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Germany's Epigenomics bets its future on an early-detection colon cancer Dx

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BERLIN--In 15 years, Germany's Epigenomics has experienced a heady series of ups and downs.

The Berlin-based diagnostics company went public on the Frankfurt stock exchange in 2004 and raised €41.6 million. It merged with a Seattle operation that is now its U.S. arm and gained CE marks for a colon cancer early-detection diagnostic and a lung cancer confirmatory assay. These are all major accomplishments.

But over the last two years, there was also the restructuring, which included lowering the employee count from 85 people to less than 40 in order to reduce the company's cash burn rate and conserve its resources. That also meant the elimination of the company's sales and marketing arm in the European Union and a narrowing of focus. Undaunted, since 2011 execs have placed their attention on gaining U.S. approval for their early-detection Epi proColon test, a 2.0 version of which gained a CE mark in early 2012. (The first version gained the status in 2009.) While the FDA is still determining a final approval timeline, they are hoping to gain a PMA signoff by year's end, a milestone that would give Epigenomics the ammunition it needs to raise more money to keep running.

Thomas Taapken, who became chief financial officer when restructuring began in 2011, assumed a second role as CEO in September 2012. We spoke extensively about the company's bullish focus on the U.S. market during an interview in Epigenomics' offices in the trendy Hackescher Markt neighborhood in eastern Berlin. The offices are lean and modern, right by the elevated S-Bahn tracks in what has become a vibrant, cosmopolitan district since the city reunited at the end of the Cold War. (Think Dupont Circle in Washington, D.C., a densely packed urban neighborhood of shops, restaurants, tech and life sciences company offices, and you'll get the picture.)

Epigenomics CEO Thomas Taapken

Why the U.S., and why colon cancer diagnostics? Taapken explained during our conference room sit-down that high colon cancer rates in the U.S. and $14 billion spent annually on treatment offers an opportunity for a diagnostic test that can boost the standard of care. The current diagnostic standard involves using either fecal tests or a colonoscopy, the latter of which forces patients to undergo a nearly weeklong regimen of dietary and medical restrictions before the procedure. And testing compliance rates in the U.S. are low; patients may be urged to have the test, but they resist, in part due to the limited options. So the market, Taapken firmly believes, has room for a simple blood test lab kit that could boost those compliance rates and possibly increase earlier-stage colon cancer detection and treatment.

An earlier and less invasive way to detect colon cancer would be the holy grail for diagnostics companies and clinicians alike, and Epigenomics isn't alone in trying to get there. Earlier this month researchers in South Korea announced they had come up with a noninvasive biomarker methylation blood test that had a high rate of detection of early-stage colon cancer and helped ferret out patients who didn't have it to a wide degree. And there are others. But Epigenomics bills Epi proColon as a game changer in the space--something it says is the first blood-based polymerase chain reaction IVD test for colon cancer screening. It also takes about 8 hours to process using standard lab equipment made by companies including Life ($LIFE) and Roche ($RHHBY), the company says.

Assuming Epigenomics can make its PMA submission as planned, the company will certainly be backed by reams of data, including a pivotal clinical trial of its 2.0 version involving nearly 8,000 samples. The test generated 68% sensitivity and 80% specificity--all promising, but the 20% false-positive rate is a bit high. Taapken said the numbers are still positive because doctors could order a colonoscopy follow-up to be certain. Another test comparing Epi proColon to the fecal immunochemical test (FIT) showed that the tests' accuracy and sensitivity were comparable, which hopefully gives the less-invasive blood test the edge. Taapken adds that even with that in mind, both tests could be complementary, because some cancers go undetected with FIT. Also, patients with positive results could get an FIT follow-up before a colonoscopy.

But there are plenty of hoops to jump through first.

The FDA has granted priority review status for the test, and the company hopes for a panel review meeting by the second half of this year, after which a PMA decision would be issued within four to 6 weeks. No meeting has been scheduled yet, however, even after an FDA meeting in mid-May during which the company sought an update. That's a crucial thing to resolve, because Epigenomics has enough cash only until the end of this year. It is counting on the approval to give it the results it needs to raise money so it can continue operating. Thus, a clear approval timeline is needed to plan for the future.

Taapken tells me the company remains "confident about where we are in the review process" and continues to be optimistic about an approval decision by the fourth quarter.

"The risk of plain nonapproval is fairly low," Taapken said. And so the ultimate goal remains: for Epigenomics to be added to major medical society recommendations for testing protocol. If that happens, the choices would be colonoscopy, fecal test or the company's blood test.

-- Mark Hollmer (email | Twitter)