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UPDATE: PE Announces Major Molecular Diagnostics Initiative

This story has been updated from a previous version.

NEW YORK, Nov. 6 – PE plans to begin spending an estimated $20 to $30 million a year on a new molecular diagnostics initiative, and has hired Roche Molecular Systems CEO Kathy Ordonez and two other Roche senior executives to head up the operation, the company announced Monday afternoon.

The initiative will focus on development of molecular-based DNA assays for infectious diseases, genetic diseases, cancer and general drug response, said PE chairman Tony White in a conference call with industry analysts.

" The market today for these types of products is about one and a half billion dollars today,” White said. “The expectation pretty much across the range of studies is that it would grow at a compound rate of 25 percent or better over the next ten years. This translates into a 10 to 12 billion dollar market.”

“We’re convinced that this is the future of medicine, the future of more personalized medicine,” added Celera CEO Craig Venter during the call.

The Molecular diagnostics work will initially take place under the auspices of Applied Biosystems, with active participation from Celera. But PE is considering spinning the new initiative out into a separate publicly traded stock, PE executives indicated.

PE will be hiring about 200 additional people in the coming 12 to 18 months to staff the new initiative, and plans for it to be based in the 80-acre Pleasanton, Calif. site that Applied Biosystems recently purchased when the site finishes construction in 2002.

Ordonez, who oversaw Roche Molecular’s rise to dominance in the PCR arena over the last nine years, is bringing with her Tom White, Roche Molecular’s vice president of R & D, and John Sinensky, its vice president of genetics.

PE plans to leverage the PCR expertise this trio brings to the company, the executives indicated Monday. PE gained broad licenses to Roche’s PCR technology several months ago in an expanded licensing agreement with Roche, and expects to use this technology in its new foray.

“The initiative focuses on using DNA technology as a way of diagnosing and treatment of diseases,” said Michael Hunkapiller, president of Applied Biosystems.

The diagnostic tools that this new initiative develops will run on Applied Biosystems instruments, and will be developed using Celera’s genomic database. Celera’s HIV genotyping assay, which it expects to submit for FDA approval later this year, will be a starting point for the new group. But the molecular diagnostics group will also seek outside collaborators.

“It’s not like we’re starting from zero here,” said Hunkapiller. “We’ve had some fairly serious overtures from pharma companies.”

The announcements of Ordonez's and White’s departure from Roche, which Roche employees learned of Friday, fueled speculation of a shakeout at this company or a transfer of power from Roche Molecular’s Pleasanton, Calif. offices back to the parent company’s Swiss headquarters.   

Indeed, Ordonez will be replaced at Roche by Heiner Dreismann, who was formerly head of global strategy for Roche Diagnostics in Switzerland, and the new head of Global strategy will be Knute Bartle, head of research for Roche Molecular systems in Penzburg, Germany, according to Walt Mahoney, Senior Director of Roche Molecular’s Chief Technology Office.  

But Mahoney denied speculation that these personnel changes had any larger implications for Roche Molecular’s overall PCR business.  

“The whole PCR portfolio is very active and very robust,” said Mahoney. “Business in that part of Roche is still growing at rates in excess of 25 percent per year.”

  Although some of Roche’s PCR patents will run out in a couple of years, Mahoney said the company just received a patent on material that stabilizes Taq. “The overall patent portfolio is very secure,” he said.


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