NanoString Technologies has been talking for months about diving into the molecular diagnostic business. Now it is going full-steam ahead with a plan to use its genetic analysis instrument to help physicians better understand the severity of certain kinds of breast cancer.
The Seattle-based company is announcing today that it has obtained an exclusive worldwide license to technology from Bioclassifier, a coalition of four academic researchers, which has intellectual property around what is known as the PAM50 gene signature. NanoString will now have the right to develop an instrument that incorporates the activity of the 50 genes involved in this array, which can be used to classify breast cancer patients into four distinct subpopulations with varying degrees of disease severity. Financial terms of the arrangement aren’t being disclosed.
It’s the kind of information that’s hard to obtain consistently and cost-effectively with any other device. So NanoString is betting that it can help popularize this kind of diagnostic test by selling a new instrument that can give physicians a new piece of information that will help them better understand a patient’s prognosis, and therefore help guide how aggressive he or she ought to be with a treatment strategy. NanoString currently sells its device as a research tool to academic groups and Big Pharma companies, and with this new technology, it is now free to create a modified instrument that can tap into potentially larger diagnostic markets. The plan is to run tests to win an initial FDA approval for the device in 2012, and start branching into other specific forms of cancer diagnosis after that, says CEO Brad Gray.
“We’ve gone from talking about going into molecular diagnostics to now working actively to make it happen,” Gray says. “It’s a very exciting moment for the company.”
NanoString outlined its strategy in some detail back in February, when I did an exclusive interview with chairman Bill Young, and then again when Gray was introduced as the new CEO in June. The company, founded in 2004 with technology from the Institute for Systems Biology in Seattle, first began selling its instruments to researchers in July 2008. It’s a digital machine, called nCounter, which helps biologists determine the extent to which many genes are dialed on or off in a sample-what’s known as gene expression analysis.
There are entrenched competitors in this field, like Santa Clara, CA-based Affymetrix (NASDAQ: AFFX), Carlsbad, CA-based Life Technologies (NASDAQ: LIFE), and San Diego-based Illumina (NASDAQ: ILMN). NanoString isn’t yet profitable, but it has built a small and influential fan base of academic researchers at places like the Broad Institute of MIT and Harvard, Caltech, and the University of Washington. The technology is supposed to help researchers do a new kind of large-scale genetic experiment, where they might compare 50 or 100 genes from 100 different patients to see how they respond to certain therapies.
While that kind of broad capability allows academic scientists to use their creativity to run lots of experiments they couldn’t easily do before, NanoString sees more future potential in a similar instrument that’s tailored to be a workhorse diagnostic machine. In the case of breast cancer, this diagnostic instrument could conceivably be used to help classify patients who are newly diagnosed, Gray says. About 207,000 women are diagnosed with breast cancer each year in the U.S., according to the American Cancer Society.
The technology to help physicians stratify those women, based on the PAM50 gene signature, comes from four researchers. They are: Charles Perou of the University of North Carolina; Matthew Ellis of Washington University in St. Louis; Philip Bernard of the University of Utah; and Torsten Nielsen of the BC Cancer Agency.
Those researchers have long been curious about how useful it might be to physicians if they could classify patients based on intrinsic subtypes based on their PAM50 gene signature. Through research efforts, they learned that the NanoString tool could generate a consistently reliable result, Gray says. The subtypes are thought to be useful for both establishing a patient’s prognosis, and showing how a patient is or isn’t responding to therapy, Gray says.
NanoString hopes to tap into this market through selling a modified version of its nCounter instrument to hospitals and pathology labs, as well as the assays to run on the machines. This is different than one clear alternative—setting up a centralized company service lab, and asking doctors to ship the samples in for analysis. “We’ll allow the pathologists to do their job,” Gray says.
The centralized lab approach has been popularized by the market leader in molecular diagnostics for breast cancer, Redwood City, CA-based Genomic Health (NASDAQ: GHDX). NanoString hopes that by selling instruments to the customers and letting them run the machines themselves, it will enable them to get their test results faster, and allow for global distribution, Gray says. The information on PAM50 subtypes itself will also be a new piece of data beyond what is widely available to clinicians today, he says.
Right before hanging up with Gray—actually my cell phone battery died, an occupational hazard, I suppose—I asked about how the traditional life sciences tool business is performing for NanoString. He told me that many pharma companies have started buying the nCounter, and he followed up with an e-mail to say specifically that nine biotech and pharma companies now use the machine for their R&D efforts. By 2012, he said the life sciences tool business will be profitable, although he stopped short of saying the company at large will be profitable then.
By posting a comment, you agree to our terms and conditions.