Roughly one month after it closed its $45 million acquisition of California-based oncology-testing services provider Oncotech, Exiqon said it remains on track to launch its first microRNA-based diagnostic in the US before the end of the year.
Although the test’s specifics remain undisclosed, Exiqon President and CEO Lars Kongsbak told RNAi News this week that it will replace one of Oncotech’s existing cellular-based extreme drug resistance tests, most likely for colon cancer.
Although it will “not be a very advanced product” since it will target a single microRNA, Exiqon’s first miRNA diagnostic is expected to help demonstrate the efficacy of the company’s technology and its ability to leverage Oncotech’s key assets, which include a bank of more than 150,000 tumor biopsies and related clinical information, as well as a Clinical Laboratory Improvement Amendments-certified facility that will commercialize the test.
With the first test on the market, Exiqon will be able to focus on launching its next miRNA diagnostic, which will analyze the expression of multiple miRNAs, in the US “early next year,” Kongsbak added.
Initially, all of Exiqon’s miRNA diagnostics will be aimed at replacing the majority of Oncotech’s current portfolio of EDR tests, which are designed to help physicians determine which patients will respond to which therapies, according to Kongsbak. In addition to colon cancer, Oncotech markets cellular-based EDR tests for breast, ovarian, and lung cancers.
“Seven out of 10 patients diagnosed with cancer will be prescribed a drug that does not work well or has severe side effects,” he said. As such, “there is an enormous need in the market for better products that can stratify the patients prior to prescribing” a treatment.
According to Kongsbak, cancer drug-resistance testing “is where we have our competencies” given that Oncotech’s tumor bank is built around this indication, Kongsbak noted. “Longer term, we will go more into [cancer] recurrence, prognosis, and maybe … early detection. But short term, that’s not the focus at all.”
By keeping its sights on drug resistance, Exiqon is also avoiding direct competition from another key player in the miRNA-based diagnostics arena, Rosetta Genomics, at least for now.
“To some extent, [Rosetta] is in the same field [as Exiqon] because they are also trying to classify a patient so that the patient can be given the optimal treatment,” Kongsbak said. However, “to my knowledge, we don’t have too many products [directly] overlapping.”
Last week, Rosetta announced that its first miRNA test, which is designed to differentiate squamous from non-squamous non-small cell lung cancer, had been submitted for approval by the New York State Department of Health. Columbia University Medical Center, which collaborated with Rosetta to develop the test, will sell the test nationally once it is approved.
Rosetta also expects to launch two other miRNA diagnostics this year: one for differentiating lung adenocarcinoma from mesothelioma and one for identifying the source of cancers of unknown primary origin.
Still, the similarities between Exiqon and Rosetta’s miRNA-based diagnostic activities may end up pitting the companies against each other — either over market share or intellectual property rights — some time down the road.
According to Kongsbak, Exiqon is “applying some of the same microRNAs [and] … some of the same technologies in order to identify the microRNAs” as Rosetta.
More importantly, he said that Exiqon’s process for drawing diagnostic conclusions from miRNA signatures closely parallels Rosetta’s.
“We don’t have any concrete plans of moving Exiqon. But there is no doubt that we will focus very significantly on the US market because … if you want to be a winner, you have to win the US market.”
“The way we do it is basically the same way as Rosetta is doing it,” he said, referring to Rosetta’s process of classifying tumors using an algorithm constructed as a branched binary tree, which was described last month in a Nature Biotechnology paper (see RNAi News, 3/27/2008).
Kongsbak told RNAi News that the current miRNA IP landscape is murky “as most of the relevant patents have not been issued nor received allowance yet.
“It looks like the patents will cover the specific miRNA sequences, the miRNA biomarker profiles, and the miRNA detection technology,” he noted.
Exiqon has “issued patents worldwide on our [locked nucleic acid]-detection technology, which enables in situ detection of miRNA expression and enhances array and qPCR detection of miRNA,” Kongsbak added. Additionally, the company “has filed patents on miRNA sequences [that were] identified by deep sequencing and subsequent validation, as well as miRNA biomarker profiles.”
For its part, Rosetta “has a very strong intellectual-property portfolio in microRNAs, with two issued and two allowed patents, and more than 60 patents under active examination,” Rosetta CSO Dalia Cohen told RNAi News in an e-mail.
Cohen noted that “technology” related to Rosetta’s cancer of unknown primary test is also included in a patent, but was unavailable to elaborate.
“Regarding potential IP disputes, we believe we have exclusive access to the majority of known human and viral microRNA genes, and that this strong IP position will enable us to rapidly expand our pipeline and advance new microRNA-based diagnostics for a wide range of indications,” she added.
‘Becoming a US Company’
When it first announced its plan to acquire Oncotech in late 2007, Denmark-based Exiqon touted the transaction as key to speeding its entry into the miRNA diagnostics field (see RNAi News, 11/29/2007). At the same time, however, the deal has also brought Exiqon one step closer to becoming a US company.
In addition to its tissue bank, regulatory and reimbursement know-how, and US sales and marketing experience, the acquisition effectively doubled Exiqon’s headcount to about 200.
With a significant portion of its pre-merger staff located at its Boston facilities, which Exiqon continues to expand as it transfers certain of its manufacturing operations out of Denmark, the company is now poised to have at least 60 percent of its employees located in the US, Kongsbak said.
“In many [ways], Exiqon is becoming a US company,” he noted, adding that 70 percent of the firm’s current revenues are generated in the US — a figure that is “going to increase going forward.”
Still, the company hasn’t made the decision to pull up stakes in Denmark. “We don’t have any concrete plans of moving Exiqon,” Kongsbak said. “But there is no doubt that we will focus very significantly on the US market because … if you want to be a winner, you have to win the US market.”
As part of this goal, Exiqon is expanding its US headcount “across the board,” he said. This includes adding staffers to the sales and marketing teams at Oncotech, which will be primarily responsible for the company’s diagnostics operations, and at Exiqon’s Boston location, which handles the company’s tools business in conjunction with the corporate headquarters in Denmark, as well as growing Oncotech’s CLIA laboratory.
By the end of 2008, Kongsbak said that Exiqon expects to have “somewhere between 200 and 250” employees.
This growth, however, won’t come cheaply. Last month, Exiqon reported that it anticipates posting a 2008 loss in the range of DKK 100 million to DKK 115 million ($21.1 million to $24.2 million). This compares with a 2007 loss of DKK 67.8 million.
Revenues for 2008, meanwhile, are expected to be in the range of DKK 140 million to DKK 150 million, which includes sales of both research products and diagnostics from Oncotech’s activities. In 2007, Exiqon’s revenues climbed to DKK 49.5 million from DKK 43.1 million the year before.
Exiqon’s research and development spending last year rose to DKK 29 million from DKK 27.6 million in 2006, helping to push its total operating costs up 82 percent to DKK 124.6 million.
As of Dec. 31, 2007, Exiqon had cash and cash equivalents totaling DKK 355.8 million. The company continues to anticipate reaching profitability by 2011.