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First Test Launched, Theranostics Focuses on Reimbursements as it Builds Commercial Operations

NEW YORK (GenomeWeb News) – Months removed from the commercial launch of its first test, Theranostics Health is targeting reimbursements as it looks to build a revenue stream for the test.

The Rockville, Md.-based firm launched the TheraLink HER Family Assay at the American Society of Clinical Oncology annual meeting in June, marking the next chapter in Theranostics' commercial build-out.

A 14-biomarker panel that runs on the company's reverse-phase protein array platform, TheraLink is directed at breast cancer and measures the total amount of HER2 protein as well as EGFR and HER3. Additionally, the test determines whether the proteins are activated and measures three pathways that play "key roles in breast cancer," Theranostics President and CEO Glenn Hoke told GenomeWeb Daily News last week on the sidelines of the 32nd Annual JP Morgan Healthcare Conference in San Francisco.

To date, the commercialization of TheraLink has been handled largely by Med Fusion, with whom Theranostics reached a market development agreement in August 2012.

As it seeks expanded adoption of the test, he added, a primary goal for 2014 will be to secure reimbursement for TheraLink. The test is currently covered under three CPT codes for about $350, although in practice TheraLink is not reimbursed. Theranostics is working to get a molecular diagnostic code from the Centers for Medicare and Medicaid Services, and with a list price of $2,500, the company anticipates CMS will set reimbursement at about $1,300, Hoke said.

Additionally, the company has begun the process to secure reimbursement from private payors and has hired Quorum Consulting to help in those efforts. Theranostics, Hoke said, has run retrospective samples toward that goal and it plans on conducting clinical trials.

He declined to disclose revenue figures for TheraLink, but said that until reimbursement becomes a reality, test revenues will remain limited. In the meantime, Hoke said the short-term opportunity for TheraLink could be in the service business for drug firms, similar to what Foundation Medicine has created for its FoundationOne test.

Theranostics currently has 26 pharma clients, including six of the top 10 firms, such as Genentech and Pfizer. "Our thought is if we could get our test to be used very similar to Foundation Medicine where we would offer to [pharma our test] for a fixed price, not go through the CPT code ... [and] they're running a clinical trial, I can get enough flow to start getting revenue off it," he said. "We see that as the next stage for the effort to get more involved in the clinical studies while we go and get our CPT codes."

TheraLink is used to predict whether individual patients will respond to certain breast cancer therapies, and in addition to measuring HER2, EGFR, and HER3 levels, it measures three important breast cancer pathways — the JAK-STAT pathway involved in inflammatory breast cancer; the MAP kinase pathway, a proliferative cell-division pathway; and the mTOR pathway.

The mTOR pathway, Hoke noted, could be a particularly important opportunity for Theranostics.

Novartis' Afinitor (everolimus) was approved by the US Food and Drug Administration in July 2012 for use in combination with Pfizer's Aromasin (exemestane) as a treatment for certain postmenopausal women with advanced hormone-receptor positive HER2-negative breast cancer. Afinitor has become a standard of care in such patients who are not responding to anti-hormone therapies, Hoke said, but while the drug has shown "great benefits," there is no test on the market for determining which patients have an active mTOR pathway and who may respond to Afinitor.

"So we see that as a unique piece of this particular test," Hoke said.

In all, TheraLink measures the activation of 10 marketed drugs, including Herceptin (trastuzumab), Perjeta (pertuzumab), as well as Tykerb (lapatinib) and Vectibix (panitumumab).

The underlying technology for TheraLink is a spotted array in which a patient's sample is interrogated with a primary antibody and then with a secondary antibody. The laboratory-developed test is run out of Theranostics CLIA-certified lab in Rockville.

But TheraLink is not a companion diagnostic, Hoke said, as it is not married with any one specific drug, but rather with multiple drug targets. Med Fusion, through two of its founders, McKesson and US Oncology, markets the test directly to McKesson's network of healthcare providers, as well as providers in the Texas Oncology network and the Baylor Healthcare System.

The Med Fusion agreement covers about 30 percent of US oncologists, and Theranostics now has in its sight the remaining 70 percent, which are largely concentrated in big hospital systems. Hoke said that the firm has a large clinical study being performed at Sanford Health in South Dakota, who along with Scripps Health in San Diego, is comparing different molecular diagnostic tests, including tests from Genomic Health and Foundation Medicine, as well as their own assays and TheraLink, in order to determine which "provides the best guidance for treating breast cancer patients."

The pilot study is targeting about 25 to 30 patients and is estimated to be completed during the summer. Depending on its success, the study could progress to an expanded cohort.

In addition to breast cancer, the TheraLink assay has applications for lung cancer and colorectal cancer, and in 2014 Theranostics will move the test to those disease areas, Hoke said. It also has under development a test with an additional 15 analytes covering receptors such as ALK that is slated for launch in 2015.

Additionally, the firm is working on a pancreatic cancer panel for launch at the end of this year.

Theranostics was founded in 2006 by Emanuel Petricoin and Lance Liotta with about $5 million in funding. By the time Hoke arrived as president and COO in 2009, it had almost run through all of its funding, he said, and the first order of business was to build up its service revenue. Since its founding, the company has raised about $8.5 million in equity, while its pharma service has taken in about $11.5 million in revenues, he added.

The company now is eyeing a $10 million raise, which would go toward building its infrastructure and further commercializing TheraLink, as well as developing additional tests, Hoke said.