MRD Detection as the Second Growth Curve for Tumor NGS Companies Amid Intensifying Companion Diagnostic Competition

After the two waves set off by IPOs and early screening, the oncology NGS industry has once again returned to calm. Although the companion diagnostics market continues to expand, finding a second growth curve has long become a consensus within the oncology NGS industry amidst the ebb and flow.

From the current perspective of the development of the oncology NGS industry, MRD (minimal residual disease) testing, as a product with extensive precedents abroad, is more likely to emerge in the short term as the second growth curve for the oncology NGS sector, both in terms of developmental maturity and clinical demand.

Companies’ strategies in the MRD space have become increasingly clear, with continuous announcements of new clinical advances and technological breakthroughs. However, there has been little significant movement in product commercialization.How Can MRD Recurrence Monitoring Gain Mainstream Acceptance and Truly Become a Growth Driver for the Oncology NGS Industry?To sprint the final “100 meters,” some external boost may be needed.

MRD is not a new concept; it has been applied for many years, particularly in the diagnosis and treatment of hematologic malignancies.

“We were the first team in China to conduct minimal residual disease (MRD) testing, having already begun using flow cytometry for MRD detection around the year 2000. It has been over twenty years now,” said Professor Tang Yongmin, Chairman of the Pediatric Oncology Professional Committee of the China Anti-Cancer Association and Director of the Center for Hematology and Oncology at Zhejiang University Children’s Hospital.

As Professor Tang stated, over the past two decades, flow cytometry has been the primary technical method for clinical detection of minimal residual disease (MRD). Flow cytometry assesses whether a sample contains cancer cells by detecting the presence of specific protein markers on cell surfaces. Its sensitivity can reach approximately 10⁻⁴, meaning it can identify one cancer cell among 10,000 cells.

A clinical technology that has been in use for 20 years has undoubtedly proven its clinical value. However, much like the Olympic motto of “Faster, Higher, Stronger,” demands for medical products are evolving toward being “more accurate, more efficient, and more sensitive.”As NGS technology matures, this more precise detection method continues to expand new application scenarios in the oncology field, iterating over traditional detection technologies. MRD detection is also one of the areas receiving attention.

Related products have already gained regulatory approval abroad. In September 2018, Adaptive Biotechnologies’ clonoSEQ received FDA approval for minimal residual disease (MRD) testing in patients with acute lymphoblastic leukemia (ALL) or multiple myeloma (MM). As the first FDA-authorized NGS-based MRD test, clonoSEQ holds significant importance for both Adaptive Biotechnologies and the field of MRD testing.

clonoSEQ continues to select bone marrow as the sample for testing. Professor Tang informed us that, in MRD detection for hematologic malignancies, bone marrow specimens remain the gold standard regardless of the technical approach employed.

The clinical data on clonoSEQ provided by Adaptive to the FDA included 273 patients with acute lymphoblastic leukemia, 323 patients with multiple myeloma under evaluation, and a clinical study involving 706 patients with multiple myeloma.

In its final review, the FDA stated that clonoSEQ has a sensitivity exceeding 10⁻⁶, meaning it can accurately identify one tumor cell among more than one million cells, representing a two-order-of-magnitude improvement in sensitivity compared to flow cytometry.

It was precisely due to this substantial clinical improvement that clonoSEQ was included in Medicare coverage in January 2019, four months after its approval, thereby addressing reimbursement concerns for a large number of patients.

Undoubtedly, NGS technology has demonstrated proven clinical value in the detection of minimal residual disease (MRD) in hematologic malignancies. Both the guidelines issued by the National Comprehensive Cancer Network (NCCN) and those released by relevant Chinese authorities have long listed MRD testing via NGS alongside flow cytometry as a key indicator for evaluating treatment efficacy in hematologic tumors.

Currently, among domestic tumor NGS companies, there are fewer products targeting hematologic malignancies, while more companies have established layouts for MRD detection in solid tumors.

However, first, MRD testing in hematologic malignancies already has well-defined application scenarios and clinical needs; second, NGS technology offers significant advantages for MRD detection; furthermore, there are already successful international case studies to serve as models. Therefore, although MRD testing in solid tumors holds considerable promise, in the context of the current market reality, commercialization of MRD testing for hematologic malignancies is clearly progressing at a faster pace if one aims to achieve market breakthroughs in the short term. Particularly at this juncture, with few domestic companies having launched MRD testing products for hematologic malignancies, it is an opportune time to capture market share.

Among the companies we focus on, Genetron Health is one of the few that has strategically prioritized MRD testing for hematologic malignancies.

