Even though the US Food and Drug Administration’s recent approval for Nanosphere’s warfarin sensitivity test may appear to give the company an advantage in the market, it faces a crowded field of established competitors and uncertainty regarding reimbursement,
Clinical Data, LabCorp, Genelex, Nanogen, and AutoGenomics are a few of the companies that market homebrew warfarin sensitivity tests.
Clinical Data launched PGxPredict: Warfarin last October, and the company has an ongoing collaboration with CVS’s pharmacy benefit manager subsidiary PharmaCare to explore commercialization of its test.
Third Wave plans to submit a warfarin test, based on its Invader technology, to the FDA, the company has publicly stated. Earlier this year, the company launched ASRs that will enable clinical laboratories to build molecular assays for warfarin sensitivity. Kimball Genetics this summer launched its Warfarin DoseAdvise service, based on Third Wave’s PCR and fluorescent signal-based Invader technology.
Meantime, Seattle-based Genelex launched its warfarin test, based on Tm Biosciences’ Tag-It platform, last October [see PGx Reporter 10-18-2007]. Also using Tm Biosciences’ platform are Medco and Mayo Clinic, who are researching the potential of warfarin testing to deliver cost-savings while improving patient outcomes [see PGx Reporter 12-06-2006].
Other companies, such as Osmetech and ParagonDx, have announced plans to develop their own tests in this area. The Harvard-Partners Center for Genetics and Genomics has also developed its own test to research economic and clinical outcomes of warfarin testing [see PGx Reporter 11-29-2006].
It would appear that Nanosphere gained an advantage in this very crowded market when the FDA last week cleared its Verigene Warfarin Metabolism Nucleic Acid Test, making it the first assay to be cleared by the agency for the detection of gene variants in patients who are sensitive to the widely-prescribed anticoagulant.
The Northbrook, Ill.-based company is in a quiet period prior to a proposed initial public offering, however, and was unable to comment on its newly approved test.
“We believe that the Verigene System’s ease of use, rapid turnaround times, relatively low cost, and ability to support a broad test menu will simplify workflow and reduce costs for laboratories already performing molecular diagnostic testing and allow a broader range of laboratories, including those operated by local hospitals, to perform molecular diagnostic testing,” Nanosphere said in an Aug. 13 filing with the Securities and Exchange Commission.
However, the company — founded in 1998 by two Northwestern University chemistry professors, Robert Letsinger and Chad Mirkin — “face[s] increasing competition from current and potential competitors, some of which have greater name recognition, more substantial intellectual property portfolios and longer operating histories,” according to the filing.
Nanosphere’s Warfarin Metabolism Nucleic Acid Test, which runs on the company’s Verigene platform, “detects some variants of both [CYP2C9 and VKORC1] genes,” the FDA said in a statement announcing the test’s approval.
The agency cleared the test based on results of a study conducted by Nanosphere of “hundreds of DNA samples as well as on a broad range of published literature.” In a three-site study, the test was “accurate in all cases where the test yielded a result,” the FDA said. However, approximately 8 percent of the tests could not identify which genetic variants were present.
In August, FDA updated labeling for warfarin with information explaining that people with variations of the genes CYP2C9 and VKORC1 may respond differently to the drug. The agency, however, stopped short of requiring physicians to genetically test their patients, noting that additional outcomes studies needed to be done [see PGx Reporter 9-5-2007].
The FDA continued this note of caution in its statement last week about Nanosphere’s test, explaining that the assay “is not intended to be a stand-alone tool to determine optimum drug dosage, but should be used along with clinical evaluation and other tools, including [International Normalized Ratio], to determine the best treatment for patients.”
Nanosphere has not discussed the technology behind the Verigene System, but did provide some details about the system in its August SEC filing.
In the document, the company distinguished Verigene – a technology it licensed from Northwestern University’s International Institute for Nanotechnology in May 2000 – from PCR, enzyme-linked immunosorbent assays, and mass spectrometry, the platforms upon which competing marketed warfarin tests are based. In the filing, Nanosphere described PCR and mass spectrometry-based systems as complex and expensive, and criticized ELISA technologies as “not sufficiently sensitive to detect protein biomarkers” until a disease has advanced.
