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JP Morgan Healthcare Conference, Day 3: LabCorp, Bruker, Myriad Genetics

By Tony Fong

SAN FRANCISCO (GenomeWeb News) - The third day of the JP Morgan Healthcare Conference was short on molecular research tool firms, but had its share of molecular diagnostics presenters.

Laboratory Corporation of America talked about the effect of the Genzyme Genetics acquisition, while Bruker took on a subject it hasn't focused too much attention on in the past — molecular diagnostics — and Myriad officials discussed their plans to gain market share in Europe. Below are the highlights from their presentations and breakout sessions.

Laboratory Corporation of America

Last month, LabCorp completed its $925 million purchase of Genyzme Genetics, and at the conference on Wednesday LabCorp Chairman and CEO David King said one of the benefits of the purchase is the access it will provide to genetic counseling.

Genzyme Genetics has about 130 genetic counselors, King said, adding that he is “excited” about the potential to incorporate the service into LabCorp’s network to provide similar services.

When the deal was announced in September, King said that it "provides us with an unprecedented opportunity for revenue growth in our key strategic focus areas of esoteric testing and personalized medicine.” Today, he said that with the addition of the business, about 40 percent LabCorp’s revenues will now be esoteric testing-based.

Genzyme Genetics generated about $371 million in revenues in 2009, and is expected to become break-even on a GAAP basis for LabCorp next year, King added.

Asked about the company’s plans to expand its companion diagnostic business into Europe and Asia, King said that is not a priority for the company. LabCorp’s strategy has been to access pharmaceutical services, and as more tests are being developed that may have particular interest in utility in Europe and Asia, the company will evaluate those opportunities.

But, King said, “We’re not interested in doing sizeable international acquisitions.”

Lastly, on Tuesday, Bloomberg News reported that Thermo Fisher is seeking to divest its laboratory businesses Athena Diagnostics and Lancaster Labs for about $1 billion. While King did not say LabCorp would be interested in acquiring either business, he said, “We will probably be asked to look at them and we will.”

Bruker

According to President and CEO and Frank Laukien, Bruker is “very keen” on developing more diagnostic tools based on mass spectrometry.

The company, which generates about 90 percent of its business from scientific instruments, is not generally known for its efforts in diagnostics, it currently is preparing a submission to the US Food and Drug Administration for clearance of its MALDI Biotyper for microbial identification. The platform has been available in Europe since 2006, where it has been “a paradigm shifter” because of rapid results that can be achieved on the platform, he said.

The company also is approaching submission to Canadian and Australian regulators for clearance of the platform, Laukien said.

Bruker, he added, is set to launch a clinical chemistry mass spec platform as well, which will have diagnostic applications, though he did not set a timeline for a launch.

On the M&A front, he said that there are no significant gaps or needs that the company felt it needed to address. However, he said that there are technologies and fields that Bruker is staying away from, including genomics, in vitro diagnostics, and consumables.

Bruker is interested in high-performance instruments and “we like to look at things with higher barriers to entry … We’re going to stick to our business model” of targeting scientific instruments, Laukien said, adding that the firm “probably won’t do any big acquisitions for a while.”

In May, Bruker completed its purchase of certain Varian product lines for about $32 million. Today, Laukien called the transaction “a fixer-upper, but it’s a very good deal.”

The business is housed in Bruker’s Chemical Analysis division, and the plan is to expand those instruments into the applied markets with the instruments and development of new technologies. The combined Varian businesses generated about $90 million in revenues with a 10 percent to 12 percent operating margin. Bruker is not satisfied with those performance metrics, however, and expects to improve upon them beyond 2012.

“We’re in second gear” in our planning for the Varian acquisition, “and we hope to be in fourth gear later this year,” Laukien said.

Myriad Genetics

Myriad Genetics CEO Peter Meldrum said that the company will focus on four goals to drive future growth of the company — revenue from its existing products, the launch of new products, becoming the leader in companion diagnostics, and moving into the European market.

While not putting special emphasis on any one of the goals, Meldrum today moved up the company’s targeted timeline to establish a “significant” presence in Europe to 2012. At an investor conference in September, Mark Capone, president of Myriad Genetic Laboratories, had targeted 2013 for the company’s entry into Europe.

According to Meldrum, the European market size is about 75 percent of the US, and based on surveys that the company has done, it has concluded that Europe is “ripe for Myriad products.”

The plan is to evaluate opportunities there on a country-by-country and product-by-product basis. So far, interviews with government officials and opinion leaders have been “very positive,” Meldrum noted. He identified Germany, Italy, and France as attractive markets currently, but said that because of reimbursement issues, the UK is not.

Of the opportunities that exist in Europe, he noted that, on average, reimbursement for breast cancer testing is about €2,600 ($3,411). In the US, Myriad’s BRACAnalysis, which tests for the risk of inherited breast cancer and ovarian cancer, is reimbursed at 92 percent of the $3,340 list price on average.

He also said that while the US market for its Colaris colorectal cancer test is about half that of BRACAnalysis, the level of colorectal cancer testing in Europe is roughly the same as for breast cancer testing, which could bode well for Colaris in Europe.

Meldrum also said that Myriad wants to “dominate” the companion diagnostics space as part of its growth strategy and cited work developing tools directed at PARP-inhibitors and P13k-inhibitors.

In line with that goal, in October, Myriad announced a deal with Abbott Laboratories to perform BRCA1 and BRCA2 mutation testing for an Abbott drug for metastatic breast cancer.

Addressing its ongoing litigation concerning its BRCA1 and BRCA2 patents, Meldrum said that he expects the US Court of Appeals in March to hear Myriad’s appeal of a US Federal court’s decision last year against Myriad. A decision is then anticipated three to four months later, he said.

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