Spotting Disease Before It Arrives

New tests for genetic markers save lives--and spin profits

Colorectal tumors claimed the lives of more than 60,000 U.S. citizens in 2000. Many of those deaths could have been prevented by routine colonoscopies. But lots of people dread this procedure--and no wonder. Patients must endure an arduous purging process before showing up at the hospital or doctor's office. And while the test itself takes only one hour, it's uncomfortable and requires a full day's recuperation.

Exact Sciences Corp. sees a day when such procedures won't be necessary. The five-year-old biotech company in Maynard, Mass., has developed a way to examine the genes in excreted cells for abnormalities that develop before precancerous lesions appear. Early studies at the Mayo Clinic in Rochester, Minn., suggest that the test accurately spots 91% of all patients with colorectal cancer and 73% of those with premalignant polyps, with no false positives. If additional clinical trials support these findings, this patented DNA test could prevent thousands of cancer deaths each year, say the Mayo researchers.

Most scientists agree that a wealth of new medicines will eventually emerge from nature's newly cracked database, the human genome. But the celebrations triggered by that promise have all but eclipsed another fantastic boon: the birth of a new breed of diagnostics. Doctors are especially thrilled because tests such as the one from Exact Sciences will do more than just indicate who is at risk for disease. They'll allow doctors to identify molecular changes that herald the onset of scourges such as cancer and heart disease before symptoms appear.

The result will be nothing less than a revolution in medicine, predicts Gregory C. Critchfield, director of diagnostics at Myriad Genetics Inc. (MYGN), a Salt Lake City outfit that currently markets three gene-based tests. "With these new tools, we can shift from diagnosing disease to actually preventing it," he says.

Many of these companies have been toiling away quietly, far from the riotous arena of biotech investment. In addition to Exact Sciences, there's DiaDexus Inc., a joint venture between SmithKline Beecham Corp. (SBH) and Incyte Genomics Inc. (INCY), which has identified a fatty protein called Lp-PLA2 that may be a marker for heart disease. Two other companies, Vysis Inc. (VYSI) and DAKO A/S, have developed new breast cancer tests. And in Britain, Gemini Genomics PLC (GMNI) and Axis-Shield PLC, both in Cambridge, will launch a diagnostic for osteoporosis.

BANDWAGON. It may be years before such tests make a dent in the $19 billion global market for conventional medical tests--the familiar panoply of blood and tissue assays dominated by the likes of Roche Diagnostics Corp. and Abbott Laboratories (ABT). But these giants are also throwing their weight behind the new DNA tests, as are biotech stars Myriad and Millennium Pharmaceuticals Inc. (MLNM) All told, says Scott Wilkin, an analyst at SG Cowen Securities Corp., more than 50 companies are crowding into this market. Wilkin estimates sales will jump by 25% in the next five years.

As Wilkin sees it, the human genome could house up to 50,000 genes. Even if just 1% of them turn out to be useful diagnostic markers, that would mean at least 500 additional commercial tests. All of them, like therapeutic drugs, will have to prove their efficacy in Food & Drug Administration trials. But unlike drugs, which enter the patient's bloodstream, diagnostics don't have to undergo strict safety testing. That means the time from discovery to market could be as short as four years, as opposed to as much as 10 years for pharmaceuticals. "We are at the beginning of a period of explosive growth," says Wilkin.

Intellectual-property rights add to the luster of diagnostic startups. Most traditional tests aren't protected by patents. So they retail for tens of dollars, with profit margins of pennies at best. But DNA tests come with precious patent safeguards, allowing companies to charge a premium for their insights. Genzyme Genetics, for example, offers a prenatal test to detect cystic fibrosis for $235. Myriad charges nearly $2,600--reimbursable by most insurance companies--for a test that identifies inherited abnormalities tied to an increased risk of breast cancer.

For patients, these tests can be a godsend, as a 31-year-old Raleigh (N.C.) woman named Rebecca can attest. When she was seven, her mother had a double radical mastectomy to treat an aggressive form of cancer. Twenty-two years later, the family learned that Rebecca's mother carried specific mutations in a gene called BRCA1 that were statistically linked to increased breast disease. Had Rebecca inherited those alterations? What about her 18-month-old daughter? Last year, eager to learn the answers and tired of "feeling like a walking cancer," Rebecca joined a study run by Duke University. When the results came back negative, "I regained hopes of building a career and dreams of having more children," says Rebecca, who asked BusinessWeek not to use her last name.

One of the brightest stars in this nascent business is DiaDexus, which plans to go public in the next few months. The company is conducting clinical trials to confirm that the presence of its Lp-PLA2 marker in a patient's blood can double that person's risk of a heart attack, regardless of cholesterol levels. If the trial goes well, DiaDexus may be able to identify healthy people with normal cholesterol levels who are at risk of heart problems. The test alone could be worth millions in annual revenue.

The ability to help patients and doctors navigate among different treatment options lies at the heart of these new tests. Millennium Pharmaceuticals, for example, is working with Becton, Dickinson & Co. to market a new test that identifies which deadly melanomas are most likely to metastasize. Based on this information, oncologists can more effectively identify patients who require the most aggressive chemotherapy while the cancer is still treatable.

Before the diagnostics market really takes off, however, a myriad of legal, medical, and reimbursement issues must be settled. Patients may avoid testing because they fear what insurance companies and employers will do with the information. And doctors may opt not to administer novel diagnostics, either because the results are tricky to interpret or because the tests don't alter treatment options.

While lawyers and genetic counselors work to resolve such issues, researchers continue to identify new markers. They are convinced that these will translate into a big business. And once the tests are widespread, medicine will never be the same.

Before it's here, it's on the Bloomberg Terminal.