Cepheid forms collaboration with Novartis

Deal focuses on commercialization of test to monitor the BCR-ABL gene transcript in peripheral blood specimens related to Ph+ chronic myelogenous leukemia

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SUNNYVALE, Calif.—Cepheid announced in early October an exclusive collaboration with Basel, Switzerland-based Novartis for the commercialization of a test for monitoring the BCR-ABL gene transcript in peripheral blood specimens from patients diagnosed with Philadelphia chromosome-positive chronic myelogenous leukemia (Ph+ CML).

Development of such a test is intended to be used in conjunction with other lab tests to monitor BCR-ABL transcripts in Ph+ CML patients, with the intention of improving patient management.

"Across the healthcare industry, focused diagnostic tests offer a very real opportunity for improved patient care and resource management through more directed treatment decisions," says John Bishop, Cepheid's CEO. "With this in mind, Cepheid's collaboration with Novartis aims to deliver a standardized and accurate molecular test to support the management of CML patients."

In addition to funding development and clinical trial costs, Novartis will pay Cepheid an upfront fee of $5 million and an additional $3 million in milestone payments over the next year. Upon commercial release in the United States, Novartis will have exclusive global distribution rights to the Xpert BCR-ABL test under a Cepheid/Novartis label, working in conjunction with Cepheid's Commercial Operations team.

By moving to a rigorously developed, cleared and approved test that is linked to a globally accepted standard called the international scale, "the collaboration aims to reduce the variability that is currently inherent in BCR-ABL testing," Bishop says—an effort to which both his company and Novartis are committed because it will help Ph+ CML patients "have access to the broadest range of therapeutic options ever available," such as tyrosine kinase inhibitors.

"Cepheid's unique combination of accuracy, ease-of-use and reproducibility is unmatched in molecular diagnostics, and has established the GeneXpert system as the leading molecular platform for healthcare associated infections," Bishop says. "Benefiting from Novartis' global reach and experience as the well respected leader in the treatment of CML, we look forward to extending the benefits of our best-in-class GeneXpert system to patients in the oncology field."

The Xpert BCR-ABL test has already been available outside the United States since 2006, and has a CE Mark in Europe. The agreement with Novartis, Bishop says, will accelerate the potential U.S. commercialization of Xpert BCR-ABL, with Novartis funding the clinical studies and other development expenses.

Following the commercial release of the test, Novartis and Cepheid will be working together to identify other diagnostics on which they can collaborate to help physicians better manage patient treatment in various areas.

In other news released shortly after the Novartis announcement, Cepheid reported $56.1 million in revenue for the third quarter of this year, compared to revenue of $41.6 million in same period of 2009.

"Cepheid continues to make solid progress on its two-pronged strategy to establish the GeneXpert System as the molecular platform of choice, while also working steadily towards sustainable profitability," Bishop says. "With another record quarter of revenue and bottom line performance behind us, we continue to expect strong growth in our Healthcare Associated Infection test and critical infectious disease portfolio, while our aggressive investment in our test pipeline extends Cepheid's addressable opportunity into women's health, viral infectious diseases, and oncology."

Novartis had its own good news in the third quarter of 2010, with sales up 13 percent compared to the same quarter last year.

Simon King, pharmaceutical company analyst at Datamonitor, recently praised Novartis for a "strong new launch output in recent years coupled with a low level of exposure to major generic competition continues to drive steady organic growth," and added that, "compared to many of its peers, Novartis has been particularly adept at replenishing its portfolio and compensating for generic erosion to mature brands."

Although not a diagnostic like the Xpert BCR-ABL product with Cepheid, Novartis had some very good news on the CML front therapeutically, with King noting that "life-cycle management for one of Novartis' key brands—the chronic myeloid leukemia therapy Glivec—was boosted by the Swiss approval for follow-up therapy Tasigna as a first-line therapy."

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