Redwood City company at the forefront of personalized medicine

An estimated 100,000 people will die this year from adverse reactions to drugs. Millions of others, the Department of Energy Human Genome Project warns, will experience dangerous or uncomfortable affects from such reactions.

This year, anti-depressants will cause some patients nervous system degradation; painkillers administered to mothers after childbirth will poison some infants with morphine; 6,000 individuals inflicted with stroke, who would have otherwise survived, will die from receiving an incorrect dose of warfarin, the drug used to break down blood clots.

More and more present-day case studies tell us that the one-size-fits-all approach that has defined much of medicine’s past will not be the way of its future.

The relationship between drugs and genes continues to serve as a potent catalyst in the medical profession, spurring researchers and health professionals to explore an emerging wave in healthcare: personalized medicine.

The field of personalized medicine is often defined as giving the right drug to the right patient at the right dose at the right time. It is evolving most quickly in the United States.  Silicon Valley and Boston are international hotspots of innovation, according to Chunlin Wang, a researcher at the Stanford Genome Technology Center.

Analysts agree that Genomic Health, Inc. (NASDAQ: GHDX), a Redwood City based diagnostics company founded in 2000, has positioned itself as a global leader in personalized medicine, specifically in cancer diagnostics.

The company’s president and chief executive officer Kim Popovits, said the adoption of personalized medicine in clinical settings calls for a fundamental shift from a therapeutics-based medical system to one rooted in diagnostics and prevention through analysis of genomic data.

Many Americans may not be familiar with the term “personalized medicine,” according to Ron Leuty, a biotech reporter at the San Francisco Business Times. But many say it is a field that dates back to prehistory. For Baback Gharizadeh, a researcher at SGTC, personalized medicine refers not only to pharmaceuticals, but to food: determining diet based on individuals’ specific physical and mental conditions, for example, was a common practice in ancient Hindu and Aztec societies.

The successful completion of the Human Genome Project in 2003 forged new paths for personalized care. According to Ron Davis, director of the SGTC, the 13-year project gave rise to next generation sequencing, the fastest, most advanced and most comprehensive sequencing technique used by scientists today. Over the course of the project, the cost of sequencing the genome decreased 10 million-fold.

Personalized medicine is “just starting,” Davis said. In an interview at his office at the technology center’s campus, just minutes from Stanford’s main campus, he described a future world in which babies’ genomes will be fully sequenced at birth, and adults will attach diagnostic devices to their skin to monitor vitals and take real-time assays, sending alerts to a doctor when needed; if someone were about to have a heart attack, such a device would send a text message with a message such as, “Go to the emergency room immediately. You’re going to have a heart attack.”

Most labs in the United States currently rely on PCR, the predecessor to next generation sequencing, to produce commercial diagnostic tests. Diagnostic companies like Genomic Health are eager to apply next generation sequencing technology for new medical applications. The first of this month marked the official launch date of a Genomic Health’s new company-owned research subsidiary dedicated to this newest sequencing method.

Randy Scott, chief executive officer of the subsidiary and a founding member of Genomic Health, described the subsidiary as reflective of a “turning point” in the history of medicine.

“This is a great opportunity to bring this new genomic technology, knowledge and expertise broadly to the medical community, much like we did in cancer with our core business,” he said. “Investment we’ve made over the past several years in the development of a robust next-generation sequencing platform, and the capabilities we have established in building a successful cancer genomics business, make this the ideal time for Genomic Health to expand into both common and rare genetic conditions.”

Genomic Health has shown a keen interest in remaining ahead on the sequencing curve. Leuty described Genomic Health’s key advantage as an “ability to look out into the future.” Since its inception it has demonstrated an ability to innovate in-house and to be the first to make its tests commercial.

Applying its approach within cancer diagnostics to diseases in areas such as immunology, neurology and cardiology could take the company far. Genomic Health’s persistence in pushing its breast cancer diagnostic test seven years ago in a market that was decades behind its vision suggest that the company could be fearless enough to bring new changes that medicine doesn’t know it is ready for.

Yet the challenges facing Genomic Health and other life science companies trying to bring diagnostic tests to clinics are considerable.

Popovits said that Genomic Health’s two greatest challenges in expanding the scope of its diagnostics are obtaining reimbursement for tests from governments, insurance companies and payers, and navigating regulatory processes.

Davis also outlined problems associated with data management. Sequencing technology is evolving faster than the computers available to process the data. This leaves biotechnology firms struggling to find ways to store and analyze the massive data sets generated by next generation labs.

Leuty drew comparisons between the current state of bioinformatics technology to the early stages of the personal computer industry.

“In a couple years, there will be a big player in gene sequencing analysis, and they’ll be the new Oracles of this world,” Leuty said.

What’s more, integrating genomic analysis smoothly into clinical diagnostic settings and medical school curricula is another obstacle, Davis said, as physicians and rising professionals will need training in making new biostatical tests and results part of their practices.

Among patients, Leuty said, there seems to be a prevailing concern about the privacy of individuals’ medical information. Many worry that if not fully protected, such information regarding genetic traits or predispositions could at some point impact their health insurance or work opportunities.

According to Stuart Kim, Stanford School of Medicine professor of genetics and developmental biology, rather than approaching medicine by “putting out fires,” personalized medicine opens the door for everyday people to make better decisions about their health.

“Right now, everybody is saying, ‘I’m going to invest equally in diet, and exercise and going to get a check up on this and the other thing,’ when really, they’re at much more risk for certain things than for others,” Kim said. “So if I had the knowledge, I could be smarter about what I concentrated on. And that would make me, overall, healthier. It’s preventative.”

Genomic Health rumored as potential acquisition

Expanding genomic analysis and diagnostic companies aren’t escaping the attention of big time pharmaceutical and medical-device companies. In mid-February, the pharmaceutical giant Roche  put forth a hostile bid for Illumina, a San Diego-based firm which Gharizadeh referred to as the global leader in next generation sequencing machines.

Some analysts  expect 2012 to be a year of mergers and acquisition activity involving diagnostic companies, and Roche’s bid intimates the company’s growing interest in the diagnostics field.

GE, the world’s largest producer of medical imaging equipment, and Siemens, Europe’s largest engineering company, have both expressed increased interest in next generation sequencing and focusing more on molecular-based medicines.

Analysts have described Genomic Health and Affymetrix, a Santa Clara-based cancer diagnostics company, as potential acquisition candidates.

“They (Genomic Health) would be attractive, but there would be a huge premium for the acquirer to pay because of the intellectual property and the person power with Randy Scott, Kim Popovits and everyone on the clinical end of things,” Leuty said about the prospect of a take over.

The company’s upcoming expenses on further research and development could also present a barrier to companies considering an acquisition  Genomic Health reported on its last earnings report that it could see zero profit in 2012, as $20 million  will be invested in the new subsidiary over the next two years. The company’s public relations manager Victoria Steiner said  in an email that the company has a policy declining to comment on takeover speculation.

Genomic Health currently holds $830 million in assets and is expected to increase revenue by 61 percent in the next three years, according to Bloomberg data.

The company  receives orders for its diagnostic tests in over 60 countries. It has reached over 200,000 patients since its founding out of a total of about 1.2 million potentially patients it hopes to reach globally, according to its most recent annual report.

Genomic Health’s stock was slightly up Wednesday at $31.43 at the 4 p.m. close of trading on the NASDAQ stock market. Shares of Genomic Health  have hovered around $29 since its fourth quarter earnings call last month.

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