Diagnostics & Imaging Week Executive Editor

SAN FRANCISCO — Those involved with the medical diagnostics sector like to refer to how diagnostics — despite accounting for under 5% of hospital costs and less than 2% of total healthcare expenditures — are responsible for between 60% and 70% of healthcare decisions.

In an environment where cutting costs is taking on chiseled-in-stone status, diagnostics are clearly only going to grow in importance. This growing stature is obvious in the ubiquitous presence of test manufacturers in the lineup of presenting companies during last week's JPMorgan Healthcare Conference at the Westin St. Francis Hotel, adjacent to Union Square.

Most of those firms, in turn, attracted considerable audiences, indicating that investors are recognizing their considerable role as healthcare trods the path toward personalized medicine.

Ken Buechler, president and chief scientific officer of Biosite (San Diego), expressed the diagnostics development proposition succinctly: "Improving diagnostics will improve healthcare outcomes and save lives."

Discussing Biosite's line of cardiac testing products, Buechler cited in particular the growing use of the firm's Triage test panel, which he characterized as addressing "a huge market" of diagnosing acute myocardial infarction.

Noting that some 6 million persons present in emergency departments (EDs) annually with chest pain, he said cardiac assessment "is relatively poorly served by Troponin I." Thus, the Triage Cardiac Panel has carved out an 18% share of the ED chest pain assessment market.

Use of the Triage BNP test in cardiovascular profiling is another area of large market potential for Biosite, and the test also is widely used in hospitals for acute monitoring on an off-label basis, Buechler said.

He cited several additional areas of interest to the company for its protein- and antibody-based technologies, including applications for stroke, sepsis and abdominal pain which, taken together, represent some $1 billion in market potential.

"Stroke is a massive medical problem," Buechler said. "Early diagnosis can lead to greatly improved outcomes."

He said the market for the stroke product would include some 2.4 million tests annually in EDs, 800,000 additional tests in other U.S. care settings, and 2.1 million tests outside the U.S.

Biosite has its Triage Stroke Panel at the FDA for review, but the application is on hold pending submission of additional data by the company in the present quarter.

The stroke panel is in use in some 50 centers in Europe, where Buechler said it "has shown comparable accuracy to that of an assessment by an expert stroke professional." Of the company's sepsis program, he said 750,000 patients in the U.S. develop sepsis each year, and about 215,000 of them die.

"The condition is very complex, symptoms vague," he said, and the current testing regimen, blood culture tests, "low."

Biosite has identified about 80 potential markers for analysis, and a prospective study involving about 1,000 patients is under way.

Abdominal pain is another potentially large market for the company, according to Buechler. "Abdominal pain is the leading cause for patients coming to the emergency department, some 8 million patients."

He noted the complexity of this diagnosis, primarily via ultrasound, so there obviously is room for a test panel such as that under study by Biosite.

Another noteworthy diagnostics firm, Cytyc (Marlborough, Massachusetts), has broadened its women's health focus by acquiring two companies with therapeutic products.

CEO Patrick Sullivan noted that the firm, whose foundation is its 10-year-old ThinPrep system for cervical cancer screening, now has a two-division setup.

The Diagnostics Division is built around the ThinPrep system, with some 55% to 60% of the cervical cancer screening market in the U.S. Some 50 million to 55 million tests are done annually in the U.S., 100 million internationally.

In international markets, Sullivan said, Cytyc is pushing its global sales efforts, now operating in more than 20 countries. It sees a $200 million-plus revenue opportunity in Europe, $250 million-plus opportunity in the Asia Pacific region, and a huge growth opportunity in China, "which has the potential to be our biggest market outside the U.S."

Sullivan said the company would launch the ThinPrep product line in Japan in March, a market with the potential for 10 million tests to be conducted annually.

The Surgical Products Division includes the NovaSure treatment, a radio frequency-based procedure to treat excessive uterine bleeding that came via the Cytyc acquisition of Novacept (Palo Alto, California) in 2004, and the MammoSite Radiation Therapy System, a breast cancer treatment that allows a lumpectomy to be performed rather than removal of the entire breast. It joined the Cytyc product lineup as a result of the acquisition of Proxima Therapeutics (Alpharetta, Georgia) last March.

Sullivan said of the Novacept acquisition: "This has been a tremendous home run' for us — really a grand slam."

Another diagnostics firm in the cervical cancer space is Digene (Gaithersburg, Maryland), with the only FDA-approved test for human papilloma virus (HPV), a primary cause of cervical cancer.

President and CFO Charles Fleischman termed Digene "a leading player in a very large business," citing a potential global screening market upwards of $1 billion. He said that with some $122 million in revenues, Digene has U.S. market penetration of only 13% thus far, so major market and revenue growth opportunities are available.

Referencing reports last year of several pharma firms working on HPV vaccines, Fleischman said such vaccines would not diminish its market but rather would "increase market awareness."

XDx (South San Francisco, California), an emerging firm focused on developing products to help physicians better manage transplant patients, drew an overflow crowd of interested investors to the hotel's Elizabethan C&D meeting rooms.

Pierre Cassigneul, president and CEO, described XDx as working "in the space of personalized medicine." He said the company's AlloMap product is "a monitoring system to provide longitudinal data for physicians."

He characterized the science involved as "the convergence of genomics and informatics," adding that AlloMap "reduces a huge amount of data to something actionable for the physician."

The first use is in monitoring heart transplant patients, which Cassigneul described as "an unmet clinical need" in a "protocol-driven environment" involving "closely followed patients."

XDx's analysis of such patients involves 20-gene PCR (polymerase chain reaction) testing, and results in a quantitative score ranging from zero to 80. As a non-invasive alternative to standard-of-care cardiac biopsies, AlloMap offers "immediate benefits of enhanced patient management, better control over infections, and improved quality of life," he said.

The company is already in clinical trials on a similar system for lung transplant patients, and also is looking at applications for kidney, liver and other transplants.

Cassigneul said the other side of XDx's business is in autoimmune diseases such as lupus, where there is "a critical need for better tools to measure the efficacy of drugs" for patient treatment.