8-K: Interpace Biosciences to Discontinue PancraGEN Test Following Medicare Coverage Determination

Interpace Biosciences will discontinue its PancraGEN test after February 7, 2025, due to a final Local Coverage Determination by the Centers for Medicare & Medicaid Services that establishes non-coverage for the test.

Summary

• Interpace Biosciences, through its subsidiary Interpace Diagnostics, will no longer offer its PancraGEN test due to a final Local Coverage Determination (LCD) issued by the Centers for Medicare & Medicaid Services (CMS).
• The new LCD establishes non-coverage for PancraGEN, a molecular diagnostic test used to assess pancreatic cyst cancer risk.
• Because PancraGEN is primarily ordered for Medicare patients, Interpace will cease accepting specimens for first-line fluid chemistry and PancraGEN testing after February 7, 2025.
• Interpace believes this decision is inconsistent with advancing medicine and improving patient care.
• The company is developing a plan to restructure in response to the loss of Medicare reimbursement for PancraGEN.
• Interpace expects its ThyGeNEXT + ThyraMIRv2 testing franchise for indeterminate thyroid nodules will allow it to remain profitable in 2025 and beyond.
• PancraGEN has been offered since 2013 and has helped over 80,000 patients and their physicians determine a course of treatment.

Sentiment

Score: 4

Explanation: The sentiment is moderately negative due to the loss of a key product and the need for restructuring, although the company expresses confidence in its remaining business.

Positives

• Interpace has a restructuring plan ready for implementation to address the loss of PancraGEN revenue.
• The company expects its ThyGeNEXT + ThyraMIRv2 testing franchise to maintain profitability in 2025 and beyond.
• Interpace has other commercialized molecular tests, including ThyGeNEXT, ThyraMIRv2, and RespriDX.

Negatives

• CMS has decided to end coverage for PancraGEN, a widely used test for assessing pancreatic cyst cancer risk.
• Interpace will no longer offer the PancraGEN test, impacting Medicare patients who rely on it.
• The company anticipates the need to restructure due to the loss of Medicare reimbursement for PancraGEN.
• The decision may result in unnecessary surgeries and added healthcare costs, according to Interpace.

Risks

• The loss of Medicare reimbursement for PancraGEN could negatively impact Interpace's revenue and profitability.
• The company's restructuring plan may not be successful in mitigating the financial impact of discontinuing PancraGEN.
• Interpace's reliance on its ThyGeNEXT + ThyraMIRv2 franchise may expose it to risks related to that specific market.
• The company faces the risk of inaccurate estimates of future revenue, cash flows, and adjusted EBITDA.

Future Outlook

Interpace expects its ThyGeNEXT + ThyraMIRv2 testing franchise for indeterminate thyroid nodules will allow it to remain profitable in 2025 and beyond, despite the loss of PancraGEN revenue. The company is developing a restructuring plan to address the financial impact.

Management Comments

• Tom Burnell, President and CEO of Interpace, stated that it is extremely unfortunate that CMS is ending coverage for PancraGEN.
• He also mentioned that the decision will result in unnecessary surgeries and added healthcare costs.
• Dr. Nicole Massoll, Chief Medical Officer for Interpace Diagnostics, stated that the adoption of molecular diagnostic tests aligns with the growing understanding of molecular genetics and improvements in patient care.
• Mr. Burnell added that the decision is inconsistent with advancing medicine and goals to improve the quality of patient care.

Industry Context

The decision by CMS to end coverage for PancraGEN reflects ongoing scrutiny of genetic testing and its cost-effectiveness within the healthcare system. This may signal a trend towards stricter reimbursement policies for molecular diagnostic tests, impacting other companies in the personalized medicine space.

Comparison to Industry Standards

• The impact of CMS's decision on Interpace can be compared to how similar coverage decisions have affected other diagnostic companies, such as Exact Sciences (EXAS) with its Cologuard test or Genomic Health (now part of Exact Sciences) with its Oncotype DX tests.
• These companies have faced challenges in securing and maintaining reimbursement for their tests, highlighting the importance of clinical evidence and cost-effectiveness data.
• The success of Interpace's ThyGeNEXT + ThyraMIRv2 franchise will depend on its ability to demonstrate clinical utility and cost savings compared to traditional diagnostic methods, similar to how Myriad Genetics (MYGN) has positioned its GeneSight test for mental health.

Stakeholder Impact

• Shareholders may be concerned about the impact of the PancraGEN discontinuation on the company's financial performance.
• Employees may be affected by the company's restructuring plan.
• Patients, particularly Medicare beneficiaries, will no longer have access to the PancraGEN test.
• Physicians will need to find alternative methods for assessing pancreatic cyst cancer risk.

Next Steps

• Interpace will implement its restructuring plan.
• The company will focus on growing its ThyGeNEXT + ThyraMIRv2 testing franchise.
• Interpace will consider any and all remedies or actions against Novitas/CMS.

Key Dates