Choosing what tests to order for each patient’s cancer and then collecting individual samples for those tests has become complex and time consuming—which is why Foundation Medicine expects a big market for FoundationOne.
The single, comprehensive test retails for $5800 and sequences tumor DNA around some 236 cancer-related genes, a number that will grow as new oncogenes are identified.
Among the first people to take a prototype of the test, according to a recent biography, was the late Apple founder Steve Jobs, who flew the test’s four inventors from the Broad Institute of MIT and Harvard out to California and paid $100,000 for the work itself.
A Foundation Medicine prospectus reported in September that more than 1500 physicians in 25 countries have since ordered FoundationOne tests for patients with solid tumors— a version for blood cancers should arrive next year—and that annual sales may eventually reach 800,000 tests.
A study conducted by the company and presented at the 2013 American Society of Clinical Oncology Annual Meeting concluded that a sample of 2112 FoundationOne tests identified “actionable” genetic alterations just over 76% of the time. The company also reported that its metaanalysis of tests had identified genetic mutations that might provide novel targets for medication, targets such as 13 potentially druggable kinase gene fusions.
In addition to selling its flagship test through individual doctors, Foundation Medicine also generates revenue by analyzing tissue samples from clinical trials conducted by companies such as Novartis, Johnson & Johnson, and Celgene. Novartis alone accounts for roughly 10% of Foundation Medicine’s revenue.
The 4-year-old company, which is based just outside of Boston, raised $99 million in private capital from such investors as Google Ventures, (Bill) Gates Ventures, and Kleiner Perkins Caulfield & Byers before it went public in late September.
That initial public offering raised $137 million by selling 7.6 million (out of 27.17 million) shares for $18 apiece.
Observers who expect Foundation Medicine to succeed generally argue not only that the company has a useful product, but also that it has chosen exactly the right moment to introduce it—just as our knowledge of tumor genetics has reached the point that it is appropriate to give a large number of patients one comprehensive test, rather than several individual ones.
Better still, optimists say, the test presents huge amounts of data in ways that physicians can easily interpret. The investors from Google have helped the company with data presentation.
Some analysts have suggested, however, that the company might struggle to sell to third-party payers, particularly at a rate that approaches retail cost. No insurer systematically covers FoundationOne right now, and those third-party payers who have financed the test in some cases have negotiated steep discounts. Foundation, on average, has collected $3800 per test—almost 40% less than retail. Still, if the positive momentum for the test continues, it will be difficult for insurers to deny coverage.
Miller VA, Ross JS, Wang K, et al. Use of next-generation sequencing (NGS) to identify actionable genomic alterations (GA) in diverse solid tumor types: the Foundation Medicine (FMI) experience with 2,200+ clinical samples. J Clin Oncol. 2013;31(suppl; abstr 11020).