This document discusses the challenges and opportunities of molecular diagnostics and personalized medicine. It defines personalized medicine as using a patient's genetic information to tailor their medical care. The two key components are pharmaceuticals and molecular diagnostics. Existing business models for pharma focus on high volume and high margins, while molecular diagnostics focuses on high volume and low margins. Standardization of molecular diagnostic assays is challenging under the current system. Reimbursement is also a major challenge for widespread adoption of molecular diagnostics. The document suggests government reforms are needed to address reimbursement issues and help realize the potential of personalized medicine.

1. Molecular Diagnostics and Personalized Medicine: Challenges and Opportunities David S. Lester, Ph.D. Executive VP, Corporate Development

2. Wikipedia Definition “ Personalized medicine is the concept that information about an patient's genotype or gene expression profile could be used to tailor medical care to an individual's needs. Such information could be used to help stratify disease status, select between different medications and/or tailor their dosage, provide a specific therapy for an individual's disease, or initiate a preventative measure that is particularly suited to that patient at the time of administration.” http://en.wikipedia.org/wiki/Personalized_medicine

3. The Two Components of Personalized Medicine Pharmaceuticals + Molecular Diagnostics = Personalized Medicine

4. Existing Business Models Pharma: High Volume + High Margins (due to high attrition rate and high cost of development). MDx: High Volume + Low Margins (relative low cost of development and relatively low attrition)

5. The Discovery to Delivery Chain for Diagnostics; Gene Express, Inc. Discovery CLIA assay Standardization & Validation Commercialization Delivery/ Clinical Practice + $50B Market Academic Labs Technology Platforms (ABI, Beckmann, Ventana, Agilent, etc.) Monogram, Roche Genomic Health, Navigenics Roche, Abbott, Siemens, Philips, etc. LabCorp, Quest CROs SUPPLY DELIVERY

6. Speed to Market vs. traditional IP approach Traditional IP approach – results in companies that have single test, “one trick ponies”. Very high risk. Speed to Market approach – biomedical imaging approach. Closer to the software model.

7. Examples of challenges in the present system Standardization – bcr-abl CML as an example

8. bcr-abl in clinical practice Three phases : Chronic lasts 3-5 years Accelerated 4-6 months Blast crisis 2-3 months 5,000 new cases a year 20% of leukemias IRIS trial (2003) indicated that treatment with imatinib could reduce BCR-ABL gene transcripts by 3 logs and this was associated with a significant inhibition of disease progression

9. bcr-abl Molecular Assay Defined by initial creation of translocation between Chromosomes 9 and 22 BCR-ABL Fusion Gene is necessary and sufficient to cause CML Mughal and Goldman 2006 Deininger et al. Blood 96:3343 2000

10. bcr-abl Molecular Assay 1993 - competitive PCR 2000 - RQ-PCR 2005 - clear need for standardization - Bethesda Conference 2005 to present - continuing efforts to improve the quantitative RT-PCR assay, IS committee In response to the IRIS trial and success of Imatinib: Problem in US: - 156 Labs - 41 different methods - 6 different control genes - No harmonization of results

11. Conclusions of AMP Survey to 39 laboratories “ Our study emphasizes the need for optimization of real time qRT-PCR before offering clinical testing and the need for widely available standards that can be used for calibration.” Zhang et al. J. Mol Diagn. 9:421,2007

12. Impact for MDx – allows development of kits and propagation of glucose strip diagnostic model. This means high volume and rapid global deployment. Impact for Pharma – allows launch strategy, globalization, of drug with a highly reproducible diagnostic assay. Impacts of Standardization of Assays

13. Examples of challenges in the present system 2. The question of reimbursement

14. Examples of challenges in the present system 2. The question of reimbursement Adapted from presentation by Bruce Quinn Senior Health Policy Analyst, Foley Hoag LLP

15. The Realities of Reimbursement - Medicare

16. Examples of Cost of Development of an MDx

17. You get what you pay for!

18. Some suggested changes – must come through govt. reforms

19. Conclusions

20. Thank You! David Lester, Executive VP [email_address]