NEW YORK – NeoGenomics aims to expand its informatics and pharmaceutical businesses through companion diagnostic partnerships, in addition to deals and acquisitions.
The cancer diagnostics firm will consolidate its multiple businesses in newly-built headquarters in Fort Myers, Florida, which it plans to occupy around September.
Douglas VanOort, CEO and chairman of NeoGenomics, said the company initially hired a consulting firm in 2019 to plan its strategy for fleshing out the informatics division. It wanted to develop product ideas to solve "real-world problems" of different players in the "pharmaceutical ecosystem," which VanOort said included pharma firms, healthcare providers, payors, and patients.
While NeoGenomics' informatics and pharma divisions have not established much traction with providers and payors, VanOort touted recent agreements the firm has signed with undisclosed pharma companies.
"We are entertaining [opportunities] to use the data we're generating to [produce] new kinds of products, mainly for pharma companies," VanOort said. "Right now, we're running 40 companion diagnostic projects, [but] we want to grow that number this year."
For example, NeoGenomics is working with pharmaceutical firms to help match cancer patients to specific clinical trials and therapies. VanOort noted that the firm has a clinical database covering "the complete spectrum of oncology testing" from over 1.6 million patients that its partners can tap into for their trials.
"Pharma companies developing new drugs need patients who have particular genetic anomalies, like NTRK-1 fusions … to move their clinical trials forward," VanOort said. "[Since] we're testing more than half a million patients a year, we can find them the necessary patients for these trials."
In addition, VanOort pointed out that the firm has begun sponsored testing programs with certain pharma partners. For these, instead of receiving reimbursement from Medicare or other managed care organizations, NeoGenomics will be paid by the partner for performing companion diagnostic assays for a specific therapy that the company may possibly offer patients.
"Since the patient's doctor is our client … we have medical liaisons that call the client [and say] 'you have a particular patient that tested positive for this [disease] and we wanted to let you know that there's a particular therapeutic and companion diagnostic,'" VanOort said. "Since it’s a sponsored program, their patient wouldn't have to pay."
VanOort believes that NeoGenomics' informatics business could also potentially help hospital groups ensure that oncologists in cancer centers across the US adhere to their standards of care. He noted that the product idea has gained some traction with providers.
"Oncologists might be not practicing according to the guidelines and ordering a single-gene molecular test instead of a small panel approved by someone like the National Cancer Center Network," VanOort said. "If you see one of your oncologists, who is one of our clients, not ordering properly for this condition, we'd like to work with you on that, [since] if they're not ordering right, they're not getting the right results and not treating [the patient] correctly."
NeoGenomics has also experimented with developing care algorithms for certain payors to help them manage patients through their cancer care journeys.
"For example, if we identify a patient with non-small cell lung cancer, the managed care organization might say 'We want you to make sure that this testing profile is performed so that we know that the patient with an ALK, EGFR, or BRAF mutation … will get the right therapy,'" VanOort said.
While NeoGenomics expects to develop products through its different collaborations, VanOort said that the firm will also build technology to help with client connectivity.
"The clinical decision support systems [are important] for clients to have a better sense of what [tests] to order, because the world of oncology is getting more complex," VanOort said. "Things like that will help our clinical business and help us grow out our informatics business [as well]."
At the JP Morgan Healthcare Conference earlier this month, VanOort noted that NeoGenomics currently derives 85 percent of its revenue from its well-established clinical services testing division, while 15 percent stems from its pharma and informatics divisions. However, he said this week that NeoGenomics' biopharma and informatics divisions are growing at a faster pace than the rest of the company.
"We would like, in a few years, to have at least a third of our company be pharma and informatics," VanOort said. "I think it's possible to do that, hopefully, in a relatively short period of time."
NeoGenomics aims to eventually derive over $100 million in annual revenue from the fledgling informatics division. While VanOort acknowledged that this amount is an "aspirational" goal, he believes that the number shows the firm's investors that it "is serious" about the business' future growth.
He said that NeoGenomics will augment the organic growth of the smaller divisions through well-timed deals and acquisitions. While declining to provide specifics, he noted that the acquisitions will depend on the landscape of the cancer space in 2021.
"We try to know what's out there, but we're surprised by new things that we didn't know before," VanOort said. "There might be more opportunities right now to acquire [firms] in the pharma area, but we are looking widely, and that's why we raised money recently."
In a public offering of common stock and convertible senior notes earlier this month, the firm raised more than $500 million in gross proceeds.
While NeoGenomics will use these for general corporate purposes, VanOort explained that the firm will fund its informatics division growth through cash flow. He said the firm has invested "a fair amount" in the division's infrastructure, including the hiring of 35 people and creation of a data lake for storing patient data.
VanOort also discussed NeoGenomics' plans to complete a new 150,000-square-foot building in Fort Myers that will serve as its new headquarters and will house a CLIA-certified, CAP-accredited lab. He noted that the new building will help consolidate NeoGenomics' different businesses, as the firm currently operates in five different locations across the city.
The new lab will allow the firm to perform cytogenetics, flow cytometry, FISH, immunohistochemistry, and comprehensive molecular testing — from single-gene tests to whole exomes and NGS panels — all under one roof.
VanOort said that NeoGenomics plans to provide additional details about its commercial plans for 2021 and beyond during its next quarterly earnings call on Feb. 24.