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Dx Shops’ Flexibility Will Encourage Co-Development Alliances, Qiagen CEO

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Open, flexible collaborations that allow drug and diagnostics companies to become comfortable with one another are the best way to spur Rx/Dx co-development, according to Qiagen CEO Peer Schatz.
 
In today’s risk-averse regulatory and reimbursement environment, “the pharmaceutical industry cannot take more risk into their projects at very early phases,” Schatz said at a personalized medicine conference last month hosted by Harvard-Partners Center for Genetics and Genomics. “This is the reason why we never lock down a pharmaceutical partner, [and] we never ask them to sign lengthy agreements giving exclusivity to certain targets.”
 
Rather, Qiagen “move[s] into very open collaborations and simply through our performance allow [pharmas] to get used to the way we work, and ultimately, we hope that we’re their diagnostic partner of choice,” he said. “But having an open platform technology approach is the greatest value typically to pharmaceutical partners.”
 
As the life sciences industry increasingly moves toward targeted therapeutics, both the drug and diagnostics industries will have to change the way they work, learn more about how the other operates, and work together to align drug- and diagnostic-development timelines.
 
In Qiagen’s experience, Schatz noted, what has worked well are “open collaborations” with pharmaceutical companies that started with Qiagen providing genetic profiling services and then grew to more exclusive Rx/Dx co-development agreements. Schatz spoke generally about Qiagen’s business strategy in this regard and did not reveal the name of its pharma partners.
 
The strategy isn’t feasible for every diagnostic company because just as introducing a diagnostic into the drug development process can add financial risks and uncertainty for a pharma company, the kind of open collaborations embraced by Qiagen also require patience and heavy investment on the part of diagnostic companies.
 
As a result, the strategy “is something that the diagnostics industry is not very comfortable with,” Schatz said. “I think that’s something the industry has to learn better.”
 
Qiagen’s Experience
 
In its early days, Qiagen, founded in 1984 by scientists from the Heinrich Heine University of Dusseldorf, Germany, focused on developing DNA-purification columns.
 
But over the last decade, half of the company’s business has been developing PCR-based assays. This capability has helped Qiagen advance its partnerships with pharmaceutical companies from helping them genetically profile drug candidates in early discovery to developing companion diagnostics.
 
According to Schatz, approximately 15 percent of Qiagen’s sales are due to its molecular-diagnostics business. “We’re moving very rapidly in this area and … we actually have a quarter of our sales to pharmaceutical companies where the same tools and technologies, which were initially used more in the discovery area, are for the majority now used in the development area,” he said.
 
Schatz cited an example of a 10-year relationship with an undisclosed pharma partner for which Qiagen provided molecular profiling services that has recently blossomed into a deal that may lead to Qiagen developing a companion diagnostic for one of its drugs.
 
“When that project started, we advised the company to use [Qiagen’s platform] as the profiling technology for a clinical trial for a potential diagnostic that might be coming out at some point in time now,” Schatz said.
 
According to Schatz, the industry is in a very early phase for embracing pharmacogenomics tools and personalized medicine. From Qiagen’s standpoint, the company is trying “to provide the broadest available portfolio of molecular testing technologies, meeting almost any need for the earliest phases, for the earliest stage discovery of research, allowing for a seamless progression … into [the development of] in vitro diagnostics products.
 
“I think the industry still has to learn a lot,” said Schatz. “We have to start moving together more, reacting to each other. The industry will have to change on both sides.”
 
Changes Necessary
 
At the conference, Schatz outlined areas that make it difficult for drug and diagnostics companies to work together, including misaligned development timelines, cumbersome pharma-development structures, and the need for significant investment from diagnostics companies.
 
Although Qiagen is interacting with pharma companies more readily in a “seamless fashion” from the discovery phase to diagnostics development, the company has had to address several obstacles.
 
For instance, “there are so many different structures with which the pharmaceutical companies are trying to address this area of personalized medicine [that] it makes it difficult for a [diagnostics] company to create the right approach, the right messaging to the decision makers.”
 

“I think the industry still has to learn a lot. We have to start moving together more, reacting to each other. The industry will have to change on both sides.”

In this regard, Qiagen has had to make significant investments to meet the needs of its pharma partners.
 
“Things like rapid design of products and creating small and specialized lot manufacturing are things that the diagnostics industry traditionally cannot do,” Schatz said. “It’s something we had to invest a lot of money and time in over the past 10 years, to create that capability, to react very quickly to the needs of the pharmaceutical industry.”
 
In addition, industry observers have noted that diagnostics companies working with pharma to develop tests for older drugs have to battle drug makers’ established notions, and deal with prescriber habits that might slow the adoption of the assay.
 
Consequently, Schatz said that simultaneously developing new Rx/Dx products is the best way to avoid these obstacles and advance personalized medicine.
 
“I don’t really believe in the strategies of taking existing pharmaceuticals and trying to narrow them down in terms of adding a diagnostic angle to them,” he said. “There is so much status quo that you have to go up against and it’s very tough for even large players in the diagnostics space to fund that and make that happen.”
 
Other major barriers to Rx/Dx co-development are the incongruent development timelines for drug and diagnostics products [see PGx Reporter 12-13-2006]. Whereas it can take as long as 15 years for a drug to reach the market in the US, diagnostics can hit the streets in a fraction of that time.
 
In Qiagen’s experience, since it took as long as a decade for the company to nurture a genetic profiling services relationship with a pharma partner and turn it into a co-development deal, it was critical that the company’s technology platform was advanced enough to have a very long shelf life. Since new technologies are pushing rapid changes in the diagnostics industry, pharmaceutical partners will be looking to invest in technologies that are at once novel and well established.
 
“We are now in the market with a well-advanced and, in the meantime, well-established … high-tech approach that probably has 10 to 15 years of runway in front of it,” Schatz said. “So, looking ahead is something that is very important also for the pharmaceutical companies, as diagnostics are changing very rapidly.”
 
Big pharma’s massive marketing power is another reason why it will be essential for diagnostic companies to partner with pharma in order for Rx/Dx co-development, and thus personalized medicine, to establish strong roots.
 
As an example, Schatz noted Qiagen’s newly acquired play in the human papilloma virus market. With the completion of its acquisition of Digene in July, the company became a leading provider of HPV tests. During the conference, Schatz recounted his company’s experience marketing its HPV tests during a time when Merck was ramping up its direct-to-consumer campaign for its HPV vaccine Gardasil.
 
“We’re the largest provider of HPV tests in the world. It’s a couple of hundred million dollar business for us. And we’re investing a lot in marketing and educating the public about this virus and the disease behind it,” Schatz said.
 
However, “when [Merck’s] vaccine came online, it totally dwarfed what we were able to spend in marketing,” he recalled. “The magnitude of difference in power that the pharmaceutical industry brings to the table” makes it “absolutely critical for the diagnostics industry to partner with the pharmaceutical industry to make personalized medicine a reality.”
 
Schatz did not say if Qiagen planned to strike up such a partnership with a pharma company for its HPV diagnostic.

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