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Transgenomic Hopes US Diagnostics Labs Will Soon Be Riding Its Wave

NEW YORK, Nov. 1 - Conceding that sales of his company's Wave instruments have been lackluster in recent months, the CEO of Transgenomic yesterday hinted the firm will step-up efforts to land the tool in US-based molecular-diagnostic labs.


"We are optimistic about our opportunities to advance [the] Wave technology into higher-value markets such as molecular diagnostics. ...," Collin D'Silva said in Transgenomic's third-quarter earnings statement, released yesterday. Optimistic for good measure: By setting his sites on downstream diagnostics, D'Silva will be taking a swing at a sliver of a market that some say may reach $3.7 billion by 2006.


"We're really in the early-going here to just enhance targeting of institutions, entities, and individuals involved in clinical-diagnostic testing," said Rob Pogulis, director of strategic planning at Transgenomic. "So that's the first step at this point. We're not necessarily fleshing out lots of details, but we certainly want to make a concerted effort to advance the Wave technology into the [US-based] clinical-diagnostics setting."


To be sure, moving the Wave platform from the bench to the clinic would not be a logistical stretch for Transgenomic--clinics in the UK and France already use the technology to help diagnose colon cancer and cystic fibrosis, according to Pogulis. One challenge would likely be in overcoming US regulatory requirements.


Because the Wave instrument does not have 510K marketing clearance, its use in the United States is limited to CLIA lab settings. And because molecular diagnostics are regularly performed in CLIA labs, Transgenomic can first "look for opportunities with those sorts of users," Pogulis explained.


He stressed, however, that Transgenomic's downstream designs do not necessarily portend an increase in R&D spending or in sales and marketing efforts. "There's really not a whole lot to develop other than optimizing the specific PCR amplicons for the genes of interest," he said.


Since the Wave technology tells researchers whether a mutation exists on a stretch of DNA, "you don't have to go through and design a whole bunch of hybridization primers and see if they work," said Pogulis. "That's one of the things about the platform that's nice for some of these diagnostic applications."


While Pogulis wouldn't disclose Transgenomic's timeline--or whether the company has in fact nailed down a schedule--some analysts caution the move into the clinical lab would take a long time to realize.


"Our view is very long-term," said RBC Capital Markets analyst Thomas Flaten. "This is not a market that is going to explode over the next year or two. Does the [Wave] technology have an opportunity in diagnostics? Sure. Is it something I would build into a model for next year or the year after? No--unless we saw some extremely compelling evidence of them ... producing ASRs"--so-called home-brew diagnostics.


These days, likely Transgenomic competitors Nanogen and Third Wave Technologies have already begun their migration downstream by courting the home-brew market with novel ASRs, according to Flaten. "That's likely going to be the first entry for a lot of these diagnostics as they gain some type of traction in the market. At that point companies will make the decision whether to run down the 510K path," he said.

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