Mayo Clinic Ventures Portfolio Company Purchased In $410M Deal
Venture capital backers of the Mayo Clinic-related biotech startup, Assurex Health, were afforded a return on investment this month with its purchase by Salt Lake City-based Myriad Genetics for $225 million in upfront cash and potentially $185 million more in performance-based milestones.
One of those early investors was the Mayo Clinic itself, which also has a licensing deal with Assurex for its GeneSight Psychotropic test. The technology uses a proprietary algorithm to analyze the individual genomes of mental health patients as a way to predict whether they may react adversely to psychotropic medications.
GeneSight was invented in the last decade by the late Dr. David Mrazek, former chairman of the Department of Psychiatry and Psychology at the Mayo Clinic and a psychiatry professor in its College of Medicine; Dr. John L. Black, co-director of the Personalized Genomics Laboratory in the clinic’s Department of Laboratory Medicine and Pathology; and Dennis O’Kane, a Mayo clinical lab director.
That team developed GeneSight’s initial algorithm, which is now used by physicians when prescribing psychotropic medications for such disorders as schizophrenia, post-traumatic stress disorder and depression.
According to U.S. Securities Exchange Commission records, privately-held Assurex Health, based in suburban Cincinnati, has raised $109 million in equity and debt financing since 2009. Mayo Clinic Ventures was one of its earliest equity investors, as well as holder of a licensing arrangement for the GeneSight technology. In the latest fiscal year, Assurex generated revenue of more than $60 million and its tests were used for more than 150,000 patients.
Assurex on Aug. 3 was purchased by Myriad Genetics (Nasdaq: MYGN). The Utah molecular diagnostics firm touted GeneSight as “one of the fastest-growing new diagnostic tests ever in a multi-billion-dollar global market.” The neuroscience market it operates in was described as “one of the highest-growth areas for personalized medicine.”
Myriad CEO Mark Capone predicted the global market for GeneSight testing “is greater than $4 billion based upon current and future indications.”
Its market prospects took off after Medicare agreed to cover the test in 2014, and the U.S. Department of Veterans Affairs named Assurex as a preferred provider. GeneSight’s credibility was strengthened after clinical studies showed using the test more than doubled a patient’s likelihood of response to medications. It was also found to reduce healthcare costs by more than $2,500 per patient per year. Physicians are given test results within 36 hours of submitting a patient’s sample.
When the Mayo Clinic trio of Mrazek, Black and O’Kane first got the idea for GeneSight in 2002, they were looking for a way to improve how doctors treated mental health disorders, which has traditionally involved repeatedly adjusting and piggybacking patients’ psychotropic medications in order to find the best options.
The results were very often unsatisfactory: Nearly half of psychiatric patients don’t respond well to treatment using standard drug therapy. But their molecular diagnostic tool removed the guesswork by analyzing patients’ genetic markers to evaluate what drugs would likely provide better outcomes. In 2006, the technology was exclusively licensed to Assurex Health through Mayo Clinic Ventures.
Its technology analyzes 50 “alleles” from six genes to determine a patient’s response to antidepressant and antipsychotic treatments using more than 30 drugs, allowing doctors for the first time to pinpoint which patients will be vulnerable to adverse reactions or are likely to respond negatively or positively to specific psychotropic drugs.
Mayo Clinic Ventures says its early investment allowed the research team to develop the concept.
Later rounds of funding saw the participation of such investors as Sequoia Capital (the Silicon Valley firm that financed Google), Claremont Creek Ventures, Cincinnati Children’s Hospital Medical Center, CincyTech, Allos Ventures, Four Rivers Partners, Danmar Capital and jVen Capital.