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Foundation Medicine Secures Z-Code ID as Test Sales Rise; Aims to Develop NGS-based CDx with Clovis

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NEW YORK (GenomeWeb) – Foundation Medicine said last week that orders for its NGS-based tumor profiling tests — FoundationOne and FoundationOne Heme — continue to rise, both among the academic medical community as well as among community oncologists. It has also received unique identifiers for its tests from the online test registry McKesson Diagnostics Exchange, which it said would help in obtaining reimbursement for its tests.

In addition, the firm has expanded on an agreement with Clovis Oncology to develop a next-generation sequencing-based companion diagnostic for the PARP inhibitor rucaparib, for which it will seek US Food and Drug Administration premarket approval.

In a conference call discussing its first-quarter results, Foundation Medicine CEO Michael Pellini said that the firm received orders for 4,702 tests in the first quarter of 2014, up from 3,752 in the fourth quarter of 2013. Sales of FoundationOne Heme, which the company launched last December for hematologic malignancies, sarcomas, and pediatric cancers, comprised 715 of the total, while biopharmaceutical partners purchased 851 tests. Sales of its tests drove a 121 percent jump in year-over-year Q1 revenues to $11.5 million. See GenomeWeb Daily News coverage for Foundation Medicine's full financial results.

The company added that it is on track to release an expanded version of its FoundationOne test in the first half of this year, which would include over 300 genes and 30 gene fusions.

Separately, the company said that it has received CE marking for its FoundationOne test in Europe and that it has established an agreement with Barcelona, Spain-based Laboratorios Leti to distribute its clinical products to physicians in Spain and Portugal.

Reimbursement

Foundation Medicine said it is receiving average reimbursement of $3,400 per test from commercial payors. At the end of 2013, it started submitting claims to Medicare for reimbursement using a miscellaneous code. During the call, Senior VP of Finance Jason Ryan said that "consistent with our expectations, we have not yet received payment on those claims, given that we're not yet covered by Medicare." He added that the firm is "appealing those claims through the normal channels" as well as continuing "broader dialog with our local Medicare administrative contractor and with other regional contractors."

In addition, Ryan said that the company received unique Z-Code identifiers for both its FoundationOne and FoundationOne Heme tests through the McKession Diagnostics Exchange, an online test registry that provides codes for molecular and genetic tests that lack sufficient means of identification through the standard CPT codes. According to the McKesson Diagnostics Exchange website, Z-Code Identifiers are assigned based on the "uniqueness of each test" and "enable the consistent identification of that unique test across systems by labs, providers, payers, and policy makers."

Ryan said that obtaining the Z-Code Identifiers for the tests was "another step towards adequately differentiating our assays and providing greater transparency in reimbursement and billing practices."

Another key facet of Foundation Medicine's reimbursement strategy is to keep pricing consistent, even as it adds content to its tests. Pellini said that the new version of FoundationOne would have the same price as the current test. "Our focus is to set a price and deliver the necessary clinical information to our clients for that set price," he said.

NGS-based CDx

During last week's call, Foundation Medicine also said it had expanded on an agreement with Clovis Oncology that began in 2012 to develop an in vitro diagnostic test to identify cancer patients who may best respond to Clovis' PARP inhibitor drug rucaparib.

The expanded agreement now includes the development of a multi-gene next-generation sequencing-based companion diagnostic test and will include milestone payments from Clovis.

Pellini said that those payments would help fund the costs of seeking premarket approval for the test as well as the construction of a laboratory that meets FDA quality system regulations, which could then be used for other future premarket approvals, "an important step in our work to enable the development, approval, and clinical use of novel, targeted therapeutics."

Steven Kafka, Foundation Medicine's COO, said during the call that while the company is "not keen to be in the traditional CDx business," the deal with Clovis is "not a traditional relationship," and the company got over a couple of key hurdles.

First, he said, the milestone payments that will help fund the PMA and laboratory construction make "good economic sense." Second, Kafka said the firm is interested in working with "molecules where our approach is really uniquely suited to the molecule and to the development paradigm." And finally, he added, the deal with Clovis is an "important component of our overall regulatory strategy." He said that the field is likely moving toward "comprehensive complex tests," and so the Clovis deal, since it will require registering the test with the FDA, "continues our engaged dialog with the FDA."

Foundation Medicine is not the only firm using next-generation sequencing in developing companion diagnostics. At the American Association for Cancer Research annual meeting in San Diego last month, Illumina Chief Medical Officer Richard Klausner discussed the use of next-gen sequencing in companion diagnostic tests. He said that Illumina is interested in working with pharmaceutical companies to develop one test that would serve as a companion diagnostic to multiple drugs.

Illumina also struck a deal this year with Amgen to develop an NGS-based companion diagnostic test for Amgen's colorectal cancer drug Vectibix (panitumumab).

"What we believe we're going to see across clinical trials and across industry is this gradual migration to this concept of a universal diagnostic or a universal companion diagnostic," Pellini said, which will "play out over the coming years."

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