NEW YORK (360Dx) – In the diagnostics space there has long been a trend of firms adding molecular technologies for infectious disease testing either through internal development or by acquisitions.
The beginnings of molecular diagnostics may date back some 30 years, but the competition to develop diagnostics technologies based on molecular methods has reached fever pitch only more recently. Companies have sprung up using next-generation sequencing and PCR-based methods, as well as other molecular technologies, to develop diagnostics that have the potential to detect disease more quickly and accurately than traditional diagnostic methods.
At the same time, though, older methods show no signs of fading away either in the near or far term. While there is potential for cannibalism, early adopters of molecular technologies, as well as companies that have brought them on more recently, note that there can be synergy in having both molecular and traditional diagnostic methods in their product portfolios.
In interviews with four of the largest companies operating in the infectious disease MDx and Dx spaces, executives said that rather than replacing traditional diagnostics, molecular technologies exist with the older technologies synergistically. The trick is in achieving a balance between the two kinds of technologies, and developing products that meet the needs of a company's customers.
And while NGS is attracting most of the attention in some disease areas, notably cancer, in the infectious disease space, it has not yet shown that it's quite ready for widespread use for diagnostic purposes. For now at least, most molecular diagnostics in infectious diseases still rely on PCR methods, the granddaddy of MDx technologies.
An historical perspective
Indeed, the use of molecular technologies in the diagnostics space may have been ushered in when Kary Mullis developed the polymerase chain reaction at Cetus Corporation in 1983. Eight years later Roche acquired the rights and patents to the PCR process from Cetus, making it one of the earliest adopters of molecular methods for diagnostic purposes.
At the time, some said PCR would never work for diagnostics, or that it would never be adopted because it was too complicated or too expensive, Roche Chief Operating Officer for diagnostics Roland Digglemann said in an interview. "And here we are 30 years later; PCR is still here and its the gold standard for molecular tests," he said.
The decision to make this early and daring jump was strategic, he said, and was driven by dual desires to stay at the forefront of innovation and to best serve customers and patients.
Roche introduced the first PCR tests — the Amplicor Chlamydia trachomatis and Amplicor HIV-1 tests — for clinical diagnostic use outside the US in 1992. The following year the CT test became the very first PCR-based test to be approved by the US Food and Drug Administration.
The nucleic acid amplification CT test offered a "dramatic increase in sensitivity," early user Charlotte Gaydos at Johns Hopkins University recalled in an email — from 60 to 85 percent in culture and enzyme-linked immunosorbent assays, respectively, to upwards of 95 percent with PCR-based testing. The higher sensitivity may have enabled advances in screening, as well. Gaydos published an evaluation in 1993 saying Roche's test demonstrated high sensitivities and specificities in the urine of symptomatic and asymptomatic men. This was at a time when screening of asymptomatic males using culture was not done because of the trauma and inconvenience of the urethral sampling required.
Decades later, Roche's strategic adoption of PCR-based technologies has paid off, according to Digglemann. "We enjoy healthy market leadership — above 30 percent in molecular — and that holds true for the US; I think that is a function of being in early and then continuing to follow the science," he said.
Another early adopter, and for a while a co-developer of molecular technologies, was BioFire, previously known as Idaho Technology and now part of BioMérieux. BioFire pioneered PCR instruments and chemistries in the early 1990s and it co-developed the LightCycler platform with Roche.
"PCR was a brand-new technology that we thought had a lot of potential, and I think at Roche they made the same calculation," BioFire CEO Randy Rasmussen said in an interview.
The field "was pretty wide open, the instrumentation wasn't very good, the chemistry wasn't very well developed, so it was one of these new fields that opens up, and it just seems like there [are] opportunities in every direction," he said.
More recently other players, including Alere and Quidel, which had been traditional diagnostics manufacturers, also joined the molecular party after it became clear that there were benefits to doing so.
Quidel's decision came from a 2009 strategic planning meeting at the company during which the speed and cost of molecular technologies were highlighted as barriers to use, company President and CEO Douglas Bryant said in an interview. But company officials also knew that someone would find a way to address those limitations. "And why not us?" he said. At the time, the firm also outlined a new emphasis on point-of-care technologies, and quickly developed its Sofia platform for rapid fluorescent immunoassays.
The Quidel approach to molecular was to collaborate to get access to helicase-dependent amplification technology — an isothermal nucleic acid amplification method — via licensing and a co-development agreement with BioHelix. Quidel currently has 36 scientists dedicated to the firm's molecular strategy in its R&D and clinical and regulatory teams, Bryant said.
Alere, meanwhile, began gathering enabling technologies for molecular in 2010, based on an assessment of the market dynamics similar to Quidel's, said Alere Vice President of Global Marketing for Infectious Disease Steven Henn. "We were motivated by the market's increasing desire for higher performing rapid tests, while diagnostic testing continued its trend to move from the traditional centralized lab setting closer to the point of care," he said. Alere obtained its molecular technology, in part, from German firm Clondiag.
