It's Fashionably Late, but This Biotech's Party Is Just Starting

Usually a company develops a companion diagnostic while a drug is in clinical development. For example, Aeterna Zentaris (NAS: AEZS) recently signed upRoche for its phase 2 drug candidate, AEZS-108. Ariad Pharmaceuticals (NAS: ARIA) made the move at the same stage. That allows the FDA to approve the diagnostic test to determine which patients are appropriate for the drug when it's approved, as Abbott Labs (NYS: ABT) did with its companion diagnostic for Pfizer's (NYS: PFE) Xalkori.

But Seattle Genetics (NAS: SGEN) and ex-partner Takeda announced yesterday that they had established a partnership with Roche to develop a companion diagnostic for their already approved blood cancer drug, Adcetris.

Rather than thinking of Adcetris as being tardy to the party, think of it as fashionably late for an all-nighter. The drug is approved to treat relapsed Hodgkin's lymphoma and systemic anaplastic large-cell lymphoma, but the presence of CD30, which Adcetris attacks, is well-established in those lymphomas, so it isn't really necessary.

But those two indications are relatively small markets, and Seattle Genetics needs to expand into other cancer types to really drive sales. It's planning two phase 3 trials, one in CD30-positive cutaneous T-cell lymphoma and another in CD30-positive mature T-cell lymphomas. Because the drug will only work on tumors that express CD30, the company needs a commercial way to screen for patients with CD30-positive lymphomas.

Beyond those two, there's potential for other tumor types as well. Seattle Genetics is running two phase 2 trials to test activity and determine CD30 expression levels in other cancer types. In one trial it's looking at non-Hodgkin's lymphomas, including diffuse large B-cell lymphoma, peripheral T-cell lymphoma, and other, less common lymphoma subtypes. In the other trial it is looking at non-lymphoma malignancies, including multiple myeloma, leukemia, and solid tumors.

Seattle Genetics has the ability to test for CD30 levels internally or through a third party, but doing the test on a clinical-trial scale is a completely different ball game from doing it on a commercial scale -- think "house party" versus "White House gala." If Adcetris is going to be the belle of the ball, it couldn't have picked a better diagnostic escort than Roche.

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At the time thisarticle was published Fool contributor Brian Orelli holds no position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Abbott Laboratories. Motley Fool newsletter services have recommended buying shares of Pfizer. The Motley Fool has a disclosure policy.
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