NEW YORK (GenomeWeb) – Foundation Medicine expects to grow its clinical testing business this year while continuing to expand its pharma collaborations, following the anticipated final national coverage determination (NCD) for its FoundationOne CDx test by the Centers for Medicare and Medicaid Services later this month.
During a conference call yesterday to discuss the firm's fourth quarter earnings, CEO Troy Cox and CFO Jason Ryan provided an outline of the firm's plans and strategy for 2018.
Cox said that the company has four strategic priorities for the year: to launch FoundationOne CDx commercially, to secure Medicare reimbursement for the test, to strike new and expanded biopharma partnerships, and to develop new biomarkers for immunotherapy.
CMS plans to finalize its NCD, which covers next-generation sequencing testing for advanced cancer, by March 16, Cox said, and the company expects that F1CDx will be covered under the final version. Subsequently, it plans to launch F1CDx commercially and to transition most of its patient cases to the new test, from the current FoundationOne test, over the course of the year.
Once the NCD is finalized, the company will also be able to ramp up reimbursement from Medicare for the test. It had already received limited payments under a local coverage determination from its local Medicare Administrative Contractor (MAC). Medicare payments under the NCD are expected to become material in the second half of the year as the new test takes over from the old one, Ryan said.
To prepare for Medicare reimbursement, the company recently received a Proprietary Laboratory Analyses (PLA) code for F1CDx, Cox said, which will become effective in April, and it is waiting for the test to be designated as an Advanced Diagnostic Laboratory Test (ADLT).
Ryan declined to say how much per test the company expects to receive from Medicare but he said that $3,000 or above is "a good number" to work with. Under the Protecting Access to Medicare Act of 2014 (PAMA), he explained, the eventual rate will depend on how much Foundation Medicine is paid by third-party payors.
The preliminary NCD covers FDA-approved companion diagnostics for advanced cancer patients with five tumor types: lung, breast, ovarian, colorectal cancers and melanoma. These five types cover approximately half of FoundationOne tests conducted in the past, and Medicare or Medicare Advantage patients make up about 40 percent of its testing volume, Cox said.
The NCD allows for coverage to be expanded over time by adding companion diagnostic claims for new tumor types, he said, adding that more than 600 oncology drugs are in late-stage development, of which many will likely require a CDx. Also, the NCD allows for so-called 'coverage with evidence development' for all late-stage solid tumor types, for which patients need to enroll in a clinical study or registry. "This could represent an additional path for coverage for FoundationOne CDx for Medicare beneficiaries with all late-stage advanced solid tumors," he said.
The company also continues to seek coverage from private payors, Cox said, and an important part of that is to support efforts to include broad molecular profiling into clinical care guidelines. The National Comprehensive Cancer Network recently expanded molecular testing guidelines for ovarian and prostate cancer, as well as melanoma, he said, "and we expect more to follow."
Foundation Medicine also plans to grow its business with biopharmaceutical firms, both with its partner and investor Roche and others. The company has seen good demand from pharmas, Cox said, especially in the area of CDx development, which has benefitted from the FDA approval for F1CDx.
Cox said the company already has more than 30 biopharma partnership contracts today, a number it plans to grow, both with new and existing partners. "We signed new and expanded partnerships, including with [Bristol-Myers Squibb] and most recently with Pfizer, further establishing Foundation Medicine as the molecular information partner of choice, particularly in the area of immuno-oncology," he said.
The company also recently amended its commercial agreement with Roche. According to Ryan, the main change was to include F1CDx, which Roche will now be able to offer internationally.
Roche currently sells Foundation Medicine's tests in 27 countries, Cox said, including Europe, South America, the Middle East, and Asia, and Foundation's laboratory in Germany has started processing patient samples. Without Roche as a partner, "Foundation Medicine would have a hard time expanding globally," he said, and both companies will continue to expand into major markets around the world, including China.
Finally, the company plans to develop new biomarkers for targeted therapies and immunotherapy. Cox said it has presented data showing that a new assay it has developed to measure TMB in blood has shown promise to predict response to immunotherapy. The assay is used by Roche/Genentech in a phase 3 clinical trial as a potential CDx for an immunotherapy drug to treat advanced non-small cell lung cancer.
In addition, BMS has been using Foundation's tissue-based TMB assay, which is part of FoundationOne, in a study, the CheckMate-227 trial, of two immunotherapies for advanced NSCLC patients and has found TMB to be an independent predictive biomarker for patients who might benefit from the combination therapy.
"This is a meaningful advancement as it's the first time that we're able to demonstrate prospectively that TMB has clinical utility as a biomarker for immunotherapy," Cox said.