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Germany's CeGaT, B. Braun Set up US Dx Subsidiary; Courting 'Large' Partner to Market Services

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NEW YORK (GenomeWeb) – B. Braun CeGaT, the recently-founded US subsidiary of German genetic diagnostics firm CeGaT and its minority stakeholder B. Braun, will initially offer molecular diagnostic testing services through CeGaT's German laboratory but plans to establish a US lab in the long run. The company is also negotiating with a large US partner to provide branded services to US hospitals.

Earlier this month, CeGaT, based in Tübingen, and B. Braun Medical US, which is part of German medical device giant B. Braun Group, said they had established B. Braun CeGaT "to supply the US market with the highest quality diagnostic panels and molecular diagnostic services," including tumor diagnostics and panels for neuromuscular diseases and epilepsy. The subsidiary is housed in B. Braun Medical's Bethlehem, Pa. headquarters.

Paul O'Connell, president of B. Braun Interventional Systems, another US firm of the B. Braun Group, is leading B. Braun CeGaT as president.

In 2012, the B. Braun Group, a family-owned business with 50,000 employees worldwide that is headquartered in Melsungen, Germany, and had €5.2 billion ($7 billion) in sales and €316 million ($429 million) in net income last year, made a single-digit million euro investment in CeGaT and took a 20 percent stake in the company.

O'Connell told Clinical Sequencing News that while the majority of next-gen sequencing-based diagnostic tests are currently not reimbursed in the US, this is likely going to happen within the next five to 10 years, particularly in pediatrics and oncology. "We want to build something and be present on the ground and have a reputation and a capability here in the United States as things grow," he said.

The new subsidiary will offer "the full spectrum" of CeGaT's molecular diagnostic tests to customers in the US, he said, including NGS-based diagnostic gene panels and single-gene tests.

According to its website, CeGaT currently offers about 160 NGS-based diagnostic panels for a variety of hereditary disorders, including hereditary cancer; a somatic tumor panel with more than 550 genes; a tumor exome test; and a large number of single-gene tests.

Its Tübingen laboratory, which will move into a bigger space at the end of this month, allowing it to expand capacity as the US business picks up, uses the Illumina HiSeq 2500 and MiSeq platforms, Ion Torrent's PGM, and Sanger sequencing.

The lab has been accredited as a diagnostic medical laboratory in Germany and is hoping to become CLIA-certified and CAP-accredited by the end of this year or early next year, according to O'Connell, aided by B. Braun's expertise in this process.

In the long run, B. Braun CeGaT expects the US Food and Drug Administration to regulate NGS-based testing, which he said the company is "entirely prepared for" and has "a lot of experience with."

In the meantime, the firm is accepting samples from US patients on a research-only basis, which CeGaT has been doing for some time.

B. Braun CeGaT, which currently has three staff members, will market CeGaT's services directly to clinicians and hospitals in the US. "We're reaching out to some of the thought leaders in areas like pediatric medicine and oncology to make them aware of who we are and what our offerings are," O'Connell said.

It is also handling shipment of samples and will deliver clinical reports, which will be generated in Tübingen, to ordering clinicians.

In the US market, CeGaT will be facing competition from both academic diagnostic NGS laboratories and companies such as Foundation Medicine. It will compete on quality, turnaround time, price, and innovation. "Our belief is that the science at CeGaT is at least as good as anybody's," O'Connell said.

Longer term, B. Braun CeGaT plans to establish its own US laboratory, but because sequencing technology keeps improving rapidly, requiring frequent updates, this will likely happen two to three years from now at the earliest, he said.

The firm is already scouting possible locations for a lab, though. The Bethlehem area is one possibility, O'Connell said, but it is also considering a location north of Chicago that it is discussing "with a major potential partner."

He said the company is currently negotiating a pilot agreement with that large prospective partner, which he reckons is still "several months away," to provide branded testing services to the partner's client hospitals in the US, starting with a small subset.

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