Licensed to test

LAVAL, Quebec —Warnex Medical Laboratories has licensed fromGerman molecular diagnostics firm Epigenomics non-exclusive rights to theSeptin9 biomarker.

Under the terms of the agreement, Warnex has obtained therights to establish a laboratory-developed test for Septin9 and offercolorectal cancer blood testing services in Canada.

Warnex plans to launch the testing service in the next fewmonths. As the first laboratory to offer Septin9 testing in Canada, Warnex,subject to certain conditions, enjoys a time-limited head-start period ofexclusivity for the Canadian market.

Oliver Schacht, CFO of Epigenomics, notes that his companyis entitled to receive royalties based on Warnex's test sales.

"Analysts have typically estimated Epigenomics' royalty ratefrom such laboratory licensing deals to be in the high single-digit to lowdouble-digit range," he says.

Further contractual details were not disclosed.

Mark Busgang, president and CEO of Warnex, says his companyis pleased to add the colorectal cancer test based on real-time PCR technologyto its service offering as part of a continued commitment to offering the mostadvanced specialized diagnostic services to Canadian healthcare professionals.

"This blood test, using Epigenomics' Septin9 biomarker,offers an easy and accurate method to help diagnose patients with colorectalcancer," he says.

Schacht points out that Warnex was an attractive partnerbecause it is "one of the most innovative and leading laboratory players inCanada with a clear focus on novel molecular diagnostics. The team at Warnexhas been very enthusiastic about the Septin9 colorectal cancer blood testopportunity, and they are working closely with our team to coordinate marketingand positioning efforts. So from our end, they are a highly motivated anddedicated partner that is ideally positioned to introduce such a novel testconcept in Canada."

According to Schacht, the measurement of Septin9 in a simpleblood draw is more convenient for the patient and for the doctor than a stoolbased test or an endoscopic examination. Secondly, early detection ofcolorectal cancer in a simple blood draw has the potential to overcome the mostchallenging hurdles in colorectal screening—patient compliance.

"Epigenomics showed in seven clinical studies between 2005and 2008 with a total of more than 3,300 subjects that Septin9 in blood plasmais a strong biomarker for the presence of colorectal cancer," he notes."Furthermore, the test has been prospectively validated in the screening cohortstudy PRESEPT. Since October 2009, the test is available as a CE marked kit inEurope already and is marketed as a CE marked test kit by Abbott in Europe andAsia Pacific."

In this short period of commercialization, Schacht notesthat the Septin9 test has proven its ability to detect cancers at early stagesfrom simple blood samples in the European market.

"As a simple one-marker the test has clear advantages interms of complexity and costs compared to multi-marker RNA panel tests," hesays. "Using blood rather than stool is another clear advantage for the Septin9test."

According to Yvan Côté, vice president and general managerof Warnex Medical Laboratories, the license between Warnex Medical Laboratoriesand Epigenomics was attractive because the Septin9 blood test is a specializeddiagnostic test for colorectal cancer screening that clearly answers a clinicalunmet need.

Côté adds that Warnex Medical Laboratories is a referencelaboratory in high-value specialized diagnostics.

"Warnex does not perform any routine tests such as a basicglucose measurement, but rather, concentrates its efforts in offeringspecialized diagnostic services in niche markets with a clinical unmet need,"Côté adds. "One of Warnex Medical Laboratories' growth strategies is to bringmore high-value, specialized diagnostic tests to the Canadian market. Giventhat the Septin9 blood test for the screening of colorectal cancer is a highlyspecialized diagnostic test and that it answers a clinical unmet need, it willclearly be a great addition to the niche services that Warnex MedicalLaboratories already offers to the Canadian population."

Two examples of such niche services currently offered byWarnex are the KRAS test that helps in the selection of treatment options forcolorectal cancer and the PCA3 test for the detection of prostate cancer.

"This agreement is an important further step in theinternational rollout of Septin9 testing, which is already commerciallyavailable in the US and Europe," says Geert Nygaard, CEO of Epigenomics.

Berlin-based Epigenomics sells the CE-marked test EpiproColon, which it said is the world's first regulatory cleared moleculardiagnostic test for the detection of colorectal cancer in blood that is basedon the Septin9 biomarker.

This paved the way for a convenient blood test forcolorectal cancer early detection that can easily be integrated into thepatient's routine physical, is non-invasive and does not require any drug ordietary restrictions.

Colorectal cancer is the second-leading cause of cancerdeath in Canada. In 2009, an estimated 22,000 Canadians were diagnosed with thedisease and 9,100 died from it.

Warnex currently offers KRAS genetic testing, which has beenshown to help identify patients whose tumors may become resistant to anti-EGFRtherapies like Vectibix and Erbitux. The assay could become an importantrevenue driver for labs that perform it because the American Society forClinical Oncology in January 2009 urged routine KRAS testing to guide treatmentfor metastatic colorectal cancer.

According to Côté, the goal is to develop and validate anassay for Septin9 according to our standards in the next three to six months.

"The success of any new service that Warnex MedicalLaboratories launches is measured by looking at 3 different parameters: (1)Increasing revenues as the service is rolled out in Canada, (2) Broad adoptionof the new service by physicians (i.e. increasing number of physicians usingthe service) and (3) Client satisfaction, patients and physicians," Côtéconcludes.

Schacht points out that there are some milestones on the wayto the success of Septin9 in Canada.

"As a first important step we have to create acceptance bykey opinion leaders in the country," he notes. "We anticipate commercialtraction as a lab testing service and expect ultimately IVD test kit sales inCanada once a Canadian cleared IVD kit becomes available."

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Moreover, the test has definitely the potential to increasecompliance with CRC screening and Schacht says the company hopes to measurethat in the near future by the lives saved due to higher compliance withcolorectal cancer screening.

"With the high health economic benefit of increasing CRCscreening compliance by performing a simple blood test and detecting more andmore CRC cases early, we expect that the survival chances are much better andcosts to healthcare system are low," he concludes.