Impact of DNA Microarrays on Molecular Diagnostics · 2008-11-20 · 2007 WW Microarray MDx Market:...

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2008

Scientia Advisors, LLC

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Impact of DNA Microarrays on Molecular Diagnostics

By Scientia Advisors LLC

http://www.scientiaadv.com/

All materials copyrighted and can not be used without explicit permission2Scientia Advisors LLC

Agenda

• Market Overview

• Product case study, Regulatory, and Reimbursement Overview

• Technology Overview and Emerging Array Technologies

• Conclusions

• About Scientia Advisors and Contact Details

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Microarrays for molecular diagnostics (MDx)Definition

Microarrays for MDx

Microarrays consist of biological material hybridized to a solid surface or a bead bound probe in aqueous suspension. They are used to profile gene expression, compare genomic hybridization, determine protein binding sites on a gene, detect single nucleotide polymorphisms, assay the expression of alternative splice forms of a gene and to empirically detect expression of transcripts or splice forms that may not have been previously known or predicted.

Includes DNA and microsphere microarray diagnostic tests; multiplexed diagnostic microarray tests; automated diagnostic microarray analyzers; microarray kits; microarray consumables

Excludes sample preparation; splice variant microarray technologies; microarray technologies used in drug discovery

Source: Scientia analysis

Focused arrays are those that are capable of multiplexing 25-50 targetsArrays are typical high density microarrays capable of multiplexing 50+ targets


Microarrays in MDxSmall market today with attractive growth prospects driven by multiplex tests

for complex diseases such as cancer

$0

$100

$200

$300

$400

$500

$600

$700

2007 2012

WW Microarray MDx Market

Infectious Disease Breast Cancer CF HLA Other

US $ MMKey Trends & Growth Drivers

• Array market today is limited to genetic testing such as CF, HLA, transplantation rejection, and PGx^ (cancer market is small)

• Since many diseases and potential treatment outcomes are determined by the function of multiple genes and pathways; molecular assays will require multi-dimensional analysis of genetic alterations, pathways, and processes. This has resulted in a pressing need for reliable technologies such as microarrays with high multiplexing technologies» A large number of microarray based diagnostic

products such as those for breast cancer prognosis, sepsis are set to enter the market over the next few years and drive further growth

» Tests for sepsis, breast cancer prognosis are high value tests that command premium price due to their ability to address unmet needs and change clinical paradigm

• Breast cancer arrays are set to grow at a rapid pace driven by products from Agendia, Veridex, and Roche. Both Veridex and Roche are expected to launch products soon and will be based on Affymetrix GeneChip

• Autoimmune, cardiovascular, and diabetes represent long-term opportunities (as biomarkers still need to be validated)

$160M

$660M

33%


* Other includes PGx^, other cancer types, and other emerging tests

^ PGx = Pharmacogenomics

*


Competitive landscapeLuminex has a head start but market is likely to become fragmented in the

future as numerous companies are positioned to enter the market

Key Observations


2007 WW Microarray MDx Market: $160M

* Other includes Autogenomics, Nanosphere, Osmetech, Pathwork diagnostics, and other emerging companies

• Today the microarray market is dominated by Luminex, with its own product in CF and platform partnerships with One Lambda and Tepnel lifecodes for HLA typing

• Although, Agendia MammaPrint Dx for breast cancer recurrence was the first IVDMIA to be approved; the product is not as well accepted as Genomic Health’s OncoType Dx

• Although Roche/Affymetrix was the first to enter the market with FDA approval; reception of the AmpliChip has been lukewarm

• Currently, Innogenetics (now Solvay Pharmaceuticals) CF product is based on its line probe array and will be switched to its array 4-Mat microarray platform soon

• XDx is gaining traction with strong performance of AlloMap to monitor heart transplant rejection

• Roche and Veridex (JnJ) are expected to launch several assays in the oncology area in the near future using the Affymeterix GeneChip

• Emerging companies such as Almac, Autogenomics, Combimatrix, ExonHit, GeneWave, Nanosphere, Osmetech, Pathwork Diagnostics, and Xceed Molecular are positioned to enter the market with offerings in oncology, pharmacogenomics, genetic testing , diabetes and inflammation