Aetna says it considers genotyping for CYP P450 polymorphisms through diagnostic tests “experimental and investigational because the clinical value of this type of genetic testing has not been established.”
In comparison, Nanosphere noted that the Verigene System is “a compact, bench-top molecular diagnostics workstation” that “allows multiple tests to be performed on a single platform, including both genomic and protein assays, unlike most existing systems, which provide a diagnostic result for one test or specific niche.”
According to the company, its test – consisting of a microfluidics processor, a reader, and disposable test cartridges – has at least 100 times greater sensitivity than systems based on ELISA and detects nucleic acids with greater specificity “without the … risk of contamination inherent in the use of amplification techniques such as PCR.”
Faster and Cheaper?
The system is also faster than currently marketed products, the company claims. “With a prepared sample, the Verigene System completes tests in 45 to 90 minutes and requires less than 20 minutes of technician time,” the company said. The system “allows laboratories to economically run tests at the time they are ordered, unlike other systems where laboratories must wait to process patient samples in batches to control reagent and labor costs.”
Turn-around times for currently marketed warfarin tests range between 24 hours for the Kimball Genetics test to up to 10 days waiting time for LabCorp’s test.
Additionally, Nanosphere plans to sell its warfarin test with its own 18-person sales force and will target its marketing efforts to hospital laboratories where there is a demand for molecular testing “but where cost, complexity, and resource needs of existing technologies have limited their ability to process tests in-house.”
The company is touting its test as “low cost” since it will not need “sophisticated instrumentation” or “complex” reagent kits. Although it is unknown what Nanosphere will charge for its test or the Verigene System, the costs of currently marketed tests range between $300 and $500.
Reimbursement Prospects Uncertain
The FDA’s recent update of Coumadin’s label coupled with its approval of Nanosphere’s test would appear to signal a somewhat positive reimbursement environment for the test, but there are still uncertainties surrounding most payors’ plans for coverage.
In an interview with Pharmacogenomics Reporter, Annette Taylor, CEO and president of Kimball Genetics, said that in her conversations with a spokesperson at the Centers for Medicare and Medicaid Services, the agency has signaled its intention to reimburse for the test under Medicare. CMS did not return requests for an interview. However, the Wall Street Journal reported in an Aug. 16 article that warfarin tests are covered under Medicare.
Additionally, at a recent conference hosted by the Personalized Medicine Coalition, Lewis Sandy, senior vice president of clinical advancement at United Health Group, said the insurer would likely reimburse for warfarin sensitivity tests now that the FDA has approved a test and updated Coumadin’s label. UHG is a managed care firm and parent to United HealthCare, the second largest health insurer in the country.
Other large insurers such as Aetna, WellPoint, and Cigna, however, still do not cover the test. On its website, Aetna says it considers genotyping for CYP P450 polymorphisms through diagnostic tests “experimental and investigational because the clinical value of this type of genetic testing has not been established.”
Aetna states in its policy that there is a “need for well-designed clinical trials to ascertain the extent of environmental influences on the [adverse drug reactions] for which a genetic basis has been implicated” Furthermore, the clinical effectiveness and cost effectiveness of genotyping for CYP polymorphisms has not been established, Aetna claims. The company did not respond to requests for an interview.
Garnering broad reimbursement for its test may be key to Nanosphere’s future solvency. “Our financial results depend on commercial acceptance of the Verigene System,” the company stated in its filing. “If we do not achieve significant product revenue, we may not be able to meet our cash requirements without obtaining additional capital from external sources, and if we are unable to do so, we may have to curtail or cease operations.”
Nanosphere’s 2006 revenue was $1.13 million, down from $1.91 million the previous year.
The company said it plans to raise up to $100 million in its planned IPO, of which $50 million would finance ongoing research and development and $40 million would go toward sales and marketing initiatives. “We expect to use the remainder of the net proceeds for additional working capital and general corporate purposes,” the company said.