Couples Therapy: Challenges In Companion Dx-Biopharma Relationships Noted By VC

Companion diagnostic firms facing skeptical partners in big pharma need to focus on ways of establishing the value of their test to payers and patients, Third Rock Ventures’ Mark Levin advised the Personalized Medicine Coalition.

Companion diagnostic firms facing skeptical partners in big pharma need to focus on ways of establishing the value of their test to payers and patients, Mark Levin, co-founder and partner of the venture capital firm Third Rock Ventures advised at the Personalized Medicine Coalition’s annual State of Personalized Medicine luncheon in Washington, D.C. May 8.

He acknowledged that companion diagnostic relationships can be difficult because drug firms may focus on protecting their assets at the expense of the diagnostic. For example, biopharma companies may demand that the cost of the test be kept low so it does not impede uptake of the drug. And what’s driving the cost issue for diagnostics is the fact that reimbursement is an ongoing challenge. Payers are cautious about covering diagnostics based on a lack of evidence linking tests to health outcomes.

Royalty arrangements are another source of tension in the relationship between diagnostic firms and drug companies, Levin noted. Drug companies have balked at committing to royalties, and “the argument on the pharma side is that ‘We’re going to spend $5 billion over the next 15 years and your involvement is not as significant. You haven’t spent as much money. You haven’t risked as much,’” he said.

Levin agreed with a member of the audience that companion diagnostic companies and their drug firm partners are “a little bit heading toward therapy.” Nevertheless, he maintained that forming and maintaining productive relationships between diagnostic firms and biopharmaceutical companies is crucial for realizing the promise of personalized medicine.

To work toward better relationships, Levin suggested that “on the diagnostic side we need to think about ways we can capture value.” Some models for establishing value might include risk-sharing arrangements, in which payers would reimburse for the diagnostic only if it is effective, he proposed. “The key thing is to have a breakthrough product that actually makes a huge difference to pharma. … If you really have an asset that they need, then you need to be able to demand a lot more” in negotiating partnerships, he pointed out.

GSK A Leader In Companion Dx Deals

Most of the large biopharmaceutical companies are involved in collaborations with companion diagnostics makers, and a survey of recent publicly announced deals shows that GlaxoSmithKline Inc. has been particularly active in pursuing such arrangements (see chart). Most of the deals announced over the past couple of years, and most companion diagnostics, are focused on treatments for cancer.

Levin stressed the importance of teamwork among all stakeholders in order to advance personalized medicine. But he said companies often are reluctant to leave their own “silos” to work collaboratively. “At times we are very focused on making a dollar, or making sure our organization does the best, or that we protect ourselves, so that there’s no risk,” he observed. “But there are huge opportunities that we are dramatically slowing down because we’re not all working together.”

“When we have a team, we have a deep sense of purpose, mutual accountability toward a common purpose. … That’s absolutely critical, and we don’t have that today,” according to Levin.

Third Rock Ventures is committed to promoting personalized medicine, he said. The firm will invest “well over half a billion dollars in personalized medicine over the next few years and well over a billion [dollars] certainly, over the next decade.” He highlighted three of the firm’s development programs, including kinase-based combination oncology therapy, drugs targeting the genetic mutations that cause hypertrophic cardiomyopathy and a diagnostic test for Barrett’s esophagus.

However, he noted his firm is in the minority in terms of its commitment to personalized medicine, and the lack of start-up funding from other sources is another obstacle to expanding its application. “Most of my [VC] colleagues” are “backing out of personalized medicine” because “they’re not prepared to face the regulatory challenges, the reimbursement challenges, the integration of all of this together,” Levin noted. As a result, “we are finding it difficult now to find partners to build these companies.” Levin also was co-founder and former CEO of Takeda Oncology

