N.Y. Approval Of ColonSentry Opens Door For GeneNews And Enzo

Includes: ENZ, GNWSF
by: Len Zehr

Last week's approval by New York State of GeneNews' (OTCPK:GNWSF) ColonSentry molecular diagnostic test to determine a person's risk of having colorectal cancer opens the door to the entire U.S. market and other jurisdictions around the world for the simple blood test.

"Our lead product has now been approved by the most stringent level of review for clinical lab services, giving us access to the single largest market in the world where reimbursement exists," President and COO, Gailina Liew, said in an interview with BioTuesdays.com.

ColonSentry has been licensed to Enzo Clinical Labs, a division of Enzo Biochem (NYSE:ENZ), which has exclusive rights to market the test in New York and New Jersey.

"It's an important validation of our technology as many jurisdictions around the world recognize the rigor of review in New York," she says, adding that approval in New York will facilitate additional partnerships.

The ColonSentry test, which is based on the company's Sentinel Principle®, a platform technology, uses RNA contained in blood to measure the mRNA expression levels of seven genes, which serve as biomarkers and can reflect the current presence or severity of a disease state.

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Sentinel Principle Illustration

Interpretation of the status of the seven biomarkers can allow physicians to identify patients who have an increased current risk of having colorectal cancer. The test requires only a small sample of blood and can be easily incorporated as a pre-screening measure into routine yearly physical exams.

"From a clinical perspective, the test is important, because it addresses a large gap in the current management of colorectal cancer screening," Ms. Liew says.

The U.S. level of compliance for colorectal cancer screening is a relatively low 45% to 50% as a national average, compared with screening compliance rates for other cancers, such as prostate, breast and cervical, which range from about 65% to 85%.

Until now, recommended screening for colorectal cancer included colonoscopy and stool-based tests, which have not been well received by patients, she says. In addition to the problem of people's discomfort working with their stools and toilet water, stool-based tests have suffered from not being particularly accurate.

Colonoscopy is considered the gold standard for diagnosis. But colonoscopies are not readily available across all regions of the U.S. and are expensive and terribly invasive as a frontline test.

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Using ColonSentry first can increase cancer detection by up to 4 times

"The importance of ColonSentry as a blood-based test is that it offers a very friendly first step into this area of screening," Ms. Liew contends. "Physicians can encourage someone who has been otherwise reluctant to engage in colorectal cancer screening to take this blood test. And if there is a high risk result, you can push that person towards colonoscopy. That should lead to earlier detection of cancer, lower treatment costs overall and potentially save lives," she adds.

Dr. Robert Burakoff, clinical chief of gastroenterology and director of the Center for Digestive Diseases and of the Crohn's and Colitis Center at Brigham and Women's Hospital, Harvard Medical School, says there is no question that the greatest barrier to reducing mortality arising from colorectal cancer is patient compliance with screening.

"The approval of blood tests to facilitate colorectal cancer screening is very much welcomed," he adds.

Barry Weiner, CEO of Enzo Biochem, says the company will roll out ColonSentry in March in New York and New Jersey, with a sales force of about 23 people. Enzo Clinical Labs is a leading provider of high value molecular and esoteric products and services to a large network of physicians in the New York and New Jersey regions.

"We have been pre-marketing the concept of the product for a while now through focus groups and meetings with our physician network," he says. "Our game plan is to introduce ColonSentry to our base of general practitioners, OB/GYN specialists and gastroenterologists and also make it available to all physicians in our service area."

Enzo is the only lab licensed in the U.S. to perform the ColonSentry test, and New York State approval would allow the company to accept blood specimens from most other states.

"Our goal is to get our feet wet first in our geographic region and then determine how we might accept specimens from elsewhere in the country," he says. "But ColonSentry could give us a broader and more national reach with our unique molecular types of tests."

Based on existing Current Procedural Terminology codes that are in place for standardized molecular procedures, ColonSentry will be reimbursed in the range of $350 per test, Mr. Weiner adds.

"We are optimistic on the uptake of ColonSentry," he says, adding that there appears to be a "very high level of interest among physicians for the test."

Ms. Liew says GeneNews selected Enzo as its first partner because it is a "market leader in the key New York region, has a great service reputation and is developing a good track record in marketing esoteric tests."

According to Ms. Liew, Enzo's referring physician base - primary care doctors, OB/GYN specialists and internists - are the "gatekeepers for the ColonSentry test, because we are targeting seemingly healthy people as a general risk predictor of colorectal cancer."

She also notes that "Enzo is of a size where success in rolling out a single new product is going to move the corporate needle for them, which would not be the case with a big multinational lab. For example, if Enzo moves 10,000 tests a year at a conservative reimbursement of $300 to $400 a test, that's real revenue for them. So, the incentive level is high to keep the engagement at a high priority."

Under the accord, Enzo is responsible for sales, marketing and reimbursement exclusively in New York and New Jersey. GeneNews receives royalties, subject to a per-test minimum and annual minimums.

Asked what New York approval means financially for GeneNews, Ms. Liew says, "Enzo doesn't have to sell that many tests on an annual basis for us to be self-sustaining. If Enzo can perform moderately well, we are looking at perhaps getting to breakeven or cash flow positive sometime in the next 12 to 18 months."

GeneNews has a loyal shareholder base, and "we're looking at ways to take us through the next 12 to 18 months in the least dilutive way possible," she explains. She adds that a U.S. listing also will be considered after "we have a strong revenue base and reach breakeven."

Ms. Liew says GeneNews is engaged in ongoing discussions with other potential partners servicing other regions of the U.S. "The New York State approval is quite important to these discussions," she acknowledges, adding that the company expects to announce additional partners in the coming months.

In most other states, with the exception of California, a future lab partner would go through a standard analytical evaluation to make sure it can perform the test. There is no elaborate submission required to a state authority; it's simply registration of the test under a partner's existing lab license. "From signing through evaluation to registration should take less than six months," she figures.

GeneNews is also looking at a couple of initiatives that would generate more evidence to support the cost-effectiveness and clinical utility of ColonSentry to build a market leadership position for the risk stratification test.

New York approval for ColonSentry is expected to give GeneNews' pipeline a shot in the arm.

Diagnostics for prostate cancer and liver cancer have progressed quite well, and both are at a stage where an "initial identification of a clinically useful panel has been established," she says, adding that both tests still need to be pushed out to a broader validation.

"So, we would welcome partners to finance the additional validation required for those two tests, because they both represent an unmet medical need and significant commercial opportunities," she adds.

In prostate cancer, GeneNews is developing a test to identify the subpopulation of PSA-positive men that is more likely to have aggressive prostate cancer, allowing that group of men to be aggressively treated. In liver cancer, the target is the subpopulation of hepatitis B-positive patients that is more likely to progress to hepatocellular carcinoma.

Earlier this month, GeneNews entered into a strategic alliance with Shanghai Biochip of China. The memorandum of understanding, which is expected to be finalized in the third quarter, is designed to provide access to the Chinese market and to establish an operating base in China in order to continue "our pipeline development, not only on a more cost-effective basis, but also in a place where access to large numbers of patient samples would be easier to obtain than in North America," Ms. Liew says.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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