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JP Morgan Healthcare Conference Roundup: Day One

By Edward Winnick and Tony Fong

SAN FRANCISCO (GenomeWeb News) – A busy first day of the 29th Annual JP Morgan Healthcare Conference wrapped up with several firms in the molecular tools and diagnostics industries making their pitches to investors.

Many firms talked about new markets and new products, either recently introduced or on the way, as key revenue drivers. Below are brief summaries taken from some of the firm's presentations and breakout sessions.

Waters

After concentrating on the high-end mass spectrometry market, Waters said on the first day of the JP Morgan Healthcare Conference that in the coming year it will turn its attention to lower-end instruments.

According to Douglas Berthiaume, president and CEO of the Milford, Mass.-based company, lower-end instruments had “relatively low growth in recent years, but we’ve [been seeing] more robust growth” in such systems recently. He also said the company had not done enough technology development to give researchers a reason to buy such platforms from the firm.

In 2011 and perhaps beyond, however, Waters will be launching single quadrupole systems and other systems based on quadrupole technology, as opposed to Q-TOF technology, as well benchtop systems, in contrast to the company’s strategy in recent years of going after the very highest-end mass spec user, targeted by the Synapt, launched in 2006, and the Xevo, launched in 2008.

In line with that strategy, the company announced on Monday the introduction of the Xevo G2 TOF benchtop instrument, to which the full-system Xevo is a “big brother,” Berthiaume said.

Berthiaume also cited the Food Safety Modernization Act, which Congress passed just before Christmas to help ensure food produced in the US and imported from elsewhere will be safe. President Obama signed it into law last week.

Berthiaume said that the legislation could mean additional revenues for Waters, who he claimed “pioneered” food safety tests. The company, he added, has been “deluged” by calls from food processors on compliance issues with the legislation.

Lastly, asked about the effect of Thermo Fisher Scientific’s pending purchase of Dionex for $2.1 billion, he said that in the short term “it’s hard to imagine it changes much." Thermo has had "no bones" about trying to carve out a space for itself in the liquid chromatography space, but Dionex occupies only a “niche position” in the LC market, Berthiaume said.

Genomic Health

Genomic Health said Monday that it has accelerated development of its prostate cancer test with the goal of launching it in 2013, a year earlier than it had previously estimated. The firm made the decision based on study results presented in December at the Society for Urologic Oncology annual meeting, which identified 295 genes that were "strongly associated" with clinical recurrence in that population.

The prostate cancer test would be the firm's third, after its Oncotype Dx breast cancer and colon cancer tests.

Kim Popovits, president and CEO of the Redwood City, Calif.-based firm, told investors at the conference that Genomic Health expects to present results from a validation study of its test for ductal carcinoma in situ later this year.

She also noted that the firm expects to publish data from the QUASAR trial, which was the validation study for the colon cancer test, this year. That will be followed by "an aggressive push for reimbursement" from payers.

Popovits reiterated comments made a few months ago by company officials that the firm intends to reinvest in R&D efforts, rather than focus on significantly growing profits. Among those R&D efforts are the expansion of the Oncotype product line and potential companion diagnostic development.

Popovits also said that the firm may look to partner and commercialize tests developed by others.

Bio-Rad Laboratories

Bio-Rad Laboratories CEO Norman Schwartz said the firm's initial efforts in molecular diagnostics are focused on developing tests for sexually transmitted diseases. The firm is a more recent entrant into the molecular diagnostics field, and Schwartz said it is taking an "organic approach" to growing that part of its business by leveraging the life science tools already in its portfolio.

Schwartz told GenomeWeb Daily News after a breakout session that Bio-Rad is focused initially on getting its molecular diagnostic tests on the market in Europe. But it also intends to seek US Food and Drug Administration clearance, though he couldn't provide a timeline for those efforts. Bio-Rad usually develops its own assays, and it intends to do the same for future molecular diagnostic tests, he said.