In October 2020, Genetron Health announced that it had entered into an exclusive licensing agreement with Hangzhou Aimu’en, securing global exclusive rights to its minimal residual disease (MRD) detection product for hematologic malignancies (Seq-MRD®), and committing to accelerate the product’s development and commercialization. Following the acquisition of this product, Genetron Health further optimized Seq-MRD® using its proprietary “one-step” technology (Chinese Invention Patent No. ZL 201710218529.4), enabling library preparation to be completed in a single polymerase chain reaction (PCR) step, thereby significantly reducing the risk of sample contamination and false-positive results.

Most recently, Genetron Health successfully launched the fully upgraded Seq-MRD® product in the form of an LDT.To date, Seq-MRD® has completed testing on thousands of samples from patients in China with acute lymphoblastic leukemia (ALL), multiple myeloma (MM), chronic lymphocytic leukemia (CLL), and other conditions.Meanwhile, Genetron Health also announced a key channel partnership.

On October 22, 2021, Genetron Health announced the signing of an exclusive commercialization cooperation agreement with Fosun Pharma regarding the Seq-MRD® testing service. Under the terms of the agreement, Genetron Health and Jiangsu Fosun Pharmaceutical will jointly sell and promote Seq-MRD® in key hospitals and clinics specializing in hematological diseases within designated regions of China, serving patients with lymphoid hematologic malignancies such as acute lymphoblastic leukemia, multiple myeloma, and chronic lymphocytic leukemia.

Previously, collaborations between tumor NGS companies and pharmaceutical firms have largely focused on companion diagnostics, developing exclusive companion diagnostic products for targeted drug R&D. Channel partnerships entirely based on specific products, such as the one between Genetron Health and Fosun Pharma, are indeed rare. A closer look at this collaboration reveals that Genetron Health aims to address precisely the current channel challenges facing MRD testing in hematologic malignancies.

Hematologic malignancies and solid tumors represent highly differentiated markets, with significant distinctions in both diagnostic and therapeutic approaches and in the division of responsibilities among hospitals.

In terms of diagnostic and therapeutic approaches, hematologic malignancies are systemic diseases, unlike solid tumors, which can be directly resected. Imaging diagnostics can only assess the extent of infiltration at sites involved by hematologic malignancies, making it less straightforward and direct than in the case of solid tumors. Consequently, for monitoring recurrence in hematologic malignancies, there is a greater need for minimal residual disease (MRD) testing, a method capable of detecting tumor relapse at a relatively early stage.

In terms of hospital departmental responsibilities, the diagnosis and treatment of hematologic malignancies are primarily managed by the Department of Hematology. Only in a few hospitals that have established a combined Department of Oncology and Hematology is this responsibility undertaken by the Department of Oncology. Therefore, from a product promotion perspective, it is insufficient to rely solely on coverage within the Department of Oncology for market education related to hematologic malignancy products; it is also necessary to engage more extensively with hematologists and gain their endorsement.

For oncology NGS companies, hematologic malignancies are largely a blind spot. Their first-generation companion diagnostic products rarely involve hematologic malignancies, eliminating the need to target hematologists.Therefore, although many tumor NGS companies have established robust offline promotional teams, these teams are significantly weak in promoting hematologic oncology products.

Therefore, for Genetron Health, promoting Seq-MRD® independently would necessitate building a distribution network from the ground up. This requirement applies equally to any enterprise seeking to enter the MRD market for hematologic malignancies. In this context,Genetron Health made a more prudent decision by seeking out channel partners with hematology coverage capabilities from external sources, namely Fosun Pharma.

Fosun Pharma has two key products in the field of hematologic disorders: Hemocoagulase Agkistrodon for Injection and Avatrombopag Maleate Tablets. The company maintains a specialized marketing team of approximately 1,500 personnel in China, responsible for the marketing and promotion of innovative drugs across therapeutic areas including hematologic and lymphoid malignancies as well as solid tumors.

Genetron Health’s decision to partner with Fosun Pharma is undoubtedly a strategic move to strengthen its distribution channels in hematologic oncology. According to Hu Yunfu, Chief Medical Officer of Genetron Health,Under this collaboration, Genetron Health will provide professional support in scientific promotion, marketing activities, and product training, while Fosun Pharma will leverage its sales force and channel resources to promote Seq-MRD®. This division of labor aligns perfectly with our analysis of the current landscape.

The market for tumor NGS companion diagnostics has long entered a phase of intense competition, gradually penetrating from top-tier markets down to the grassroots level. Beyond first- and second-tier cities, there is a greater need for physicians to learn about and understand the clinical applications of NGS technology. Consequently, although tumor NGS companies currently maintain high sales expenditure ratios, these costs continue to rise in tandem with revenue growth.

In the current stage of development, identifying blue ocean opportunities within the industry and cultivating a second growth curve will represent a critical turning point for tumor NGS companies. Particularly during the development of this second curve, leveraging other companies’ sales networks—whether through channel partnerships or deeper product integration—will enhance their competitive edge in a fiercely contested market.