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Foundation Medicine Officials Detail 2016 R&D Investments, CDx Plans


NEW YORK (GenomeWeb) – Foundation Medicine officials this week detailed several efforts the firm intends to take on in 2016 including plans to launch its FoundationAct clinical circulating tumor DNA test and to submit its first companion diagnostic test to the US Food and Drug Administration.

In addition, the firm plans to work towards a universal companion diagnostic, launch its clinical tests further outside the US with Roche, look for a new facility outside of Cambridge, and expand reimbursement for its clinical tests.

During a conference call to discuss the firm's fourth quarter and full year 2015 earnings, Foundation officials said that the company expects a majority of its revenue growth in 2016 to come from its biopharmaceutical business, while clinical revenues will likely stay essentially flat. The latter is due to reimbursement issues and because revenues from tests outside the US will be shared with its partner, Roche, CFO Jason Ryan explained.  

Foundation's pharmaceutical revenues increased 68 percent year over year in the fourth quarter, a trend the company believes will continue. Pharma revenues come from clinical trial specimen profiling, data services that include access to the firm's FoundationCore database with more than 68,000 clinical cases, and companion diagnostic and regulatory support work. "We remain very excited about the long-term opportunity in total addressable market surrounding each of these three components and we plan to provide additional detail over the course of the year," Ryan said during the call.

In addition, Foundation plans to make a number of "key investments" this year in R&D and technology, among them an immunotherapy testing platform, the universal companion diagnostic platform, improvements to the FoundationAct assay, and an expansion of molecular information solutions such as SmartTrials.

Along with smaller investments to support commercial and reimbursement activities, these will lead to an increase in the company's operating expenses to between $175 million and $185 million in 2016 from $143.5 million in 2015. "It’s important to note that these new investments in 2016 are not solely intended to drive 2016 revenues but also to support meaningful leverage in revenue growth in the years to come," Ryan said.

According to CEO Michael Pellini, the company is also looking to establish a facility outside of its current location in Cambridge, Massachusetts, which is "not the most cost-effective place to build a lab for the long term," he said, adding that the firm is "in the process of evaluating other opportunities."

Foundation Medicine is on track to launch its liquid biopsy test, FoundationAct, for clinical use this quarter. Initially, the test will be for patients who do not have a tissue sample available for genomic analysis, which is the case for about 10 to 15 percent of patients with metastatic cancer. Earlier this month, the company presented results from its analytical validation of the test at a conference. It also has a multicenter clinical validation study ongoing to define the best indications for the test and which tumor types will be most suitable for it. "This is particularly important since preliminary studies suggest that many tumors may not shed detectable ctDNA into the bloodstream," according to Steven Kafka, the company's president and COO.

The firm is not yet predicting revenues or reimbursement for FoundationAct, but Pellini said it has learned "a thing or two from the process that we went through with FoundationOne" to obtain reimbursement and plans to apply this experience to seek reimbursement for FoundationAct.

Later this year, the company plans to submit its first companion diagnostic — for Clovis Oncology's ovarian cancer drug rucaparib, a PARP inhibitor — to the FDA for premarket approval. Foundation has two other companion diagnostic collaboration agreements, one with Roche and the other with Mirati Therapeutics, and expects to begin additional collaborations this year, Kafka said.

Foundation Medicine also continues to work towards a universal companion diagnostic. "Ultimately, we do believe a single validated assay will provide physicians with much of the necessary genomic information to point them to the relevant therapeutics," Pellini said. "We believe that this will drive clinical volume in the future, and that the work we are doing with the FDA will further differentiate and strengthen our offerings."

To improve the clinical utility of its assays, the company will also expand its "data solutions" this year, for example, its SmartTrials program, which aims to identify patients eligible for clinical trials. In addition, it aims to expand its Precision Medicine Exchange Consortium (PMEC), which facilitates the exchange of genomic and clinical outcomes data across organizations and helps create a clinical trial network.

In collaboration with Roche, Foundation plans to launch its clinical tests further outside the US this year. "We're on track to launch into several countries as planned," Kafka said. "As we introduce FoundationOne through Roche, our early focus will be on market development activities to drive adoption and to build evidence for reimbursement in each of these markets." However, the majority of clinical tests in 2016 will still come from the US, he added.

With regard to expanding reimbursement for its tests, Pellini said the company continues to work closely with "many payors." Foundation has already signed a national agreement with United Healthcare for covering the FoundationOne test for a subset of metastatic non-small cell lung cancer patients.

It also has an ongoing prospective clinical study with Horizon Healthcare Services, a New Jersey health insurer, and Clinical Outcomes Tracking Analysis (COTA) to measure survival benefits and costs savings associated with genomic profiling with FoundationOne in patients with previously untreated metastatic NSCLC.

One goal for the company this year is to obtain Medicare coverage and payment for at least one indication, Kafka said.

National Government Services, Foundation's local Medicare Administrative Contractor (MAC), recently finalized an LCD for NSCLC patients that covers certain hotspot panels and a limited number of genes.

"While it's disappointing for patient care that NGS did not even set minimum validation standards for these types of tests, and further, that the LCD groups all panel tests of less than 50 genes into one category, I do want to make it very clear that this LCD does not apply to Foundation Medicine," Pellini said during the call. "In fact, NGS made the distinction that the LCD and the related hotspot code are not meant for comprehensive genomic profiling, which is an important point of differentiation for Foundation Medicine. While we will continue to work with NGS whenever possible, in parallel, we will continue to push on additional options for Medicare coverage, as well as on other third-party payors for our tests."

Palmetto GBA, another local MAC, recently made a final local coverage determination for comprehensive genomic profiling in a subset of NSCLC patients, he said, and one consideration in choosing a location for Foundation's new facility is whether it would be covered by a MAC that is more open to covering its tests.