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Sera Prognostics' Deal with LabCorp Brings Potential Risks, Rewards

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NEW YORK (GenomeWeb) – Sera Prognostics said this week that it has signed a licensing deal with Laboratory Corporation of America for its PreTRM test for predicting risk of preterm birth, taking a commercialization route traveled by several other proteomics firms, with mixed success.

Companies like Vermillion and Somalogic have in the past partnered with large reference laboratories to help bring their proteomic tests to market, but these deals have in some cases failed to deliver on initial expectations, some say due to a lack of the focus and specialization within these large laboratory companies that is required to drive adoption of new molecular diagnostics, particularly in a still nascent field like clinical proteomics.

Perhaps most notably, Vermillion several years ago ended its licensing agreement with Quest Diagnostics for its OVA1 ovarian cancer test after determining that the company was not well suited to selling that product. At the time, Vermillion's then-CEO Thomas McLain suggested that the sales support needed to drive adoption of the test "is not typical of a reference lab sales force, which generally is advancing a menu of tests and trying to get people to purchase tests on volume."

In the case of Somalogic, the company licensed tests including a pancreatic cancer diagnostic and a lung cancer diagnostic to Quest, but the companies have not yet brought either of those tests to market.

A number of early proteomics diagnostics developers, including now-defunct Correlogic and the Yale University team behind the failed ovarian cancer test OvaSure, also chose to license their products to large clinical reference labs.

Sera Chairman and CEO Gregory Critchfield suggested, though, that LabCorp's strong position in noninvasive prenatal testing and women's health more generally makes it a good partner for the PreTRM test.

The agreement, he noted, "allows Sera to leverage a nationwide sales force and network of patient service centers for specimen collection." He added that Sera will have its own sales team working in collaboration with LabCorp to drive doctor awareness and adoption of the test.

Financial terms of the deal remain undisclosed, including how Sera would receive payment from LabCorp for the test. Critchfield also declined to specify the duration of the deal, noting only that it is a multi-year agreement.

LabCorp is also making an investment in Sera, leading its $40 million Series C funding round. Sera said that it will use these funds to collect clinical data to support reimbursement and expand commercial availability of PreTRM nationwide.

While history, particularly that of the Vermillion deal, suggests that caution is warranted regarding agreements like that between Sera and LabCorp, sales patterns of OVA1 since Vermillion terminated its agreement with Quest indicate that the test itself might have been more the issue than any particular sales strategy.

OVA1 sales volume has remained essentially the same since Vermillion began offering the test through its Aspira Labs subsidiary last year. In fact, the company has recently begun considering new deals with outside labs to help drive sales. On its Q4 2015 earnings call, Vermillion President and CEO Valerie Palmieri said the firm was exploring agreements with large regional reference laboratories.

She noted, however, that the company was "not looking to repeat Quest," adding that Vermillion would want as part of any such arrangement to "implement specialized training programs" for its partners.

Last year, one of Sera's competitors, NX Prenatal, which is similarly developing a mass spec-based proteomic test for preterm birth, inked a deal with genetic testing firm NxGen MDx that could be seen as a middle ground between entering into an agreement with a large clinical reference lab like LabCorp and shouldering the burdens of commercialization alone.

With its focus on genetic carrier screening, NxGen MDx has accounts and contacts with the same sets of physicians and patients that NX Prenatal aims to reach with its test.

"They have full commercial capabilities from all of the lab operations through to the commercial infrastructure, which includes everything from sales folks all the way through to relationships with payors and all the billing capabilities and everything you need to have a successful launch," NX Prenatal CEO Brian Brohman noted upon announcing the deal.

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