad’s BRACAnalysis tests: While BRCA1/2 genetic abnormalities occur in only 5 percent of breast cancers, the risk profile designed by DeCode is associated with 95 percent of breast cancers, he said. 
 
Reimbursement
 
DeCode’s reimbursement push for its products began in February, when it established CPT-code billing for individual tests.
 
In addition, the company has developed economic models and clinical-utility monographs for its type 2 diabetes and atrial fibrillation tests, showing insurers and government agencies that using these tests can save the healthcare system money.
 
Gulcher noted that DeCode’s AF test can potentially save Medicare “almost a billion dollars per year” by determining which drug the patient should be treated with. According to his presentation, as many as 150,000 stroke and TIA patients annually are released from hospitals on the wrong treatment.
 
The company did not provide specific numbers regarding the cost-savings associated with its type 2 diabetes test.
 
Since DeCode began CPT-code billing for its individual tests, the company has engaged 33 major insurers and received “several” positive decisions regarding reimbursements, according to Shores.

 
Decode Genetic Test Market Potential in US
Product Indication Target Market
Population
Annual Benchmark
Test Price
Market Penetration/Potential
1%
5%
10%
Decode T2

type 2 diabetes risk

prediabetes
54,000,000
N/A
$370
$198.8 million
$999 million
$2 billion
pharmacogenomics type 2 diabetics
20,000,000
5,000,000 new
$370
$74 million
$370 million
$740 million
Decode AF cryptogenic stroke 30% of strokes/TIA
300,000
300,000
$200
$600,000
$3 million
$6 million
post-operative AF cardiac surgeries
500,000
500,000
$200
$1 million
$5 million
$10 million
intermittent AF-CHF CHF
3,000,000
N/A
$200
$6 million
$30 million
$60 million
Decode MI early-onset MI annual lipid panel patients
30,000,000
30,000,000
$200
$60 million
$300 million
$600 million
Decode Glaucoma exfoliation glaucoma glaucoma prevalence
3,000,000
N/A
$285
$8.6 million
$42.8 million
$85.5 million
Decode ProCa prostate cancer risk annual PSA patients
40,000,000
40,000,000
$710
$284 million
$1.4 billion
$2.8 billion
Decode Breast Ca breast cancer risk annual BRCA1 patients
50,000
50,000
$710
$355,000
$1.8 million
$3.6 million
DecodeME personalized genome scan all individuals
300,000,000
N/A
$1,000
$3 billion
$15 billion
$30 billion

Source: DeCode Genetics presentation.

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