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Foundation Medicine Projects $12B to $15B Market for Cancer Tests by 2020; Plans Ex-US Launch Soon

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NEW YORK (GenomeWeb) – Foundation Medicine expects the market for its cancer tests to grow to between $12 billion and $15 billion by 2020. In collaboration with Roche, the company plans to start selling its assays outside the US starting this year.

In the meantime, reimbursement for its tests from private insurers continues to grow. United Healthcare recently published a medical policy under which it will start covering molecular profiling for stage IV non-small cell lung cancer patients in October, which will likely include the firm's FoundationOne test.

Earlier this week at Foundation Medicine's inaugural analyst and investor day at its Cambridge, Massachusetts headquarters, which was webcast, company executives laid out their vision for the firm's development over the next five years.   

According to CEO Michael Pellini, Foundation is a "fully integrated molecular information company that has pioneered an entirely new market" — comprehensive genomic profiling for cancer.

The firm currently has about 400 employees at its two Cambridge locations and works with more than 25 pharmaceutical and biopharmaceutical partners. Over the last few years, it has run more than 50,000 of its tests, FoundationOne for solid tumors and FoundationOne Heme for hematological tumors. More than 3,000 oncologists or pathologists have ordered its tests so far, and they are part of more than 200 clinical trials run by Foundation's partners.

Today, the company's tests could benefit about 1.1 million cancer patients in the US, including about 1 million with solid tumors and 100,000 with hematological tumors. They include patients with aggressive disease, those who have failed treatment, patients with rare tumor types, and those who have tested negative in other tests. According to Chief Commercial Officer Dave Daly, given the company's average reimbursement of $3,000 to $3,300 per test, this translates to a current US market opportunity of about $3.5 billion.

Over the next few years, the company expects the number of US cancer patients who could benefit from its tests to almost double to 2 million as the overall number of cancer patients increases, more targeted therapies get approved, genomic profiling is more broadly adopted across cancer types and used earlier, and as the company launches liquid biopsy assays. This will increase the addressable US market to about $6.5 billion to $6.8 billion.

In addition, Foundation expects growth from international markets. Over the next year or so, it plans to launch its tests in Israel, Germany, Switzerland, Austria, Brazil, China, and Canada — a list that might still change, Daly said — and will release the tests in one of these countries before the end of this year. In late 2016 and 2017, it plans to launch the tests in Australia, India, other European countries, and maybe additional locations.

Roche, Foundation Medicine's majority stockholder and partner, will be responsible for launching the tests outside the US and will deal with reimbursement, and it has allocated $30 million for the task, Daly said.

Foundation will run the tests at its Cambridge laboratory or at facilities it might establish elsewhere in the world. It is currently evaluating sites in Western Europe and in Asia, including China, he said, adding that the global launch of its tests will be jointly managed by representatives from Roche and Foundation.

International markets will add another 2 million cancer patients who might benefit from its test, translating into a total market opportunity — within and outside the US — of about $9 billion, Daly said, assuming that reimbursement rates outside the US are about one third of those in the US.

But the total addressable market in 2020 could increase by another $3 billion to $6 billion, he said, to between $12 billion and $15 billion, through new monitoring assays that Foundation plans to introduce. For this projection, the company assumed that patients would receive these monitoring tests up to three times a year, and that they would be reimbursed at a rate of $500 per test.

Revenue opportunities from pharmaceutical partners will also grow as Foundation expands its work into drug discovery and the development of universal companion diagnostics. According to Pellini, the total market opportunity from these collaborations could be $500 million.

The company will only capture all these market opportunities, though, if adoption of its tests increases. Daly said the firm has devised several programs to further engage the four stakeholders it has identified for its tests: oncologists, pathologists, payors, and patients.

A new Precision Medicine Exchange Consortium, announced earlier this week, will make it easier for oncologists to integrate molecular information with patient outcomes and for doctors from different institutions to exchange their data. The plan is to expand the consortium from its initial eight founding members to community-based hospitals and community oncology networks, Daly said, and to establish a clinical trial network that will help members and pharmaceutical companies connect. In addition, before the end of the year, the company plans to start a pilot program under which Roche's Genentech will work with consortium members to give them priority access to off-label drugs, provide financial support for those drugs, and help with enrollment in clinical trials.

Through its own program, Daly noted, Foundation Medicine is already helping patients by providing financial support for its tests, and by assisting them in getting access to off-label drugs and clinical trials, if indicated by the test results. "We're not just a test, not just providing a report, we're providing actionability," Daly said. "That's what gets physicians to adopt our test."

Through Roche's Genentech, Foundation Medicine is also getting involved in educating pathologists about comprehensive genomic tumor profiling and recently started training more than 50 individuals for the Genentech Pathology Research Education Program, he said.

In addition, the company just launched GeneKit, a cloud-based software portal that helps pathologists interpret genomic data from targeted next-generation sequencing and hotspot assays. For example, the portal will allow pathologists to reflex to one of Foundation's tests if a cancer hotspot test comes back negative, Daly said. GeneKit can be integrated with electronic medical records and laboratory information management systems, he added.

While the company awaits a coverage decision for Medicare patients, private health insurers are starting to cover its tests for some indications. According to Daly, United Healthcare recently issued a medical policy under which it will start covering molecular profiling for stage IV non-small cell lung cancer patients in October. The policy indicates that the testing lab must be certified by the New York State Department of Health, which Foundation's lab is, setting "a very high bar for validation," Daly said.

The United Healthcare policy referenced material from Foundation Medicine several times, which "is a demonstration that our scientific accuracy and clinical validation are resonating with payors," he said.

Vince Miller, Foundation's chief medical officer, provided an update on new tests the company plans to develop. As reported previously, the firm is in the midst of a multicenter study for its circulating tumor DNA (ctDNA) assay.

In addition, it sees an opportunity for a clinical test that will be based on circulating tumor cells (CTCs), which Miller said would allow for more comprehensive genome profiling than a ctDNA test. Patients who could benefit from a CTC test include those with tumor types in which ctDNA cannot be routinely detected or patients where ctDNA analysis cannot reliably detect key genomic drivers.

Foundation Medicine is also considering developing a blood-based monitoring assay that would detect genomic alterations in DNA from cancer. Such a test may be performed on different platforms and needs to be priced low enough so payors would cover repeat testing in a patient, maybe over several years, he said.

In addition, the company is thinking about developing a universal companion diagnostic, a single assay that would combine all companion diagnostics that are currently available for cancer-related therapeutics. "The markers are already there but studies need to be conducted to give everyone comfort that this is as robust and validated for patient care as the original CDx," he said.

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