NEW YORK (GenomeWeb) — Qiagen last week announced its plans to fill one of the few remaining gaps in its molecular diagnostic product portfolio — multiplex molecular infectious disease, or 'syndromic' testing — through the acquisition of Spanish molecular diagnostics developer Stat-Dx for up to $191 million.
The acquisition, announced alongside the company's fourth quarter and full-year 2017 earnings, thrusts Qiagen into a market that one company executive said could eventually be worth $1 billion to $2 billion, and into direct competition with established players such as BioMerieux's BioFire Diagnostics, Biocartis, GenMark Diagnostics, and Luminex.
And although it will be a late entrant into the market, Qiagen believes the testing platform it is acquiring along with Stat-Dx will differentiate itself from similar platforms in the areas of flexibility for an evolving insurance reimbursement landscape, ease of use, and, eventually, the ability to support molecular testing for other applications, including oncology and immune monitoring.
Under the deal, Qiagen is acquiring all shares of Barcelona-based Stat-Dx for approximately $147 million in cash and additional payments of up to about $44 million based on the achievement of regulatory and commercial milestones.
Stat-Dx already launched a respiratory pathogen panel on the platform in Europe after receiving CE marking in January, and has maintained that it would CE mark a gastrointestinal pathogen panel in the first quarter of this year.
In a conference call last week recapping Qiagen's fourth quarter earnings and the Stat-Dx acquisition, Qiagen CEO Peer Schatz said that Qiagen would reapply CE marking to the respiratory panel under Qiagen's quality systems, and that the company would be launching both the respiratory and GI panels in Europe in mid-2018 and in the US in 2019 following regulatory clearances.
Stat-Dx unveiled its platform, called DiagCore (to be rebranded as the QiaStat-Dx), in April 2017 at the European Congress of Clinical Microbiology and Infectious Diseases. At the time, the company's biggest value proposition for the platform was its ability to conduct both highly multiplexed real-time PCR and immunoassays, although the latter feature was still under development.
The real-time PCR function — up to 48 viral and bacterial targets simultaneously — is enabled by the company's proprietary microfluidic test cassette design coupled with a six-wavelength optical sensor on the instrument. Immunoassays, meanwhile, would be run using separate cassettes and detected using time-resolved fluorescence.
This dual-assay modality is still a highly differentiating feature, and when Qiagen relaunches the rebranded QiaStat-Dx in Europe and other markets in the second half of this year, it will likely be the first comprehensive in vitro diagnostics platform on the market with such capabilities.
Thierry Bernard, senior vice president for molecular diagnostics at Qiagen, noted that this feature could confer several advantages.
"First of all there is the natural trend in many labs to try and rationalize their costs, and if you can limit the number of investments they have in different platforms … [it is an advantage] to be able to run either a PCR-based or immunoassay cartridge," Bernard said.
"Second, I see potential for reflex testing, by which you would go immunoassay first, then molecular as kind of a reflex approach," he added. "This is something we need to explore more from a marketing standpoint." In addition, Bernard noted, although Qiagen is a molecular biology company, "for years to come, a significant part of oncology testing, or for example auto-immune testing, will still be run on an immunoassay platform."
Jordi Carrera, cofounder and CEO of Stat-Dx, noted that the dual-assay capability would enable users to "tackle a problem from the genotype and the phenotype." The system would also confer "operational advantages" such as less training for laboratory personnel and less space taken up in the lab.
"Qiagen would be the first company to bring these two capabilities [to market], and this will be a bang on the door to others that will have to follow," Carrera said.
As a hypothetical, Carrera provided the example of sepsis testing. "You could run a [procalcitonin] test with the immunoassay — that would be your first routine test, and then with real-time PCR … you could determine which pathogens have created that septic infection."
Bernard confirmed that Qiagen is in fact interested in sepsis as an application, "because imagine if you can combine an MDx- and protein-based solution, we can cover both pathogen and host response. Obviously, we need to investigate that with the clinical community further, but we believe it can be done."
Another feature that Qiagen views as a differentiator is the platform's ability to work with a variety of different raw sample types and provide a result with minimal up-front manual sample prep. This feature is primarily enabled by integrated Qiagen sample prep technologies.
"All the reagents are on board, so there really is no sample prep," Carrera said. "You put the sample in and run the cassette, so this allows you to really have 24-7 operation in labs, on the weekends, when the technicians that specialize in [microbiology] are not there.
Another unique element, he said, is that the system can work directly from a patient dry swab, which is introduced directly to the cassette, with results available in about an hour.
That direct-from-swab capability, Bernard noted, will be key in bringing the platform closer to the patient. "Obviously we will go for a CLIA waiver in the US, and that will open the door for physicians' offices and labs and expand the range of samples that we can cover."
Beyond dry swabs, QiaStat-Dx will also be able to work directly with tissues samples, sputum, and blood samples, for instance. Taken together with the dual assay functionality, this will enable Qiagen to expand beyond infectious disease panels and into areas like oncology testing and immune monitoring, Bernard said.
