Abbott Signs Up Another One

Abbott Labs' (NYSE:ABT) diagnostic division is finding new partners left and right. Last month it partnered with GlaxoSmithKline (NYSE:GSK) to develop a screen that should find patients who will benefit from Glaxo's cancer vaccine. Yesterday, Abbott announced that it has set up a partnership with Pfizer (NYSE:PFE) as well.

Pfizer is developing a drug, PF-02341066 -- let's just call it "1066" -- that targets mutated ALK, a mutation that's implicated in several cancers, including non-small-cell lung cancer (NSCLC). Pfizer would like to test the drug only on patients who have that particular genetic mutation in their NSCLC.

Abbott to the rescue. The companies didn't talk specifics on who's paying for what or even what platform Abbott would use to run the test, but it's clearly beneficial for both sides to set up the partnership before the phase 3 trial begins.

As better drugs are developed to treat diseases and the bar for new entrants becomes increasingly higher, drug companies need to figure out a way to show that their drugs are superior. By eliminating from consideration the patients who can't respond to drugs like 1066, companies can increase the average response and thus make their drugs look better.

Clearly developing a companion diagnostic to select patients before the clinical trial begins is preferable to what happened to Amgen (NASDAQ:AMGN), Bristol-Myers Squibb (NYSE:BMY), Merck Serono, and Eli Lilly (NYSE:LLY). They didn't figure out that their oncology drugs, Vectibix and Erbitux, worked in only a subset of patients until after the drugs were on the market.

As the cost of DNA sequencing continues to fall, it will become increasingly easier for drugmakers to determine why patients fail to respond to some medicines and respond well to others. That's a win-win-win process for patients, drugmakers and diagnostic-test makers. But if Abbott continues signing up partners, we may have to put its "win" in big, capital letters.