NEW YORK – The 40th Annual JP Morgan Healthcare Conference is being held virtually this week due to the ongoing coronavirus pandemic. Day three continued to be busy for firms operating in the diagnostics and genomic tools markets. Our coverage of presentations from day one and day two can be found here and here.
Below are brief reports on individual presentations webcast by the companies or through the JP Morgan conference portal on Wednesday.
Steve Rusckowski, Quest's president, chairman, and CEO, said during his presentation that while the company continues to see its testing business as a source of growth, it is increasingly focused on the opportunities provided by its information and services business.
"We see an opportunity to take our data and take our information and develop services that can help problems in healthcare," Rusckowski said, outlining a vision similar to the Lab 2.0 idea that many in the industry believe represents a promising way forward for labs. "Therefore, we see an opportunity to extend our services business."
Rusckowski also addressed Quest's COVID-19 testing business, noting that while the company expects a decline in COVID-19 testing volumes in 2022 versus 2021, it believes that testing for the virus would become a permanent part of its portfolio, similar to flu testing. He said that exiting 2021, Quest's base business had fully recovered to pre-pandemic levels.
Omicron led to a "steep increase" in COVID-19 testing volumes in the last two weeks of December and into January, Rusckowski said. Omicron put pressure on the company's testing capacity both because high infection rates had limited the usefulness of test pooling and because of labor shortages due to employees being out with the virus.
Quest averaged around 120,000 molecular tests per day in the last weeks of 2021 and more than 150,000 per day over the last week.
Looking at potential areas of growth for the company, Rusckowski highlighted its goal of capturing testing from more health plans, noting that Quest aims to capture at least 25 percent of the testing from each of the health plans the company participates with.
He also highlighted acquisitions and other deals with hospital health systems as a path to growth. Hospital labs, he said, will see "continued consolidation," "pressure on margins," and "problems with labor," all of which "afford us an opportunity to implement more lab strategies to become more productive and at the same time become more effective."
He suggested Quest's professional lab services business, through which the company provides lab services for hospital systems, could benefit from this dynamic. He noted that growth of this business would also bolster the company's advanced diagnostics business as it typically captures these system's advanced diagnostics testing as well as their routine testing.
Rusckowski also cited consumer-driven testing as a potential growth driver, putting the overall market at around $2 billion. He noted that this space has "grown considerably throughout the pandemic."
Quest believes the uptick in home and consumer-driven testing brought on by the pandemic will continue after it is over. "We believe that is a permanent shift in patients and consumers engaging with healthcare in a different way going forward."
Rusckowski said the company has begun to see inflationary pressures on labor and supplies and said it was looking at accelerating its efforts around automation to address those pressures. He said Quest anticipates wage increases in the 3 to 4 percent range versus 2 to 3 percent in a typical year. Employee turnover rates are also high historically, Rusckowski said.
Discussing the Protecting Access to Medicare Act, he said Quest was working with members of Congress in hopes of getting legislative changes to the law before scheduled cuts go into place in 2023, echoing a sentiment made by several other industry groups. He said Quest anticipates around 100 basis points of price erosion outside of PAMA.
Wednesday morning Quest released preliminary Q4 2022 results showing a 9 percent decline in Q4 revenues year over year but a more than 14 percent rise in full-year 2021 revenues.
CEO Douglas Bryant said Quidel's proposed $6 billion acquisition of Ortho Clinical Diagnostics will enable his firm to leapfrog other pure-play in vitro diagnostics companies and jump from the company with the 12th-highest revenues to one with the fifth-highest revenues, based on the firms' total 2020 revenues of $3.43 billion.
Quidel continues scaling its COVID-19 rapid testing from its current 40 million tests per month to an expected 70 million tests per month — specifically with production rates of 20 million Sofia tests and 50 million QuickVue tests — by mid-February. Bryant noted that many of Quidel's Sofia analyzers placed for COVID testing came with three-year contracts, so the firm expects future revenues on these systems going forward.