•Agendia• Innogenetics•Roche/Affymetrix•Tepnel/Luminex•Tm-Luminex•XDx•Other

Luminex/One Lambda


Agenda

• Market Overview



• Conclusions


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Roche’s AmpliChip CYP450 Case StudyThis test has had limited adoption due to a lack of physician education and

reimbursement

• Although the test was FDA approved; acceptance of the test has been lukewarm

• One of the key reasons the test had limited acceptance was lack of sufficient evidence for incorporation of into guidelines for clinical practice

» The professional journal American Family Physician stated in August 2007: “As new genetic testing technologies are approved and made available for clinical use, it is important to emphasize that FDA approval is based on test accuracy rather than on demonstration of improved clinical outcomes. Availability of technology should ideally be paralleled by availability of evidence regarding its impact in clinical practice (through methodologically sound studies), which unfortunately has not yet happened in the case of CYP450 genotyping.”

» Most insurance companies do not cover the cost of the test due to uncertainty of cost benefits

• Array companies seeking to launch products need to keep in mind that besides regulatory approval; reimbursement and physician education through clinical outcomes studies are paramount

Key Learnings

The Roche AmpliChip Cytochrome P450 Genotyping test based on the Affymetrix GeneChip Microarray aims to identify slow and fast drug metabolizers by capturing genetic variations in two genes, CYP2D6 and CYP2C19 in the cytochrome P450 system.

Source: Scientia analysis, Roche, American Family Physician, Aetna


Regulatory RequirementsClinical burden varies by regulatory filing; EU less stringent than the U.S.

US Regulatory Bodies EU Regulatory Bodies

IVD Directive

Guides requirements for clinical diagnostic

products and manufacturing

practices (device classification)

CE Mark

Seal of approval to sell clinical

product – to be renewed every 5

years

CLIA

Extends regulation for devices for

performance sites

Source: Scientia analysis, FDA

Regulates diagnostic

products and related

manufacturing practices

• Research use only (RUO)• Investigational use only (IUO)• Special purpose reagents (SPRs)• 510(k) [Class I or II]• Premarket Approval (PMA) [class

III]• In vitro Diagnostic Multivariate

Index Assay (IVDMIA)

• Analyte Specific Reagent (ASR)

» Can only be sold to high complexity CLIA labs

» Prohibited from making any statement regarding analytical or clinical performance

• Manufacturer’s self-declaration of conformity to the Medical Devices Directive (MDD) and its essential requirements

» Intervention of a notified body is not required

» Firms are subject to inspection for conformance to ISO standards

• Device classification is based on adherence to Annex II, IV, V, VI, and VII

• These devices must not only be compliant with the basic requirements under the EU IVD law, but also require a conformity assessment by a notified body

FDA


Source: Scientia analysis, FDA, Nature, HHS

• On September 7, 2006 the FDA issued a draft guidance

interpreting and explaining the ASR* rule, and on July 26,

2007 the In vitro Diagnostic Multivariate Index Assays

“IVDMIAs^”

» Agendia’s MammaPrint Dx for breast cancer recurrence

was the first IVDMIA^ test cleared by the FDA in February

2007

• With these new guidance and policies the FDA intends to

regulate the novel, high value multiplex MDx tests from the

moment they are introduced into the market. Manufactures

will no longer be allowed to register them as ASRs

• The FDA is requiring more pharmacogenetics information.

The agency relabeled Warfarin to accompany

pharmacogenetic testing by approving the first genetic test

for Warfarin sensitivity, “Verigene” in September 2007. The

test can determine an individual’s ability to metabolize the

anti-coagulant medication, this information is critical to

determining safe and appropriate dosing

» Osmetech’s Warfarin sensitivity test was cleared by the

FDA in July 2008

• These moves indicate that the agency recognizes MDx as

being paramount for personalized medicine and better health

outcomes

» This outlook from the FDA will drive pharma to change

their perspective on personalized medicine tests

^ In Vitro Diagnostic Multivariate Assays multiplexed tests that use a computer software to analyze the test results to make a final diagnosis or diagnostic recommendations)

* Analytic Specific Reagent

Cleared by FDA on February 2007

Key Takeaways

The FDA is Being Proactive About Array based MDx Tests Array based test was the first approved IVDMIA


IVD ReimbursementReimbursement differs by geography; better policies are needed for new high

value diagnostics*

Source: Scientia analysis, The Lewin group

xx

xx

U.S.

