Interleukin Genetics is pioneering a new commercialization model in personalized medicine in which it is being bankrolled by insurers who see the potential for lowering healthcare costs through utilization of molecular diagnostics.
This week, Interleukin announced that the Delta Dental Plan of Michigan has purchased 500,000 shares of its Series B convertible preferred stock for $3 million. Interleukin will receive net proceeds of $2.7 million after fees and expenses are deducted, and Delta Dental will garner a seat on Interleukin's board of directors, replacing one of its existing directors.
The financing will be used to advance commercialization of Interleukin's periodontal disease susceptibility risk test, PST, which identifies individuals at heightened risk for severe periodontal disease and significant tooth loss.
Delta's investment is not the first time that Interleukin has worked closely with dental insurers in developing PST. For example, a 5,400-subject validation study for the test that is being conducted by researchers at the University of Michigan School of Dentistry is being funded by Renaissance Health Service, a nationwide dental insurance firm. Renaissance insures 8.6 million people and last year paid out $2.2 billion in dental benefits (PGx Reporter 4/11/2012).
Delta Dental of Michigan, meanwhile, is part of a group of companies that covers 8.6 million people and paid $2.2 billion in dental benefits in 2011.
The insurer's investment makes it a minority shareholder, Lewis Bender, CEO of Interleukin, told PGx Reporter. "They hopefully will see their investment go up," he said, adding that Delta Dental of Michigan's financial involvement in the firm doesn't conflict with the independent conduct of the validation study for the PST genetic test.
According to Bender, Interleukin has worked with Delta Dental for several years. For the validation study being conducted by the University of Michigan, researchers identified potential study participants from Delta Dental's claims database and enrolled those individuals who gave their informed consent.
In March, Interleukin and the university announced that they had finished enrolling patients in a 5,400-subject clinical trial. Based on results from Interleukin's genetic test as well as clinical and environmental factors, the study participants will be classified as being at low risk or high risk for periodontitis progression. With this molecularly guided treatment strategy, the researchers hope to determine whether visiting a dentist twice a year impacts tooth loss in patients classified as being at low risk for severe or progressive periodontal disease (PGx Reporter 3/28/2012).
University of Michigan will analyze the data from the validation study "completely independent of [Interleukin] or this particular insurance company … They're in complete control," Bender emphasized.
Furthermore, the investment by the Michigan-based Delta Dental "has nothing to do with MetLife or Aetna or any other insurance company in the country," he added. "So the fact that an insurer has made this equity investment doesn't take away that [adoption of the test] has to be data driven … The employers will still make a determination as to whether they will take this benefit as part of a program.
"We have to detach the investment from the actual study and data we're generating," Bender stated.
Traditionally, even after molecular diagnostics companies complete validation studies of their tests, they face an uphill battle when it comes to convincing insurance companies to reimburse for them. For example, Genomic Health launched its multi-gene Oncotype DX breast cancer recurrence test in 2004 and has studied the test on more than 4,000 patient samples showing its ability to assess whether women are at high or low risk of their disease returning. Even though most US insurers cover the test for women in certain clinical scenarios, the firm has continued to conduct cost-effectiveness and utility studies to expand reimbursement of the test and remove barriers to coverage.
Interleukin is taking a different approach by working closely with insurers in financing its diagnostic development efforts. "This is a little bit different than what [Genomic Health] did, where they do the study and then they go around and shop this to the insurance companies to try to get reimbursed for [the test] based on their data," Bender said. "Here, you have the flip effect, where insurance companies are looking for tools and they have identified our [PST Genetic Test] as a tool … and have worked with us to find the independent organization that can conduct the [validation] study."
According to Bender, the insurers working with Interleukin performed cost-effectiveness analysis for the PST test when assessing whether to invest in the company's activities.
"That's all been done by the insurance company to determine that they will reimburse for this [test] if the study that we're doing shows that there's … a non-inferiority [in outcomes] between the first and second [dental] cleanings in people with low risk [of periodontal disease]," Bender said. "The cost analysis to show that [the PST test] can save tremendous money in their system has been done."
Bender could not provide details of the cost-effectiveness analysis for the PST test since this information is proprietary to the insurance firm.
Currently, most dentists recommend that individuals visit them every six months for an examination and cleaning. However, according to William Giannobile, director of the Michigan Center for Oral Health Research and the leader of the study involving PST, a recent systematic review provided "insufficient evidence" to either support or refute that adults need two preventative dental visits per year.
With the PST test, Interleukin is hoping to save insurers money by identifying those at low risk of gum disease who can benefit just as much from one visit to the dentist a year as they would with two annual visits. This would free up resources for those who are at high risk for severe periodontal disease and need more aggressive dental care.
"The adoption of this test is not going to be straightforward if the data are not good. If the data are positive, in that we can show that you can triage patients into risk categories, such that people who need more care can get more care, you can have a major benefit in reducing healthcare costs by preventing gum disease and the associated extractions and implants," Bender said.
Approximately 8 percent to 15 percent of adult Americans have moderate to severe periodontitis, which can lead to tooth loss if gone untreated. According to the Centers for Disease Control and Prevention, 25 percent of adults in the country 60 and older have lost all of their teeth. In 2009, people in the US spent $102 billion in dental services.
The PST test has been on the market as a laboratory-developed test since 2003. Quest’s Oral DNA group holds a non-exclusive license to market the diagnostic.