Although the concept of personalized medicine is about a dozen years old by now, we are just beginning to see its role in the clinical practice. Doctors and patients worldwide spend $730 million a year on genetic tests today, says Piper Jaffray, and the market is growing 20% a year.

Soon all of us will be able to find out what ticking time bombs lie hidden inside our DNA… if we really want to know. And this is really the main question: how will the new knowledge about the genetic probabilities change clinical decisions?

After years of skepticism, the corporate world has begun to figure out effective business models in the personalized medicine arena. For example, take a relatively new entity, Clinical Data Online (CLDA considers itself now a worldwide leader in providing molecular services, pharmacogenomics, genetic testing and clinical diagnostics to improve patient care). The company is a result of the integration and re-branding of the Genaissance, Icoria and Genome Express acquisitions into PGxHealth and Cogenics. As such, CLDA has assembled a proprietary genomic diagnostic platform in hopes that its market knowledge gained through the established service-based businesses will enable CLDA “to become a leading pharmacogenomics company with high margin, proprietary tests and services serving broad markets.”

CLDA is one of the first “pure play” pharmacogenomics companies whereas most of its competitors are divisions of larger instrumentation companies.

CDLA had $63MM in revenues last year, produced a $37MM net loss and is valued at about $220MM by Wall Street. These financial metrics (Price/Sales of 3.5x ) are not bad, considering that CDLA is a small company competing with the multi-billion dollar full-menu of products of global giants.

There is also new evidence of clinical utility of pharmacogenomics (“Pfizer wins U.S. approval for new HIV drug“).

The U.S. Food and Drug Administration approved Selzentry for use in patients who have tried other medicines and for those for whom a diagnostic test has confirmed their HIV strain is linked to the mechanism of action of this new medicine. In short, in the eyes of the FDA, medical benefits for the selected group of patients outweigh the severe toxic effects of the medicine.

“We are on the verge of the most profound transformation in the history of medicine,” said FDA commissioner Dr. Andrew Von Eschenbach. The medicine of the future “will look no more like the past than a butterfly looks like a caterpillar. It’s that profound.”

Personalized medicine is set to transform the industry.

Veronika Litinski

Veronika Litinski provides advisory services to entrepreneurs and high growth companies, with a special focus on life sciences markets, specializing in corporate finance and business development. See more…