Veracyte, J&J team up on early lung cancer detection

Veracyte and Johnson & Johnson have inked a deal worth up to $20 million to develop and commercialize diagnostic tests to screen for lung cancer at its earliest stages. Veracyte will pick up a $5 million upfront fee and could reap as much as $15 million in milestone payments.

The plan is to create new “interventions” based on “field of injury" science, in which genomic changes associated with lung cancer can be identified with a simple brushing of a person's airway, Veracyte said in a statement.

Under the agreement, Veracyte and J&J’s Lung Cancer Initiative will combine multiple years' of clinical outcome data from more than 5,000 patients. Veracyte will also contribute bronchial and nasal samples from its clinical trials and use its RNA whole-transcriptome sequencing platform on the combined data. J&J will be able to use the genomic analysis “for therapeutic purposes,” and Veracyte expects the partnership to boost two of its lung cancer programs—the development of a noninvasive nasal swab test to catch lung cancer early and the commercialization of its Percepta Bronchial Genomic Classifier, which will run on the company’s RNA whole-transcriptome sequencing platform. The test is designed to identify patients at low risk of cancer so they can avoid diagnostic surgery. A first-generation version of Percepta that runs on a different platform is already on the market.

RELATED: Study: Veracyte’s genomic lung cancer screening cuts invasive procedures in half

The U.S. Preventive Services Task Force recommends annual screening using a CT scan for people at high risk for lung cancer. But studies have shown that many patients whose scans suggest they need further treatment, such as surgery, turn out not to have early-stage lung cancer at all. In late 2017, Veracyte presented data showing that the Percepta test reduced the number of invasive procedures by more than 50% in screening and diagnosis of lung cancer

The cash value of the J&J deal could reach $20 million, but Veracyte CEO Bonnie Anderson reckons it’s worth more than that.

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“We estimate the combined monetary and non-monetary value of the collaboration to Veracyte at more than $50 million,” Anderson said in the statement. “The monetary component consists of a $5 million upfront payment and the potential to earn up to a total of $15 million in future development and reimbursement milestone payments. The non-monetary value reflects the significant value of clinical cohorts accessible to Veracyte through the collaboration. Also as result of this agreement, we expect our biopharmaceutical service revenue for 2019 to increase by an estimated $5 million.”

Editor's note: This story has been updated to clarify that the partnership will accelerate the development and commercialization of a second-generation Percepta Bronchial Genomic Classifier.