Espicom View: This is the latest in a string of positive results released for NanoString's Prosigna PAM50 assay, which the company is boasting does not need to be sent away for laboratory processing. Its recent approval and launch in the EU will provide impressive growth for the company. However, NanoString will have to prove that it can take market share from the current leader for diagnostic tests used in guiding treatment decisions for ER+ breast cancer in order to bolster its attractiveness to potential investors. The company will also have to improve its net losses if it wants to impress investors. Despite the success of its current offerings, the company will need to invest in other technologies to remain competitive. Especially if the company loses the exclusivity of the PAM50 gene signature due to the Myriad Genetics case in which Myriad was not allowed to patent human genes.
A genetic test for one of the most common forms of breast cancer (BC) will help doctors better identify those women who should be considered for chemotherapy, and those who can avoid it, say researchers. A team at The Institute of Cancer Research, London, The Royal Marsden NHS Foundation Trust and Queen Mary University of London found that the test, identifying the PAM50 gene signature, produced better long-term information than current methods for determining if a patient's BC would return.
The test, which can be processed locally instead of being sent off to an American lab, identifies more women with the highest risk of their BC returning, with fewer women classed as at intermediate risk. The PAM50 test could help doctors identify with greater certainty the women who will have the most potential of benefitting from chemotherapy, while letting others avoid unnecessary treatment. The research, published in the Journal of Clinical Oncology, was funded by Breakthrough Breast Cancer, AstraZeneca and the NIHR Biomedical Research Centre at The Royal Marsden, with additional support from Cancer Research UK.
In this study, scientists assessed RNA in tissue samples taken from 940 patients with ER+BC and compared the new PAM50 score, which analyses 50 genes linked with BC, with the Oncotype DX test, developed by Genomic Health, and with a test called IHC4, developed by Breakthrough Breast Cancer. The PAM50 test provided more long-term predictive information for doctors than both the Oncotype Dx test and IHC4, while being as effective as other tests in identifying women at low risk of their BC recurring. The PAM50 test was carried out using NanoString Technologies' nCounter equipment.
Notably, the PAM50 test categorised more patients as having a high risk of their BC returning within 10 years and fewer as intermediate than the other two tests. The researchers said the PAM50 test could therefore be a more cost-effective tool while providing doctors with more relevant information for determining which BC patients will benefit most from chemotherapy.
Oncotype Dx analyses a panel of 21 genes within tumours to determine a Recurrence Score, a score out of 100 that corresponds to the likelihood of BC recurring within ten years of the initial diagnosis. Together with a clinical treatment score based on a doctorâs assessment, the Recurrence Score is used to determine if a patient will need chemotherapy. OncoType Dx is currently priced at US$4,290. The tests have to be sent to Genomic Health's lab in California to be analysed. Medicare has announced coverage for this test, and the UK's National Institute for Clinical Health and Excellenceâs Diagnostics Assessment Programme issued guidance recommending OncoType Dx for use as a guide in determining use of chemotherapy in patients with BC.
The Prosigna assay, NanoString's PAM50 assay, runs on the company's proprietary nCounter analysis system, which offers a simple, reproducible and cost-effective way to profile many genes simultaneously with high sensitivity and precision. The Prosigna assay requires minimal hands-on time and can be offered through qualified pathology laboratories, allowing oncologists and pathologists to manage the diagnostic evaluation of BC patients locally. The nCounter-based Prosigna BC prognostic gene signature assay is the first in vitro diagnostic kit to be marketed through the company's recently formed diagnostics business. The Prosigna assay has received a CE mark and is available for use by healthcare professionals in the EU and Israel since February 2013; it is not available for sale in the US. However, the company has filed a 510(k) with the FDA, and responded to the FDA's request for more information, it is aiming for a US launch in Q1 2014.
NanoString secured an exclusive licence for the PAM50 gene signature from Bioclassifier in 2010. However, with the recent Myriad ruling, stating that genes can not be patented, it may not be able to hold onto this for much longer. ARUP Laboratories has a qPCR test for the gene signature, although this will have to be sent to ARUP's laboratory, giving NanoString's test the competitive edge. According to NanString, the 2012 global market for gene expression profiling products was estimated to be US$1.2 billion.
NanoString has recently floated its stock on the Nasdaq Global Market. In June, NanoString announced the pricing of its initial public offering of 5.4 million shares of common stock at a price to the public of US$10.00 per share; this was a decrease of the original US$13 to US$15 per share. In addition, the company has granted the underwriters a 30-day option to purchase up to an additional 810,000 shares to cover over-allotments, if any. On 26th June, NanoString's shares opened at US$9.9, but closed at US$8.06. Its shares have since risen, closing at US$8.57 on 3rd July. NanoString went public while there was unrest in the market, which some analysts are blaming for the company's poor performance so far. Since the initial sink in share prices, NanoString appears to have picked up slightly. However, the consistent losses the company has faced may not inspire investors.
NanoString generated revenue of US$11.7 million, US$17.8 million and US$23.0 million in 2010, 2011 and 2012, respectively, and US$5.7 million in the three months ended 31st March 2013, while incurring net losses of US$12.8 million, US$10.9 million and US$17.7 million in 2010, 2011 and 2012, respectively, and US$7.3 million in the three months ended 31st March 2013. As NanoString is the exclusive provider of proprietary reagents for the nCounter Analysis System, the growth of its installed instrument base should drive an increasingly predictable stream of recurring consumable revenue. In 2010, 2011 and 2012, the company's average consumable revenue per installed instrument exceeded US$100,000 per year. Now that NanoString has launched its test as a CE-marked diagnostic, and is no longer relying on the research market, it has the potential for impressive growth.