Hera Biotech is developing and commercializing the world’s 1st non-surgical test for definitive diagnosis and staging of endometriosis.
A often-painful, benign condition that is the number one cause of female infertility. Endometriosis is estimated to affect 10-20% of women, aged 15-44 worldwide; 7-13 million in the U.S. And 176M worldwide.
The market for endometriosis is estimated at $9B, making it both substantial and sustainable. Hera’s target market includes reproductive endocrinologists, fertility clinics and OB/GYNs, who are most likely to see patients experiencing symptoms of endo. In discussions with target market physicians and reimbursement advisors our test has been met with enormous enthusiasm, as there is a dearth of innovation in this disease.
HERA is 1 out of 2 companies developing a diagnostic other than surgery. While the second method of sample collection is favorable, inflammatory markers in the blood are not endo specific. Their assay has been met with skepticism from practitioners, researchers and the NIH.
Endometriosis is a benign gynecologic disorder, causing painful abdominal inflammation that affects ~10% of women worldwide, and contributing to a large fraction of female infertility (35-50% of endometriosis patients experience infertility issues)17. At an estimated annual cost of $12,118 per patient in terms of direct medical costs, this represents a financial burden of ~$80 billion per year for the US alone.18 Yet the only diagnostic for the condition is surgery which, in 50% of cases, fails to confirm endometriosis through histology.4 Because this method for diagnosis requires general anesthesia, surgery, considerable tissue mortality and only results in confirmation of disease ~50% of the time4, physicians, and patients alike, are understandably hesitant to pursue it. Further, patients in minority or economically disadvantaged populations suffer from restricted access to diagnosis. Thus, there is a pressing need for understanding disease etiology to aid in developing non-surgical diagnostics and therapies. Surprisingly, there has been a dearth of studies to identify an underlying genetic fingerprint for endometriosis.
MetriDx™ utilizes increased expression of Cx genes in stromal cells (relative to epithelial cell expression) for endometriosis diagnosis.
Endometriosis is an invasive process, wherein tissues of the endometrium that lines the uterus invade other pelvic organs, such as the fallopian tubes. This invasive tissue leads to the build-up of inflammation, scar tissue and adhesions. One class of genes, encoding the structural components of gap junctions (GJs), has surprisingly not been included in most studies, despite extensive evidence that implicates these structures in BOTH of the major pathogenic features of endometriosis – formation of invasive ectopic lesions and infertility (seen in 35-50% of endometriosis patients). GJs are structures which mediate direct contact and communication between most cells of the body via exchange of metabolites and signaling molecules <1000Da. GJs are comprised of a family of 21 GJA-D genes that encode connexin proteins (Cx), and have been shown to be essential to many invasive processes, such as pathogenic cancer metastasis19,20, including invasion into the peritoneal mesothelium.20,21 Our initial gene expression profiling of a panel of Cx genes, and other intercellular junction components and their regulators (e.g. kinases, transcription factors), revealed marked changes over the progression of endometriosis compared to controls. These changes were cell-type specific, likely explaining why they had previously escaped detection.
In our genetic screens of endometriosis patients, we have identified striking changes in Cx expression profiles that are uniquely associated with the progression of endometriosis. Furthermore, these changes were evident in the lining of the endometrium, that is easily accessible without surgery through pipelle brush biopsy, demonstrating that these changes occur in the very earliest stages of endometriosis. Validation of the unique Cx expression “fingerprint” from the uterine endometrium of patients will provide the first non-surgical diagnostic for endometriosis.
At an estimated cost of ~20% that of the current surgical approach to diagnosis, along with significant decrease in risk to the patient, this diagnostic assay could have a very large impact on the clinical management of this condition world-wide. The small tissue sample from the pipelle biopsy is processed to separate and isolate both the epithelial and stromal cells (which show opposite shifts in gene expression) and an individual cell is analyzed in a micro-fluidics instrument for expression of several Cx and associated genes. Up to 96 cells and 96 distinct genes can be analyzed at once and this process requires only nano-liters of reagents to operate.
As shown in the Heat Map example below, Endometriosis is marked by a significant change in the connexin (Cx) gene expression of stromal and epithelial cells. Normal cells have a high expression of Cx genes (shown as a black or green color), whereas epithelial cells have a low level of Cx expression (red color). As the disease advances, this expression pattern becomes reversed. This pattern is consistent throughout the menstrual cycle, unlike the pattern of other potential endometriosis markers.
Currently, the only definitive diagnosis for endometriosis is with a surgical (laparoscopic) biopsy procedure followed by histological confirmation with an average cost per procedure of $17,65622. The accuracy of surgical evaluation is highly site specific. Overall, surgery fails to detect lesions in ~16% of surgeries and almost half of biopsies are negative2. The average time to diagnosis for endometriosis in the US is over 8 years5 and as a result, at least 7 million women (age 15-44) in the US are undiagnosed.
