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Medicare to Reimburse CombiMatrix Molecular Diagnostics' Array-Based Tests

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By Justin Petrone

CombiMatrix said this week that Medicare will reimburse all of the array-based tests marketed by its CombiMatrix Molecular Diagnostics laboratory-services subsidiary.

Calling it a sign of "significant progress" in the company's ongoing quest for reimbursement, CombiMatrix CEO Amit Kumar said Medicare's decision will "drive the acceleration of our diagnostic-commercialization efforts."

"As Medicare is a large payer of services for individuals over 65 and the bulk of cancer patients are over 65, this step is a major accomplishment for the company's commercialization efforts," Kumar said in a statement. "We believe that certain barriers to the utilization of our cancer tests have now been eliminated."

Since CombiMatrix founded it in 2005, CombiMatrix Molecular Diagnostics has introduced its HemeScan test for chronic lymphocytic leukemia; its HERScan test for HER2 analysis in breast cancer patients; and an array-based, post-prostatectomy prostate cancer-stratification assay.

The subsidiary, based in Irvine, Calif., also offers BAC and oligo-based HDScan tests that identify congenital chromosomal abnormalities; the Prenatal Scan test, which assays amniotic fluid to identify genetic disorders in utero; and the ATScan test, which IDs copy number variants associated with autism spectrum disorder.

Obtaining reimbursement for these tests, though, has been an ongoing challenge for CombiMatrix Molecular Diagnostics. During its parent company's fourth-quarter earnings conference call in March, Kumar said that he was not "not satisfied with the pace" of growth in the firm's diagnostics business. He blamed a "difficult reimbursement environment" together with "limited resources for clinical testing and validation, and limited sales and marketing infrastructure" (BAN 3/16/2010).

Kumar acknowledged at the time that reimbursement issues are "headwinds faced by all molecular diagnostics companies," but that he "personally underestimated the degree to which this would be an issue."

"While we are not happy with where we want to be regarding reimbursement of our tests, we predict improved reimbursement and improved average revenue per test," he said at the time.

In a statement this week, CombiMatrix Molecular Diagnostics CEO Mansoor Mohammed said that Medicare's decision to pay for the lab's array-based tests would enable the firm to "effectively build successful sales distribution partnerships."

Mohammed said that oncology-related sales are "often predicated by Medicare coverage determinations and a company's ability to bill for related services." He said Medicare's decision provides CombiMatrix with a "reimbursement environment that allows us to execute our oncology business strategy."

Medicare's decision comes two months after CombiMatrix enacted a companywide restructuring that shifted all its resources to its molecular diagnostics business. The reorganization cut the parent company's headcount in half; closed its former headquarters in Mukilteo, Wash.; froze certain R&D programs; and kicked off a search for a new president and CEO to replace Kumar, who will step down at the end of June (BAN 4/20/2010).

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