NanoString to produce companion test for Celgene's blockbuster cancer drug Revlimid

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Seattle's NanoString Technologies ($NSTG) stands to make up to $45 million if it can come up with a successful companion diagnostic test to screen for a subset of lymphoma patients who will benefit from Celgene's ($CELG) blockbuster drug Revlimid.

NanoString gets $5.75 million from Celgene up front. The company gets $17 million more if it can reach the required developmental and regulatory milestones. are under the Assuming the test is approved and reaches the market, the rest of the potential payments would come from commercial sales.

"This new collaboration demonstrates the power of our business model to leverage biomarker discovery and advance the treatment paradigm, bringing the right therapy to the right patient at the right time," Brad Gray, NanoString's president and CEO, said in a statement.

In other words, the deal takes personalized medicine another step forward. Along those lines, we've seen a steady drumbeat of companion diagnostics deals in 2014, and many more are likely to come before the year is out. Targeted treatments and tests that help enable their use are becoming increasingly commonplace as understanding of disease subsets increases.

For the Celgene deal, NanoString will use its nCounter Analysis System to help support the clinical validation of Revlimid to treat patients with diffuse large B-cell lymphoma. This form of non-Hodgkin's lymphoma will encompass 37% of the 70,000 new cases of the disease identified in 2014, according to National Cancer Institute data cited by the company. The eventual companion diagnostic will be an in vitro diagnostic.

After its use in the new Celgene clinical trial, NanoString will pursue regulatory approval of the assay globally. Smartly, NanoString also holds on to the rights to pursue approval of the test for other indications.

For Celgene, the arrangement continues efforts to broaden the reach of Revlimid, a drug first approved in the U.S. in 2006 that produced $1.09 billion in global sales in 2013 and is already used to treat multiple myeloma and mantle cell lymphoma.

While the companion diagnostics deal is significant for NanoString, the company has been preparing for accelerated growth for months. In January, NanoString raised $55 million in a follow-on offering designed to help advance commercialization efforts for its Prosigna breast cancer assay and other products. About a year ago, NanoString raised $54 million in a scaled-back IPO, one of a handful of diagnostics companies that went public in 2013.

- read the release

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