Synergies between MDx and Dx
Concerns about cannibalization between immunoassays and molecular diagnostics are commonly raised by analysts on earnings calls, and this is especially the case when a firm markets assays of different modalities for the same target.
Yet companies seem to agree that there is a purpose, and even a benefit, to offering customers both molecular and traditional options.
Quidel, for example, offers influenza testing in both molecular and immunoassay formats and a large proportion of the firm's revenue remains tied to flu testing. Yet, "Every solution and technology has both capabilities and limitations," Bryant noted.
Influenza testing is a good example of the complexity of the in vitro diagnostic market, and highlights how workflow is a key factor underlying the market's need to have different technologies available.
"When workflow is patient-driven, as it is in a physician's office or in an urgent care center, time to result, ease of use, and connectivity are important," Bryant said. For these environments, Quidel has developed a new immunoassay platform, Sofia 2, that can read out positive flu cases in as little as three minutes with data sent automatically to the firm's cloud.
In settings where the workflow is sample-driven, such as in labs, molecular methods that can be run on any swab type and from any type of viral transport media offer cost-effective confirmatory-level performance, Bryant said, noting that the firm's Solana instrument is designed for these instances.
Finally, when cost and time to result are less important but influenza may not be the only respiratory pathogens, larger panel assays are often useful, particularly with hospitalized patients, he said.
"Historically, the difference in performance, particularly with sensitivity, between PCR and visually read rapid point-of-care assays for infectious disease pathogens has been dramatic," Bryant noted. But the difference between PCR and the newer immunoassays that run on instruments is far less pronounced, especially when performed directly on swabs, and particularly on those taken from pediatric patients who are very often highly viremic, with low cycle threshold in PCR-based tests indicating abundant virus. However, if the patient sample is stored in viral transport media before being sent to a lab for testing, the performance of most molecular methods will often be better than immunoassay, and that performance difference should be considered, Bryant said.
Thus, "Having MDx, rapid immunoassays, and cell-based technologies enables us to address almost any customer's performance, cost, and workflow requirements … in almost any setting," he said, adding, "Our conversations with customers are more about what they need, and less about the benefits of a specific technology."
Alere's Henn agreed and noted, "In its current form, MDx is not the most appropriate approach for every infectious disease diagnostic need," and that the firm "continue[s] to invest in both enhancements and new disease applications of traditional rapid diagnostics, as they are often the most suitable solution."
Taking this synergy one step further, Digglemann said Roche is working to combine molecular technologies with other forms of diagnostics.
For example, the firm has been developing the Roche Blood Safety Solution, a "cross-portfolio synergistic solution" for blood and plasma screening under its Cobas brand that links molecular testing on the Cobas 6800 and 8800 to serology with the Cobas 6000 or 8000, so labs "can do both nucleic acid testing and serology in one go," Digglemann said.
Roche also sells cross-portfolio products combining PCR, tissue-based immunohistochemistry, and immunoassays in the areas of oncology, virology, and women's health.
Although one reasonable take might be that molecular technologies are superior and will gradually dominate the diagnostic testing market, Digglemann begs to differ.
"Antibody testing will always be faster and more inexpensive than a molecular test due to the complexity [of molecular methods] ... I think the customer will make the decision, early on, what he needs, and in many cases we see customers increasingly needing both answers," he said. "I think things are starting to move much closer together."
BioFire's Rasmussen said he also believes that molecular technology and more traditional assays will remain forever wedded.
For example, traditional microbiology has been used for 200 years, Rasmussen said, and the technology continues to improve. "I think it will always be a useful part of diagnostics — there's nothing like that final phenotypic determination that you have the bug that you think you have, and that the drug that you're thinking about using is effective against it. In the end you can't beat that."
He said that customers are fitting microbiology and molecular systems together, such that they take advantage of the speed of molecular but also have traditional microbiology as a backup to make sure that, in the end, the answer is correct.
Ultimately, many customer decisions will come down to health economics, Alere's Henn said, and the cost of molecular diagnostics prohibits their indiscriminant use.
"Instead, we have to be thoughtful to deliver the molecular capability where its properties will be most valued by health systems throughout the world," he said. Unlike Roche and BioFire, whose molecular diagnostics systems tend to be based in hospital labs, Alere's MDx focus has been on point-of-care. "This means targeting disease burdens that require a high degree of accuracy, rapid results, and the ability to perform the testing in a non-traditional setting," Henn said.
Alere has, therefore, pushed its molecular testing toward applications such as influenza testing in developed markets and HIV testing of newborns in sub-Saharan Africa. "By focusing on solving these important clinical challenges where molecular delivers differentiated value, we don't have to concern ourselves with the tension that would normally arise from marketing competing technologies," Henn said.
But just offering a menu of molecular and traditional platforms is only part of the goal: After a firm has built the tools, how does it sell the right platform to the right customer? For some, the answer is to use a single sales force. For others, it's to split sales by technology and customer type. And for some, it's to vary these approaches by region.
