Oncimmune sells US operations to and partners with Biodesix

The AIM-traded firm said the agreement with lung cancer diagnostic solutions company Biodesix encompassed both the commercialisation by Biodesix of EarlyCDT Lung, as well as the supply by Oncimmune of the EarlyCDT Lung product.

It said the agreement also involved the sale of Oncimmune's US subsidiary operations, including the CLIA laboratory.

The company said the agreement, which met its core forward strategy of driving organic growth through partnerships, also strengthened its cash position with non-dilutive capital, and accelerated the organic growth of its lead asset - EarlyCDT Lung - in the largest lung cancer market in the world.

Under the terms of the agreement, from today until 1 November Oncimmune said it would continue its current US activities in exchange for a monthly payment from Biodesix, lowering its monthly cash burn.

On the effective date of 1 November, Biodesix would acquire the assets of Oncimmune's US operations for a fixed cash lump sum consideration, and take on the full operating costs of those assets, further materially lowering Oncimmune's ongoing monthly cash burn.

From 1 November onwards, Biodesix would be fully responsible for the commercialisation of EarlyCDT Lung, and would make increasing volume-based payments to Oncimmune for the product's current intended use in lung nodule patients.

Oncimmune said it had also entered into a supply agreement under which it would provide Biodesix with diagnostic plates and associated reagents.

It said it had also granted Biodesix the opportunity to commercially exploit the EarlyCDT Lung potential as a screening indication in the US, in consideration for a further, “significant” cash lump sum payment by the end of 2020.

Following the announcement by the firm on 4 June that the ‘Early Cancer Detection Test - Lung Cancer Scotland Study’ (ECLS) had met its primary endpoint, the Oncimmune board said it believed that the potential screening indication opportunity - in addition to the current lung nodule application - increased “substantially” the total addressable market for EarlyCDT Lung in the US as well as in all its other major markets.

Oncimmune said it would also collaborate with Biodesix on research and development activities in order to fully leverage EarlyCDT Lung both in the US and other major lung cancer markets.

Over the next five years, the agreement represented value to Oncimmune of up to $28m, of which approximately $7.2m was minimum volume-based revenue.

The balance of approximately $20.8m was represented by both cash lump sum payments - including $1m for the sale of Oncimmune's US subsidiary operations - and direct operating cost savings of approximately $2.2m per annum, which would lead to the material reduction in the company’s monthly cash burn from 1 November.

Oncimmune’s board said that in its opinion, strategic partnerships and other non-dilutive transactions such as the agreement with Biodesix presented the group with “line of sight” to funding its current operations.

“In October 2018, I undertook to bring to investors a strategic partnership which fully realises the value of EarlyCDT Lung in the US, exhibiting a critical number of salespeople, exclusive focus on a pulmonology sales point, and a complementary product portfolio,” said Oncimmune chief executive officer Dr Adam Hill.

“I believe in Biodesix we have found that strategic partner.

“Like us, Biodesix is committed to delivering solutions that span the continuum of care, but importantly, focuses exclusively on lung cancer.”

Dr Hill said the agreement was designed to accelerate access for EarlyCDT Lung into the US market, and created a “compelling” new commercial partnership in lung cancer management.

“We are proud to be working with Biodesix, a company with a successful track record of commercialising three clinical diagnostic lung tests in the US.

“This will be the 11th agreement we have signed for EarlyCDT Lung in the last 12 months, reinforcing a strong track record of delivering against the strategy of commercialising the EarlyCDT portfolio.”