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Following End of Qiagen Deal, HTG Molecular to Focus on CDx Plans and Other Alliances

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NEW YORK – While initially caught off-guard by Qiagen's decision to nix its next-generation clinical sequencer development activities, which derailed an important alliance for the firm, HTG Molecular Diagnostics is now focusing its energies on a whole-transcriptome panel developed in house and companion diagnostic alliances.

The Tucson, Arizona-based company also plans to leverage existing collaborations with firms including Illumina and Thermo Fisher Scientific tocontinue building in vitro diagnostic assays on their platforms.

While HTG has received CE-IVD marking for its EdgeSeq ALK Plus and Diffuse Large B-Cell Lymphoma Cell of Origin assays, the firm is also shaping up to develop US Food and Drug Administration-approved, clinically relevant companion diagnostic kits using the EdgeSeq technology.

At a recently built San Carlos, California Center of Excellence, HTG is now building a "new, clinical grade, 22,000 gene whole-transcriptome" EdgeSeq panel that CEO John Lubniewski argued will serve as a surrogate for full transcriptome RNA-Seq for gene expression.

"Because we're planning to build the panel to clinical-grade, it will serve as a universal companion diagnostic that could be used in any RNA gene expression assay," Lubniewski explained.

Lubniewski said that HTG also plans to develop a pan-breast cancer assay based on the whole-transcriptome clinical product to provide clinicians with information to "allow precise and timely treatments for cancer patients."

Lubniewski said the firm has not decided which assay it will develop as its first FDA-cleared Class 2 or Class 3 medical device, which requires 510(k) approval or premarket approval, respectively. "It could be our breast assay or it could be a companion diagnostic if one of our collaborations reach that stage," he said.

HTG currently offers four major RUO molecular tests — EdgeSeq Oncology Biomarker Panel, EdgeSeq Precision Immuno-Oncology Panel, EdgeSeq Autoimmune, and EdgeSeq miRNA Whole Transcriptome Assay — that Lubniewski said collect low patient sample input and can analyze several thousand genes. The assays utilize the firm's EdgeSeq technology, which is a nuclease protection probe chemistry that allows users to prepare genetic material without DNA extraction, amplification, and reverse transcription steps.

"We are selling these assays up against people using RNA-Seq, and they use our panel versus RNA-Seq because [the technology] is extraction-free and there is no reverse transcription step," Lubniewski said. "Because of our chemistry, what would take a sophisticated user with RNA-Seq with bioinformatics about seven to eight hours, you can do with our assay in about 20 minutes."

In the short term, HTG also expects to launch new applications for its existing RUO panels — including a tumor inflammation signature on the EdgeSeq Precision Immuno-Oncology panel and a cell proliferation panel on the EdgeSeq Oncology Biomarker Panel — later this year.

"In H2 2019, we launched a comprehensive autoimmune panel, and we continue to expand the applications on our Reveal analytics software package so that the customers can now use the software on all our main profiling panels," Lubniewski added.  

Post-Qiagen Dx plans

HTG originally inked a master assay development, commercialization, and manufacturing agreement with Qiagen in 2016, before signing subsequent development agreements in 2017 and 2018 to use the HTG EdgeSeq technology to develop gene expression profiling assays on Qiagen's GeneReader NGS instrument.

Last October, however, Qiagen ceased development of a next-generation clinical version of the GeneReader platform and instead signed a long-term partnership with Illumina to develop larger diagnostic NGS panels on its sequencing platform. HTG consequently terminated the development agreement with Qiagen later that month.

"In hindsight, [Qiagen's] decision made sense to us, because we saw them pivoting more to PCR in 2018 and 2019," Lubniewski said. "Qiagen was making several acquisitions in the infectious disease space and moving back to their PCR franchise." 

Even if Qiagen had completed development of its new clinical sequencer, Lubniewski argued that HTG would have maintained assays on sequencers from both Illumina and Thermo Fisher, as well as saved patient samples that Qiagen could later use.

Despite stating in HTG's Q3 2019 conference call that Qiagen's decision to stop developing its GeneReader clinical sequencer was a "clear breach of contract," Lubniewski declined to comment on whether HTG will pursue legal action against Qiagen.

However, Lubniewski argued that HTG needed to terminate the contract fully in order to have "full freedom to pursue other collaborative agreements." He explained that the Qiagen contract was a mutually exclusive agreement that tied HTG to sequencing-based RNA or DNA companion diagnostic development and commercialization.

"Going forward, we wanted to make sure that it was abundantly clear we [are] able to operate and directly contract other collaborators," Lubniewski explained. "The contract with Qiagen had a tail to it, which said, for example, if we had a new collaborative agreement, there might be an argument that Qiagen could benefit from the economics of the agreement by claiming part of the original contract."

Under the old agreement, Qiagen was the contracting party and recognized all program revenues. HTG then billed Qiagen monthly for collaboration expenses, which was the fraction of the original revenue that HTG recognized. Lubniewski elaborated that every quarter, HTG would true up revenues and split the profits in half.  By terminating the agreement, HTG will recognize all project revenues and all profits — which Lubniewski noted will double the gross margin of each program — rather than sharing any revenue with Qiagen.

"We will continue to honor any contracts and statements of work that were signed with pharma that were agreed to under the previous agreement, [for example] we will not let this impact the end customer," Lubniewski said. "Terminating the Qiagen-HTG agreement has no impact on our other Illumina or Thermo agreements."

Lubniewski also highlighted that HTG's agreement with Thermo and Illumina are instead non-exclusive and allow HTG to build IVD products on the companies' sequencing instruments systems as part of the workflow and regulatory filings.

"When Qiagen didn't deliver the GeneReader, a central element of the partnership, we needed to terminate the agreement and go at it alone and use our pre-existing Thermo and Illumina agreements," Lubniewski said. "We meet [with] Illumina and Thermo quarterly to maintain these relationships [and] don't anticipate any significant changes in either relationship."

However, Lubniewski said that HTG is currently in conversations with Qiagen to potentially develop a commercial partnership rather than a development agreement. He envisions developing an HTG assay that runs on an Illumina or Thermo Fisher sequencer, which then would be distributed by Qiagen.

In addition to NGS agreements, Lubniewski said that HTG has two confidential collaborative partnerships with two undisclosed pharmaceutical companies — referred to as PDP 2 and PDP 3 — to potentially develop companion diagnostic assays.

Lubniewski noted that HTG will provide further information about plans for 2020 and beyond during a conference call following the release of its earnings on March 25.