Quest forks over milestone payments to French Dx company in development deal

Quest Diagnostics' ($DGX) partnership deal with a state-of-the-art French company is showing signs of paying off.

As part of their arrangement, the New Jersey diagnostics player will be paying Genomic Vision nearly $2.3 million in milestone payments based on its progress in developing new cancer-related diagnostic tests and equipment covered by their partnership.

Multiple points of progress earned Genomic Vision the money, the company said. For one thing, it validated a diagnostic test for Lynch syndrome, an inherited condition that heightens the chance of getting colon cancer. The test helps to visualize the 5 major genes involved in the condition, and Quest plans to start marketing it in the United States in 2015.

Genomic Vision also obtained approval for a new DNA extraction protocol involving "genomic Morse code" tests to help spot breast and ovarian cancer, and Lynch syndrome. These would be used in conjunction with a new laboratory high-throughput scanner covered by the partnership, though tweaking on automation for the DNA extraction protocol is ongoing.

Additionally, Genomic Vision said it has begun production of pilot laboratory instruments to be used with the scanner. The company said it worked with British laboratory instrument company ITL to develop these, and that Quest will gain access to the instruments in early 2015.

Aaron Bensimon

Aaron Bensimon, Genomic Vision's co-founder and chairman, said in a statement that the goal is to give Quest a new high-throughput scanner, and the ability to market related tests for Lynch syndrome and breast/ovarian cancer in the U.S. in 2015.

If all the deadlines are met, Quest gains more new test and imaging technology to help fuel growth.

Quest has also turned to other companies for similar arrangements. Its deal with Sequenom ($SQNM), for example, gives Sequenom's prenatal diagnostic tests entry into Quest's U.S. labs, and Quest is also licensing some Sequenom patents relating to prenatal testing.

By signing partnership deals with other companies and selling their tests under the Quest umbrella, the company gains a relatively efficient way to generate revenue. It could use the boost. Quest's $1.8 billion in 2014 first-quarter revenue reflects a 2.3% drop from the same period a year ago. Net income also declined, in part because of federal reimbursement changes and an acquisition. Quest wants to be robust, and not sluggish, in its growth.

Quest remains undaunted, pursuing its 5-point strategy to restore aggressive growth that has also included job cuts, aggressive product launches and acquisitions.

Quest is a backer of Genomic Vision, along with Institut Pasteur, SGAM AI and Vesalius Biocapital.

- read the release

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