Veracyte, Inc. (VCYT) just reported some fresh data related to its lead portfolio asset and the markets are yet to respond to the news. The numbers, which have been collected as part of a post marketing study in the population that the asset targets (we’ll get to this in a little more detail in a moment) are designed to reinforce the argument that the asset in question is a valuable addition to the current standard of care portfolio in its target sector and – in turn – to promote extended insurer coverage.
Here’s what we learned and what it means for the company going forward.
So, the asset in focus here is called the Percepta Bronchial Genomic Classifier and it’s a type of test called a genomic lung cancer test. The idea behind this sort of test is pretty simple. Lung cancer is one of the most common forms of cancer in the US and it’s incredibly difficult to treat if caught late stage. Just as with any cancer, there’s an obvious advantage to catching it early, but with lung cancer it’s that little bit more important that with many other types. Right now, the standard of care preventative screening involves using a CT scan to try and identify early signs of lung cancer and many of these tests result in a recommendation that a patient goes for more invasive testing – generally surgery.
That’s fine, but the problem is that up to 50% of the surgical tests result in negative outcomes, meaning the patient has gone for invasive surgery for no reason. Very few people are going to get a positive CT scan (positive, that is, in the sense that the outcome is the recommending of further investigation) then decide that they’ll take their chances on no surgery because there’s only a 50% chance that the positive readout is correct.
This is where Percepta comes in to the picture.
It’s a test that uses proprietary “field of injury” technology to catch molecular changes in the lining of the respiratory tract, which can indicate cancer or cancer-related changes in the lung. By doing this, it can serve as a precursor to invasive surgery and can help patients that didn’t need surgery in the first place avoid it.
The FDA approved the test last year and earlier this year, it picked up its first major insurer coverage from Medicare.
Which brings us to the latest news.
The company just put out (as mentioned above) data that’s designed to strengthen the sales pitch for this asset when the Veracyte sales team head out to pitch it to payers. And the data looks excellent.
As per the results, across a 390 total patient sample, the study found that doctors who used the test to identify patients at low risk for lung cancer recommended invasive diagnostic procedures half as often as when they did not use the test.
That’s a substantial time and cost saving and one that insurers are very unlikely to ignore, especially given that this is an already approved, insured and widely used product and that this latest evidence bolsters the justification for increased adoption.
Bottom line, then, this is a very strong development for Veracyte and its shareholders but – as yet – markets are being pretty muted in their response to the news. There’s a good chance that once it hits the major outlets it will start to translate to some upside for the company, with said upside likely to continue heading into the close of the week.