EU

• Reimbursement in the U.S. is determined by CMS and private insurers

• CMS pays for each test based on a fee schedule using CPT codes determined by American Medicare Association (AMA)

• CMS decisions can influence private insurers

• Many new laboratory tests that are substantially similar to existing tests may be assigned to the same code

• New tests can petition for a new code from the AMA, but this process can be lengthy and often results in delays. Outcome studies are essential to prove perceived value of tests; The AMA in conjunction with a panel of experts, may assign substantially new tests a new code. CMS then decides on a method of payment

• MDx companies such as Genomic Health and XDx are blazing the path for reimbursement of high value MDx tests such as breast cancer prognosis. Third party payers such as the California Medicare contractor, National Heritage Insurance Company, United and Aetna are starting to reimburse these tests

• The reimbursement of in vitro diagnostic tests in Europe is determined by individual government bodies. European nations have compulsory health insurance for citizens, high levels of coverage and public ownership of hospitals

• In U.K, the pricing environment is affected by budget constraints, as budgets are based on historical spending rates rather than future demand. NHS local lab directors decide how to spend their allocated diagnostic budget. NICE is starting to screen diagnostics and make recommendations as part of broader disease management plans

• The DRG^ payment system in Germany is developing and can considerably affect diagnostic reimbursement. Office-based payment for tests may depend on findings of a technology assessment committee

• The French reimbursement process is also made via DRG and requires an assessment of medical benefit by a government commission

*=Tests that provide critical information to help physicians make clinically relevant decisions; as a result command premium price

^ Diagnosis related group: A new reimbursement system based on the number and type of procedures rather than bed days


MDx Tests ReimbursementAlthough codes and regulations are evolving, better policies are still needed

** Includes relevant old and new codes* Hospital associated infections^Secretary’s Advisory Committee on Genetics, Health, and Society

• Historically several MDx reimbursement claims have been denied due to inaccurate codes use

• Recent changes to MDx coding, including the addition of eleven

new codes in the 2006 and 2007 CPT are expected to partially

improve this situation

• Several organizations such as SACGHS^, the Lewin Group have

questioned Medicare’s coding for MDx and believe

reimbursement needs to be re-adjusted to reflect their added value

• Under new Medicare regulations, hospitals will no longer receive higher payments for the additional costs associated with treating patients for certain hospital- acquired infections. These new rules will go into effect in October 2008 and will compel hospitals to improve care by migrating to fast turnaround time MDx tests

• When reimbursement bodies switches to DRG^^, only MDx tests showing significant clinical utility will be reimbursed

• MDx companies such as Genomic Health and XDx are blazing the path for reimbursement of high value MDx tests such as breast cancer prognosis

• Reimbursement agencies need to implement better policies to better accommodate high value multiplex MDx tests* that are changing the healthcare paradigm (currently there are no codes available to bill for multiplex tests such as MDx tests for sepsis causing pathogens)

Key Takeaways

CPT Code

Total # of

claims

submitted

% of

Claims

Denied

83890 (extraction) 162,297 48%

83896 (DNA Probe) 422,628 25%

83898 (amplification) 639,134 40%

83901 (Multiplex

Amplification)85,105 36%

83902 (Reverse

transcription)42,670 30%

87798 (infectious agent) 54,939 10%

Procedure CPT Code

Molecular diagnostic assays 83890 - 83914

Assays which identify or quantify

infectious agent antigens 87470 - 87660

DNA based studies on culture

material 87149

Lack of an organism specific code

for a DNA based infectious agent

assay

87797-99

Total number of claims for molecular diagnostic laboratory tests submitted to all Medicare carriers, ’00-’04

Relevant CPT Codes**

Source: Scientia analysis, CMS, other industry reports

^^ Diagnosis related group*=Tests that provide critical information to help physicians make clinically relevant decisions; as a result command premium price


Agenda

• Market Overview



• Conclusions


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Microarrays in MDxArrays are invaluable multiplexing tool; however, widespread use in MDx will

require reproducible, fully automated and easy to use array platforms

Characteristics of a well engineered microarray platform: miniaturization, massive scale-up, low costs, reproducible data, complete automation and minimal biological

sample requirements

Source: Scientia analysis, IVDT

Workflow of developing a diagnostic array

• During the past decade, DNA microarrays have been used in every facet of life science research, from basic science to the study of clinically relevant diseases

• In MDx, arrays have been historically viewed as powerful research tools to identify markers; However, with the recent advent of commercially available, low-cost, reproducible, technically simple arrays, and easy-to-use analytical software, the direct use of microarrays as diagnostic platforms have emerged

• With their ability to gain more information from a limited clinical sample by using highly parallel expression-analysis techniques; arrays are powerful MDx tools. Since many diseases and potential treatment outcomes are determined by the function of multiple genes, DNA microarrays will be important in advancing molecular diagnostics


Comparison of MDx technologiesAlthough arrays score high in multiplexing; TaT^, ease of use, and ability to

quantitate need to be improved for wide spread clinical adoption

Real Time PCROther Amp.

