Challenges
to Molecular Diagnostics Will Yield Growth Opportunities for New
and Improved Tests:
An Interview with David A. Okrongly, Ph.D., Bayer
Diagnostics
Advancing
technologies are pushing the diagnostics industry to the fore, and the
molecular diagnostics industry in particular is emerging as a powerful
health care player with tremendous potential. The molecular diagnostic
industry is characterized by a very diverse, constantly changing technology
base that continuously produces new opportunities and applications. In
particular, the emergence and growth of personalized, or pharmacogenomic,
medicine, is providing tremendous revenue opportunities for molecular
diagnostics.
In
this interview, David A.
Okrongly, Ph.D., Senior
Vice President of Global Research and Development
at Bayer HealthCare, LLC,
Diagnostics Division discusses current and emerging trends in this dynamic
market. This article is excerpted from the new CHA Advances Report,
Molecular Diagnostics: New Growth, New Markets. For more information about
this report, please visit http://www.advancesreports.com/all_reports/2005_57_Molecular_Diagnostics/overview.html
or contact Cindy Ohlman @cohlman@chadvisors.com.
Cambridge
Healthtech Advisors (CHA): What is Bayer Diagnostics’ strength as a
molecular diagnostics company?
David
A. Okrongly (DAO): Our strength is in
delivering a very comprehensive set of tests that can be used to manage
critical diseases such as HIV, HCV, and HBV––tests needed at all stages
for a patient’s
disease
management. For instance, with respect to HIV, we can provide a serology
test to diagnose its presence, a viral load test to stage and monitor the
disease, and HIV resistance testing that can be used to help guide
physicians in making choices for therapy after treatment failure. We can
pinpoint the resistance-inducing mutation with our sequencing technology and
then provide guidance with an FDA-approved mutation and resistance report
that will direct the physician to options for going forward with changes to
that patient’s triple therapy. Our strength is in being able to provide
this comprehensive, disease management menu, empowering a laboratory to work
with one supplier for all its needs.
CHA:
What percentage of Bayer
Diagnostics’ revenues come from molecular diagnostics?
DAO:
Bayer is number two, and we occupy
approximately 10% of the total molecular diagnostics market (excluding blood
screening).
CHA:
What percentage of the company’s
R&D activity is focused on molecular diagnostics?
DAO:
I usually talk about it as a percent
of sales, so we are putting roughly 25% to 30% of our molecular sales back
into R&D for molecular diagnostics. It is currently a high investment
area for us due to the emerging technologies and tests that require
investment now for the long run.
CHA:
What kind of growth are the HIV and
hepatitis testing markets experiencing?
DAO:
It is steady growth, currently 10% to 12% annually. Asia is growing faster,
which may change the rate in time and will undoubtedly influence the menu we
develop as well. When you look at the difference in chronic infection rates
in hepatitis B in Asia, compared to Europe and North America, it is a very
different kind of market. The patient with chronic infection requires
different management and different types of tests. We are actually looking
at that more from our immunodiagnostic line of products.
That
raises an important point: When we look at in vitro diagnostics, we
tend to view molecular and immuno- as two different markets, and from a
laboratory perspective, they really are not. Rather, they are part of the
total package of management for a patient. As I mentioned with HIV, the
initial diagnosis could come from a serology test that detects antibodies to
HIV. That kind of sets the whole ball in motion for all of the molecular
follow-up––CD4, viral load, and HIV genotyping––that is used
afterward to fully characterize and monitor the disease.
CHA:
To what extent is Bayer’s molecular
testing group focusing its R&D activity on improving existing HIV and
hepatitis tests versus developing new products for other diseases?
DAO:
I would guess that it is about 3:1:
three parts focused on improving, one part developing new. With respect to
improving existing assays, the challenge is that our current customers have
changing demands with respect to productivity and ease of use, which require
new investment in either platform or assay technology. Added to that is the
burden of regulatory approvals for the changes that are going to be made to
that product. In fact, that becomes a significant part of both the time and
cost of doing the product development with existing assays.
We
are very excited about some new genomic products that will be launched into
the market next year. One is a cystic fibrosis test. Also in development is
cytochrome P450 work, and we have active research efforts in pharmacogenomic
tests that could be used for patient selection for certain types of therapy.
