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With Q2 Revenue Boost and Sale of IVD Division, Clinical Data Transforms Into PGx Rx, Dx Shop

With a 25-percent increase in fiscal 2008 second-quarter revenues, an expanded intellectual property portfolio, and the divestiture of its in vitro diagnostics business, Clinical Data is focusing on becoming a pharmacogenomics-based drug and diagnostics developer.
“Now that we’ve divested the IVD businesses … we’ve really emerged now as a pureplay in pharmacogenomics,” Clinical Data CEO Drew Fromkin told Pharmacogenomics Reporter this week.
The firm will try to build that business with its two remaining divisions: Cogenics, which offers genomics services to pharma and biotech companies; and PGxHealth, which offers PGx services, and under which the firm is conducting research for the investigational antidepressant vilazodone.
For the three months ended Sept. 30, Clinical Data’s total revenues from continuing operations rose to $9.1 million from $7.3 million in the year-ago period. Revenue from the Cogenics segment during the same quarter rose 22 percent to $7.7 million, while PGxHealth contributed $1.1 million, a 17-percent increase over the same period one year earlier.
According to Fromkin, under PGx Health, Clinical Data has been focused on developing a strong intellectual property portfolio for markers related to drug response, which will be the platform for three kinds of services the company hopes eventually to market.
“The first prong is really developing independent pharmacogenomic tests that are proprietary to us around drug response,” Fromkin said last week. He stressed that Clinical Data will develop these tests “independent[ly] of work directly with a pharmaceutical company around one of their drug franchises.”
In this regard, the company has already developed and is marketing, tests under its PGxPredict branding for the anticoagulant warfarin and the schizophrenia drug clozapine [see PGx Reporter 09-20-2006].
“The second prong is based on … the [concept of] Rx/Dx combinations where a companion diagnostic would support the targeting of the drug,” Fromkin said. “And we may have opportunities where we may leverage our intellectual property where we may develop a test that lies alongside another drug company’s drug commercialization plan.” He declined to elaborate on what those opportunities may be.
The last prong involves using the company’s own intellectual property for certain biomarkers to develop its own drugs. Vilazodone represents the first drug to come out of this model.
In September, Clinical Data announced that vilazodone had met both primary and secondary endpoints in a pivotal Phase III trial and that the company had identified some response markers for the drug.
According to Fromkin, these biomarkers “will likely play a key role in the commercialization of this drug.” These markers, which the company recently identified through sequencing and genotyping, signal that the drug may have the potential for a companion diagnostic. And Clinical Data’s experience doing genomics research for pharmaceutical companies may help it develop in-house a companion diagnostic for the drug.
“Our [research] team has been doing this for pharma companies for over a decade,” Fromkin said. “Now the only difference is, we’re applying that know-how, as well as new and existing intellectual property, to our own drug-development franchise.”
Fromkin said Clinical Data expects to launch two additional Phase III trials for the drug in the first quarter of 2008, as well as a long-term safety study. The firm plans to submit an NDA for vilazodone to the US Food and Drug Administration in 2009.

“Our [research] team has been doing this for pharma companies for over a decade. Now the only difference is, we’re applying that know-how, as well as new and existing intellectual property, to our own drug-development franchise.”

The endpoint of the upcoming Phase III trials will be to validate the strongest of the markers for vilazodone response that the firm had identified. The company will solidify plans to develop and market a companion diagnostic for the drug following these trials.
If the firm ends up marketing vilazodone on its own for the indication, the company would use its two CLIA labs to market and perform any companion tests that arise from its research, Fromkin said. “But because we can transfer this technology, we can also do this through other labs as well,” he added.
During the quarter, Clinical Data closed its acquisition of Epidauros, whose IP of genes and other biomarkers relating to prominent drug transporters such as MDR1, OCT1, MRP1, and drug-metabolizing genes such cytochrome P450, are aimed to move the company closer to its goal of becoming a pure-play PGx company.
According to Fromkin, “the key biomarker” in the Epidauros portfolio is MDR1, which helps to move drugs in and out of cells. “Depending on the gene variant a patient may have, an individual may have a different response to a drug based on how the drug is pumped in and how it is pumped out.”
Additionally, some of the relationships Clinical Data has nurtured with pharma companies, first through its Cogenics unit and now potentially also through Epidauros, may help it garner diagnostics development deals in the long term.
Cogenics has had “long-standing relationships with pharma companies around regulated genotyping and sequencing work with respect to clinical trials,” Fromkin said, adding that Epidauros has “similar strong relationships with pharmaceutical companies.”
According to Clinical Data, helping to drive the 25-percent increase in fiscal second-quarter revenue was a 23-percent increase in the use of its Familion family of tests for cardiac channelopathies.
The company also hired 10 new sales representatives at the end of the quarter.
Although R&D costs declined to $2.9 million this quarter from $3.2 million in the same quarter in 2007, recent positive clinical results for vilazodone have emboldened the company to “devote increased R&D resources” for the drug during the second half of the year and through fiscal 2009.
Clinical Data reported a loss from continuing operations of $9.8 million, compared to a loss of $8.2 million in the year-ago period.
“We expect to continue to improve the bottom line performance of Cogenics while investing even more aggressively in the development of intellectual property held by PGxHealth and related products and services,” the company said in a statement.

The company finished the quarter with cash and marketable securities totaling $61.1 million. As of Nov. 14, Clinical Data had approximately $80 million in cash and cash equivalents.

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