opportunities and challenges associated with novel companion diagnostic technologies

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Opportunities and challenges associated with

novel companion diagnostic technologies

L.E.K. Consulting LLC, 1100 Glendon Avenue, 21st Floor, Los Angeles, CA 90024, USA

T: 310.209.9800 F: 310.209.9125 www.lek.com

December 12, 2013

© 2013 L.E.K. Consulting LLC. All rights reserved.

CONFIDENTIAL

1

L.E.K. Consulting is a leading global strategy consulting firm

Overview Global Network

Established in 1983

Clients include 25% of the largest 200

companies globally, as well as innovative

start-ups and leading private equity firms

Areas of expertise include:

Strategy

Transaction Services

Finance

Marketing and Sales

Operations

Organization

Worldwide more than 900 professionals,

led by 100 Vice Presidents in 20 offices

In North America more than 350

professionals, led by 40 Vice Presidents,

all heavily involved in delivering client

assignments

Tokyo

San

Francisco

London

Munich Milan

Mumbai

Beijing

Shanghai

Singapore

Melbourne

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Bangkok

Chicago Paris

Boston

New York

Sydney

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Angeles

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L.E.K. introduction


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2

Emerging CDx technologies

The big four established players (Roche, Qiagen, Dako and Abbott) have

historically been pharma’s CDx partners of choice

Source: FDA, company websites, L.E.K. analysis

15 10 5 0 45 90

20

85 80 40 35 30 25 20 75 70

40

30

60

80

90

70

50

100

10

0

100 95 65 60 55 50

qPCR

IVD company CDx partnerships (2005 – present) Percent of total (# of total deals = 86)

30

FISH / ISH Other /

Undisclosed

31 7

IHC

18

Dako

Abbott

Other - emerging

Other - established

Roche

Qiagen

BioMerieux

Cepheid

Hologic

Life Tech

Leica

Alere

Beckman Coulter

BioMerieux

GE

Life Technologies

Ortho-Clinical

Siemens

Asuragen

MDxHealth

Nanosphere

Sequenom

BG Medicine

Luminex

Meso Scale Discovery

Saladax

Sysmex (Inostics)

Veridex Incell


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3

Biomarker trends are driving the need for novel technologies in CDx

CDx technology needs Example biomarker trends

Source: L.E.K. analysis

Sample access and analysis:

- Sample access / availability limitations

- Single cell analysis

- Sub-population analysis

Exploration of nuanced biology:

- Systems biology

- Small fold changes

- Absolute quantitation

- Single molecule detection

- Biomarker modifications

(phosphorylation, methylation)

Broadening applications:

- Patient acquisition (rare patient ID,

diagnosis, Rx selection)

- Monitoring

- Beyond oncology (e.g., ID, neuro, AI)

Peripheral detection

(e.g., for CTCs or ctDNA)

Multiplexing

(e.g., NGS, NanoString, protein arrays,

CyTOF)

Multi-omic

(e.g., RNA FISH, RNA flow, MultiOmyx)

New detection modalities

(e.g., methylation-specific PCR)

POC / near patient



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4

Emerging Platforms / Examples Peripheral

detection Multiplexing Multi-omic

Novel

detection

NGS Illumina

Life

Qiagen

Digital PCR Inostics / Sysmex

RainDance

Life

Bio-Rad

Arrays NanoString

Boreal Genomics

Epigenomics MDxHealth

Epigenomics

Digital

immunoassay

Singulex

Quanterix

Proteomic arrays Aushon

Luminex

MSD

Theranostics

CTC Veridex

BioCept

Emerging

cytometry

DVS

RNA FISH / Flow ACD

Affymetrix

Multi-omic

histology

GE / MultiOmyx

Source: L.E.K. interviews and analysis

Most novel technologies reside within emerging companies or companies

with emerging diagnostics capabilities (acquisitions are expected)

Example Emerging CDx Technologies



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5

Most emerging companies lack a range of important CDx capabilities; even

emerging technologies within established companies may lack infrastructure

and logistics support


CDx partner selection criteria Emerging technology

Emerging company

Emerging technology

Established company

CDx

development

capabilities

Technical capabilities and expertise Core competency

Novel test development experience

Therapeutic area expertise

Regulatory experience CE / 510(k); rarely PMA

Operational

and

commercial

infrastructure

Testing infrastructure / installed base Initially limited

Manufacturing infrastructure

Pricing and reimbursement

Sales and marketing

Logistics support Outside of competency

Company

background

Global footprint

Financial health

BioPharma partnering experience

Novel CDx technology partner strength

High Moderate Low Relative strength



CONFIDENTIAL

CDx access is a significant issue even with established technologies;

access solutions will be critical when working with emerging technologies

Advanced NSCLC patients

Drug and test awareness

Sample accession

Lab access

Test ordering

Testing and reporting

Drug utilization

Reimbursement

Negligible

Percent not tested

15-20%

5-10%

0-5%

5-10%

Negligible

0-5%

Total 25-50%

Directional


Key risks for emerging CDx technologies:

Sample access:

- Test requires significant sample

- Test requires non-standard sample

(e.g., fresh tissue in the U.S.)

Lab access:

- Limited installed base

- Central lab model

- Lack of sample logistics support

Lack of established reimbursement


6 © 2013 L.E.K. Consulting LLC. All rights reserved.

CONFIDENTIAL

7

A range of mitigating strategies may be considered (typically customized for

each situation):


Platform risk Work with novel reagent companies compatible with cleared platforms

- RNA FISH / Flow (e.g., ACD, Affymetrix)

- qPCR (e.g., MDxHealth, Epigenomics, Asuragen)

- dPCR (Sysmex / Inostics; leverages qPCR and flow)

Pre-analytical / channel partners for sample access and logistics (e.g., BD, GE Healthcare)

Coalition / consortium efforts with other pharma and stakeholders (e.g., Foundation Medicine

Master Protocol)

Clinical labs Work with labs across the R&D and commercial value chain (build, partner, finance, acquire):

- Technology access (e.g., Myriad, Foundation Medicine)

- Site-specific PMAs for accelerated timelines, reduced regulatory risk and lower costs

- Commercial support including logistics, S&M, reimbursement (multiple across regions)

Partner network

Appreciation of partner value drivers, needs and capabilities

Coordination across multiple partners

Partnering

excellence


opportunities and challenges associated with novel companion diagnostic technologies

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