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Agilent Adds More Informatics Efforts With $11.7M Icoria Grant Collaboration

Agilent Technologies will replace Lion Bioscience as a partner in an $11.7 million National Institute of Standards and Technology advanced technology grant project managed by Icoria, formerly known as Paradigm Genetics.

NIST approved Agilent after Lion withdrew from participation. The grant is designed to develop informatics applications for discovering and validating drug-development targets.

The announcement is the latest in a series of informatics business deals at Agilent’s new Integrated Biology Solutions unit, and reflects a focus on strengthening the company’s informatics portfolio. (For more, see BCW 9/16/2004)

The deal also provides Agilent with an opportunity to develop and refine its informatics technologies to address the need for applications that integrate massive amounts of data from different molecular biology tools platforms. This functionality is seen as a key enabler for the vision of systems biology, where data from any platform can be integrated and analyzed to provide a “global” view of cellular processes.

Agilent will provide analytical support and use the project to develop a commercializable software product that integrates genomic, proteomic, toxicology, and drug efficacy data for target analysis. The company will provide its Synapsia Informatics Workbench, a workflow-based data framework, as the developmental platform to integrate data flowing from the project’s research efforts.

“Synapsia, as a product and a technology, is a best-effort and a key step for us in enabling systems biology,” Francois Mandeville, director of the informatics unit of the IBS team, told BioCommerce Week. “Synapsia has been a calling card proving that we were thinking along the right lines.

“There are clear deliverables,” he said. “We have been chartered to do the research and invent new technologies as part of the ATP grant. This will leverage Synapsia as a platform.”

Two years ago, Mandeville told Dow Jones that Agilent’s share of the estimated $1 billion informatics market could grow to $100 million in three years. He told BCW on Tuesday that those measures “need to be revised downward” to reflect the turmoil of the bioinformatics market, which is in recession.

Agilent launched its informatics business unit in April 2002 and released the Synapsia Informatics Workbench the following August. The application was revised as version 2.0 in December 2003, and upgraded to version 2.0.1 in July.

Agilent did not disclose financials or installed base numbers for the product, but Mandeville said Synapsia has been installed at Icoria.

To be approved for the Icoria collaboration, Agilent had to commit to bringing to market a commercial product based on the research and development conducted during the remaining four years of the grant, Mandeville said.

He said he was unable to disclose any revenues that might be generated in this collaboration, but said that the research will have long-term and tangible benefits for Agilent’s informatics product lines, and for the company’s investors.

“If you have the right products and do research to keep aligning future versions of the products and get exposed in real time to the true process of conducting systems biology, it’s an ideal opportunity to do first-bench learning and develop breakthrough technology,” he said.

Mandeville said it is a challenge to address the emerging integrated biology market, in which data from any molecular biology tool can interoperate with other data, and provide analytical insight into biomolecular activity.

“It’s like building a house and the foundation keeps changing,” he said. “The workflow [for systems biology] is still evolving.”

More Deals

Agilent has been moving to expand its molecular biology-tool offerings by investing in emerging technologies and mature applications, and acquiring new product lines.

For example, in August, Agilent contributed $1.1 million as part of a syndicate of a dozen investors participating in Genospectra’s Series C round of venture-capital financing. Genospectra, of Fremont, Calif., is an early-stage company developing cell-based assays and a quantitative cell-based method for gene expression profiling, and includes Affymetrix founder Alex Zaffaroni and Affymetrix among its existing investors.

The Genospectra investment is one of five investments made by the company’s Agilent Ventures fund since 2000, and joins a $1.4 million stake taken in Aria Biosystems in June as the only two deals of 2004. Aria, of Menlo Park, Calif., is developing a fiber-optic sensor technology for label-free assays for the detection of biological molecules.

Additionally, the company increased its investment stake in Rosetta Biosoftware, a business unit of Rosetta Inpharmatics, a wholly owned subsidiary of Merck. The amount of the investment was not disclosed. Agilent is the exclusive distributor for Rosetta Resolver and Rosetta Luminator gene-expression data analysis systems.

This string of deals followed the Aug. 23 announcement that Agilent would acquire Silicon Genetics, which sells the GeneSpring gene-expression analysis software, which has 4,000 users; the Varia genetic-analysis software; and GeNet, a database for expression data. That deal has not closed yet and financial details have not been disclosed Agilent said the deal is subject to regulatory approval and may close as soon as the end of the month.

Mandeville said Silicon Genetics’ products would be complementary to Agilent’s current informatics portfolio products.

Q4 Report in November

Agilent will release its financial results for its fiscal fourth-quarter on Nov. 11. Eight of the 11 analysts that cover the company are estimating total revenues of $1.9 billion, and earnings of $.32 per share, according to the Thomson Financial Network.

Wachovia Securities on Monday upgraded Agilent to “outperform” based on expectations of double-digit revenue growth over the next year. The upgrade is driven more by the company’s new telecommunications products than life sciences, said Stephen Koffler, the analyst covering Agilent. A research note published by the brokerage firmalso noted expectations for “robust results in the near future” for the life sciences division.

Agilent reported $1.9 billion in revenues and net income of $100 million for the three months ended July 31. The Life Sciences and Chemical Analysis unit had net revenues of $335 million, compared to $303 million for the year-ago period, and $46 million in income from operations, compared to $41 million for the same period in 2003. The company does not provide operating results for its IBS unit.

However, the LSCA unit had $262 million in net revenue from products in the quarter, compared to $231million in the year-ago period, and reported $73 million sales in services, up over $72 million for the same period in 2003.

Agilent recognizes revenue on delivery after customer acceptance criteria have been met, and installation is complete. The company records orders as firm purchase commitments for products and services to be delivered within six months.

The company measures financial performances by the yardstick of return on invested capital, dividing annualized income from operations by invested capital. The LSCA unit reported a ROIC ratio of 23 percent for the last quarter, compared to 22 percent for the year-ago period.

— Mo Krochmal ([email protected])