This story was originally published May 3.
Genomic Health said last week that it is partnering with OncoMed Pharmaceuticals to use next-generation sequencing to identify biomarkers that can be applied to the clinical development of OncoMed's cancer therapeutics.
Additionally, during a conference call last week to discuss its first-quarter results, the company said it is expanding the management team of its subsidiary InVitae, which it established in March with the goal of focusing on integrating genomic sequence data into medical practice for patients with common and rare genetic conditions. It plans to launch its first products from that subsidiary in 2013 (CSN 2/8/2012).
Under the terms of the agreement with OncoMed, the pharma will provide Genomic Health with breast, prostate, colon, and lung tumor samples, a subset of which will include OncoMed's proprietary xenograft models. Genomic Health will then sequence the samples to identify biomarkers to stratify patients that will respond to cancer therapeutics targeting the Notch, Wnt, and other pathways "critical to cancer proliferation," CEO Kim Popovits said during the conference call.
The partnership "underscores the opportunity we have in optimizing patient selection to enhance clinical development of targeted cancer treatments," she added.
Aside from patient selection, the collaboration will focus on developing diagnostic tests based on the biomarkers. "A big part of the future of oncology is the ability to marry the right drug with the right test," said Steven Shak, Genomic Health's chief medical officer.
He added that OncoMed Health focuses on developing therapeutics that target cancer stem cells, and Genomic Health has "identified a number of very novel pathways that are critical to those stem cells."
The partnership will enable Genomic Health to "leverage our investment that we made in [next-gen sequencing] over the last few years, making it possible now to gain insights with regard to critical resources that will allow us to do cost saving and pursue our own other programs," he explained.
Shak added that going forward the company would likely pursue additional similar collaborations but would be "very selective" about potential partners. Popovits said that the collaboration with OncoMed made sense because it will give the company a chance to both improve its sequencing capabilities and will also result in a diagnostic product.
The OncoMed partnership will fall under Genomic Health's core business unit, not its InVitae subsidiary, Popovits said. Genomic Health's core cancer business represents a $3.5 billion market, she added, while InVitae presents an additional opportunity in new markets.
InVitae will focus on building a genetic services business using next-gen sequencing for the diagnosis of common and rare genetic conditions. During the quarter, the company hired Richard Tompane as president of InVitae. Tompane was previously president and CEO of Gemfire and has also served as an independent consultant.
Tompane, along with InVitae CEO Randy Scott, plans to hire additional management in the next few months and launch the group's first products by 2013.
Scott added that the company would not be providing many details on the products under development until closer to their launch dates, but said that InVitae is an "opportunity to apply next-gen sequencing into the genetic testing market."
"We believe one day everyone in all major healthcare systems will be able to have their whole genome sequenced and made a part of their healthcare management. We see that as a very large multibillion dollar business in the future," he said.
"There is a clear need for a genetic services-type businesses that can help to turn the value of the tools that we have today into information that patients can actually use," Popovits said, estimating that market to be over $1 billion.
Expenses related to InVitae were minimal during the first quarter, however the company expects those to increase as additional staff are hired and research is conducted.
Previously, the company said that it plans to invest up to $20 million in InVitae over the next two years and expects to incur an $8 million net loss in 2012.
Genomic Health's first-quarter revenues increased 17 percent to $58.5 million, compared to $49.8 million for the first quarter of 2011.
The company's R&D spending increased 18 percent year over year to $11.9 million from $10.1 million, while SG&A costs grew 17 percent to $36.3 million from $30.9 million.
It ended the quarter with $37 million in cash and cash equivalents.