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ABI Pulls Plug on ‘Niche’ 1700 Array System As Users Cry Foul and Competitors Circle

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Continuing an exodus of second-tier players from the microarray-based gene expression market, Applied Biosystems announced last week that it has decided to discontinue its 1700 array platform and will instead market its newly launched SOLiD next-generation sequencing platform for expression analysis.
 
According to Spokesperson Lauren Lum, the company plans to phase out the array system over the next two years while seeking to fulfill its customers’ expression analysis needs with the SOLiD System, which ABI maintains is a better platform for expression studies. ABI officially launched the SOLiD platform last week.
 
ABI’s decision to exit the array market follows Nanogen’s announcement last month of its intent to evaluate its array business, and comes nearly a year after GE Healthcare decided to end its involvement in the array market. Over the past 12 months CombiMatrix also decided to ditch the research market for chips, and began focusing solely on growing a diagnostics business.
 
ABI first launched its 1700 Chemiluminescent Expression Analysis System in 2003 and now sells whole-genome arrays for expression studies for human, mouse, and rat. While the company never had an installed base to rival larger players like Affymetrix and Agilent Technologies, it maintained a loyal customer base and in 2006 certified 11 labs and companies as service providers (see BAN 2/14/2006).
 
“The 1700 system was a niche product for Applied Biosystems and we've concluded that the SOLiD System with its proprietary stepwise ligation technology will be very good for counting applications including gene expression,” Lum wrote in an e-mail to BioArray News last week.  
 
“SOLiD can produce high quality ‘digital’ gene expression data that should be superior compared to hybridization arrays for certain applications, such as whole transcriptome profiling and detection and quantification of non-coding microRNAs,” she wrote.
 
As customers hypothetically move to the SOLiD System, ABI will phase out the Expression Analysis System. Lum wrote that sales of the 1700 instrument have been “discontinued immediately.” The firm will continue to offer “human, mouse, and rat microarrays and associated labeling and hybridization reagents” through 2008 and will “make every reasonable commercial effort to provide current system users with maintenance and repair service and technical and application support through 2009,” she wrote.
 
The company does not break out revenues for its specific product lines, but in a conference call last week Tony White, chairman of ABI parent company Applera, said that the 1700 system “was not a material portion of our revenue.”
 
Dropping a Product Line
 
ABI has been touting the capability of its sequencing platform for use in expression studies ever since it acquired Agencourt Personal Genomics last year. However the company previously said that its sequencer wouldn’t impede sales of its array platform.
 
In June 2006, Kevin Corcoran, vice president and general manager of ABI's genetic analysis business, told BioArray News that " the opportunities for [expression applications for sequencing] technologies are in areas where there are no microarrays developed. That's where we are going to position this technology" (see BAN 6/13/2006).
 
Therefore, the apparent turnaround in strategy caught some users by surprise.
 
Shawn Levy, director of the Vanderbilt University Shared Microarray Resources and an ABI service provider, told BioArray News in an e-mail last week that the decision is “very disappointing” because of the extent to which Vanderbilt has invested in the system.
 
Levy, who said ABI representatives informed him of the firm’s decision before disclosing it during its fiscal first-quarter earnings call last week, said he was “not given a firm reason why it was dumped but it was clearly not a profitable platform for them.
 
He said ABI’s move “is especially difficult for us since we invested significantly in the platform after AB management assured us that they were investing in the platform for the long term. Obviously that is not the case,” he wrote.
 
Levy suggested that the the phase-out sets a precedent that could slow adoption of ABI’s SOLiD sequencer. Specifically, he noted that the firm was a late-comer in the array market, and is now playing catch-up in the next-generation sequencing market since rival firms like Illumina and Roche’s 454 Life Sciences business have a healthy head start. 
 
“Their promises are clearly not valuable in respect to instrument longevity,” he added, noting that the SOLiD’s $600,000 price tag is a significant investment for most research labs — especially when there is no guarantee of long-term support.
 
”The 1700 decision may very well impact the uptake of the SOLiD depending on how the news of the 1700 platform is taken by the academic and industry researchers,” he said.
 
Levy said that the discontinuation will affect about a dozen investigators at Vanderbilt. “Since the arrays will be available for another year, it probably won't have an overly detrimental impact,” he wrote. “More significant is the $200,000 invested in a platform that was supported for just over two years. We will be pursuing AB to make good on their original promises.”
 
With the 1700 out of the picture, Levy said VMSR will be offering customers Affy exon- and gene-level arrays. The resource is also expanding its offerings on the Agilent platform as well, he wrote.
 

“I would predict that most of the ‘full-genome’ microarray platforms for transcriptome and genomic analysis will be off from the market in ten years.”

Christian Guelly, director of the Department of Molecular Biology at the Medical University of Graz in Austria and also an ABI service provider, told BioArray News in an e-mail last week that he was not surprised that ABI decided to scuttle the system. “The success of the full-genome sequencing systems [sold by Illumina and Roche] has put pressure on the microarray market,” he wrote.
 
He said that he had heard rumors last year that ABI might discontinue the Expression Analysis System and decided to adopt an Affymetrix platform in parallel as well as to evaluate Agilent arrays as an alternative.
 
“I would predict that most of the ‘full-genome’ microarray platforms for transcriptome and genomic analysis will be off from the market in ten years,” Guelly wrote. “Once full-genome sequencing is affordable for the average lab, why should someone still mess around with cross-hybridization, hybridization kinetics, repetitive elements, pseudogenes, [or] splice variants?” he wrote. “Maybe only some diagnostic arrays will survive.”
 
However, Guelly added that he was still “astonished” about the “earliness” of the phase-out and echoed Levy’s comments that the timing might tarnish ABI’s reputation. “I bet that competitors on the full-genome sequencing market will [benefit] from this step as the trust in the brand Applied Biosystems has suffered damage,” he wrote.
 
“I would have waited — at least until the SOLiD is well on the market and successfully implemented also in some European labs,” he added, noting that to date, there have been no peer-reviewed studies published for the SOLiD system, though there have been quite a few for Illumina’s and Roche/454’s platforms. “How would you decide [what platform to use] in such a situation?” he asked.
 
’Open Arms’
 
Despite ABI’s expectation that current array users will eventually switch to sequencing, the technology is still too pricey for many researchers. Instead it is likely that in the short term, scientists will adopt other arrays, such as the Affymetrix or Agilent platforms.
 
During a third-quarter earnings call with investors last week, Affy Chairman and CEO Stephen Fodor said that the company would “receive any of [ABI’s] customers with open arms.”
 
“I think there is probably a very, very high likelihood that there is a large overlap already, since we have a large number of scanners throughout the world, that those customers are probably already using Affy arrays in addition to the ABI products,” Fodor said. “Certainly our sales force will be working to address any customer needs and gaps that may exist.”
 
Doug Farrell, Affy’s head of investor relations, added that Affy could benefit from the ABI discontinuation despite ABI’s small user base. “When you look at the breadth of products that we offer all the way, on the gene level ... up to exon and tiling, we certainly are in the best position to capture that business, if in fact it is up and playing now,” he said.

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