Oncimmune Holdings plc (LON: ONC), a leading global immunodiagnostics Group, have announced the completion of the strategic commercialisation agreement with Biodesix, Inc. for EarlyCDT Lung in the United States, which was announced on 28 June 2019.
We believe this agreement will unlock the potential of EarlyCDT Lung in the US, a key strategic market for Oncimmune. Biodesix is a leading lung cancer diagnostic solutions company which has now commenced the commercialisation of EarlyCDT Lung. Biodesix will make increasing volume-based revenue-sharing payments to Oncimmune from its sales of the EarlyCDT Lung test.
To satisfy the expected growth in sales volumes, Oncimmune will provide Biodesix with diagnostic plates and associated reagents under a profitable supply agreement which was also signed today. Biodesix’s current sales force of around 30 is set to increase to over 80 over the next two years, enabling wider reach across the US.
Under the terms of the commercialisation agreement, Biodesix today completed the acquisition of Oncimmune’s CLIA laboratory facilities in Kansas, US and will pay $1.0 million to Oncimmune in quarterly instalments of $250,000, with the first being made within 30 days from today. The sale of Oncimmune’s US laboratory operations will materially improve the Company’s cash position through a reduction of ongoing US operating costs, which were approximately $3.2 million over the past 12 months.
Biodesix is focused on exploiting the full potential of EarlyCDT Lung by extending the utility of the test to screening in the US. To facilitate this significant opportunity, Oncimmune has granted Biodesix an option to commercialise EarlyCDT Lung as a screening diagnostic for lung cancer in the US in exchange for a further significant cash payment. The option is exercisable by the end of 2020. Following the announcement by the Company on the 4 June 2019 that the Early detection of Cancer of the Lung Scotland (“ECLS”) trial had met its primary end-point, it is the Board’s belief that lung cancer screening, over and above the current lung nodule application, increases substantially the total addressable market for EarlyCDT Lung in the US, and indeed, in all other major markets.
This strategic commercialisation agreement with Biodesix represents value to Oncimmune of up to $28 million in the five-year period to 1 November 2024, of which approximately $7.2 million derives from minimum volume-based revenues. The balance of approximately $20.8 million is represented by both cash lump sum payments, including the $1.0 million sale of Oncimmune’s US subsidiary’s operations, as well as the significant payment that will be due if the screening option is exercised, together with the material cost savings resulting from a reduction in US operating costs. The Agreement can be renewed by Biodesix for a further five years to 1 November 2029, and by mutual agreement thereafter.
Oncimmune will also continue to collaborate with Biodesix on research and development activities in order to fully leverage the commercial potential of EarlyCDT Lung in the US.
Dr Adam M Hill, CEO of Oncimmune Holdings commented:
“We are delighted to be working with Biodesix, a company with a successful track record of commercialising clinical diagnostic lung tests in the US and dedicated to improving patient management and outcomes. Biodesix is focused on extending the utility of EarlyCDT Lung to screening in the US, and this partnership, which fully realises the value of EarlyCDT Lung, will accelerate market access and save lives through earlier detection of lung cancer.
“This partnership and other agreements announced this year, demonstrate our ability to deliver on the core objective to drive organic growth through commercial collaborations. In addition, we have secured further funding through a credit facility arrangement, which puts us in a strengthened cash position to deliver on our three-year forward strategy.”
David Brunel, CEO of Biodesix commented:
“More than 1.6 million patients a year in the US are found to have an incidental pulmonary nodule, and most of these patients do not have cancer. Avoiding unnecessary invasive procedures and expediently moving those with cancer into treatment are equally high priorities, and with our current Nodify XL2 and now with EarlyCDT Lung, Biodesix brings the most comprehensive, simple, blood-based testing solutions to address this urgent problem.”