DiagnoCure’s one, two punch against cancer

There is much talk these days about personalized medicine, but John Schafer likes to call it personal diagnostics.

“I’m not trying to use my (molecular) test to make a drug, although you can and pharmaceutical companies are doing that,” the CEO of DiagnoCure (TSX:CUR) says in an exclusive interview with biotuesdays.com.

“What I am using it for is to determine what treatment will cure your individual cancer because there are no two cancers that are the same.  And they will react differently to different chemotherapies.  The overall goal is getting the right drug to the right patient to put their cancer into remission.  And we think molecular diagnostics is a tool to do that.”

Molecular diagnostic testing in cancer is a $4.5 billion (U.S.) a year sector and is growing at 34% a year.  By 2014, he figures the market will more than double to the $10 billion to $12 billion range.

Montreal-based DiagnoCure has two molecular tests on the market: PCA3 gene expression for prostate cancer and a GCC biomarker for colorectal cancer, both designed to increase clinician and patient confidence in making critical treatment decisions.

In 2003, it made a big splash by licensing the commercial development of the prostate test to Gen-Probe (NASDAQ: GPRO).  In the next year or so, that ripple could turn into a tsunami.

Gen-Probe now sells only reagents to U.S. labs that perform the PCA3 test.  But it began a pivotal trial last year on 500 men intended to secure FDA approval and labelling claims.  The data should be filed with the FDA in 2010 and a decision obtained in 2011.  It has also published more than 20 peer-reviewed articles to support the clinical value of the assay, which has been available in Europe since the end of 2006.

In large part, FDA approval would allow Gen-Probe to advertise the test and, in return, promote certain reductions in the number of costly and painful prostate biopsies, replacing them with a simple urine test to check for the PCA3 gene.

Will the PCA3 test make standard PSA blood sample testing obsolete?  “It happens a lot in the diagnostic world, as a better product replaces an existing one,” Mr. Schafer contends.  “Time will tell. It doesn’t happen the first day, it takes time and studies and building confidence in physicians.”

The impact of regulatory clearance could have a profound impact on DiagnoCure, which receives an 8% royalty from Gen-Probe, increasing to 16%.  For example, there are some 45 million worldwide PSA tests done annually, which are sold to insurers for around $45 each.  Gen-Probe is now selling the PCA3 test in Europe for 100 euros.

Mr. Schafer explains that the worldwide opportunity for replacing a second prostate biopsy is about 1.8 million PCA3 tests a year, or $180 million.  At the other end of the scale, there are some 20 million men worldwide walking around with an elevated PSA, but have decided not to do anything about it.  Annual PCA3 monitoring could generate a market potential of $2 billion. “So, it’s a huge market.”

Gen-Probe’s pivotal trial is largely designed to formalize earlier studies, which have been 70%-to-80% specific for prostate cancer, compared with PSA specificity of 25%.  As a result, Mr. Schafer is confident of regulatory approval.  “We would be disappointed if the testing came in at 65% specific for prostate cancer.  But even at that, we would still sell a lot of tests.”

Citing the high number of false-positives with the $45 PSA test, he says that $100 for DiagnoCure’s PCA3 has to be compared with false-positive PSAs, which lead to prostate biopsies costing $3,000 each.  “You may be paying somewhat more for our test, but 75% of the time, the health system is saving $3,000.”

DiagnoCure’s GCC colorectal cancer test also made headlines this year when the Journal of the American Medical Association published a major study that found the GCC biomarker represented the “strongest independent predictor of colorectal cancer recurrence.”

At its lab in Pennsylvania, DiagnoCure analyzes lymph nodes for the GCC gene in tissue surrounding a section of colon removed by a surgeon.  “Our advantage is a genetic amplification of the technology,” Mr. Schafer says, compared with a pathologist who examines 10-to-15 lymph nodes under a microscope to see whether cancer cells have spread to the lymph nodes.

By looking for the GCC gene in the lymph nodes, DiagnoCure’s technology can find one cancer cell in 10 million normal cells, he adds.  On the other hand, a pathologist would have to examine 10,000 microscope slides to look at every lymph node for each patient, an impossible task.

“We look at 50% of the tissue versus 0.1% (by a pathologist after surgery),” Mr. Schafer points out.  “We are 100,000 times more sensitive answering the question for patients, ‘Am I cured?’”

Last month, DiagnoCure signed an exclusive arrangement with Lab21 to market the Previstage GCC test in Britain as a “key initial step in reaching out to the European market.”  Under the accord, Lab21 will collect tissue samples in Britain and send them to DiagnoCure’s lab in Pennsylvania for analysis.

The North American market opportunity for the Previstage test is $340-million a year, DiagnoCure figures, based on 97,000 stage 1 and 2 confirmed cancer patients receiving the $3,500 test.

Mr. Schafer says the company will soon get interim data from a National Institute of Health-sponsored, five-year study of whether annual blood testing for the GCC gene can be used to determine recurrence of colorectal cancer.  It would be a first ever bloodstream indication that colon cancer cells are growing somewhere.

“So treatment at that point would give patients better odds than waiting for a tumor to appear, when your chances of survival for another five years drop to 5%,” he adds.

The North American market opportunity for a GCC blood test is $450 million a year, DiagnoCure figures, based on 550,000 colorectal patients receiving about three blood tests a year at a cost of $300 each.

All of which begs the question why investors are shunning DiagnoCure?  “Everybody in Canada is just getting beat up,” he says.  “It’s just an irrational thing right now and we have to get through it.  We’re being conservative right now but we’re in good shape with enough money to get through these times.”