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Oncocyte Provides Post-Mortem on DetermaDx Failure, Describes Renewed Focus on Remaining Assays

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NEW YORK – Diagnostic firm Oncocyte made a surprising announcement this June that it was discontinuing efforts to bring its blood-based lung cancer detection assay, DetermaDx, to the clinic, after more than five years of development and having reached the final stages of clinical validation.

Moving forward, the company will be focusing on driving adoption and revenue for its two commercially available products: DetermaRx and DetermaIO, which both resulted from acquisitions made in the last nine months.

During a call with investors discussing the firm's Q2 earnings this week, OncoCyte executives discussed the decision to jettison what had continued to be Oncocyte's sole product as recently as last November when the company shifted strategy to begin acquiring other near-clinical stage assays, resulting in the rapid launches of DetermaRx and DetermaIO.

DetermaDx (originally DetermaVu) had a rough path through validation beginning in 2017, when Oncocyte initially said it was confident that it would be able to launch the assay before year's end following a final CLIA validation study.

In November that year, the company announced that it was delaying this planned launch to 2018 due to issues with that clinical validation, in which "inconsistent analytic results" attributed to a bad lot of consumables forced a reanalysis.

In early 2018, Oncocyte stepped back even further, deciding to also reevaluate the DetermaDx test platform, performing a cross-platform comparison. In addition to switching from the Nanostring nCounter to a next-generation sequencing strategy, the platform study also ended up uncovering new predictive markers, which prompted the firm to start over from scratch with an altered panel incorporating these new signals.

As of late 2018, the final clinical validation of the new rejiggered DetermaDx was slated for 2019, and in January 2019, company executives said Oncocyte had seen strong performance data from its latest internal validation using a population-reflective, blinded sample cohort. But on June 26, 2019 the company said its validation efforts were again taking longer than expected, and that the test likely wouldn't be ready for launch by the end of that year.

Ronald Andrews was appointed as the firm's new CEO on July 1, 2019, replacing the outgoing Will Annett, and he expressed confidence at the time in the newly extended timeline for DetermaDx, saying that the company had isolated the cause of variability in its R&D validation studies and was implementing new QC protocols to ensure no further impact on test reproducibility.

As of March 2020, Andrews said Oncocyte had finished its CLIA lab validation of the blood-based test and begun a clinical validation that would support a publication in the scientific literature and a bid for CMS coverage. But when the firm reported the completion of the clinical validation study at the end of June, it said that the performance of DetermaDx did not meet the predetermined endpoints, namely a statistically significant improvement over and above the clinical factors currently used by physicians to aid the diagnosis of intermediate-risk lung nodules.

During the firm's call with investors this week, Andrews said that Oncocyte has spent the period following its announcement doing a "deep dive into each component of the trial," aimed at salvaging aspects of the assay that might provide some value.

"We have used independent third-party experts for every major area of the testing process to ensure we effectively understand the results and identify any components of the panel that may have value to other companies in the blood-based screening market," he said.

"Based on results of our autopsy, we were able to confirm biologic activity in a subset of the larger panel that made up the Dx product. But we were unable to power the endpoint sufficiently with our algorithm using this smaller marker set," he added.

That said, Andrews believes this subset of RNA markers still may be of interest to other companies pursuing a position in the emerging cell-free DNA and DNA methylation-based cancer screening market.

In addition, he said the company has seen interest in using the IRENE biobank that was used to develop DetermaDx and includes over 3,000 blood samples with matched patient outcome data.

"The decision to discontinue our work on DetermaDx was not an easy one. But when we balance the ongoing costs of the program with the time to market and risk in the product, it became clear that reducing our burn and focusing on our two commercial products was in the best interest of all stakeholders. So, while we've made the decision not to continue to invest ... given the risk profile, we will make efforts to pursue opportunities to monetize the marker set and our IRENE Biobank," Andrews said.

Ending its efforts around DetermaDx will also help the company focus financial and other resources behind the two assays that have resulted from Oncocyte's recent acquisitions.

DetermaRx — which uses tumor gene expression data to differentiate patients at high risk for lung cancer recurrence, who may benefit from adjuvant chemotherapy post-surgery, from those at a lower risk who might avoid it — recently received a final local coverage decision from its Medicare administrative contractor Noridian, which goes into effect in August and establishes Medicare coverage for approximately 70 percent of eligible patients nationwide.

On the call, Andrews and other executives mentioned some hurdles they have faced in discussions with CMS around the pricing for the test, which has not yet been set, as well as with Noridian regarding payments for tests performed prior to its final LCD, but after an identical LCD issued by Palmetto.

Despite these points of contention, Oncocyte  will begin to receive payments for the assay, after the August effectiveness date. The company has now performed the test on more than 100 clinical samples and Andrews estimated its total volume for the year could be around 250.

Andrews also spent a significant portion of his update discussing the company's other remaining test, DetermaIO, an immunotherapy response predictor— currently for research use only — that it brought on via its acquisition of Insight Genetics this January.

The company believes that the testing market for appropriately identifying patients who will respond to cancer immunotherapy could grow to over $5 billion dollars globally by 2026. "This tremendous and growing market is why Insight genetics was such an important and timely acquisition for us," he said on the call.

Oncocyte has said previously that it believes DetermaIO could be a better predictor of immunotherapy response than existing immunotherapy predictors like PD-L1 biomarker assays and tumor mutational burden, or TMB.

Andrews argued that ahead of any clinical commercialization, the test is already an attractive RUO tool for pharma companies seeking to expand checkpoint inhibitors into new indications or expand their potential market beyond PD-L1-positive, MSI-high, or TMB-high patients.

Toward developing clinical use cases, the company plans to put particular focus and investment toward advancing studies of DetermaIO in triple negative breast cancer, and Andrews said during that call that the test "has already been selected as the predictive biomarker for a checkpoint inhibitor clinical trial for triple negative breast cancer in the early stage, neoadjuvant setting where PDL-1 failed to accurately identify responders."  He declined to provide additional details of the trial and drugmaker involved.

Oncocyte also believes that it can position itself as a potential companion diagnostic partner for newer immunotherapies designed to complement checkpoint blockade and overcome a suppressive tumor microenvironment.

"There's potential to convert a cold tumor into a hot tumor with the application of combination drug regimens, [and] there are also several companies interested in utilizing DetermaIO to identify the cold tumors that could then be suitable for such combinatorial trials. Assuming success, OncoCyte would take IO through the regulatory process as the companion diagnostic for these drugs," Andrews said.

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