LabCorp-backed GeneCentric raising $20M Series B to build portfolio of molecular diagnostic tests

No one would argue that startups are particularly good at securing reimbursement and sales for their molecular diagnostic tests. That's where GeneCentric Diagnostics is stepping in to fill the gap by in-licensing molecular diagnostic tests and developing the clinical trial data for them to secure adoption and reimbursement.

The startup is uniquely equipped to do all this because it is headed by a trio of former LabCorp ($LH) executives. GeneCentric's inception was in 2011 as a spinoff of Lineberger Comprehensive Cancer Center at the University of North Carolina.

The first application of that technology was for the HistoPlus lung cancer test that is now marketed by LabCorp. It's a gene expression assay using quantitative real-time PCR for 57 genes expressed in non-small cell lung cancer subtypes and can be used to distinguish adenocarcinoma from squamous cell cancer subtypes.

GeneCentric CEO Myla Lai-Goldman

"When lung cancer comes in to LabCorp or any of the pathology groups, pathologists are asked to determine if it's adenocarcinoma or squamous carcinoma. In some of those biopsies, pathologists can't answer that question; it's either indeterminate or the biopsy is too small, since it has to go for mutation testing as well. If they come up to an indeterminate result, they can utilize our test to help with that distinction," GeneCentric CEO Dr. Myla Lai-Goldman told FierceMedicalDevices in an interview. She spent her last 10 years at Lab Corp as EVP, CMO and CSO; she then went on to be a venture partner at Hatteras Ventures.

At the end of 2014, GeneCentric started clinical testing on another diagnostic test that would further identify adenocarcinoma subtypes. Data is expected in the third quarter of 2015 with an FDA submission to be forthcoming subsequently.

GeneCentric got the second tranche of its $5 million Series A from Hatteras and LabCorp in June. That financing was largely dedicated to the lung cancer tests.

Now the startup is raising about $20 million in a Series B that should enable it to take a portfolio approach to work on three to 5 projects. The company outsources its laboratory and kit-building activity, so there's no need to pay to build these internally. That eliminates significant expenses usually absorbed by diagnostic startups.

GeneCentric has already in-licensed intellectual property around diagnostics for head and neck cancer and is also contemplating bladder cancer and other indications. GeneCentric expects to be able to develop all of these programs for the cost it might take another company to do just one test.

"We have a very attractive business model that investors are beginning to understand," Lai-Goldman said. "The traditional diagnostics business model just isn't working."

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