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Nanogen on Road to Entering Clinical Diagnostics Market, President Says

NEW YORK, May 18 - Nanogen is gearing up to launch its first clinical diagnostic products and to see its revenues from product sales increase substantially this year, Kieran Gallahue, the company's president said Friday.

We are accelerating the march to clinical diagnostics," Gallahue told GenomeWeb. "Right now we're selling to clinical researchers, then the next stage is to sell to clinical labs and then to various sized hospitals."

Gallahue said that Nanogen's decision to hire Vance Randy White as CEO reflected the company's plans to accelerate its efforts to start developing clinical applications for its NanoChip Molecular Biology Workstation.

"Randy White has been in the industry for 30 years and he used the product at AML," said Gallahue, referring to White's previous role as executive vice president of technical operations at American Medical Laboratories.

"So we were already moving in that direction and Randy had firsthand experience and the two came together perfectly," he said.

On Thursday, Nanogen announced that White, who was not available to speak, would in June replace founder Howard Birndorf, who will remain chairman of the company's board. The appointment followed on the heels of another recent change in Nanogen's top management. In April, Nanogen announced that it had hired Gerald Wills, formerly the chief financial officer of Trega Biosciences, as its chief financial officer. Wills took over from Gallahue, who until then had been serving as both CFO and president.

"Companies like Nanogen are continually evolving," Gallahue said.

Recently, other companies have also started to sell their genomics-based products as clinical diagnostics. On Thursday, Third Wave Technologies said that California's Kaiser Permanente Regional Laboratory Services signed on as the first health maintenance organization to use the Invader diagnostic system for routine clinical procedures.

Under the terms of that deal, Kaiser will use Third Wave's Invader operating system to test for mutations associated with the development of deep vein thrombosis, a potentially life-threatening condition that can result from complications following surgery. 

And last month, Applera formally announced the formation of Celera Diagnostics, a long-discussed joint venture between its two companies Celera and Applied Biosystems, to form genomic-based diagnostic tools. The initiative will use Celera's treasure trove of genomic data as well as data from a new proteomics project, in which Celera is identifying gene-protein-disease pathways, starting with those surrounding lung, breast, colon, and pancreatic cancer.

Gallahue said that the company was not yet ready to announce which areas Nanogen would be targeting, or when it would release its clinical diagnostic products, but he said that it was reasonable to assume the company would be targeting the areas the Nanochip products are already addressing.

"We have customers today using our product in research applications for oncology, infectious diseases, genetic diseases, and drug metabolism," said Gallahue.

The cost of the products will depend on which tests they are designed for.

"We do believe, however, that there will be performance and cost advantages," Gallahue added.

Nanogen of San Diego currently has 190 employees and is expected to have revenues of $13 million to $15 million this year, with $4 million to $6 million stemming from product sales.

The company posted revenues of $2.9 million in the first quarter of the year, $229,000 of which came from product sales while the remainder stemmed from sponsored research and contract and grant revenue.

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