But while Qiagen did not previously have a platform for syndromic infectious disease testing in house, it has multiple established technologies for oncology testing, which begs the question of what QiaStat-Dx will bring to the table in that market.
"If you look at the current portfolio … from PCR to NGS, we cover the spectrum from basically screening to treatment monitoring, and we can also cover different-sized hospitals and hospital needs," Bernard said. QiaStat Dx will add another component to this portfolio to, enabling the company to have a complete oncology offering that covers screening, diagnosing, monitoring, or stratifying patients toward an appropriate drug, he said.
Another key aspect of QiaStat-Dx will be its flexibility for the purposes of adapting to insurance reimbursement of panel tests, which has varied significantly over the past several years in the US, from tiered options depending on the number of targets being assayed to a "one-size-fits-all" model where labs must submit one reimbursement code for a multiplex panel regardless of how many targets it assays.
Also, in May of last year, Medicare contractor Palmetto GBA issued several draft local coverage determinations, including for two types of multiplex infectious disease tests. Specifically, it said it would provide limited coverage for PCR-based gastrointestinal pathogen panels and non-coverage for multiplex PCR respiratory viral panels.
"Payors are beginning to raise questions about the value of multiplex panels," Charles Mathews, a principal specializing in in vitro diagnostics at healthcare consulting firm ClearView Health Partners, said in an email. "Specifically, what is the clinical utility of looking at everything all at once? The likely outcome is that payors will begin to focus on covering only certain tests for specific patient populations."
Flexible pricing, he suggested, will make it easier for players to adapt their offerings to such a cost-constrained environment, but, he added, "I believe the industry as a whole needs to do a better job of defining the value of multiplex molecular testing. This will help lift the ceiling for everybody."Â
Qiagen CEO Schatz noted in last week's earnings call the importance of QiaStat-Dx's "scalability" in the face of these uncertainties. "We are increasingly seeing that these very rigid assay designs are difficult to tailor to regional reimbursement needs," he said. "On some reimbursement settings, it would be preferential to only have a five-plex versus a 10-plex versus a 25-plex, and in other settings, you might want to go higher than that," he said. The microfluidic design of the test cartridges, he noted, will allow Qiagen to design panels flexibly and at low cost.
Bernard later elaborated on this point, noting that "what you have on the market at the moment with other rigid panels [is that] the customer pays for a full set of analytes in the panel, and whether those analytes were helpful in the results or not, they have to pay for it. We want to move away from that rigid interpretation and go more flexible."
This would be achieved through software, not necessarily custom cartridge design, Bernard said.
"I want to make sure that for software interpretation, we have the capability to basically tailor the [test] results analysis to the customer's needs, and that's what's going to guide our approach," he said. "[When] we launch a panel, we will be launching [with] the analytes that we believe the customers will need. But we have the capability here to tweak the results from a software standpoint to make it more customizable to the customers."
Finally, Qiagen noted in a statement last week that QiaStat-Dx will be "highly cost-efficient" in that the assay cartridges will have "significantly lower manufacturing costs compared to other systems" which should enable "broader utilization."
The company did not quantify these cost efficiencies, and Bernard said that this point was again about flexibility for reimbursement purposes.
"I don't think the point is about quantification," he said. "The point is not to attack or compete on price, because that's not the strategy of Qiagen. But you see what's happening in reimbursement … with, for example, the most recent Palmetto [draft LCDs] … [the platform] gives us more flexibility again. That's going to be crucial in the US and Europe, and also some other geographies."
Qiagen enters a rapidly crowding market that does have some wiggle room for innovation. BioMerieux's BioFire Diagnostics, GenMark Diagnostics, and Luminex all offer respiratory, GI, and other types of syndromic panels, with BioFire far and away achieving the greatest market penetration to date with its FilmArray brand. Each of these platforms has certain features that set it apart from the others. Meanwhile, in the oncology space, BioCartis has achieved some success with its Idylla sample-to-answer multiplexed PCR system, inking several companion diagnostic development deals with pharma companies just as Qiagen has done with its current low-plex PCR and NGS platforms.
But Qiagen believes that none of these competitors offers the combination of features that QiaStat-Dx will have.
"We knew that integrated platforms … will be the future of this market … so this was a natural move," Bernard said. "We needed to move to an integrated PCR platform, and then the question for us was, 'Where'? High throughput, where we believe the market is already seriously crowded [with] Roche, Abbott, Siemens, [and] Hologic? Or, the more decentralized syndromic market, where there are obviously players, but it's less crowded, where the growth rates are faster, and where we believe this market is at least already a $500 million market size for a couple of assays, so you can quickly go to at least a $1 billion to $2 billion market size?"
"It's a very natural investment for us, and also fits clearly where we are investing from a molecular diagnostic standpoint: infectious diseases, oncology, and immune monitoring," Bernard added. "It's a very good complement."