Executive insights. Forging a Path From Companion Diagnostics to Holistic Decision Support



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Volume XIV, Issue 12 Forging a Path From Companion Diagnostics to Holistic Decision Support L.E.K. Consulting is a strong believer in personalized medicine and its promise to improve patient outcomes and reduce healthcare costs. While still in its relative infancy, we see personalized medicine as enabling the healthcare community to tailor screening and prevention programs, identify and dose the most effective treatments, and customize disease monitoring and management programs. Companion diagnostics 1 (and their companion therapies) are critical building blocks in personalized medicine as they typically enable the identification of likely responders to therapies that work in patients with a specific molecular profile. Companion diagnostics have also enabled access to novel therapies that may otherwise have not been approved or reimbursed in allcomers by demonstrating strong efficacy signals in enriched patient populations. While companion diagnostics enable personalized medicine, they tend to only answer a targeted drug-specific question and may not address other important clinical decision needs. As an example, HER2 testing informs Herceptin candidacy but does not provide insights on therapeutic intervention for non-candidates. Furthermore, landscape trends suggest companion diagnostic tests in their current one-test/one-drug embodiment will not adequately cover future decision support needs as the number of validated biomarkers overwhelms available sample amounts for testing (especially with tumor biopsies) and physicians become inundated with more biomarker data (likely to be interrelated, nuanced and at times even contradictory). Identifying the Building Blocks for Holistic Decision Support Solutions While L.E.K. expects that companion diagnostics will continue to propel advances in personalized medicine by providing highly validated biomarkers linked to approved therapies, we also expect to see the emergence of more holistic decision support tests that interrogate multiple biomarkers (e.g., panels of companion diagnostics and other validated biomarkers/ signatures) as well as more holistic decision support solutions that consider a broader range of inputs (e.g., test data, imaging data, clinical trial activity, outcomes data, patient EMR data, reimbursement and coverage data) to inform patient management. While a comprehensive decision support solution that considers all available data to support patient management is likely decades away, we are already seeing leaders in personalized medicine begin to pursue more holistic models and lay the groundwork for future participation. 1 Diagnostic tests typically used to predict responsiveness / determine candidacy for a particular therapy often included in drug labels as either required or recommended testing prior to therapy initiation. Forging a Path From Companion Diagnostics to Holistic Decision Support was written by Alexander Vadas, Ph.D., Vice President; Sue St. Sure, Vice President; and Brian Baranick, Ph.D., Manager, of L.E.K. Consulting. Please contact L.E.K. at lifesciences@ for additional information. L.E.K. Consulting / Executive Insights

L.E.K. believes the evolution to more holistic models will have a broad impact across healthcare stakeholders, creating opportunities for new businesses as well as challenges to the current one drug/one test companion diagnostic model. To better understand how the evolution to holistic models is taking shape and its potential impact on healthcare stakeholders L.E.K. examined today s treatment decision support testing landscape, personalized medicine partnership activity, and also leveraged insights from its global Biopharma & Life Sciences practice. Our findings confirm that more holistic decision support tests Surveying the Decision Support Testing Landscape As a starting point, L.E.K. characterized the landscape of available tests in the U.S. that inform treatment decisions compiled from ~50 leading diagnostics companies 2 operating in the U.S. between 2004-2011. L.E.K. identified more than 200 decision support tests that we classified by test purpose, and more specifically, whether tests inform treatment decisions for a single drug/class (e.g., companion diagnostics) vs. more holistic treatment decisions across multiple drugs/classes (i.e., multiagent response tests). (see Figure 1.) and solutions are coming and will require stakeholders to think differently about how they establish themselves through a broad network of partners and strategic initiatives. Figure 1 Example Treatment Decision Support Tests Test Purpose Description 3 Test Name Company Decision Informed Companion Diagnostics Predict response/safety or guide dosing of a single drug or class HercepTest Vysis ALK Break Apart FISH Dako Abbott Labs Determines HER2 protein overexpression for Herceptin treatment selection Predicts the NSCLC patient response to Xalkori Single drug/ class Other Decision Support Provide prognostic and predictive information on the benefit of treatment Oncotype Dx PML-RARα TRUGENE Genomic Health, Inc. Clarient, Inc. Siemens Predicts both recurrence of breast cancer and potential patient benefit to chemotherapy regimens Predicts response to all-trans retinoic acid (ATRA) and other chemotherapy agents Measures resistence to multiple HIV-1 anti-retroviral agents Increasingly holistic tests Multi-Agent Response Inform targeted therapy class selection by interrogating a panel of biomarkers Target Now ResponseDX: Lung Caris Life Sciences Response Genetics, Inc. Examines tumor s molecular profile to tailor treatment options Examines multiple biomarkers to guide therapeutic treatment decisions for NSCLC patients Multiple drugs/ classes Source: L.E.K. Analysis 2 Includes IVD and LDT tests from top-15 IVD test suppliers, top-four large reference labs, top-five AP labs, and top-20 specialty reference labs. 3 For descriptive purposes only, may not map to exact regulatory labeling. Page 2 L.E.K. Consulting / Executive Insights Vol. XIV, Issue 12

