Veracyte (VCYT) Receives LCD from Major MAC for Percepta Bronchial Genomic Classifier

September 8, 2016 7:32 AM EDT

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Veracyte, Inc. (Nasdaq: VCYT) announced that Noridian Healthcare Solutions, the nation's largest Medicare Administrative Contractor (MAC), has issued a draft local coverage determination (LCD) for the Percepta Bronchial Genomic Classifier. When finalized, this LCD will enable coverage for over 30 million – or more than half – of the Medicare beneficiaries in the United States. The Percepta classifier is the first genomic test for use in lung cancer diagnosis to achieve this important Medicare coverage milestone. The test is supported by multiple published studies demonstrating its ability to make lung cancer screening and diagnosis more accurate and safe by reducing unnecessary surgeries on suspicious lung nodules found on computed tomography (CT) scans.

The draft local coverage determination posted online by Noridian establishes the Percepta coverage policy for Medicare beneficiaries in the MAC's 14-state jurisdiction and provides coverage for the more than 17 million Medicare Advantage members nationwide. Noridian's jurisdiction includes California, where Veracyte performs and bills for the molecular test. The LCD specifies coverage for the use of Percepta in patients with an inconclusive bronchoscopy to identify those who may be followed with CT surveillance in lieu of further invasive biopsies or surgery. Under CMS rules, the draft LCD is open to a 45-day public comment period. The company anticipates the final LCD will be issued and go into effect on or about January 1, 2017.

"This is a tremendous achievement for the company," said Bonnie Anderson, president and chief executive officer of Veracyte. "The strength of the evidence supporting Percepta met a high bar for coverage established by the Medicare MolDx Program and serves as a solid foundation for commercial expansion in 2017. We expect that the other MACs that participate in the Palmetto GBA-administered MolDx Program and typically follow its policies will also issue local coverage determinations for Percepta in the future."

Lung cancer kills nearly 160,000 Americans each year – more than the next three leading cancers combined. In 2015, more than eight million Americans became eligible through Medicare and private insurers for annual lung cancer screening with low-dose CT in an effort to find cancers earlier, when they are more treatable. Veracyte estimates that over 50 percent of these individuals are covered by Medicare.

"Lung cancer screening has the potential to save lives," said Avrum Spira, M.D., M.Sc., professor of medicine at Boston University School of Medicine and co-inventor of the genomic test. "One of the biggest challenges in lung cancer screening, however, has been the risk of finding lung nodules that are not clearly benign or cancerous. While bronchoscopy is often the initial diagnostic tool used in this setting, it is frequently inconclusive. This often leads to costly and potentially risky surgeries on nodules that ultimately prove to be benign."

The Percepta test is run following an inconclusive result from bronchoscopy – a minimally invasive procedure that is commonly used to evaluate suspicious lung nodules and lesions found on CT. Clinical validation data from two prospective, multicenter studies were published in July 2015 in The New England Journal of Medicine and demonstrate that the Percepta test identified patients at low risk of cancer with a high degree of accuracy (negative predictive value of 91 percent). The test also increased the accuracy of bronchoscopy (97 percent combined sensitivity for cancer versus 75 percent using bronchoscopy alone). Published clinical utility data suggest that use of the Percepta test could reduce unnecessary surgeries and other invasive procedures by 50 percent. Veracyte estimates the U.S. market opportunity for Percepta to be $425 million to $525 million today and expects the market to increase in size as lung cancer screening expands.

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