CHA:
What parallels do you see between the
way HIV is managed today and the way that cancer will be managed in the
future?
DAO:
HIV has been successfully managed for
millions of patients because of the development of highly targeted
therapies––drugs that target specific HIV enzymes or that block the
entry site for cell entry of HIV. With those specificities came tremendous
therapeutic possibilities, without horrible side effects, for those
patients. However, the virus was able to mutate and find ways around those
therapies. We are seeing the first signs of that with targeted therapies in
oncology as well, and I think we will see the development of a parallel set
of tests that are being used in cancer to select patients for targeted
therapies. We are going to look at genotype to select what therapy patients
should be administered. Plus we are going to monitor that patient for a
biomarker that will indicate if the cancer is under control or is beginning
to grow again. That could be coupled with other modalities of diagnostics,
like in vivo diagnostic techniques, which are becoming a very
sensitive indicator of relapse. When a patient shows signs of relapse, one
would sample or genotype again to find out what appropriate second-line
therapy should be used.
I
see this parallelism in disease management with what has proven effective
with HIV and where targeted cancer therapy is headed. I also believe that
there is going to have to be a parallel activity with diagnostics to support
that new paradigm for cancer treatment.
CHA:
You have been quoted as saying,
“The IVD industry is facing an enviable challenge other industries could
only hope for: managing the implementation of scientific breakthroughs over
the past half century…” Why is this an enviable challenge?
DAO:
Because it is a fantastic growth
opportunity for the industry, I think diagnostics has gone through cycles of
great excitement followed by lull periods, during which it was viewed as a
cost center for health care—not a value contributor—and a drain on the
system. I think changes in our understanding of human disease are going to
open up tremendous opportunities for high value-added diagnostic tests to
better and more efficiently manage patients in an increasingly budgetary
constrained area of health care. It is amazing when you look at statistics:
Although diagnostic testing is less than 5% of the actual hospital cost for
a patient and less than 2% of Medicare costs in the United States, the
impact is felt in at least 60% of the decisions that are made, especially in
prescribing drugs. And the new targeted drugs that are coming out––for
cardiovascular disease, for cancer, for infectious disease––are not
getting any cheaper. I think payers are willing to pay for effective drugs
that are expensive, but they are very frustrated with paying for ineffective
or marginally effective drugs or drugs that in some cases are actually
harming patients. I believe that it is now a great opportunity for
diagnostics to once again establish itself as a highly valued contributor to
managing patients and costs by providing new tests to better select patients
for therapy-giving decisions.
CHA:
What do you think is the most
exciting development in molecular diagnostics today?
DAO:
Without a doubt, it is
pharmacogenomics. That does not mean that virology, bacteriology, and the
types of testing that are done for infectious diseases do not have their set
of exciting possibilities and challenges, but I think pharmacogenomics will
really change the way we practice medicine, and that is exciting.
Pharmacogenomics
has been around for a long time. People have taken something that we
understood as good clinical pathology and given it a new name. For example,
women going on hormonal therapy after breast cancer have been involved in
pharmacogenomics for many years, when estrogen and progesterone receptor
testing was done on their biopsies to determine if they were therapy
candidates. However, we are just now realizing that where we are headed with
drug development is going to put an even higher premium on understanding the
disease process at a molecular level. We need to really understand why this
cell is replicating uncontrollably, why this patient is developing plaques
in the arteries, or why this virus or bacteria is continuing to grow despite
therapy. Those are the kinds of questions that we are going to be asked in
the future with a new set of tests.
CHA:
What do you think is the most
promising emerging technology in the molecular diagnostics industry?
DAO:
I think most promising emerging
technology is the ability to quickly do multiple tests in an array of some
kind or another––to multiplex. I am not talking about 500,000 SNPs in
one chip, although we will discover what polymorphisms are relevant by
researching with this technology. For most clinical decisions, no more than
100 individual tests are likely to be needed in an array. Having this
technology routinely available offers tremendous possibilities. I am talking
about being able to rule out or rule in a viral or a bacterial infection in
a patient with respiratory disease or to take a tumor sample and run it over
an array and be able to tell the physician that this patient is likely or
not to respond to Taxotere (docetaxel). These are the kinds of exciting
possibilities that are out there now and that emerging technologies are
allowing. Some great multiplex platforms are available. Luminex, for
example, has a bead suspension array with a multiplexing capability.