Figure 2 Cumulative Number of U.S. Treatment Decision Support Tests by Purpose and CAGR % (2004 2011) 250 200 183 202 219 CAGR % 2004 11 Number of Tests 150 100 76 97 113 150 Total 25% Multi-agent response 56% Other decision support 32% Companion diagnostics 22% 50 45 0 2004 2005 2006 2007 2008 2009 2010 2011 Source: Company websites, SEC filings, GenomeWeb, L.E.K. analysis Our findings highlight that most tests are companion diagnostics and other decision support tests that provide guidance on single drug/class therapy decisions. However, holistic decision support tests (e.g., multi-agent response) are growing the fastest at 56% CAGR (see Figure 2). The emergence of multi-agent response tests suggests diagnostics companies are already seeing the need to aggregate individual tests (e.g., companion diagnostics) into panels of appropriate markers addressing a given clinical decision need. L.E.K. believes this trend is likely to continue as increasing numbers of biomarkers become validated for diseases and multiplexing tools enabling the aggregation of multiple biomarker interrogations into a single test become deployed in the clinic. Surveying Personalized Medicine Partnerships L.E.K. also completed an assessment of publicly available personalized medicine partnership activity from 2009-2011 for ~150 leading organizations operating in the U.S. 4 to look at broader decision support trends and emergence of more holistic solutions beyond diagnostic tests (see Figure 3). Across the sample we identified 189 publicly announced partnerships of which ~65% focused on more traditional areas such as % Partnerships 100 90 80 70 60 50 40 30 20 10 0 Figure 3 U.S. Personalized Medicine Partnerships (2009 2011) 188 62 62 Other Holistic Decision Support Traditional Personalized Medicine Partnerships Personalized Medicine Deal Purpose Data Integration Healthcare I.T. Clinical Molecular Profiling Outcomes Data Mining Holistic Decision Support Deal Purpose Source: Company websites, GenomeWeb, L.E.K. analysis Imaging Companies AMCs / Research Institutes Tools Vendors Healthcare I.T. IVD manufacturers Biopharma PHC Companies Laboratories Payors / PBMs Regulatory / Guideline Entity Stakeholder 4 Survey of partnerships deals was conducted for top-10 academic medical centers research institutions, top-25 biopharma, top-four healthcare IT companies, top-three healthcare imaging companies, top-20 IVD manufacturers, top-20 laboratories, top-10 payers / PBMs, top-15 personalized healthcare companies, top-10 regulatory/ guideline entities, and top-20 tools vendors for the period of 01/01/2009 12/31/2011. L.E.K. Consulting / Executive Insights

Figure 4 Example Partnerships Including Holistic Decision Support Elements Executive insights Holistic Decision Support Focus Technology Provider Partners Stakeholder Deploying the Solution Holistic Decision Support Activities Life Technologies TGEN/US Oncology Sequencing of triple-negative breast cancer patients to identify potential treatment strategies Molecular Profiling Foundation Medicine Clarient, Inc. (GE Healthcare) Novartis Acorn Research Deployment of cancer genomics analysis platform to support Novartis clinical research efforts Biomarker profiling of patients within Acorn s network of providers to support clinical research efforts GenomeQuest Beth Israel Deaconess Medical Center Whole genome analysis and predictive genomics to guide patient management AstraZeneca WellPoint Evaluate comparative effectiveness of selected marketed therapies Outcomes Data Mining 23andMe NIH Leverage self-reported information to understand the link between drug response and CYP2C9/CYP2C19 variation Pfizer Medco Leverage patient genotype, phenotype and outcome to assist in treatment decisions and target therapeutics Healthcare IT Infrastructure IBM Oracle WellPoint Moffitt Cancer Center Deployment of IBM s Watson-based solution to support evidencebased health care decision making Deployment of Oracle s informatics platform to store and manage patient medical information Siemens Susquehanna Health Integration of imaging and laboratory diagnostics Data Integration Cernostics Geisinger Health Integration of advanced tissue diagnostics, digital pathology, annotated biorepository and EMR to create next-generation treatment decision support solutions CardioDx GE Healthcare Integration of genomics with imaging data in cardiovascular disease Source: L.E.K. Analysis biomarker discovery, companion diagnostics and targeted therapies. However, a significant portion (~30%) included elements geared towards creating more holistic decision support models. Partnerships categorized as holistic decision support by L.E.K. were focused on mining large patient datasets (e.g., from payers or providers), molecular profiling (e.g., deploying next-generation sequencing), creating information technology (IT) infrastructure needed to enable holistic decision support models and integrating various datasets to create richer decision support solutions. Interestingly, holistic decision support partnerships often included stakeholders outside of biopharma and diagnostics such as research tools, payers/pbms, healthcare IT companies as well as emerging personalized healthcare (PHC) companies (e.g., Knome, Foundation Medicine and 23andMe). This finding suggests that these new stakeholders will be increasingly important in influencing care decisions going forward. Page 4 L.E.K. Consulting / Executive Insights Vol. XIV, Issue 12