Recent Companion Dx Deals With Biopharma
Deals announced from January 2010 to April 2012
Biopharma	Diagnostic Firm	Deal Summary	Date
GlaxoSmithKline	Abbott Molecular	Companion diagnostic that screens for a cancer antigen.	Nov. 2011
GlaxoSmithKline	Life Technologies	Companion diagnostic for GSK’s Phase III MAGE-A3 adjuvant cancer vaccine for resected non-small cell lung cancer and metastatic melanoma.	Oct. 2011
GlaxoSmithKline	MDx Health	Use of DNA methylation specific biomarker in GSK’s immunotherapy program.	Sept. 2010
GlaxoSmithKline	Response Genetics	GSK licenses rights to polymerase chain reaction (PCR) technology to analyze tumor specimens with mutations in BRAF gene.	May 2010
GlaxoSmithKline	BioMerieux	Co-development of assay to determine optimal course of therapy for metastatic melanoma.	May 2010
GlaxoSmithKline	Abbott Molecular	Companion Dx for GSK’s Phase III skin cancer therapeutic.	March 2010
Pfizer	Ventana/Roche	Automated and standardized immunohistochemistry companion test for Xalkori (crizotinib).	Jan. 2012
Pfizer	Qiagen	Companion diagnostic for Pfizer’s Phase III dacomitinib, an oral HER1, HER2 and HER4 tyrosine kinase inhibitor for non-small cell lung cancer.	Aug. 2011
Pfizer	DiaGenic	Biomarkers for various stages of Alzheimer’s disease.	Dec. 2010
Pfizer	Qiagen/DxS	Real-time PCR companion diagnostic kit for Pfizer’s Phase II vaccine for glioblastoma multiforme.	Feb. 2010
Johnson & Johnson/Janssen	Metamark Genetics	Janssen licenses cancer drug targets discovered using Metamark’s prognostic assay for early-stage cancer prognostic assay platform.	Dec. 2011
Johnson & Johnson Pharmaceutical	Foundation Medicine	Foundation’s clinical cancer genomics test for identifying oncology biomarkers.	Oct. 2011
Johnson & Johnson	Skyline Diagnostics	Skyline genetic profiling and bioinformatics technologies to be used for an undisclosed, marketed J&J therapeutic.	July 2011
Johnson & Johnson’s Janssen and Ortho-Clinical Diagnostics	Biocartis	Co-development of Biocartis’ fully integrated molecular diagnostics system.	Jan. 2011
Merck	Roche Diagnostics	Companion diagnostic tests for Merck’s oncology pipeline.	June 2011
Merck	Laboratory Corp. of America Holdings	LabCorp gains rights to commercialize a genetic test to predict whether hepatitis C patients will respond to a common treatment.	July 2010
Merck	Roche Molecular Systems	Merck will use Roche’s AmpliChip p53 test in cancer drug development activities.	Feb. 2010
Takeda	Zinfandel	Takeda licenses rights to TOMM40 assay as a biomarker for Alzheimer’s disease. Companies will study TOMM40 used with Takeda’s Actos (pioglitazone).	Jan. 2011
Takeda	Sanford-Burnham Medical Research Institute and Translational Research Institute	Identify and validate obesity-related biomarkers.	Dec. 2010
Millennium/Takeda	Ventana/Roche	Companion diagnostic for treatment with Adcetris (brentuximab vedotin) for lymphoma.	April 2012
Novartis	Cepheid	Exclusive rights to Cepheid’s Xpert BCR-ABL assay for chromosome-positive chronic myelogenous leukemia.	Oct. 2010
Novartis Molecular Diagnostics	Pathwork Diagnostics	Biomarkers for oncology tests.	July 2010
Roche	MDx Health	MGMT gene promoter methylation testing for use of Avastin (bevacizumab) in brain tumors.	Jan. 2010
Roche	CMIC Co.	Use of liver-type fatty acid binding protein to detect liver injury and disease.	Jan. 2010
Clovis Oncology	Roche Molecular Systems	Companion diagnostic for Clovis’ CO1686, in preclinical studies for advanced non-small cell lung cancer.	June 2011
Clovis Oncology	Ventana/Roche	Immunohistochemistry assay to be used with Clovis’ investigational pancreatic cancer compound CO-1.01.	April 2010
Bayer	Ventana/Roche	Companion diagnostic for one of Bayer’s anti-cancer antibody-drug conjugates	Jan. 2012
Bayer Schering Pharma	Prometheus Laboratories	Prometheus’ oncology assay may be used to identify populations for BSP’s cancer drug candidates.	March 2010
Eli Lilly	Qiagen	Companion diagnostics for Lilly’s Janus Kinase 2 inhibitor, currently in Phase I.	Sept. 2011
Genentech	Xenon Pharmaceuticals	Companion diagnostics for drug candidates for pain.	Jan. 2012
Bristol-Myers Squibb	Saladax Biomedical	Companion diagnostics for undisclosed therapeutics in BMS’ pipeline.	June 2010
AstraZeneca	Dako	Companion diagnostics for AZ cancer projects in the discovery and development stage.	Jan. 2010
Merck KGaA	Almac Diagnostics	Assess potential biomarkers of response to Erbitux (cetuximab) in metastatic colon cancer.	April 2010
Source: Elsevier Strategic Transactions and public company records.