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Testing New Risk-sharing Business Model, Biodesix and Aveo Team Up on Drug, Companion Dx Development

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Proteomic diagnostics firm Biodesix and drug developer Aveo Oncology said this week that they are partnering to co-develop and commercialize Aveo's non-small cell lung cancer antibody drug ficlatuzumab and Biodesix's Veristrat as a companion test to predict best responders.

Under the terms of the agreement, Biodesix will fund the first $15 million of the drug development effort with the expenses thereafter split evenly between the two firms. The two will split any profits from commercialization of the drug.

Additionally, Biodesix will be solely responsible for all development of Veristrat, including taking the test through US Food and Drug Administration clearance or approval, and the company will retain all revenues from sales of the test.

The agreement is the first of its kind between a diagnostics developer and a pharma firm, Biodesix CEO David Brunel told ProteoMonitor. Typically, companion diagnostic developers operate with pharma firms on a fee-for-service basis without receiving any stake in sales of the drug itself.

The agreement stems from an exploratory Phase II study Aveo conducted several years ago in NSCLC patients evaluating the effectiveness of the combination of ficlatuzumab – a hepatocyte growth factor inhibitor – and the EGFR inhibitor gefitinib (AstraZeneca's Iressa) compared to gefitinib alone.

In that study, the ficlatuzumab-gefitinib treatment failed to reach its primary endpoint. However, using Biodesix's Veristrat test, the researchers identified a subset of patients who appeared to benefit from the combined therapy.

The study "incorporated a series of biomarkers including Veristrat because we were aware already at that time that Veristrat had been used in various settings with EGFR-[inhibitors]," Aveo CEO Tuan Ha-Ngoc told ProteoMonitor. "So we were intrigued to see if that biomarker would also be helpful in identifying a subset that might respond better to [ficlatuzumab-dirven] HGF inhibition."

According to Ha-Ngoc, roughly 20 percent of the study subjects with EGFR sensitizing mutations were identified by Veristrat as likely responders to the combination ficlatuzumab-gefitinib treatment.

"So both companies' scientists continued to work together and collect samples and do analysis," he said. "And based on that, we see signs that seem to indicate that a subset identified by Veristrat seem to benefit from a combination of ficlatuzumab with an EGFR TKI."

The two firms are now preparing a submission package for the drug and diagnostic to FDA for launch of a new clinical trial. They plan to deliver that package sometime this year, Brunel said.

The deal's unusual risk-sharing structure raises the question of what led the two parties to enter such an agreement. According to Ha-Ngoc, the decision was driven significantly by Aveo's belief that advancing personalized medicine "requires a very close partnership between the therapeutic developer and the diagnostic developer, because the biology is complex and requires the expertise and perspective of both sides."

"Most people do [companion diagnostic development] through arms-length vendor relationships," he said. "But that isn't the same thing in terms of having scientists and engineers sitting around the table with the same mindset."

Brunel echoed these comments, suggesting that "this wall we have between the diagnostic developers and the drug developers really is an artificial wall. We are both trying to understand the very complex biology of cancer, and we really bring the best skills of both companies together to identify the patients who will benefit or not benefit" from a treatment.

Beyond the aims of improving the drug and diagnostic development processes, there are also likely considerations at play that are more immediately focused on the two companies' bottom lines.

Last year, Aveo suffered a significant blow when the FDA rejected its kidney cancer drug tivozanib. The company's stock price plummeted from around $8 per share to below $2 (in trading this morning they were at $1.46 per share), and it laid off 140 workers, more than 60 percent of its staff. The company also this year has seen partnerships with drugmakers Astellas and Biogen Idec end, leaving it without any large pharma collaborators.

Ha-Ngoc denied, however, that the end of these partnerships had led the company to pursue its unusual deal with Biodesix, saying that the HGF inhibitor area was "very hot and has a tremendous amount of interest."

From Biodesix's perspective, the deal perhaps offers an opportunity to shake up a molecular diagnostic business model that many proteomic firms have struggled with as the money and time required for test development has often exceeded initial expectations.

As Paul Beresford, the company's vice president of business development and strategic marketing, told ProteoMonitor in a 2013 interview, many molecular diagnostics investors "hadn't realized it was such a long road to profitability … the business model for diagnostics generally is still being sorted out."

"The development path and bar for companies like Biodesix and their products are really going to look more like the bar for drug companies," Brunel said this week. "So we have to realize that the cost for development and validation on both sides is going to continue to be very expensive and is going to go up for diagnostic companies."

Even with rising diagnostic development costs, however, the potential costs of drug development are still far beyond what a firm like Biodesix might expect to spend building a test. A 2010 Eli Lilly study, for instance, estimated the cost of moving a therapy from Phase I trials to a commercial launch to be just shy of $1 billion (although other analyses have put that figure much lower, below $100 million in some cases.)

Brunel said, though, that the company's investors are up for the ride. Biodesix has raised more than $70 million over five funding rounds and in February secured $20 million in debt financing.

"We have investors that are really committed to the vision we just mentioned, which is that you combine these things together and do these joint partnerships and you are likely to have much better outcomes," he said. "Therefore, they are willing to take some incremental risk to prove the model, and in this case with Aveo we have been able to come up with what we think is a fair split of the benefit. So time will tell, but it’s a risk-sharing model that we have and we're excited about its potential."

Biodesix is privately held, so information on its revenues from Veristrat is not available. However, according to a company press release, it has performed the test on around 5,000 patients since launching it in 2009.

Biodesix's plans to take Veristrat through FDA approval or clearance – which will be required for its use as a companion test for ficlatuzumab – also raise certain questions and challenges.

For instance, the test currently relies on differentiating between the mass spectra of different clinical samples as opposed to identifying and quantifying specific, known, protein analytes. In the past, Biodesix has acknowledged that it has not identified all the analytes underlying the spectra generated by the test, which may be necessary from a regulatory standpoint. For FDA to green-light a diagnostic, the agency requires evidence proving its analytical validity – that the test can accurately measure the analyte of interest – and clinical validity - that the test can accurately predict a patient's outcome

Asked this week, Biodesix declined to say whether it has since identified the underlying analytes but said that it has "invested time understanding the mechanism and the MALDI protein features related to VeriStrat."

Additionally, Veristrat is run on a MALDI mass spec platform, and, to date, FDA has not cleared a mass spec platform for use with a protein biomarker assay. Biodesix may take hope, however, from Bruker and BioMerieúx's success last year in obtaining 510(k) clearance for their MALDI mass spec-based proteomic clinical microbiology platforms.

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