NEW YORK (GenomeWeb) – Integrated Diagnostics said this week that it has obtained $47.25 million in funding, $30.25 million from the closing of its Series B round and $17 million in non-dilutive debt financing from Life Sciences Alternative Funding.
The proceeds will be used primarily for commercialization of Indi's proteomic lung cancer test, Xpresys Lung, supporting an expansion of the company's sales staff and clinical infrastructure as well as efforts to obtain reimbursement for the test, Indi CEO Albert Luderer told ProteoMonitor.
The money will also fund additional test development, including ongoing research into central nervous system conditions such as traumatic injury and multiple sclerosis.
The Series B round was led by Baird Capital and joined by existing Indi investors InterWest Partners and the Wellcome Trust and new investor Alexandria Venture Investments, the strategic arm of Alexandria Real Estate Equities. It follows the company's $30 million Series A round.
As part of the financing, Michael Liang, partner with Baird's venture capital group, has joined Indi's board of directors.
Indi launched Xpresys Lung last October out of its CLIA lab. Intended to aid doctors in identifying lung nodules detected via CT scans as likely benign, Xpresys uses multiple-reaction monitoring mass spec to quantify the levels of 11 proteins in patient blood samples.
According to company data, Xpresys can rule out an individual patient's lung nodule as being cancerous with a negative predictive value ranging from 84 percent to 98 percent. The test is intended for use in patients 40 years or older and with lung nodules ranging from 8 mm to 30 mm in size.
With the test launched, Indi's focus has now shifted to commercialization. The company has since October expanded its sales force from five to eight people and plans to be at 12 by June, Luderer said.
It has also devoted significant resources toward obtaining reimbursement, he noted, adding that with the new funding it plans to "double down" on these efforts "with a very strong [Centers for Medicare and Medicaid Services] push."
"The biggest pitfall, kind of the bane of a molecular diagnostic company, is how long do you stay in this period of time where you are selling a lot of tests and not getting paid for them," he said.
With this challenge in mind, Luderer said, Indi has been consulting with CMS and private payors for several years in advance of the test's launch, incorporating their input into the design of the company's clinical trials.
"Because, at the end of the day, if they view our trials as adequate and meeting a need that is being unaddressed in the marketplace today, then we are going to get a faster reimbursement decision," he said.
He added that the company has had a favorable reimbursement decision from at least one payor and is currently being paid for tests. He declined to offer specifics, but said that he hoped within the next three to six months to "announce a major national contract and coverage decision."
Baird's Liang noted that Indi's progress on the reimbursement front was important to the firm's attractiveness as an investment.
While "many companies we see in diagnostics decide to launch and worry about payment later," Indi "had a favorable medical coverage decision prior to its initial product launch," he told ProteoMonitor. "We believed the reimbursement strategy established by Indi was sound and well thought out, and they are on their way to expanding coverage."
Indi is also enrolling patients for a 33-center clinical validation trial of the test that it hopes will help its commercialization efforts. The company has enrolled just under 500 patients and aims to enroll around 1,000 by the end of the year. It also recently submitted for peer-review publication the results of the clinical validation study used in support of the test launch, a multi-site retrospective study testing the panel against nearly 500 patient samples.
Indi is also preparing a publication containing analyses of current clinical practice regarding the treatment of lung lesions like those targeted by the test as well as a pharmacoeconomic analysis, with the aim, Luderer said, of further demonstrating the potential benefits of Xpresys Lung.
The analysis will "show to a lot of physicians that the state of practice is really poor" with 30 percent to 40 percent of patients who undergo surgery to biopsy a lesion detected via CT scan, having a benign nodule, he said.
Additionally, the company plans as part of future prospective trials to collect clinical utilization data to determine how the test is actually being used by physicians. Such data, outside physicians have suggested to ProteoMonitor, will be key to demonstrating its utility.
For instance, in an interview at the time of the test launch, Howard West, a thoracic oncologist at Seattle's Swedish Cancer Institute, raised doubts about the test's ultimate effectiveness in helping patients avoid unnecessary procedures.
The test's low positive predictive value could, in fact, lead to higher numbers of follow-up scans and invasive procedures, rather than fewer, he suggested.
Indi has been quite clear that the Xpresys test is intended only to rule out the possibility of cancer, with indeterminate or positive results not to be taken as indicating that a nodule is cancerous. "The problem is," West said, "that's not the way the world works."
"If you have somebody who has a nodule and the test comes back as anything other than negative, I think it is going to be human nature that the patient or doctors are going to potentially be far more likely to escalate the work-up and now do biopsies when they otherwise wouldn't have, or do scans more frequently than they would have," he said.
Given this possibility, the test "clearly needs to be validated in a broader setting prospectively to clarify if it leads to less anxiety and fewer unnecessary invasive studies and imaging studies," West said.
Comments from Peter Mazzone, a pulmonologist at Cleveland Clinic who is involved in collecting samples for one of Indi's clinical trials, noted as well that the test might realistically be applied only to a small proportion of the patients that technically fit within its use guidelines.
For instance, he said, he would consider ordering the test in the case of "a patient who is otherwise somewhat ill and may not do well with a biopsy."
On the other hand, "if it's a very healthy person [in] whom I don't want to miss a cancer regardless of what the blood test tells me, then I probably wouldn't order it," he said.
In total, Mazzone estimated, less than 10 percent of his patients fit the criteria under which he would consider ordering the Xpresys test.
While Indi obviously hopes the test is used for as wide a swath of the intended population as possible, Luderer said the company's business model would work with the sort of patient numbers Mazzone cited.
Noting that the approximately 600,000 US patients that fit the test's use criteria represent a roughly $2 billion market, Luderer said that the company needs only "five to 10 percent of those patients."
Indi has not provided pricing information for the test, but in a past interview Luderer said it was aiming for pricing similar to Genomic Health's Oncotype DX, which currently lists for around $4,000.
Beyond its potential clinical usefulness, the Xpresys test is also significant in that it is the first multiplexed proteomic test to go to market using MRM-MS on a triple quadrupole instrument, something Liang also cited as a driver of Baird's interest in the company.
Liang said that while he has "had experience before in proteomics diagnostics platforms that didn’t pan out" and that previous attempts at "making MRM-MS into a commercially viable technology" for clinical proteomics have failed, Indi has "benefited from these attempts."
"They were able to build a highly reproducible clinical platform off MRM-MS," he said. "We diligenced the technical aspect of Indi thoroughly and believe that when dealing with multi-variate protein analysis, MRM-MS is perhaps the only platform able to work well at low [nanogram] levels and on a consistent basis."
With the new funds, Indi, Luderer said, aims both to add additional equipment to keep up with test volumes – the company, he said, is currently planning an expansion of its CLIA lab to accommodate rising demand – and to refine its processes to reduce cost and turnaround time.
The test uses an Agilent 6490 triple quad instrument linked to standard flow HPLC. As currently constituted, Indi's clinical platform can process around 1,000 samples per month using between four and six mass spec instruments. Each sample takes roughly 10 days to process, with the majority of that time taken up by sample prep, including an overnight trypsin digestion step. The LC-MS portion of the workflow takes roughly 30 minutes per sample.