More recently, DotLab has been raising awareness of their technology which they assert can diagnose endometriosis with examining upregulation in a panel of specific miRNA targets.23 In the studies they’ve completed, to date, they have shown a correlation between upregulation of certain mRNA expression and endometriosis in the patient. However, the lack of negative controls (normal patients) in their data set means that the specificity of their assay is still being determined and there is no evidence that these markers are directly involved in the disease state. As a result, a non-causative positive correlation may exist in a similar manner by which C-Reactive protein is related to inflammation but is limited as a diagnostic tool since it is elevated by numerous inflammatory conditions (cancer, infection, allergy, etc.).
More concerning is the failure to recruit/report on patients with confounding conditions that may cause an elevation in the same targets. Perhaps as a result of this conundrum, they have recently increased the number of targets they are examining. However, in their latest study (750 patients) they are only comparing their mRNA panel results to the confirmation of visualized disease.24 This raises 2 concerns: 1) The large number of patients required to achieve statistical significance suggests a low predictive power for the assay and 2) The comparison to visualized disease lacks a pathological confirmation of endometriosis. This is important as visual-only laparoscopies often fail to correctly diagnose endometriosis, with biopsy followed by histopathology revealing that the tissue visualized is subsequently determined to not be endometrial in origin. It is the position of our researchers, as well as other key opinion leaders in this field that we have consulted, that this methodology will suffer from false positives due to confounding conditions that also cause an upregulation of inflammation in the pelvic organs. A high false positive rate will greatly limit this assay’s clinical utility and obviate any advantage that it has from the simplicity of being a blood derived test.
EndoDiag, funded by the French government, isworking on a similar approach to DotLab. This company is also looking at a blood-based target and will likely suffer from the same limitations previously mentioned. Their current study aims to evaluate 975 patients, and the goal of the study is unclear, it appears they are not actively looking to commercialize a test.25 In both cases, the use of blood-based tests has potential advantages in terms of sample collection to the current embodiment of MetrDxTM. However, Hera believes that its approach, which utilizes a direct analysis of the diseased tissue and involves genes likely to be directly involved with the disease pathology will provide a diagnostic test with superior clinical utility that greatly outweigh any perceived disadvantage resulting from a pipelle-based sample collection method.
Hera is taking a 2-stage approach to commercialization, which will include and LDT offering as well as an FDA clearance and incorporate both cash pay and reimbursement revenue models. Initially, Hera will commercialize the MetriDxTM as a Laboratory Developed Test (LDT), which will provide the most expeditious path to market entry. In the case of MetriDxTM, there are two markets of concern: the women’s health diagnostics and the fertility solutions market. The global women’s health diagnostic market is estimated to reach ~$36B this year, the majority of which is the North American market, and is expected to grow at 7.9% CAGR.26 The global fertility solutions market was valued at ~$20B in 2018, with North America being the largest portion of the market, and is expected to grow to ~$41B by 2026.
The path for the commercialization of the LDT is as follows:
The MetriDxTM assay will have a collection kit packaged and sent to the physician or clinic upon request. Hera Biotech has established a price of $2,700 for cash pay and an average insurance reimbursement of $3,000 for the assay. This price is based on comparisons to currently offered LDTs reimbursements of similar size gene panel analysis assays. It’s important to note that the panels listed below are based on bulk analysis of cells and do not require the specialized equipment or processing time required for single-cell analyses.
HCPCS 81545: Onc rna tiss predict alg ($3,600)
HCPCS 81440: Mitochondrial gene ($3,324)
HCPCS 81443: Genetic tstg severe inh cond ($2,448)
The acceptance of Hera’s PLA code, under CMS’s ADLT process will enable the company to set our own prices for our proprietary reimbursement code. This should alleviate any pricing constraints from the business model and enable the company to optimize its revenue potential.
As the LTD product becomes established, we complete FDA clearance and develop additional diagnostic assays, there is the potential option to pursue therapeutic development based on the gene panels we’ve identified. Any decision to pursue this approach would depend on the comparative revenue and margin opportunities offered through broader distribution, offset against the costs and risks of developing therapeutic indications. Further, following commercialization of the MetriDxTM in the US, Hera could pursue commercialization in the EU & Australia, under similar protocols to the LDT strategy utilized in the US. The principal driver supporting this option would be to open the global IVD market to MetriDxTM. The total global IVD market was valued at ~$61B in 2018 and is expected to reach ~$87B by 2026.28 Immunodiagnostics for infectious diseases and chronic diseases (such as endometriosis) account for the largest share of the IVD market report, with clinical laboratories accounting for ~54% of the IVD market by end user.28
In addition to the pursuit of potential therapeutics and expanding into foreign markets, Hera believes there are a number of value-add and assay expansion opportunities to consider as the company matures. Specifically:
- Non-invasive sample collection
- Allowing for direct-to-consumer marketing (see Everlywell business model)
- Gene panel revisions to allow unique diagnostic assay development for:
- Uterine Fibroids
- Polycystic Ovarian Disorder
- Pelvic Inflammatory Disorder
Given that the MetriDxTM assay requires Hera to operate a proprietary laboratory equipped with highly specialized equipment, the company would be well-positioned to expand to become the premier supplier for women’s health diagnostics based on proprietary single-cell analyses assays. Executing this strategy would provide Hera with a robust portfolio, creating significant value to potential acquirers or an IPO exit.