Forging a New Course: Q&A with John Roberts, CEO of Cancer Genetics

In February, after a string of quarterly performances that missed Wall Street analysts’ expectations, a shrinking balance sheet, and stock price that had steadily declined to under $2 per share from a high of more than $23 four-and-a-half years earlier, Cancer Genetics (CGI) Inc.’s CEO of nearly eight years, Panna Sharma, stepped down from his post. The company named John A. “Jay” Roberts, as its interim CEO, and a couple months later elevated him to the post on a permanent basis. Roberts originally joined CGI in 2016 as COO after more than 20 years in a variety of roles in financial management, mostly as a chief financial officer for healthcare and healthcare IT companies. Tasked with turning around the once high-flying genetic testing company, Roberts recently took time to speak with Clinical OMICs Editor in Chief Chris Anderson about the company’s path going forward.

Clinical OMICs: When you first joined the company as chief operating officer in 2016, what were the company’s first priorities?

Jay Roberts: We were focused significantly on our IT infrastructure. A big part of the first year and a half, we redeployed technology, IT systems, and software capabilities at the enterprise level and that included completing certain acquisition integration efforts. The second part of it was—having had experience in medical billing and reimbursement—to focus on our billing systems and working through on our clinical service business, the various reimbursement challenges we faced.

CO: What was the focus of the company at that time?

JR: When I first joined the company, the clinical services business was taking equal weight in terms of the strategy and its importance to the future of the company. The company’s business strategy and positioning has been to build a diagnostic company from bench to bedside. The business has a unique portfolio of tests that we have developed. It’s a portfolio that we believe is as good as any in the industry, and better than most. But we cut across a lot of different cancer disease areas and we had to maintain a very broad portfolio. As a small company with limited resources, that was a challenge, particularly as we compete with very large diagnostic lab companies that have high-efficiency robotics and high throughput. We were built originally as a research engine, but the company evolved over its life to compete with larger competitors on a national level. That was a dynamic change for the company over the last five to seven years since going public.

CO: How is the company being refocused under its new strategic direction?

JR: We made a recent acquisition that put us into preclinical services, to participate in clinical trials cutting across Phase I, II, and III. We support clinical trials with a focus in oncology and then weave that into our capabilities in clinical service to support clinicians, oncologists, and pathologists in the care of patients with various types of cancer.

CO: Many companies choose to serve only a specific niche in testing, is that in the plans for Cancer Genetics?

JR: Our strategy is to focus on the foundation of the business and it means that we won’t eliminate tests or [reduce] our capability. One of the advantages we have competitively in the market—particularly in our biopharma business—is because we have a broad portfolio, it allows us to do business across multiple indications with pharma. That also allows us to cross sell into existing customers. That has been a competitive advantage to the company, not a competitive disadvantage. How we think about it differently today, perhaps, than we did in the past is assuring that we have worked through reimbursement with our various payers at the regional and national level. As we innovate, and create, and develop new technologies, we make sure we solidify getting reimbursed before we bring a capability to market. That is a big part of our 2018 and 2019 business plan.

CO: What else will change under the new strategy?

JR: We recognize that we must get to profitability. One part of that is to protect and grow the top line, but it has also meant shedding non-core operations. We have executed this with the sale of our Hyderabad facility in India, which is a lab that was built for supporting government and academic institutions in discovery, and was not core to our overall strategy. It also meant looking at other ways to transform the business. We looked operationally at our various facilities and realized it was going to be in the company’s best interest to migrate all of the solid tumor capability from our Los Angeles facility to our East Coast operations both in New Jersey and North Carolina. This is allowing us to make changes in each of these facilities to absorb the volume we are bringing into these locations, and to enhance the operating efficiency that allows us to drive better margins on a per-unit basis. We are executing on that and expect to complete that in the third quarter.

CO: We’ve talked about your clinical service business, what can you tell me about the other two areas—biopharma services and discovery services.

JR: In discovery services, we are working with biopharma companies that have compounds in early discovery and they are looking for validation either around efficacy or, in an immediate preclinical world, around toxicity of the compound. We have built a number of malignant cell lines in order to construct small animal studies, and that has allowed us to provide both data and insight to our biopharma customers for the clinical trial process. We entered this market in a much bigger way through the acquisition of (oncology and immuno-oncology discovery services company) vivoPharm in August of last year, so we now have two dedicated facilities for our preclinical and clinical services.

For biopharma services, we do business with 9 of the 10 largest global pharmaceutical companies, as well as biotech companies that are bringing products to market specifically in oncology. Our portfolio today is over 200 projects across a large number of companies, including over 90 immuno-oncology programs that are currently under way. While the biopharma business fluctuates—on a month-to-month basis, and sometimes on a quarter-to-quarter basis—we like the business a lot because we have earned the right as a small company to do business with large pharma and our projects suggest there is a lot of trust put into the work we do. We have established a very high bar with our internal operations, SOPs, and the protocols under which we conduct our diagnostic tests. A lot of times we are developing custom assays for specific needs and our team has become well-known from our capabilities to do custom work.

CO: If you execute on your plan, what lies ahead in the next three to five years?

Roberts: We see the continued emergence of precision medicine as we see the products that are being developed. In some cases, we are participating in that development. As we continue developing our capabilities, our roadmap is to transform from being the provider of data to providing insight. So our business model becomes more solution driven, using data to provide our customers, physicians, and ultimately patients with more insight into treating cancer.

To see more articles from the March/April issue of Clinical OMICs click here.