Colorectal Cancer Agreement Between Quest and Epigenomics

Implications: Quest Diagnostics (NYSE: DGX) and Epigenomics (Frankfurt Prime Standard: ECX) have entered into a non-exclusive agreement for Quest to use Epigenomics' Septin 9 DNA metylation biomarker for colorectal cancer.  Because this molecular test requires just a simple blood sample, it could result in a significant increase in patient compliance with the American Cancer Society (ACS) recommended guidelines for colorectal cancer screening.

Analysis: Colon cancer is responsible for approximately 57,000 deaths in the US each year and account for 9% of all cancer deaths.  Due to the invasive nature of colonoscopy, required preparatory procedures and the unpleasant nature of stool sample handling for fecal occult blood testing, the 90 MM adults over 50 often forego screening for this preventable cancer.

The recently announced agreement between Quest Diagnostics (NYSE: DGX) and Epigenomics (Frankfurt Prime Standard: ECX) could dramatically increase the number of patients that should be screened for colorectal cancer.  This new molecular test detects a blood-based biomarker for colorectal cancer in its early, treatable stages.  The single most important advantage of this test is the convenience of blood sampling, which should be welcomed by patients as opposed to colonoscopy or fecal occult blood testing.  Colonoscopy requires diet and bowel preparation and missed work for the procedure.  It also requires someone to drive the patient to and from the site due to the sedation used in conventional colonoscopy.  Quest, along with other major commercial reference labs such as Labcorp (NYSE: LH) and Bio-Reference Labs (NASDAQ: BRLI) offer fecal occult blood tests.  However, these require stool sample collection and processing by the patient, which they find very unpleasant.  Blood samples can be easily and conveniently obtained in various collection sites such as a physician office, commercial reference draw stations and outpatient clinics.  The new test should be welcomed by those screening for colorectal cancer worldwide.

Depending on the sensitivity and specificity of this new test, it could be highly competitive with current colorectal cancer screening tests.  These include not only colonoscopy, but Fecal Occult Blood Tests (FOBT), Fecal Immunochemical Test (FIT) and EXACT Science's NASDAQ: EXAS) test, PreGen-Plus stool-based DNA test.

Quest will pay Epigenomics royalties based on sales of the test.  The specific terms and conditions were not disclosed.

According to a recent report from a leading healthcare market research group, the worldwide market for molecular diagnostics was $18 billion in 2006 and is forecasted to grow to over $92 billion in the next ten years.  The US is forecasted to account for approximately half of this revenue.  For detailed information on the companies mentioned above, the commercial reference lab segment and the high growth molecular diagnostics market; please contact your GLG representative to schedule an individual consult.