Is Guardant Health a Threat to Foundation Medicine?
Sysmex Inostics and Apocell are companies that are looking to provide the ability to test for cancer via a simple blood test which is a promising potential market. Foundation Medicine (NASDAQ:FMI), is looking to address the emerging cancer genomics market by provide a service in which using a biopsy, Foundation can interrogate the entire coding sequence of 236 cancer-related genes. The resulting information is then used to create web-based reports used by physicians to create personalized cancer treatments. One company that is looking to offer both cancer blood testing and personalized cancer genomics reports is Guardant Health.
Silicon Valley based Guardant Health was founded in 2012 by a team of serial entrepreneurs. The CEO, Helmy Eltoukhy, co-founded Avantome in 2007 which was sold to Illumina one year later for $60 million. The CTO founded Auriphex Biosciences which was acquired by Illumina in 2009. Ariphex was focused on purification and genetic analysis of circulating tumor cells for cancer management. To date, Guardant has raised over $10M in funds from Sequoia Capital and various angel investors, including a few well-known Silicon Valley tech executives.
While other companies we highlighted like Apocell look for Circulating tumor cells in the bloodstream, the GUARDANT360 test looks for tumor DNA which is shed into the bloodstream for almost every type of cancer. The below steps from Guardant show just how simple the entire process is:
The turnaround time is about two weeks and the entire process is very similar to the one used by Foundation Medicine except there is no need for a biopsy to be performed. Guardant claims that recent clinical studies show excellent performance for the GUARDANT360 in the top five cancers (breast, lung, colorectal, skin and prostate), which in total account for over half of all cancer cases. The GUARDANT360 is now available to select cancer centers across the United States.
In a recent article by Xconomy on Guardant, the CEO of Guardant is quoted as saying that the test will be priced roughly in the same range as Foundation’s genetic analysis test. In regard to seeing Foundation Medicine (NASDAQ:FMI) as a competitor, the CEO stated that “Biopsies are still the gold standard for the initial genetic diagnostics on a patient’s cancer” but Guardant could “help “democratize” genetic monitoring of tumor status for patients far from large cancer centers who may lack access to tumor biopsy surgeons“.
Even with that rather diplomatic statement from Guardant, Foundation Medicine (NASDAQ:FMI) investors should be aware of this potential threat. Even though the initial price of the two tests remains the same, with the average cost of a biopsy falling in the $10,000 range, this has to be added to the total cost of each Foundation test. Patients incurring the costs of such biopsies will much prefer the blood test to the biopsy, not only for the cost savings but also for the convenience. If Guardant’s blood tests prove to be as accurate, and effective as the Foundation biopsy tests for initial genetic cancer diagnostics, then it seems quite likely that Guardant could displace Foundation’s tests over time.
Are you paying too much in transaction fees to your broker? Check out a brokerage firm called Zacks Trade that's offering $1 trades on U.S. stocks and options for an entire year. After that, you'll pay just $3 a trade or a penny a share, whichever is greater. It's one of the cheapest brokers out there and we use them to trade stocks on over 90 foreign stock exchanges. Open an account today and get $1 trades for a year.