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add a world class oncology discovery and development team to the Ignyta team through our acquisition of Actagene Oncology in May 2013; the CEO of Actagene, Patrick O’Connor, was a superstar scientist (former worldwide head of oncology discovery at Pfizer). Jonathan and I had worked with Patrick at Halozyme and knew that we wanted to work with him again. While Ignyta was previously a precision medicine company applying an epigenomic platform for Dx discovery, Actagene was a precision medicine company applying a genomic platform for Rx discovery. We thought the two companies and sets of capabilities were very complementary and synergistic. By bringing them together, we were able to combine genomic and epigenomic capabilities and Rx and Dx discovery and development capabilities. We decided that oncology was the best application of these combined capabilities.
X: Jonathan Lim told me last year he decided to invest in the company partly because he was so impressed with Firestein’s initial data for rheumatoid arthritis. Was there some new challenge at the beginning of 2013 that led the company to pivot to oncology and away from RA?
ZH: There were several macro challenges in 2013 that made molecular diagnostics less attractive as an overall business model: 1) IP concerns relating to [Supreme Court rulings that struck down patent claims of] Prometheus Laboratories and Myriad Genetics. 2) Regulatory concerns about whether FDA would exercise oversight into regulating molecular diagnostics. 3) Perhaps most concerning, downward reimbursement pressures that have been harming margins across the molecular diagnostics industry.
When combining those factors together, the risk benefit profile for a pure diagnostics company became … Next Page »