Applying the Cytyc Formula to Breast Cancer

With its acquisition of Pro-Duct Health, Cytyc is hoping to transfer its very successful performance with the ThinPrep Pap Test to the field of ductal lavage for breast cancer risk assessment. Cytyc is paying $167.5 million for Pro-Duct, which has sales of less than $1 million. But Cytyc believes ductal lavage represents a multi-billion dollar opportunity with no direct competition. Physicians are excited about the procedure--although they caution a lot of data needs to be compiled to determine the utility of information provided by ductal lavage.

With the recently announced purchase of Pro-Duct Health Inc. , Cytyc Corp. hopes to bring its well-honed expertise at building markets to breast cancer risk assessment, and to leverage the capabilities of its core ThinPrep liquid cytology technology [See Deal]. In the five years since it got FDA approval for ThinPrep, the company has paved the way for its technology to replace the conventional Pap smear, the gold standard in cervical cancer screening. ThinPrep is now used in 50% of all cervical cancer screening procedures in the US, allowing Cytyc to grow rapidly from a miniscule start-up to a corporation with annual revenues of more than $200 million.

Clearly, Cytyc is hoping for a repeat performance with ductal lavage, Pro-Duct's core technology. Sometimes referred to as a Pap smear for the breast, ductal lavage is a minimally invasive method of collecting cells lining the milk ducts of the breast in order to detect atypical changes in those cells. These variations don't necessarily lead to cancer, but they can provide information about a woman's risk of developing breast cancer later.

Studying cells in the fluid of breast milk ducts isn't a novel concept—it has attracted small groups of researchers for years. But Pro-Duct, started three years ago by well-known breast cancer surgeon Susan Love, MD, and engineer Julian Nikolchev, has been first to develop a systematic method of extracting the fluid reliably, in adequate amounts and in a minimally invasive format that makes it appropriate for clinical use. It is the only non-invasive method of getting cells from the breast, says David Hung, MD, Pro-Duct's CEO. Although the company received FDA clearance for the procedure for use in late 1999, it began commercialization only this year and has sales of less than $1 million.

Nevertheless, Cytyc is paying five million shares of stock and $38.5 million in cash for Pro-Duct, in a deal valued at $174 million, based on a trailing 10-day average of Pro-Duct's shares. The acquisition seems expensive, but Cytyc and others say ductal lavage has enormous promise and fits well with Cytyc's core strengths. Cytyc sees the ThinPrepBreast Test as an initial $1.5 billion opportunity, aimed at the five million women already categorized as high-risk of acquiring breast cancer, as defined by certain well-accepted criteria. That market size could expand to $4 billion as acceptance grows for other uses, says Patrick Sullivan, CEO and president of Cytyc.

The acquisition leverages Cytyc's sales and marketing, clinical, regulatory, and operating strengths. Following the highly successful tactics it used to introduce ThinPrepPap smears, Cytyc will first work with thought leaders gleaned from the 1,200 surgeons and 1,700 radiologists specializing in breast cancer who are most likely to use the procedure. This is a new provider base for Cytyc, but it believes it can adapt tactics it used to get its message about ThinPrep Pap testing to ob/gyns to this group. And, as the procedure gains acceptance, the company plans to include its 20-member ob/gyn sales force in selling to its more familiar provider base. It will have a focused effort to coordinate reimbursement and use with managed care organizations. Key drivers of adoption will be attractive reimbursement, physician support, and patient demand, analysts say.

Based on the use of 1.5 catheters per procedure and reimbursement of $300 per catheter, and estimated 30,000-50,000 procedures, Cytyc believes it can expect revenues of $9-15 million from ductal lavage in 2002, with a larger sales ramp up as clinical data comes in and applications expand.

The purchase also potentially expands the role for Cytyc's existing technology. Samples gleaned from ductal lavage are adaptable to the ThinPrepplatform, and therefore have the potential to significantly expand ThinPrep's utility beyond cervical cancer screening. Slides can be prepared other ways, but samples prepared in the ThinPrep format are standardized and easier to read, says Barbara Winkler, MD, associate director of anatomic pathology at Quest Diagnostics Inc. 's regional laboratory in Teterboro, NJ, which has been using ThinPrep to read ductal lavage samples for some time.

Because 95% of all breast cancers originate in the lining of the milk ducts, the concept of looking for cellular changes in the ducts in order to detect abnormalities long before mass forms at the site of a cancer is logical, researchers say. Hung says that atypical cells are one of the strongest predictors of breast cancer risk. Women with atypical cells have a five-fold risk of getting breast cancer, which is significant compared to other risk factors, he adds. Having atypical cells combined with a family history of breast cancer increases risk by 18-fold, he argues. Studies show that 15% of women with atypical cells get breast cancer within three years of the initial examination.

The procedure, typically done by an oncologist or breast cancer surgeon, involves a local anesthetic, suction to draw the fluid out, and insertion of a catheter to collect cells into those ducts that emit fluid. The samples are then prepared for shipment to a laboratory, where they are read on a microscope. A large-scale clinical trial of 507 high-risk women who had nonsuspicious findings on mammograms and physical examinations within the previous 12 months found atypical cells in 23% of the study population. In addition, a handful of women were found to have malignant cells.

Although physicians seem excited about the technology, pointing out that atypical cells are believed to be precursors to many epithelial cancers, they also caution that its current clinical utility is limited because so many questions remain about its use: the meaning of a positive finding, for example, and how to gauge over what period of time is cancer likely to develop. Also unknown is the test's negative predictive value—i.e., does a negative result rule out the likelihood that a woman has abnormal cells—as is the potential role in cancer progression of ducts which don't produce fluid. Furthermore, no one knows yet how often the test has to be repeated. And perhaps most important, can a positive result help with therapeutic decision making, given that the women who get the test already know that they are at high risk of getting breast cancer and therefore are undergoing greater than average scrutiny.

But they believe the technology holds enormous promise, particularly if data yet to be compiled is favorable and if other tools, such as molecular diagnostic tests, can be applied to the specimens. "I'm very excited about ductal lavage and its potential, but at this time, its role is clinically limited," to a select group of women at increased risk of developing breast cancer, says Therese Bevers, MD, medical director of the cancer prevention center at the University of Texas MD Anderson Cancer Center. That said, she envisions broad research applications for ductal lavage as "an opportunity to do cellular analysis on breast tissue samples and look at modulation of biomarkers by potential breast cancer chemopreventive agents."

Sullivan says that Cytyc will continue to do clinical trials and outcomes studies to answer these questions and determine which patients develop breast cancer following atypical results of Pro-Duct procedure. A major current use for the procedure could be to help high-risk women decide if they should take prophylactic tamoxifen. NCI studies have shown that tamoxifen reduces breast cancer risk substantially, particularly in women with atypical cells. But it also has severe side effects and may not be effective over many years. Many women opt not to take it, but the Pro-Duct procedure could provide additional information that helps them make a tough decision.

Along the same lines, ductal lavage can also be used to help women decide whether to go on hormone replacement therapy (HRT). Estrogen, the primary HRT, increases breast cancer risk, so women with atypical cells may decide to opt for an alternative. There are 8-12 million women on HRT and studies about this are underway.