DiagnoCure (Quebec City, Quebec) said it is strengthening its position in cancer diagnostics by securing exclusive worldwide rights to two high-value molecular tests from Targeted Diagnostics & Therapeutics (TDT; Philadelphia) for colorectal cancer and an option to a CLIA-certified U.S. service laboratory to commercialize molecular cancer diagnostics tests.

While the company said it is not disclosing the total value of the deal, DiagnoCure's initial payment includes $2.2 million in shares, each valued at C$4.30. TDT also will receive performance-based milestone payments and royalties on revenues generated by the tests, according to the companies.

The two tests for colorectal cancer in-licensed from TDT are based on the detection of guanylyl cyclase C (GCC), a gene that appears normally in cells lining the intestinal track, but has only been found outside the intestine when colorectal cancer has metastasized.

Initial research conducted by Scott Waldman, MD, PhD, of Thomas Jefferson University (Philadelphia) showed GCC to be 95% to 100% accurate in detecting the spread or recurrence of colon cancer, in lymph nodes or blood. This led the National Institutes of Health to provide more than $10 million in funding for two five-year multi-center clinical studies on 2,500 colorectal cancer patients. Interim results from the NIH-sponsored GCC lymph node study started in 2003 are expected later this year.

"Preliminary data from the lymph node GCC study corroborated our initial research results," said Waldman, founder of TDT.

Thom Skinner, CFO of DiagnoCure, told Medical Device Daily that the deal with TDT comes on the heels of the company's raising C$25 million last month in a public offering of about 5.8 million shares for C$4.30 a share.

Skinner also told MDD that the deal is "very much within the lines" of the business plan it set in place several months ago, which included redirecting the company's focus to the molecular diagnostics market, a worldwide $2.5 billion industry projected to reach $5 billion by 2010.

The new business plan was disclosed after the August 2006 appointment of John Schafer as the company's new president/CEO (MDD, Aug. 2, 2006). Schafer replaced Pierre Desy who retired.

"We've made a number of changes in our management, we've raised new capital, and we're coming out to be the leader in molecular diagnostic testing for cancer," Skinner said. "That may sound like a bold statement for a little biotech company in Quebec to make, but if you look at the numbers of successful companies [in this sector] you'll see that we're one of the top 10. We have one test out there already, the PCA3 biomarker for prostate cancer."

The company reported receiving CE-marking for its PCA3 biomarker test for prostate cancer last fall (MDD, Nov. 10, 2006).

Skinner also noted that DiagnoCure currently has $40 million in cash, which he termed "pretty good for a little biotech company."

Schafer said the agreement with TDT "significantly strengthens" the company's position in molecular diagnostics for cancer.

"We have just obtained what we believe to be the most promising tests for colorectal cancer. With these tests and our PCA3 biomarker for prostate cancer, we now have high-value diagnostic tests for two of the top four most deadly forms of cancer," Schafer said.

And with DiagnoCure securing the GCC-based tests, added Harry Arena, president/CEO of TDT, "we are assured of the continued development and commercialization of our tests for colorectal cancer."

Schafer said having a CLIA lab will allow the company to quickly bring to market high-value molecular diagnostic tests for cancer in the "home brew" format.

According to DiagnoCure, more than 150,000 Americans are diagnosed with colorectal cancer each year, with a post-surgery recurrence close to 50%. About 53,000 Americans die of the disease annually, making it the second leading cause of cancer-related deaths.

"We believe molecular diagnostics has the power to dramatically alter the way cancer is diagnosed and managed, and we have focused DiagnoCure squarely into this market. While the entire $24 billion diagnostics market is growing at just over 5% annually, cancer molecular diagnostics is growing faster than 30%," Schafer told shareholders at the company's annual general meeting last month. "This is the first of what we expect will be several strategic acquisitions to strengthen our leadership position in this field."

The company will discuss the deal with investors on a conference call at 10 a.m., EDT, today.

TDT is a biotechnology company developing molecular-based technologies for the diagnosis and treatment of gastrointestinal cancers and infectious diseases.

In other dealmaking news:

• Eastman Kodak (Rochester, New York) reported completing the sale of its Health Group to an affiliate of Onex (Toronto) for up to $2.55 billion. The acquired business is continuing under the name Carestream Health. The sale was first disclosed in January (MDD, Jan. 11, 2007), followed by adoption of the name Carestream Health (MDD, Jan. 31, 2007).

Kodak said it has received $2.35 billion in cash, and will receive up to $200 million in future payments if Onex achieves certain returns with respect to its investment. Primarily because of tax-loss considerations, Kodak said it expects to retain the large majority of the initial $2.35 billion cash proceeds. The company plans to use a portion of the proceeds to fully repay roughly $1.15 billion of its secured term debt.

About 8,100 employees associated with the Health Group have transferred to Carestream Health.

• Eisai Machinery USA (Hackensack, New Jersey), a pharmaceutical machinery marketing and maintenance subsidiary of Eisai (Tokyo) reported the acquisition of the parenteral machinery line from M.W. Technologies (Elmwood Park, New Jersey). Financial terms were not disclosed.

According to Eisai, the acquired machines offer a solution for customers to conduct manual and semi-automatic inspection of parenteral — or intravenous — products, which is required by the US Pharmacopeia and enforced by the FDA.

Additionally, the acquisition serves to add manual and semi-automatic inspection machines to Eisai Machinery's existing product line of fully automatic inspection machines, the company said.