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Third Wave Investors Unimpressed as Genzyme Offers Its UGT1A1 Dx; Q3 Earnings Lackluster


SALT LAKE CITY â€" What a difference a label makes.

Genzyme said last week that it will sell Third Wave Technology's UGT1A1 test in North America building on a rise in demand that the company claims it is seeing for the test, and coinciding with newsof disappointing earnings and a slumping share price.

"I wish I could show you my Blackberry," Kyle Armantrout, corporate accounts manager for Third Wave, told Pharmacogenomics Reporter from the company's booth at the American Society of Human Genetics meeting held here last week. Armantrout has received a lot of emails from physicians asking about the test since the summer, he said.

Although homebrew options for UGT1A1 testing have been available from CLIA labs for some time, the factors that really kicked up demand seem to be the test's US Food and Drug Administration clearance in August and the agency's addition of genetic testing recommendations to the drug Camptosar's label in April.

Careful to note that his views don't necessarily reflect those of Third Wave, Armantrout attributed heightened physician demand for the company's test mainly to the FDA relabeling of Pharmacia's Camptosar, which is five times more likely to cause adverse events in patients with a UGT1A1*28 genotype. Genzyme has agreed to offer the test to colorectal cancer patients undergoing â€" or being considered for â€" treatment with Camptosar, and it is throwing its weight into a "direct education program" targeting oncologists and pathologists in that market, the companies said in a press release. But investors seem to have remained ambivalent about the test's apparent success, and Third Wave's recent earnings report suggests that it could use even more good luck.

"That's been a five-year assay for us" that has only recently become popular.

In its third-quarter earnings release, Third Wave reported a 50.4 percent drop in revenue, along with a net loss of $7.4 million. Third Wave had a net income of $24,000 in the comparable period last year.

Total receipts for the three months ended Sept. 30 fell to $5.2 million from $10.5 million in the same quarter last year. Third Wave blamed its disappointing results on a "reduction in non-recurring research revenue from Japan." It also said that growth related to molecular diagnostics has been "flat" but it expects continued growth from customer accounts as its new products are validated.

In mid-day trading on Wednesday, the day Third Wave released its third-quarter earnings, the company's stock price retreated 13 percent to $3.04 from an opening price of $3.45.

Asked whether he thought the FDA's Camptosar relabeling caused an upswing in Third Wave's UGT1A1 test, Armantrout said, "Absolutely â€" that's the singular event. That's been a five-year assay for us" that has only recently become popular, he said. One key to popularizing the test among physicians was the announcement by Larry Lesko, the director of the Office of Clinical Pharmacology and Biopharmaceuticals at the FDA's Center for Drug Evaluation and Research, that the test had been cleared, and that it would help identify patients at risk of adverse events, said Armantrout.

Curiously, investors reacted ambivalently when Third Wave announced Genzyme would offer its UGT1A1 test. The company's stock price closed at $3.72 on Oct. 27, the day of the announcement, and opened at $3.65 the next day. The share price then hovered near $3.70 until the day before the firm reported quarterly earnings.

"There are about 150,000 new cases of colorectal cancer each year in the United States," Rod Hise, a spokesperson for Third Wave, said this week. "My understanding is that about half of them could potentially be prescribed Camptosar."

Prior to the FDA approval of Third Wave's test, physicians could order a homebrew version of the test from many CLIA labs, but "if there is an FDA-approved test, as opposed to a homebrew, it's always preferable," said Chenet-Monte.

Lesko mentioned the company's test in an August FDA press release and discussed the then-ongoing relabeling of Camptosar at the Bio-IT World conference in Boston in May.

Third Wave had been working on UGT1A1 with Japan-based Daiichi Pure Chemical since early 2002 without releasing a product.

The FDA was aware of Third Wave's research on the gene, and "contacted us about making a product in the United States," said Hise in August. "We said we'd be happy to work with them, and did," he said.

There may be other opportunities for developers of molecular diagnostics to take advantage of the FDA's drug-relabeling effort. "The next one we're looking at, as the evidence mounts very rapidly, is the anticoagulant Coumadin (Bristol-Myers Squibb) or warfarin," Lesko told Pharmacogenomics Reporter in June.

Pharmacogenomics-related studies underway at the FDA for existing drugs include the widely prescribed blood thinner, which has a high frequency of adverse events, Lesko told the Bio-IT World conference audience in May. The agency was then beginning its own genomics-based study of the drug using 400 patients, and should the study lead to any conclusive results, "we'll re-label the drug," he said.

If the same dynamics are at work when (and if) warfarin is relabeled, Third Wave may be hoping to cash in, but it will have considerably more competition. Warfarin is metabolized by the CYP450 2C9 gene, and variations in the drug's target's gene, VKORC, also affect response.

Along with Third Wave, other manufacturers of 2C9 tests include: GE Healthcare, which incorporates this genetic test into a bundle with eight other genes on its CodeLink CYP450 microarray; Jurilab, whose DrugMet genotyping test also includes seven other metabolism-related enzymes; Tm Bioscience, which sells a 2C9 Tag-It mutation detection kit that it provides to LabOne; Genaissance, which offers 2C9 GLP-lab testing to clients, who are often drug makers; and Esoterix, which recently became a subsidiary of LabCorp.

In an interview with Pharmacogenomics Reporter at the Clinical Genomics conference in San Diego in February, Walter Koch, senior director of pharmacogenomics at Roche Diagnostics, said the company was researching a 2C9 test for use on Applied Biosystems' TaqMan platform. Together with VKORC, 2C9 accounts for two-thirds of the difference in dosing requirements for the drug, he said. "I would bundle those things," he added.

â€" Chris Womack ([email protected])

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