Affymetrix and the chips that it provides are available now in more
cost-effective, smaller array formats, which I think are going to become
part of the standard workup for diseases in the future.
CHA:
What do you see as some of the greatest technological challenges to the
industry?
DAO:
Right now I think the greatest
challenges are automation and removing the need for a PhD molecular
biologist or virologist to do the tests required to answer questions we will
have in the future. We need to simplify all aspects of sample preparation
and the integration of patient data so that we are not making mistakes on
results being reported from the laboratory. Laboratories are also facing
both a financial and a skilled technologist shortage, and they are looking
to IVD manufacturers to provide cost-effective solutions for getting their
daily workload done within their resource constraints.
Another
challenge is point-of-care testing, particularly for infectious diseases.
Many infectious disease tests would benefit from a point-of-care setting.
For example, people who show up at an STD clinic for
chlamydia
or gonorrhea tests are not likely to come back for their antibiotics even
after their test results have confirmed that they are infected. If we can do
that kind of testing and deliver the antibiotics at the point-of-care, we
can limit the spread of these diseases. The technologies are not available
yet for letting us do that in a cost-effective manner.
CHA:
How about bioinformatics? Do you view
that as a challenge?
DAO:
I think that may become an important
challenge some day, when we can convince wealthy people having children to
do a genome scan, track all their health information for their lifetime on
an electronic medical record, and be able to access this information on
demand for making clinical decisions. The biggest challenge for informatics
today is that we are using 500,000 SNP arrays to try to unlock
predisposition factors, risk factors, or selection factors for drug therapy.
Trying to associate data from 500,000 SNPs collected on several thousand
patients into meaningful correlations is a challenge.
The
software capabilities exist and those sorts of studies are being done, but
it is challenging.
CHA:
Do you view education as a challenge?
DAO:
Education is a challenge, along with
any other activity that involves some level of marketing, because we are not
an industry with huge profit margins. We do not have a lot of budget to do
the types of product development activities that we need to do and then kick
in millions of dollars to educate people about why, if they have HIV, they
need to get viral load tested and why, if their viral loads are moving up,
they need to be tested for HIV resistance.
And
then the question is, whom do you educate? Do you educate physicians? Do you
educate patients? Do you educate laboratorians? I think you have to educate
all three, but to what extent? And what kind of coverage can you achieve,
given the resource limitations? I think we rely a lot on laboratory
directors who know how to take information from the IVD industry and from
the published literature in clinical diagnostics and convert that into
knowledge for their physician base. There are not enough of those people,
however. We need more laboratorians who are able to do that. One of our jobs
is to provide that kind of information to laboratories and to sponsor
clinical trials that provide the basis for the dialogue with their
colleagues; it is a very difficult thing for us to take that next step and
educate physicians directly. For example, we have a test for complex PSA
[prostate-specific antigen] that we know would save this country millions of
dollars in unnecessary biopsies every year, but getting that educational
message out beyond a group of thought-leading urologists who did our
clinical trials has been a daunting challenge.
It
is even tougher to go to patients, although the Internet is starting to
change that. Many inquiries on our websites are coming from patients who
find out about a new test we have for monitoring breast cancer, contact us,
and want to share this information with others in their group.
CHA:
Does Bayer Diagnostics have a
blockbuster diagnostic product?
DAO:
Our blockbuster is BNP [B-type natriuretic peptide; elevated levels of
BNP indicate the presence of heart failure] testing. That has taken off like
a rocket and shows no signs of leveling off in its trajectory. We timed it
really well, like a surfer hitting the wave just right. There had been a
smoldering of basic research on BNP in the literature for many years. People
were interested in it and were studying it first in animals and then in
humans. Then some drug development activity occurred in the area, which led
to an influx of R&D money to look at its role in congestive heart
failure. A manual version of the test came out from Biosite, which did a
nice job of educating the market. We then launched the first automated BNP
test worldwide about 2½ years ago, and it just took off.
CHA:
Why do so few pharmaceutical
companies have diagnostics divisions?
