Using a combination of advanced lab technologies, and a platform giving access to expert academic pathologists, Precipio (NASDAQ:PRPO) has staked out a unique position in its battle to prevent misdiagnosis of blood related cancers.
“Many studies have found that misdiagnoses can range between 2% in solid tumors and almost 30% in blood-related cancers,” Ilan Danieli, founder and CEO, says in an interview with BioTuesdays. “Misdiagnosis is a significant problem in cancer diagnosis and due to their complexity, blood-related cancers appear most prone to misdiagnosis.”
For example, he says there are some 100 different types of lymphoma and each one potentially could have a different treatment.
Our goal is to give physicians the correct diagnosis so patients receive the appropriate treatment, which would help save lives, as well as save insurers billions of dollars and pharma companies have access to accurate data.
Precipio has partnered with the Department of Pathology at Yale University as well as with Harvard’s Dana-Farber Cancer Institute. Yale, for example, employs about 75 pathologists, Mr. Danieli says, noting that the company intends to have a network of pathologists across the country that covers every specialty in the blood cancer space.
“We span all aspects of the diagnostic process from proprietary triage algorithms that identify the correct disease state to proprietary in-lab technologies,” he contends. “And then we tap into pathologists at our academic partners to render a diagnosis and improve our accuracy.”
Mr. Danieli says Precipio has developed a hybrid pathology service and technology platform to reduce investor risk and increase returns. “The stability of our revenue-generating service business balances the cash needs of our technology investments,” he points out.
In addition, Precipio’s clinical laboratory in New Haven, Conn. acts as an incubator, enabling development of a portfolio of technologies, rather than a single technology. “We can develop from an idea to commercialization for about $100,000, which is a fraction of what most companies spend.”
Under its pathology services business, Precipio performs the technical lab work, which represents about 80% of reimbursement, while its academic pathology partners perform the professional interpretation work, representing about 20% of reimbursement.
“We are not aware of other laboratories pursuing a similar business model as Precipio’s, with its focus on services and products to aid in the misdiagnosis of blood cancers,” analyst Ben Haynor of Alliance Global Partners said in a June 2019 initiation report.
The strategy, along with an expanding sales force, seems to be working. Pathology case volume rose 39% in the second quarter of 2019, compared with the same quarter a year earlier; recurring ordering customers jumped 92% and the number of ordering customers was up 8% year-over-year.
“Emerging data suggests centralized pathology review in blood cancers should be conducted in clinical cases just as it is done in clinical trials and many large-scale and comprehensive biologic studies,” Mr. Haynor says.
Precipio is sponsoring a 1,000-patient study designed to independently evaluate the impact of academic pathology expertise on diagnostic accuracy and confirm its business model as a solution to the problem of misdiagnosis. The study should be complete later this year.
In 2018, the company released early data from the study, which showed a fourfold superiority of academic level diagnostic accuracy, compared with industry. The early data also showed that 73% of cases, which academic pathologists determined were previously misdiagnosed, had a definite or possible material impact on patient treatment plans.
Positive final data would go a long way in reimbursement discussions and lining up potential customers, Mr. Danieli adds.
In addition to its pathology services business, Precipio has developed two recently launched reagent products to improve the lab process following its 2017 merger with Transgenomic and its enabling technology for DNA liquid biopsies.
Mr. Danieli says the HemeScreen product enables cost-effective and rapid screening of four genes recommended in the guidelines by the National Comprehensive Cancer Network for patients with myeloproliferative neoplasms and myelodysplastic syndromes.
“Most labs batch these tests for cost reasons, leading to two-to-four week turnaround times, while with HemeScreen, laboratories can provide the same information in two-to-four days,” he points out.
The company also has developed IV-Cell, a proprietary media that enables culturing of all four hematopoietic cell lineages at once, compared with the existing dominant culture media, which requires the selection of only one cell lineage for culturing at a time.
Precipio recently announced a manufacturing agreement with Novamed for production of IV-Cell media for an initial term of three years. The accord would enable Precipio to provide cytogenetics labs in the U.S. and worldwide with IV-Cell media to meet their demand. The company also is in discussions with major labs about in-licensing IV-Cell.
Mr. Danieli figures the IV-Cell cytogenic media represents a market potential of $100-million a year, with the molecular HemeScreen media at $50-million a year.
AGP’s Mr. Haynor expects future launches will follow IV-Cell and HemeScreen, “targeting smaller markets of less than $100-million, where existing products leave something to be desired in terms of accuracy, ease-of-use, or turnaround time.”
In its pathology segment, the company is exploring expansion into renal and neurologic cancers because like blood cancers, “there is a high level of complexity in the diagnosis of those types of cancers as well, leading to misdiagnosis,” he points out.
The total U.S. cancer diagnostics market is expected to reach $50-billion in 2020, of which the blood-related cancer drug and diagnostics would account for some $6-billion. Renal and neurologic cancers each represent a market potential of $2-billion, he suggests.
“Our success is directly translated into saving patient lives, and that’s what motivates us to get out of bed every morning,” Mr. Danieli says. “We intent to make our products and services available to every patient worldwide. Nobody should be misdiagnosed with cancer in the 21st century.”
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