Indi Looks to Show Bang for the Buck With New Lung Cancer Blood Test

11/7/13Follow @xconomy

[Updated: 11 am PT] People with a history of smoking, and people who are getting up there in age, have an increased risk of lung cancer. That’s been known a long time. But only recently have doctors seen hard data that says routine screening tests for ‘high-risk’ patients, which attempts to spot lung tumors early, really pay off by improving long-term survival rates.

That’s great news for thousands of people with lung cancer, and those who are worried they are at risk. But even so, about one-fourth of the time when the scans show a suspicious spot, physicians can’t say for sure if it’s benign or malignant. What’s a doctor supposed to do then?

Seattle-based Indi is betting now that it can create a new category of diagnostic test that provides valuable information in that type of situation. It has recently started selling a diagnostic test that takes a standard blood draw, and uses it to look for a pattern of signature proteins in the blood that can say when the patient shouldn’t worry. A recent study by the company and its collaborators said this test is accurate about 90 percent of the time.

The idea, envisioned years ago by biotech pioneer Lee Hood at the Institute for Systems Biology, is now emerging from the laboratory and entering the commercial arena under the name “Xpresys Lung.” These next few months will be crucial in determining whether this early application of systems biology, or “personalized medicine,” is going to truly be the basis for a viable business. The key will be showing that the test is accurate enough to provide information people truly trust in medical practice, and that the information is valuable enough to justify a premium price.

“I don’t think any of the tests we use, whether it’s CT scanning, PET scans, or biopsy, is perfect,” says Albert Rizzo, the section chief of pulmonary and critical care Medicine at Christiana Care Health System, in Newark, DE. “If you can come out with a blood test, with no radiation, with very low risk, and can give a patient reassurance the same way a CT scan or PET scan can, that’s a big positive.”

Even so, Rizzo isn’t quite ready to jump on the bandwagon right away. “If it’s a $3,000 to $4,000 test, until insurance companies are willing to pay for it, it’s not something I’m going to write orders for.”

Indi has sought to build momentum for this product rollout with a scientific paper published last month in Science Translational Medicine. The marketing push began in earnest last month at the American College of Chest Physicians annual meeting in Chicago. The company isn’t yet saying what price it is charging for the test, but CEO Al Luderer said recently it’s “in the same range” as traditional molecular diagnostic tests sold by Redwood City, CA-based Genomic Health (NASDAQ: GHDX), which charges $4,000 for a test that predicts when breast cancer is likely to recur.

One large private insurer, which Luderer says he can’t yet identify, agreed in September to reimburse Indi for its test, and the company is in negotiations with several others, he says.

Al Luderer, CEO of Integrated Diagnostics

Al Luderer, CEO of Indi

It’s hard to overstate the importance of these negotiations to the future of the company. Luderer says he’s confident that the company has the data it needs to show insurers its test is worth the money.

“The price is predicated on savings to the health system, not on what we think we should charge for it,” Luderer says.

Indi will have some time to figure this out. The company, founded in 2009, has gotten to the commercialization phase by putting a $30 million Series A venture financing to work. It now has 42 employees, and the beginnings of a sales force with a vice president of sales and three regional managers. The company’s lab at 219 Terry Avenue in Seattle is licensed to process samples from most places in the U.S., except New York, California, Rhode Island, and Florida, which have different application requirements, Luderer says. Between now and the end of the end of the year, Indi has a goal of identifying early adopter physicians and getting 200 commercial orders, Luderer says.

There is a plan in place for success, Luderer says. The company is seeking to raise a $40 million Series B venture round to help it capture more of its market opportunity, to be cleared to handle samples from all states, and complete a series of lab improvements that could enable its Terry Avenue lab to process as many as 15,000 blood samples a year.

Indi, for sure, isn’t the only operation … Next Page »

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