Molecular diagnostics is a segment of the global healthcare market that has received ever-increasing attention over the past few years. It is expected to be the driver of future growth in the diagnostics industry. This growth relies on new technologies that simplify molecular diagnostic tests and will allow to address unmet diagnostics needs, foremost in cancer screening, prognosis, monitoring and therapy selection. With our technology and biomarkers, we are in the sweet spot of this development and have successfully adopted a strategy that optimally leverages our assets in this dynamic environment.
With a compound annual growth rate (CAGR) expected to be around 5% over the next five years, the expectations for the total in vitro diagnostics market are moderate. However, within this market, molecular diagnostics, currently having an annual market size of about USD 3 billion, stands out with an estimated CAGR of 14% over the same period of time. This growth will rely on the number of obvious trends in the industry: Currently, molecular diagnostics heavily relies on infectious disease testing out of centralized laboratories capable of running these rather complex molecular diagnostic tests. Diagnostics companies, in particular new players in the molecular diagnostics arena, significantly invest into innovative platforms that are fully integrated, flexible, smaller and easier to operate even outside a diagnostic laboratory environment to move molecular testing closer to the point of care. The other major force expected to drive growth in molecular diagnostics is innovative content that addresses unmet diagnostic needs. Here, cancer diagnostics for population-wide screening as well as companion diagnostics for personalized medicine take the lead.
With our DNA methylation technology and a pipeline of biomarkers with unique utility in cancer screening, diagnosis and prognosis, we believe we are ideally positioned to capture the enormous potential of this dynamic and innovation-driven molecular diagnostics market. Our strategy is based on a nonexclusive partnering model for technology and biomarkers short to mid term. At the same time we have begun building a commercial organization to progress our corporate development into a more fully integrated diagnostics company with direct access to the customer.
There is little doubt in the diagnostics industry that DNA methylation tests for cancer and other indications will play a major role in the future of molecular diagnostics. Almost all major diagnostics companies have embarked on projects to exploit this natural biological phenomenon for innovative diagnostics. By licensing our technologies for DNA methylation preanalytics and analytics broadly to diagnostics companies, we strive to set a unified technology standard for diagnostic products and services based on DNA methylation biomarkers. This strategy was successfully executed resulting in technology licensing agreements with QIAGEN, Abbott Molecular, Quest Diagnostics, OncoMethylome Sciences, DxS, TIB MOLBIOL, and, most recently, Philips, and Sysmex Corporation. With all of these agreements, we participate in our partners’ current and future commercial success with products and services based on our technology – and in many cases also our biomarkers.
While some of our partners, like Abbott, adapt existing molecular diagnostics instrument platforms to DNA methylation analysis, we work with others to develop new platforms that are optimized for DNA methylation applications. To this end – and following one of the major trends in the industry – we are supporting Philips in developing an integrated and fully automated instrument platform. It will, in addition to standard molecular diagnostic tests, allow the fully automated processing of DNA methylation assays for the diagnosis of certain cancers. With our biomarkers, we address diagnostic questions with high, unmet medical need in cancer serving the industry’s need for innovative content.
For our mSEPT9 colorectal cancer biomarker, we pursue a nonexclusive licensing strategy to maximize the penetration of the market for colorectal cancer screening through multiple partners. A colorectal cancer screening test addresses a target population of about 300 million men and women aged 50 years and older in the United States, in Europe, and Japan – the three largest diagnostics markets. This single new product opportunity has a market potential roughly the same size as today’s entire molecular diagnostics market. To address this market efficiently, we are partnering our mSEPT9 biomarker with a balanced mix of strong global and regional players in the diagnostics industry. To date, we have partnerships in place with Abbott Molecular (global), Quest Diagnostics (U.S.), and Sysmex (initially Japan), addressing the most important markets for diagnostics, and we expect to sign more partnerships in the years to come.
Our partners take the responsibility for IVD development, regulatory approval, manufacturing, marketing and sales. We bring in our expertise in DNA methylation technology and biomarkers to support our partners in the development. We also provide them with samples for clinical trials regulatory approval i.e. by giving them access to samples already collected in the PRESEPT Study. With this support, we considerably shorten their time to market to our advantage as we participate in our partners’ success through milestone payments upon product launches and significant royalties on product sales. In addition, we typically receive upfront licensing payments, R&D funding, and reimbursement of sample costs.
In the area of companion diagnostics for personalized medicine, we work with leading pharmaceutical and biotechnology companies to discover and validate biomarkers with utility in therapy decisions and patient stratification. While this approach provides a modest revenue stream short term and potential product opportunities long term, we will increasingly focus on exploring companion diagnostic applications of our biomarkers with already proven utility in stand-alone diagnostic and prognostic applications. This approach could provide the opportunity to further leverage the value of these biomarkers with relatively low incremental development costs and on a comparatively short timeline.
On our path to become a fully integrated diagnostics company, we have begun building a commercial organization with own marketing and sales. We are initially focusing on the commercialization of assays for our lead biomarkers as research products. Through these products, we enable diagnostic laboratories in Europe to establish laboratory-developed tests and give early adopters and opinion leaders timely access to our biomarkers, preparing the market for the launch of IVD products by our partners. Having built the necessary R&D capabilities in the past, we will increasingly focus on the development of IVD products for attractive niche markets and take increasing responsibility for their commercializing ration. First examples include our early access program for mPITX2, a biomarker that in our studies proved useful as a prostate cancer prognostic marker, as well as our lung cancer test. |
