NanoString, Snapping Up Genomic Health Veteran, Seeks to Prove Economic Value of Cancer Diagnostic
There aren’t a lot of success stories out there in molecular diagnostics, but Redwood City, CA-based Genomic Health (NASDAQ: GHDX) is one. So if you’re the CEO of a small private company like Seattle-based NanoString Technologies, and you’re trying to find a way to turn an innovative scientific instrument into a bigger moneymaking diagnostic tool, that’s one obvious talent stable to raid.
That’s what NanoString did this week, as it hired J. Wayne Cowens, the former vice president of clinical oncology at Genomic Health, as its new chief medical officer. I figured this was more interesting than the average run-of-the-mill personnel blurb, given that so much of NanoString’s future is riding on its understanding of the clinical diagnostics business. Plus, Cowens brings an unusual blend of experience as a medical oncologist who treated patients, many years in the pharmaceutical industry, and years spent working on new molecular diagnostics for cancer.
“If you had asked me at the outset of our search, what would the ideal candidate look like, I would have said ‘Give me the guy who built the pipeline at Genomic Health,’” NanoString CEO Brad Gray says. “We were lucky enough to find him and attract him here.”
NanoString is now clearly charging ahead fast on its diagnostic plan with a mostly new management team installed since biotech industry veteran Bill Young joined as executive chairman a year ago, and Gray, a veteran of Cambridge, MA-based Genzyme (NASDAQ: GENZ), arrived as CEO in June. NanoString bears watching in the local innovation cluster, as a spinoff from the Institute for Systems Biology that has advanced through years of R&D to the marketplace. The company makes a digital instrument designed to help scientists determine the extent to which multiple genes are dialed on or off in a sample-what’s known as gene expression analysis. The company has built a roster of academic customers at top institutions like the Broad Institute of MIT and Harvard, Caltech, and the University of Washington.
NanoString first started selling its instrument, called nCounter, in July 2008, and although it raised $30 million almost a year later, it went through a period of more than a year with no permanent CEO calling the shots. But the company made some important progress on a couple key fronts in the past six months, Gray says. The sales team has started selling the nCounter machine to pharmaceutical customers, who now make up about 20 percent of the users. And in the final quarter of 2010, NanoString’s sales boomed, as it increased the installed base of its nCounter machines by about 20 percent, Gray says. That momentum has enabled NanoString to fill out its management team, boost its overall staff to about 90 people, and start having serious talks with investors about pumping in another round of financing during the first half of this year, Gray says.
One hot quarter doesn’t make a trend, and NanoString isn’t yet profitable, but Gray says the increase in the customer base is “a testament to the tremendous momentum we have on the commercial side.”
The momentum certainly didn’t hurt in recruiting Cowens, who says he wasn’t aware of NanoString until he heard from a recruiter. But as he listened to the company’s diagnostics ambitions, he liked what he heard.
It helps to understand a bit about where Cowens is coming from. Genomic Health runs a centralized lab where physicians send samples from patients with breast cancer. The company performs a sophisticated genetic test that predicts whether a patient’s cancer is likely to relapse after a tumor is surgically removed, or whether it’s likely to stay benign. That information—which Genomic Health charges $4,000 per patient to obtain—is supposed to help doctors and patients decide how aggressively … Next Page »