Bio-Rad CFO Christine Tsingos noted that the firm is in the early stages of developing a global enterprise resource planning system, which she said would take four to five years to fully implement. She said the firm is taking a "measured approach" and is focused on a global design, adding that although Bio-Rad may be behind competitors in rolling out such a system, it has the advantage of learning from others' mistakes.

The firm had around $738 million in cash and short-term investments as of the end of the third quarter of 2010. Asked whether it would use some of that cash for acquisitions, Schwartz and Tsingos said that is a possibility, with M&A activity being one of the priority uses of cash.

Bio-Rad has traditionally been conservative in making acquisitions and has often made smaller deals for tuck-in companies and products. But Schwartz said the firm would consider a transformative deal — in the $1 billion to $1.5 billion range — though he cautioned that such transactions are few and far between. Tsingos added that the firm would also have to consider its credit rating in making any such large acquisitions.

Agilent Technologies

Agilent officials on Monday reported “excellent” progress on the integration of Varian into the company and said that by the end of 2011 about 60 percent of the cost synergy savings expected from the deal will be achieved.

Officials from the Santa Clara, Calif.-based firm told investors that 10 percent of the $100 million cost synergy savings resulting from the acquisition completed in May was achieved almost immediately. Another 50 percent is expected to be recognized in 2011, with the balance to be realized in the years after.

The firm also reiterated the three-pronged goal of Agilent in the life sciences — to drive organic growth; continue investments into that sector; and continue integrating the Varian business, which mostly affects Agilent’s Chemical Analysis Group but has applications in the life sciences as well.

Agilent is in the midst of an effort that began several years ago to grow its life science presence. Much of that work has been directed at building its technology portfolio, including its mass spectrometers, where the company now has a double-digit share of the market from no market share in 2007, according to Nick Roelofs, president of Agilent’s Life Science Group.

While Roelofs has said in the past that R&D investments as a percentage of revenues will shrink from the 12 percent of recent years, today he said that Agilent intends to continue double-digit investment into R&D.

In trying to address any gaps the firm may have in terms of technology, he said that the strategy is to concentrate on Agilent’s goal of organic growth, and cited next-generation sequencing as an example of one technology that it is interested in.

Pointing to its SureSelect Target Enrichment System, Roelofs said that the product “could shift reagent revenues toward genome partitioning,” industry-wide.

The company also has no plans in the short term of becoming a diagnostics shop, he added. Roelofs said that Agilent is seeking clearance from the US Food and Drug Administration for its microarrays for cytogenetics testing, and the company’s offerings in mass spectrometry and real-time PCR have potential in the diagnostic markets.

While “we do intend to compete in this market … it’s not an economic needle market for a couple of years,” for Agilent, he said.

Sigma-Aldrich

In November, Jai Nagarkatti, then Sigma-Aldrich’s CEO and chairman, unexpectedly died.

In spite of that, the path the company has been on since Nagarkatti took over leadership at the company in 2006 will remain unchanged, said Rakesh Sachdev, Nagarkatti’s successor.

The focus moving ahead will be on three priorities – enhancing growth in Sigma-Aldrich’s core businesses; improving operating efficiencies; and deploying its finances intelligently, said Sachdev.

Last month, the company closed out 2010 by announcing its intention to buy Cerilliant, a Texas-based analytical reference standards firm, for an undisclosed amount. Today, Sachdev said that the pipeline for other acquisitions is “very good,” and said that purchase prices have become more reasonable.

Sigma-Aldrich, he added, could become more active in making deals in the inorganic molecules space.

The Scan

Shape of Them All

According to BBC News, researchers have developed a protein structure database that includes much of the human proteome.

For Flu and More

The Wall Street Journal reports that several vaccine developers are working on mRNA-based vaccines for influenza.

To Boost Women

China's Ministry of Science and Technology aims to boost the number of female researchers through a new policy, reports the South China Morning Post.

Science Papers Describe Approach to Predict Chemotherapeutic Response, Role of Transcriptional Noise

In Science this week: neural network to predict chemotherapeutic response in cancer patients, and more.