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Fisher Hopes to Drive Molecular Dx Sales Through Nanogen Investment, Athena Technology Purchase

Fisher Scientific's growing interest in molecular diagnostics has led the firm to acquire neurological-test manufacturer Athena Diagnostics and ink a collaboration with microarray firm Nanogen.

Fisher believes the two transactions, announced last week, will greatly expand its biomarker and assay portfolio and provide a base for developing point-of-care tests. The firm, which is not known as a major diagnostics player, had been expanding its presence in the in vitro diagnostics market, and Fisher officials recently hinted that firm would play a greater role in the emerging molecular diagnostics market.

Fisher has agreed to pay $283 million for privately held Athena, a manufacturer of molecular diagnostic and immunodiagnostic tests with 2005 revenue of $55 million. Athena is owned by leveraged buyout firm Behrman Capital, which purchased the company from pharmaceutical firm Elan three years ago in a $122-million equity and debt deal.

Fisher also paid $15 million for a 9-percent stake in Nanogen, a 5-percent premium over the company's closing share price the day before the investment and collaboration was announced. The companies said they would collaborate on expanding Athena's proprietary biomarkers and tests.

"By acquiring Athena, we acquire an extensive portfolio of biomarkers and assays, enabling us to also provide the actual tests and outsourced services that are critical as healthcare moves increasingly toward personalized medicine."

Clearly, by paying more than five times annual revenue for Athena, Fisher believes the acquisition will bring significant assets that will help grow its molecular diagnostic and immunodiagnostic businesses.

"By acquiring Athena, we acquire an extensive portfolio of biomarkers and assays, enabling us to also provide the actual tests and outsourced services that are critical as healthcare moves increasingly toward personalized medicine," a Fisher spokesperson told BioCommerce Week. "There are also many growth opportunities for Athena. In addition to its portfolio of neurology tests, the company has a small offering in nephrology and endocrinology which can be expanded."

The spokesperson said that "by developing assays and utilizing Athena's genetic markers and discovering new ones, we will be able to capture a growing share of the molecular diagnostic testing markets."

"Having a CLIA-approved reference laboratory is a minimum you need if you are going to start to introduce some diagnostic assays that are on the home-brew level or are so sophisticated that you don't want the doctor to do them [and they] are pushed into the lab," said Harry Glorikian, a partner in life sciences advisory firm TSG Partners. "That may be their bridge, because [Athena] doesn't sell any assays. It does everything internally," and offers the tests as a service to physicians.

Fisher said in a filing with the US Securities and Exchange Commission that it expects to complete the purchase of Athena early in the second quarter.

In terms of the Nanogen investment, Fisher stands to gain "an even stronger base in molecular diagnostics and many of the tools and instrumentation needed to develop diagnostic tests," according to the Fisher spokesperson. She said Fisher is currently a large provider of many tools used in molecular diagnostics, such as reagents and other consumables used in sample collection, sample preparation, and DNA amplification.

"One of the things that has been discussed is that once the dust settles we will sit down with Athena and Fisher and look at opportunities," Howard Birndorf, CEO of Nanogen, told BioCommerce Week sister publication BioArray News this week. "Athena has a number of proprietary markers in the area of endocrinology and neurology, and we would look at those to see if there's any way to use markers that Nanogen has in the Athena business or vice versa to expand the market on any given marker."

He said that Nanogen currently has two choices for introducing molecular diagnostic products — either on the firm's NanoChip400 microarray-based molecular diagnostics platform, which was launched in October 2005, or as RT-PCR products, via technology acquired with Nanogen's purchase of Epoch Bioscience in September 2004.

The partnership between Nanogen and Fisher was also fostered by Fisher's former chairman emeritus Frank Jellinek, according to Birndorf. Jellinek, who died in a plane crash in January, had also served on Nanogen's board of directors since June 2005.

A Variety of Paths Into Molecular Dx

Fisher's plan for using both Athena's and Nanogen's technologies is just one example of how research-tool providers are mapping out their strategies to grow their share in the molecular diagnostics space. Although several microarray manufacturers, such as Nanogen, have announced plans to offer molecular diagnostic tests and services based on their technologies, some industry observers have questioned whether microarrays are the appropriate technology for this market.

"That's going to be a raging debate that's going to go on for a while," said Glorikian. "The P450 chip [sold by Roche as the AmpliChip] is an approved diagnostic chip. It's not quantitative, but at least qualitatively it's going to give you more information than you had five minutes ago. That diagnostic question … is going to have to work itself out over time," he said.

Many of the firms in the BCW Index, such as Applied Biosystems, Thermo Electron, Bruker BioSciences, and PerkinElmer, are already applying their mass spec technologies to biomarker discovery. PerkinElmer also sells the BioXpression system for biomarker discovery, and Beckman Coulter, which has a large in vitro diagnostics business, last year launched its Vidiera NsP nucleic sample-preparation platform, which the firm hopes will be purchased as a companion to its launched Vidiera NsD nucleic sample-detection system. Together, Beckman is hoping the systems will help it expand into the molecular diagnostics market.

Other Index firms, such as Invitrogen, Qiagen, and Stratagene have either developed or acquired reagents and assays to stake their claim in the market. Invitrogen made several acquisitions last year, including the purchases of Zymed, Dynal, and BioSource, which were key to its plans to grow its molecular diagnostics business.

Qiagen's $40-million acquisition of Artus in June provided the company with a key component — PCR-based assays — for its plans of operating in the molecular diagnostics market (see BioCommerce Week 6/2/2005). Meanwhile, Stratagene recently announced that Bayer Healthcare will sell customized versions of Stratagene's Mx3005P instruments to clinical labs for molecular diagnostic testing worldwide (see BioCommerce Week 3/8/2006).

A Growing Presence in Fisher's Broad Portfolio

At the moment, Fisher's diagnostics business is a relatively small part of the firm's offerings. The firm is divided into three segments: scientific products and services, which includes bioreagents, biochemicals, and microbiology media, among other products; healthcare products and services, which includes immunodiagnostic kits and reagents and outsourced manufacturing services for reagents, among other services; and laboratory workstations.

Fisher recently reported that fourth-quarter sales for its healthcare products and services group grew 4.5 percent to $324 million year over year, driven by the firm's expanding presence in the in vitro diagnostics market. The company as a whole reported fourth-quarter sales of $1.42 billion.

Paul Meister, Fisher's vice chairman, said during a conference call last month that he expects sales to that market to continue to grow as the industry moves to a more predictive model (see BioCommerce Week 2/8/2006).

He also may have provided a hint that the firm was about to expand its presence in the diagnostics market, saying, "The push toward personalized medicine has been driven by developments in molecular diagnostics and life-science research. In 2006, we are optimistic about our initiatives to drive better than market growth through our faster-growing products and new product introductions."

"Fisher is not particularly focused on direct patient testing as a service offering," the Fisher spokesperson said. "Generally speaking, Fisher will continue to review many potential acquisition targets across the entire healthcare spectrum — from basic scientific research to drug discovery and development to clinical trials and diagnostic testing. The main factors for any acquisition continue to be the strategic fit with Fisher, opportunities to expand our proprietary product portfolio, and strong earnings growth," she said.

— Edward Winnick ([email protected])

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