Implications L.E.K. believes the likely holistic decision support debate won t center on whether this advance will be realized, but rather how long it will take, and which models and companies will prevail. Although it will take time to achieve this capability, there are signs that the industry is already moving along the continuum from companion diagnostics to a truly holistic capability. Of course the mainstay of personalized medicine today (e.g., companion diagnostics) will continue to play an important role in validating content, but we believe they will become integrated and enhanced by other data. The companies that ultimately succeed will be able to capture vast amounts of information and synthesize it for personalized care. Holistic models will be powered by increasingly larger datasets, sophisticated decision-making algorithms and intuitive reporting mechanisms. This will likely require the participation of an increasingly broad range of stakeholders to provide the science, technologies, infrastructure and tools necessary for deployment. It will also be important for payers and regulators to support this evolution by adapting their policies as the approach to patient care evolves dramatically. Below we have identified a small number of the issues that stakeholders will need to address as the shift to holistic decision support takes place: Stakeholders Questions to Consider Medical Products Companies (e.g., Pharmaceuticals, Medical Devices) How will holistic decision support impact the landscape (e.g., treatment /testing algorithms, decision making, clinical trials)? How proactively should product companies play in holistic decision support over time? Can holistic decision support be leveraged as a differentiator? Are there situations where not being part of a holistic decision support solution could adversely impact a product opportunity? How will the move to holistic decision support impact life cycle planning (e.g., companion diagnostics) and commercial models? What partnering strategies need to be considered to ensure products are part of the holistic decision support solution? Holistic Decision Support Enablers (e.g., Diagnostics, Research Tools, IT, Payers, PBMs) In what spaces (therapeutic areas, provider segments) should holistic solutions be deployed? What components will be required to build out holistic solutions? Testing technologies Information (e.g., associations, outcomes, trial databases, records) IT infrastructure for data integration and management, simulation and reporting How can various components be brought together to build seamless holistic decision support solutions? How might solutions be tailored for provider segments and regions? How can holistic decision support solutions be effectively monetized? Are there models beyond selling infrastructure and components? Can information be monetized? What partnerships will be required to build out holistic solutions? Providers and Payers How can providers and payers leverage holistic decision support models to improve outcomes for their patients while improving healthcare efficiency? In which areas should models be deployed over time? Where are clinical and economic arguments most compelling? Where should providers and payers consider funding initiatives? L.E.K. Consulting / Executive Insights

L.E.K. Consulting is a global management consulting firm that uses deep industry expertise and analytical rigor to help clients solve their most critical business problems. Founded nearly 30 years ago, L.E.K. employs more than 900 professionals in 20 offices across Europe, the Americas and Asia-Pacific. L.E.K. advises and supports global companies that are leaders in their industries including the largest private and public sector organizations, private equity firms and emerging entrepreneurial businesses. L.E.K. helps business leaders consistently make better decisions, deliver improved business performance and create greater shareholder returns. For further information contact: Boston New York 75 State Street 19th Floor Boston, MA 02109 Telephone: 617.951.9500 Facsimile: 617.951.9392 Chicago One North Wacker Drive 39th Floor Chicago, IL 60606 Telephone: 312.913.6400 Facsimile: 312.782.4583 Los Angeles 1100 Glendon Avenue 21st Floor Los Angeles, CA 90024 Telephone: 310.209.9800 Facsimile: 310.209.9125 1133 Sixth Avenue 29th Floor New York, NY 10036 Telephone: 646.652.1900 Facsimile: 212.582.8505 San Francisco 100 Pine Street Suite 2000 San Francisco, CA 94111 Telephone: 415.676.5500 Facsimile: 415.627.9071 International Offices: Auckland Bangkok Beijing London Melbourne Milan Mumbai Munich New Delhi Paris Shanghai Singapore Sydney Tokyo Wroclaw L.E.K. Consulting is a registered trademark of L.E.K. Consulting LLC. All other products and brands mentioned in this document are properties of their respective owners. 2012 L.E.K. Consulting LLC Page 6 L.E.K. Consulting / Executive Insights Vol. XIV, Issue 12