Quidel expects to make available a digital health add-on for QuickVue, called Qvue, that can enable results reporting for employee testing as well as offer guided testing and reporting in a telehealth context. The firm is also developing the Sofia Q, with the possibility to provide at-home instrumented diagnostic testing in the future.
For diagnostics overall, Bryant said a paradigm shift has occurred in the public. "The average individual has five respiratory infections, I'm told, and for the most part the public never previously thought about being tested," he said. "COVID has changed the way people think, and if they don't have COVID they want to know what they have," Bryant added.
Quidel has launched its "significantly delayed" Savanna instrument in Europe, Bryant said, adding, "We are super proud of where we are with this product." The firm anticipates an excess of $300 million in Savanna revenues by year three after US launch and sees potential for sales growth through Ortho's commercial channel.
Initially expected to launch in 2015, the final iteration of Savanna features "the latest and greatest" technologies, Bryant said.
The sample-to-answer system has multiplexing technology for four PCR reactions in each cartridge to test three analytes plus a control. It performs 45 thermal cycles in 12 minutes, resulting in a turnaround time of about 25 minutes after extraction. It is also fully integrated, is "very easy to use," and can accommodate direct swabs as well as liquid samples, with test components that are stable at room temperature, Bryant noted. The firm has a menu in development including small panels for respiratory infectious diseases, gastrointestinal illnesses, sexually transmitted infections, herpes viruses, and pharyngitis.
"While the promise of molecular [testing] has been significant, companies that have participated in going after that segment haven't done as well as they would have hoped," Bryant said.
"There is a lot of growth there still to be had," he said, adding that although the sample-to-answer molecular space is crowded, there are not many competitors with the attributes to further penetrate the market, including ease of use, turnaround time, and cost, that can lead to more uptake.
CEO Kevin Conroy said Exact Sciences has tested 7.5 million people with Cologuard and 1.5 million with Oncotype Dx.
The firm saw 18 percent year-over-year revenue growth in 2021, with a 30 percent jump in screening and 27 percent increase in precision oncology testing, as described in the firm's pre-announced FY21 earnings.
"We expect to achieve $2 billion in revenue this year, and we expect Cologuard to be a major contributor to growth," Conroy said. Furthermore, the firm expects to be profitable by 2024 through a leadership position in colorectal cancer screening, multi-cancer early detection, and minimal residual disease recurrence and monitoring with a total addressable market of $60 billion.
Exact will release data on Cologuard 2.0 at the ASCO Gastrointestinal Cancers Symposium next week. The test can improve the false positive rate and pre-cancer detection of Cologuard through the use of different biomarkers, Conroy said. The firm's forthcoming colon cancer blood test will be made available through the current screening platform and noted that internal case-control data exceeds Medicare requirements.
The firm plans to bring together methylation, mutation, protein, and other markers to improve upon multi-cancer early detection technologies. "We are the only ones taking this approach, and this combination through two major studies we are doing this year will lock down our test and allow us to move into a clinical trial and make our test available as a lab-developed test prior to FDA approval," Conroy said.
In the precision oncology business, which includes Oncotype Dx and Oncotype Map brands, Conroy said 98 percent of US oncologists have ordered the tests, which have been evaluated in more than 300 publications.
Exact is also gathering case-control data for minimal residual disease recurrence tests that are tumor-informed and tumor-naïve. Within the MRD space, Conroy said Exact Sciences is set apart from competitors like Natera by its commercial organization. "This is a huge opportunity, we're a company that can help answer these questions, and large health systems are telling us, 'We don't want to work with 20 different providers,'" Conroy said.
Conroy noted that recently acquired PreventionGenetics will help the firm launch its germline hereditary disease test. "They have whole-genome sequencing expertise, a team of 15 Ph.D. geneticists who help deliver great results for patients, and relationships with 300 health systems," Conroy said. The hereditary disease test will be deployed across every salesperson in the organization, he also said.
