A US-First Strategy for Ovarian Cancer Screening: The Cleo (ASX: COV) story

This is Part 3 of my mini-series on ASX-listed diagnostics companies.

Monday, Rhythm.

Wednesday, BCAL.

Today, Cleo Diagnostics (ASX: COV).

Earlier this week, I had the chance to sit down with non-executive chairman Adrien Wing to hear the full Cleo story.

Cleo has developed an ovarian cancer detection test with 95% specificity and 95% sensitivity.

… with results from a pivotal registration study scheduled in the next few months.

Ovarian cancer is often called the “silent killer” because early-stage disease is usually asymptomatic. 

Meaning women don’t even know it’s there.

It’s the world’s deadliest gynaecological cancer, and the eighth most common cancer in women globally.

… but there is no widespread population screening tool.

The utopia for any diagnostics company is to become the go-to population screening tool for a particular disease or condition.

However, this takes a lot of time and data to get there.

So, Cleo has a strategy to bring a test to market in a staged way, hitting key milestones and value drivers as it builds towards a population screening tool.

This has been Cleo’s strategy since it IPOd in 2023:

FIRST, Triage - target pre-surgical patients.

THEN, Recurrence - monitoring of people who have had ovarian cancer before.

FINALLY, Screening - the holy grail. 

Cleo Diagnostics is playing a very different game to Rhythm Biosciences and BCAL Diagnostics when it comes to how and where it distributes its services.

Where Rhythm and BCAL are largely focused on cracking the Australian market first via the lab-developed tests (and in Rhythm’s case, the UK too) Cleo is heading straight for the US, and doing it with a kit.

I think that to get a better idea of the problem that Cleo is trying to solve (and how it compares to competing tests out there) its important to understand how ovarian cancer diagnostics work.

Here’s the general process…

A woman presents to her GP with persistent symptoms: bloating, pelvic pain, urinary frequency, and early satiety. 

(it needs to be persistent)

Side note, this is the reason that diagnosis almost always happens late because there are generally no symptoms at all in the early stages.

The GP then orders the standard first-line work-up:

This combo is the current standard of care for tumour markers… and frankly, it’s not great. 

Accuracy is middling at best, yet it still attracts around US$875 in reimbursement.

If the ultrasound shows an adnexal mass with suspicious features, the patient is referred to a specialist gynaecologist.

And this is where things get tricky.

Once a mass is identified, the gynaecologist has to choose between:

Surgery is the only definitive way to know whether ovarian cancer is present.

But roughly 70% of surgeries for adnexal masses in Australia turn out to be benign.

Just to put this into context, in the US, there are roughly 1.5 million investigations for an adnexal mass each year.

Of those ~200,000 go to surgery.

Of those, only ~23,000 cancers are diagnosed.

That’s a really bad way to just get a false positive. 

Before surgery, that’s where Cleo’s test comes in (triage).

Cleo’s test is designed to sit after a mass is detected, but before the decision to operate, helping clinicians decide whether that lump is a bad lump or just an unnecessary trip to theatre.

If it works, it stops a large chunk of unnecessary surgeries. 

That triage indication is just step one.

Longer term, Cleo wants to:

That last step is the holy grail.

It’s also the hardest.

There’s still a lot of work… and Cleo will need to gather a bunch more data and reformulate its test to get there.

It is still pre-FDA approval for the first indication, so one step at a time.

But if you want to understand Cleo’s ambition, that’s the end-state picture.

Right now, the baseline comparator remains CA-125 test plus ultrasound. 

I’ve covered why that’s… underwhelming.

The more interesting comparison is with ClearNote Health’s Avantect® Ovarian Cancer Test.

(This is the exact test that BCAL has licensed for Australia and New Zealand).

Avantect is already live in the US, with reimbursement of US$1,160 per test.

It’s been developed primarily as a screening tool for high-risk women (genetic predisposition, family history), with reported sensitivity around 94% and specificity of 78%.

That drop-off in specificity is important; it reflects the trade-off that comes with screening broader populations.

It also performs better in later-stage disease, and less well in early-stage ovarian cancer, which, unfortunately, is exactly where early detection matters most.

Still, it serves a real and important role for high-risk women.

But here’s the important point, as a triage test, Cleo’s product doesn’t directly compete.

Mapped onto the clinical pathway, they’re almost complementary:

Over time, Cleo wants to move upstream too. 

But in the meantime, I could easily imagine a two-stage ovarian cancer management system where both tests coexist.

The other ovarian cancer screening product was part of a multi-cancer test by Grail, which recently failed to hit its primary endpoint in a giant clinical trial:

So there aren’t many players on the field.

On Monday, I revealed the four pillars of any diagnostics business, and then followed up on Wednesday’s note. But here is a quick reminder…

Approvals: just get you to the starting line, but they are necessary to bring the product to market.

Logistics: all the unsexy work of collecting samples, ensuring they are properly stored, and managing and maintaining records.

Adoption: Will people use it? Will doctors prescribe it? This requires extensive education and thought leadership from key opinion leaders in the field.

Finally, Reimbursement (by the government or insurance companies). Get paid.

Cleo is now in the final stages of its clinical trial.

Based on guidance, FDA submission is expected mid-year, assuming everything goes to plan.

But there’s still real trial risk:

Whether Cleo can match (or beat) those retrospective numbers is the big unknown

And as always, how the market reacts will depend not just on the result, but on expectations going in.

Initial approval is for triage only, with further indications requiring additional work.

Cleo has selected the Ella™ platform by Bio-Techne as the immunoassay instrument of choice for its ovarian cancer blood test.

This FDA-cleared instrument already deployed across many hospitals and reference labs.

Here is the process:

Last quarter, Cleo appointed its first Key Opinion Leader, a necessary first step in growing adoption.

Early adopters are likely to be the ~19 trial sites collecting patient samples, but a broader rollout strategy will be needed.

This includes some of the largest ovarian cancer centres in the US, where a majority of patients are treated. 

It is likely that the results of the pivotal trial are holding up the most meaningful discussions with potential physicians and users of the test.

So I expect this to ramp up post-FDA approval.

As I mentioned in my BCAL article, the government doesn’t just pay for a test because it shows promise… 

The test needs:

A health economics study is underway to demonstrate cost savings from avoiding unnecessary surgeries, with results scheduled for this quarter.

I imagine that a broader reimbursement strategy will be developed as Cleo brings its product to market.

After looking at Cleo, Rhythm and BCAL side-by-side, what really stands out is just how different their strategies are.

BCAL is clearly focused on achieving revenue quickly in Australia, bolstered by licensing ClearNote’s tests, strong clinician engagement, and a clear strategy to secure reimbursement.

Rhythm is probably 12 months behind BCAL in market entry, but is pushing hard into the UK and has ambitions to turn its colorectal test into a kit, targeting the lucrative population screening tool.

Cleo, meanwhile, is playing a completely different game: US first. Kit first, but in a narrow indication.

Solve a painful clinical decision, surgery vs no surgery, before chasing the screening dream.

There’s also a genuine catalyst setup here for Cleo.

Results of the clinical trial and subsequent FDA 510(k) approval… but it comes with clinical risk, approval risk, execution risk and all the other caveats of any diagnostics company.

So, as the saying goes, there are multiple ways to skin a cat, and I think that if any of these three companies take off… the others will follow. 

All three can succeed in the market, and all three have very high potential to make a real difference in patients’ lives.

A big thank you to Adrien Wing for taking me through the story.

See you all next week,

The Armchair Analyst 

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If you have any rumours or interesting tid bits like this please send them through as well.

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