Tech.Signal Amplifi-

cationFocused Arrays*

Arrays**Sequencers

(incl. Nex Gen)

Multiplexing

Quantitation

Automation

TaT^

Accuracy (Sens. & Spec.)

Ease of Use

Low Med High

Source: Scientia customer survey and analysis

* Focused arrays are those that are capable of multiplexing 25-50 targets** Arrays are typical high density microarrays capable of multiplexing 50+ targets^ TaT = Turnaround time

Scientia Confidential


Emerging Array TechnologiesSeveral promising technologies on the horizon

Nanosphere

Illumina

Asuragen

• Illumina’s BeadArray Technology is based on 3-micron silica beads that self assemble in micro wells on either of two substrates: fiber optic bundles or planar silica slides

» Allows for stringent quality control, high reproducibility

» Allows for multi sample testing

NimbleGen

High throughput, cost effective array

High sensitive, easy to use array

mi RNA array for diagnostics

Epigenetics array

• NanoSphere’s Verigene system has many improvements

» Utilizes nano-sized magnetic beads

» Two mechanisms of signal amplification for analytes with low abundance, reports 2-3 fold greater sensitivity


• Asuragen’s miRNA arrays are based on Agilent and Affymetrix arrays

» Allows for high sensitivity, specificity, and reproducibility

• NimbleGen HD2 arrays offer the highest density microarray platform currently available for CGH and ChIP analysis

» Fewer arrays , less sample are required leading to a significant reduction in cost

» Greater flexibility with increased sensitivity, specificity, and reproducibility


Microarray

Planar Array

BeadArray Probe-based

(TaqMan)

Sanger Sequencing

"Next Gen" Sequencing

Affymetrix (AFFX) xABI x x xHelicos xIllumina (ILMN) x x x454 / Roche (ROHHY) x

ATTRIBUTESFlexibility for custom content -- + ++ --Robustness of fixed content + + -Accuracy / Reproducibility - ++ ++ ++ ++Throughput: # GT's sample + ++ - -- ++Throughput: Samples / Study -- + -- +Per Genotype Cost + ++ - -- -Per Sample Cost - ++ ++ - -

APPLICATIONS SUITABILITYCandidate Gene Association + ++ -- -- --Whole Genome Association + ++ -- -- --Disease Panels / Pathways ++ ++ + + ++Clinical diagnostics - ++ + -- +

NexGen Sequencer

Next Generation (NexGen) SequencingPotential to displace arrays as they become faster and cost effective

Key Takeaways• NexGen sequencers have favorable features such as accuracy and suitability to clinical diagnostics (as highlighted in the

table)• In its current state, arrays fare better than NexGen Sequencers in MDx• Ultimately, when the price per base goes down , throughput increases, and informatics solutions improve NexGen

Sequencers have the potential to displace arrays


Scientia Confidential


Agenda

• Market Overview



• Conclusions


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Conclusions

• The microarray market is small today with tests in genetic testing and pharmacogenomics. The market is expected to grow rapidly due to increasing need for multiplexing and expected launch of several high value tests such as breast cancer prognosis and sepsis

• Luminex is currently the market leader; however market is likely to become fragmented as several companies including Veridex (JnJ) are positioned to enter the market

• Regulatory, reimbursement, and physician education are hurdles to adoption

• Although arrays are exceptional in multiplexing, inability to quantitate and lack of ease of use is likely to hinder wide spread adoption when compared to MDx technologies such as real time PCR

• Although current forms of next generation sequencing may not be threatening; ultimately, when the price per base goes down , throughput increases, it has the potential to displace arrays

• Several promising new array technologies are on the horizon that could address limitations of current products on the market

• All in all, arrays are powerful MDx tools and is likely to continue its overall growth over the next 5-10 years


Agenda

• Microarray Diagnostic Market



• Conclusions

• About Scientia Advisors and Contact Details5

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