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DiagnoCure Acquires Rights to CRC Tests, CLIA Lab to Improve Position in Dx Market

DiagnoCure, a Québec, Canada-based molecular diagnostics company, is hoping that its acquisition of the rights to two tests for colorectal cancer and a CLIA-certified service laboratory in the US will help bolster its position in the market.
DiagnoCure acquired rights to the tests and the service lab from Philadelphia-based Targeted Diagnostics & Therapeutics earlier this month. DiagnoCure did not disclose the total value of the transaction, but said that its initial payment includes $2.2 million in shares and that it will provide TDT with performance-based milestone payments and royalties on revenues generated by the tests.
In a statement announcing the deal, DiagnoCure said that garnering the tests “significantly strengthens [its] position in the molecular diagnostics [market] for cancer.”
In addition, “having a CLIA lab will enable us to quickly bring to market high-value molecular diagnostic tests for cancer in the home-brew format,” the company said.
In an interview with Pharmacogenomics Reporter last week, DiagnoCure CEO John Schafer said that the company is taking a focused approach to penetrating the molecular diagnostics market by concentrating on cancer tests. In addition to the two colorectal cancer tests it picked up from TDT, DiagnoCure also markets a PCA3 diagnostic test for prostate cancer and a test for bladder cancer called ImmunoCyt, and has ongoing studies for genetic markers in lung and breast cancer.
“In all of diagnostics today there is no segment more exciting and growing faster than molecular diagnostics used for the detection and management of cancer,” Schafer said during a conference call last week. “The $2.5 billion diagnostic market today is fortunate to grow at 5 percent,” he said, noting that DiagnoCure’s target market of cancer diagnostics is growing at a rate of 30 percent a year.
The colorectal cancer tests — a lymph node-based test for chemotherapy benefit and a blood test for cancer recurrence — are based on the detection of guanylyl cyclase C, a gene that, when found outside of the intestine, signals cancer metastases. Research has showed GCC to be 95 percent to 100 percent accurate in detecting the metastases of colorectal cancer recurrence in lymph nodes or blood.
With the two colorectal cancer tests, which are currently in late-stage confirmatory trials, and a CLIA-certified reference laboratory, DiagnoCure is hoping to pave a smooth path from development to commercialization to physician adoption.
Colorectal Cancer Tests
The NIH has granted TDT $10 million to conduct two five-year multicenter studies of 2,500 colorectal cancer patients to validate the specificity of the two CRC diagnostics.
During last week’s call, company officials said that the lymph node test for chemotherapy benefit will be launched in 2008. DiagnoCure will hold off on launching the cancer recurrence test until 2010, when it receives the results from the NIH study. The interim results from the lymph node test are expected in June.
The market for the recurrence test encapsulates the approximately half-a-million colorectal cancer survivors in the US who have been treated for the disease. Meanwhile, the chemotherapy benefit diagnostic will be indicated for the nearly 70,000 node-negative colorectal cancer patients whose disease has been determined by pathology as not metastasized. However, “pathology is not an exact science — 30 percent of those that were identified as not having metastasized were [diagnosed] wrong,” Schafer noted.
That one-third of the population “will develop metastases, but there is no study that says all these patients should be treated with chemotherapy. So, most of them don’t get chemotherapy until such time as cancer recurs,” Schafer said.
“Having a GCC node test positive puts you in the same risk category as those patients [for whom] the pathologist has actually seen cancer cells on the lymph nodes,” and therefore those people should receive chemotherapy, Schafer noted. “Those that are negative have a very, very low recurrence,” and likely don’t need chemotherapy.  
The cost of these tests will range between $2,000 and $3,000. Schafer assured investors during the call that reimbursement will not be a problem since there will be appropriate studies published in peer-reviewed publications to corroborate the value of these tests.  “These are very, very sensitive, highly specific tests. These are the kinds of tests that move rapidly to adoption,” Schafer said.
Marketing Plans
DiagnoCure plans to eventually market the two tests to oncologists at the same time. However, since the clinical trial for the blood test was started later, the lymph node test will be launched first.
The company plans to build an “integrated marketing organization,” consisting of a sales force that will have reimbursement know-how, as well as traditional marketing experience. The sales reps will promote the tests to oncologists specializing in treating colorectal cancer.

“The more that’s in the bag for the sales person, the more leverage, the more money, and the more margins we make.”

Once sales reps are in oncologists’ offices they will also inform the doctors of upcoming tests or ongoing studies. “The more that’s in the bag for the sales person, the more leverage, the more money, and the more margins we make,” Schaffer said.
DiagnoCure Chief Financial Officer Thom Skinner noted that without the data from the NIH studies, it would not be wise to begin marketing the blood test.
Despite the fact that the test may be “doable,” Skinner said, “to put the marketing dollars behind it if you don’t have the authoritative support of the key opinion leaders, it’s going to take you longer to” get widespread adoption. Therefore, the company is putting those dollars behind the GCC lymph node test for chemotherapy benefit, “where the data will be coming more quickly and it’s a higher valued test,” Skinner said.
Future Expansion
The colorectal cancer tests and the CLIA lab acquisitions are “the first of what we expect will be several strategic acquisitions to strengthen our leadership position in the field,” Schafer said in a statement.
“This industry of molecular diagnostics has created a flurry of biomarkers, and small companies [are] often spun out of universities [to] develop these high-value cancer diagnostic tests,” Schafer said. “We believe this situation calls for a company like ours to take a leadership position, and develop and provide these new and better molecular diagnostic tests to the physicians and the patients fighting cancer today.”
DiagnoCure’s acquisition targets will be cancer tests that have the potential to change physicians’ behavior, have substantial clinical testing in place, and require no more than three to six months of work before commercialization, officials said.
With the colorectal cancer and the PCA3 prostate cancer tests, DiagnoCure has garnered a market presence in two of the most virulent cancer malignancies. Future areas for diagnostic development may include breast and lung cancer, areas in which the company has identified biomarkers.
However, cancer diagnostic tests, “when you start from scratch, take a quite a bit of time to develop,” Schafer said.
“We have a lung cancer marker that we are relatively enthusiastic about, but there is validation, testing, and lots of work left on that assay,” he said. “I cannot project when it can be a test that can be launched at the level that we’re now launching the GCC tests.”

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