DAO:
I think the main reason is that the
business of diagnostics does not fit the pharmaceutical model very well. It
involves moderate investment and moderate return, not the high-risk reward
type of activities that pharmaceutical companies are used to. Those
companies that had it either saw strategic value in holding it or have been
fortunate in enjoying a sustained profitable experience.
Another
reason is the complexity of the business. Our platforms are software,
engineering, and chemistry marvels––they really are, and it is something
that it is difficult to grasp from a pharmaceutical company perspective,
where they have a straightforward model for drug development. They do not
want to understand all the complexities of manufacturing instrumentation,
the obsolescence of computers, new monoclonal antibody technology, and so
forth, necessary for participating in the diagnostics business. I think most
pharmaceutical companies found it distracting to be involved with
diagnostics and sold their divisions.
CHA:
Do you think that more pharma
companies will become involved in molecular diagnostics in the future?
DAO:
This gets back to the whole question
of pharmacogenomics. Certainly, Bayer HealthCare views it as an asset to
have a worldleading diagnostics and pharmaceutical division together in the
same group. However, there is still a lot of resistance within some pharma
companies to accepting the notion of limiting their market for a new drug by
using a diagnostic test to select the subset of patients who will respond.
In reality, a pharmacogenomic strategy for drug development has yet to be
fully established as a business model by anybody. For example, why would a
pharmaceutical company intentionally limit its potential market share for
colon cancer if it thinks it has a good enough drug to get approval for all
colon cancer patients? We have not really crossed that line yet at which the
standard way of thinking is to get the drug approved faster by focusing on a
subset of patients in whom it will be highly effective and not treat the
rest.
CHA:
Won’t that kind of thinking need to
be there in order for pharmacogenomics to take off?
DAO:
Yes. That is why everybody is trying to guess when the new molecular
testing is really going to arrive.
CHA:
What about consumer concern with drug
safety or efficacy? Will consumer concerns drive the field forward?
DAO:
I think consumers are going to play a
role. If the consumers know that one drug is highly effective in the right
patient, they are going to educate themselves and ask: Why are you putting
me on this drug if I should have a test to see if I should go on an
alternative?
I
also think the FDA is going to play a role and that it is not going to sit
by idly while pharmaceutical companies have very noticeable problems with
their drugs out in the field. The FDA is probably going to start requiring
more extensive surveillance monitoring and may even mandate that
pharmacogenomic data be generated as a routine part of clinical trials so
that it can look at the data and determine if the labeling should include
subsets of patients rather than all patients. I think the payers are going
to demand it, too. They are not going to want to pay for drugs that don’t
work.
CHA:
If more pharmaceutical companies
become more involved with molecular diagnostics, will they establish (or
re-establish) internal diagnostics divisions?
DAO:
They have options, one of which is to
form a strategic alliance or partnership with a diagnostic company. Another
is to start up their own molecular diagnostics division, although there is a
huge barrier to entering the market. The same reasons that they got out of
the business of molecular diagnostics are still there. Other options include
drug test–co-marketing agreements and partnering with reference
laboratories.
CHA:
To what extent are companion
diagnostic tests co-developed, in reality, with their targeted therapies (as
opposed to being developed separately, after the drug has been developed and
tested)?
DAO:
There is a difference between the way
it works in theory and the way it works in reality. In reality, if Phase III
is unsuccessful, but the sponsors happen to have collected some kind of
immunohistochemistry data on all the patients and found that those
individuals who stained positive for a particular marker were the
responders, the sponsors will try to convince the FDA to approve the drug
with labeling limitations for patients who have positive
immunohistochemistry results. That is the way it is happening now. The tests
are used mostly in salvage mode with drugs that have efficacy problems in
Phase III.
In
the future, the biology of particular targeted therapies and their
associated patterns of disease are going to be understood in very early
development and will be reviewed through the entire drug development
process. Patients enrolled in Phase I trials will have blood drawn and
tissue samples taken, and those putative biomarkers will be evaluated. As
the drug moves through Phase II, those markers will be refined. A decision
will have to be made by the time Phase III begins regarding whether or not
to use those biomarkers to select patients for enrollment in the definitive
trial. In summary, I think companion diagnostic development will gradually
move toward the earlier phases of the drug discovery process, but that is a
long way from where we are today.