Quidel has a large group of salespeople actively promoting both its immunoassay and molecular diagnostic products, but this is supported by smaller groups that specialize in MDx and specialty or research products, Bryant said.
Roche sells into some countries using only a single sales force, "because that's what the customers demand," Digglemann said. These tend to be countries with large, integrated services that buy with tenders, or government requests for bids from vendors. "We also have countries where we have a mix, for instance a combined molecular with tissue [sales force] but then the central labs separate — it really depends on the market structure and the customer needs," he said.
In the US, Roche divides its sales force into molecular and centralized laboratory services, with private labs considered distinct from hospital labs, Digglemann said. Both use serology and molecular testing, but in different ways and with different volumes, and often big hospitals have completely separate labs for molecular diagnostics versus serology and antibody reflex testing. Roche also has a large blood bank and plasma fractionator customer base, and this encompasses both molecular and serology testing.
BioFire, meanwhile, is the primary molecular component of BioMérieux's business, and the FilmArray technology it manufactures is much more distinct from its traditional testing.
"When you're selling blood culture, you don't have to go into the hospital and convince them that blood culture is a useful technique that they need to add — it's a really kind of a different sale," Rasmussen said. Thus, there are two separate sales forces for molecular and microbiology at the firm, with different training programs to develop sales skills and knowledge bases.
However, a major appeal for BioFire in the BioMérieux acquisition was the ability to connect with a worldwide sales force. "If you're a small US company like we were, your international sales are almost all through distributors [and] there are challenges getting them to pay attention to your product and getting them trained properly," Rasmussen said, adding, "You just don't get the sort of love and attention from a distributor that we get from our colleagues inside BioMérieux."
He said the firm also gets sales people together, and "We're aware of each other's products, and everybody has an incentive to sort of keep an eye out." For example, if a salesperson is visiting a site to sell a mass spec instrument, they might note whether there is a FilmArray there. If not, they can ask whether the customer would be interested in a follow-up visit. "Having that broad net is also a big advantage."
While molecular technologies may be making inroads into the diagnostics market, MDx revenues still comprise only a minority of total revenues for firms operating in both the molecular and traditional Dx spaces.
For Quidel, molecular assays and platforms make up around 5 percent of its business, although the firm forecasts this will grow to 25 percent within the next five years. Alere's molecular business is also a "small, yet substantive portion" of the company's overall infectious disease business, though Henn did not provide specific details. "However, our point-of-care molecular platforms, the Alere i and Alere q, represent one of the fastest growing segments of our entire portfolio," he noted.
About 18 percent of Roche's sales currently are in molecular diagnostics. BioFire's Rasmussen estimated that molecular sales account for between 10 and 15 percent of BioMérieux's total sales, "a small but growing proportion," of its overall business. BioMérieux reported revenues of €2.10 billion ($2.24 billion) in the most recent quarter, of which FilmArray sales contributed €249.0 million.
But growth in molecular has not come without some challenges for any of these firms.
For example, Roche added a point-of-care platform to its portfolio two years ago. Development of the Liat instrument, initially via acquisition of the technology, was driven by technical and scientific advances in PCR-based testing that weren't possible until recently, Digglemann said. The firm viewed the technology as complementary to its existing portfolio, but a major technical hurdle was the ability to "offer lab-like performance," such that the system could be used with confidence at decentralized sites. Now, Roche is also meeting the challenges of ramping up manufacturing and penetrating the market.
"To some extent you're selling [to] the same hospital, but you will use the instrument on the wards or in a decentralized setting, and to the other extent, we have the CLIA waiver, so we can go into a completely different market, where we, of course, also need to target different customers," Digglemann said.
Alere and Quidel also face the same challenge of reaching the CLIA-waived market with molecular testing, and to date no firm has yet reported massive uptake for POC molecular in this space.
Quidel has also experienced a "lack of brand strength in the molecular category," Bryant said. The firm, overall, has a number of strong brands, such as QuickVue and Sofia in the immunoassay arena and diagnostic hybrid products like ELVIS and D3 Ultra in clinical virology. "Lyra, AmpliVue, and Solana are far less known and that's a challenge," he said. "What we need is a home run product that creates awareness of Quidel's molecular capabilities and strengths — perhaps one of the Solana assays does that for us."
Still, in terms of growth in the next three to five years, Quidel expects that Solana, with the ability to run 12 molecular assays per hour and a low total cost of ownership, will be one of the major drivers of the company's revenue growth.
Even with the challenges, though, companies believe that a diversified technology portfolio will pay off in the long run.
"Thinking … from the customer's [perspective] — what does the customer want?" Digglemann said. "I don't think the customer wants to go with very different companies for different types of analyses — he would increasingly like to buy from one," because then the customer just has one partner to talk to, he said.
His firm calls this a "One-Roche" approach, and he noted that the market synergies and increasingly combined sales forces also expand opportunities. Integrating solutions, particularly molecular and more traditional lab testing, is a key, Digglemann said. "I think that's really the future."