Conroy suggested that the market for hereditary cancer testing is "only minimally penetrated with the great work that Invitae and Myriad have done," adding, "We intend to expand the market, not take away share — our ability to call on 260,000 primary care physicians in all the large health systems in the US changes everything."
Bio-Techne is expanding its molecular diagnostics business using exosome-based technology to develop ExoTru, a kidney transplant rejection assay that analyzes exosomes from a urine sample, as well as tests for other indications, the firm's CEO Charles Kummeth said Wednesday.
The firm has selected an undisclosed partner that it may work with to develop and launch ExoTru but whether the deal goes through or not, it expects to go ahead and launch the assay this summer, he said.
As the basis of the new test, the company is using technology acquired from Exosome Diagnostics in 2018.
The Minneapolis-based company already offers ExoDx Prostate (EPI) based on the exosome detection technology to help clinicians determine whether a patient with an ambiguous PSA test needs a prostate biopsy.
Further, Bio-Techne has a pipeline of products it plans to develop over the next five to 10 years using the liquid biopsy technology, including gene-based detection arrays and a new version of the EPI test that would rule-in prostate cancer. It is exploring blood-based exosome testing technology for indications in neuroscience, lung cancer, and breast cancer, Kummeth said.
Executives at Asuragen, a business Bio-Techne acquired last March, are managing the Exosome Dx business, he said.
Asuragen is a developer and manufacturer of control reagents for molecular diagnostic tests as well as genetic carrier screening and oncology diagnostic kits for clinical and research applications. It markets the AmplideX Fragile X Dx and Carrier Screen Kit and QuantideX qPCR BCR-ABL IS Kit that enables the monitoring of leukemia patients for minimal residual disease. Kummeth noted that Asuragen recently announced the launch of assays for spinal muscular atrophy and cystic fibrosis.
Meanwhile, Bio-Techne expects to top $1 billion in revenues when it reports its financial results for full fiscal year 2022 at the end of June. It almost hit the milestone in full fiscal year 2021 when it reported revenues of $931.0 million. "We're not there yet, but we definitely will be this year," Kummeth said.
Opko Health subsidiary BioReference Laboratories has lined up numerous strategic initiatives for the next year.
Jon Cohen, executive chairman of BioReference Laboratories, said that one of its most important initiatives is to invest in growing not only its base testing business but also specialty businesses that include urology, women's health, and oncology.
The firm will also explore strategic ventures and has many in the pipeline that are similar to an initiative inked in 2020 with Westchester Medical Center Health Network, for which BioReference is providing laboratory administrative services, operations, reference testing, and outpatient lab services, Cohen said.
A third important initiative, Cohen added, is the launch of Scarlet Health, a digital platform that provides access to on-demand diagnostic services. The program, which brings laboratory specialists to a patient's door for sample collection, launched last January and, according to Cohen, has "gained enormous traction in the last year."
For COVID-19 testing, another important area of focus, BioReference has implemented a "robust response" to an uptick in demand stemming from the emergence of the Omicron variant, Cohen said.
"If you look at both our point-of-care, rapid testing business and our PCR business, it's been very busy these last four or five weeks," he noted. BioReference has built up its staffing levels to handle a "significant amount of volume," Cohen said. Though testing volumes are not as high as at the peak of the pandemic, "each week we move a lot closer to that," he added.
Cohen noted that among the highlights of 2021, BioReference acquired the US Ariosa centralized lab prenatal testing business from Roche, and its 4KScore prostate cancer test received approval from the US Food and Drug Administration. The regulatory approval should strengthen its efforts to obtain reimbursement from private payors, he said.
Through 2022, BioReference subsidiary GeneDx expects to maintain its strong focus on exome testing for the pediatric segment and for babies in neonatal intensive care units, said its CEO Katherine Stueland.
GeneDx provides "diagnoses as quickly as possible" enabling babies to be removed from the NICU, which "translates to cost savings for the hospital," she said, adding that in the pediatric segment, the firm emphasizes testing for children displaying symptoms of intellectual or developmental disorders.