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Affy Targets Q4 Launch for D-MET Panel, Rules Out Next-Gen Sequencer Acquisition

Affymetrix will begin offering its long-delayed Drug Metabolism Enzyme and Transporter panel, known as D-MET, as a service in the fourth quarter and will make the assay more broadly available to customers as a catalog product next year, according to a company official.
John Batty, Affy’s chief financial officer, told investors at the Bear Sterns Healthcare Conference in New York this week that D-MET, which has been in development since at least 2005, will become available by year end and will target pharmaceutical companies that would like to screen compounds for potential adverse events.
“The D-MET panel will be available as a service in the fourth quarter of this year and there will be broader renditions available in 2008,” Batty said. “It provides comprehensive coverage for all biomarkers known to impact drug metabolism. This is a tool that is designed for decision making in clinical trials.”
The Q4 roll-out is the latest in a series of market delays that have plagued the D-MET product. The panel was originally developed by ParAllele Bioscience and Eli Lilly and scheduled to become commercially available in the third quarter of 2005. However, after Affy acquired ParAllele that year, the project was backburnered until this year as the GeneChip vendor focused on launching a series of arrays for whole-genome genotyping.
Last month, Doug Farrell, Affy’s head of investor relations, told investors at Leerink Swan’s Life Sciences Tools Roundtable Conference in New York that the firm had renewed its focus on launching ParAllele’s molecular inversion probe, or MIP, technology, which underlies the D-MET panel, but the company did not provide a specific timeline for launching the assay (see BAN 8/14/2007).
Now, according to Batty, the firm is ready to engage pharma about D-MET, which Affy sees as a major cost saver for the industry. “Over 2.2 million Americans suffer adverse drug effects per year [and] there are over 100,000 unintentional [drug-related] deaths per year,” Batty said. “The industry is spending over $4 billion annually to treat these adverse drug reactions [and] 20 percent of all drugs are known to have serious side effects at the time of their approval.”
Batty said that Affy’s customers “need better and they need good drug studies, not just more drug studies.” He said that so far Lilly and Roche — with whom Affy has a separate diagnostic-development partnership — have discussed integrating the D-MET panel into their preclinical screening processes.
“We know from working with Roche that they are considering implementing this technology into their preclinical trial processes,” said Batty. At Thomas Weisel Partners Healthcare Conference in Boston last week, Batty said that Lilly too ”is now incorporating this product into the registration products for new drugs.”
This market for D-MET differs from the intended market for the AmpliChip CYP450 test Roche and Affy launched in 2005 in that D-MET will be used more in compound screening while AmpliChip is a diagnostic designed to help physicians fine-tune dosing decisions for many widely prescribed drugs.
Sequencing Still ‘Early Days’
In Boston, Batty also took the opportunity to dispel what appears to be a perception among the investment community that next-generation sequencing, and, more specifically, “digital gene expression” as sold by rival Illumina using Solexa sequencing, could pose a threat to analog array companies like Affymetrix.
Illumina — which also sells arrays for genotyping and gene expression — acquired Solexa earlier this year (see BAN 1/30/2007), and since that time, Affy has repeatedly told investors that it views the next-gen sequencing market as too immature to warrant any significant investment.
Meantime, Illumina recently launched two digital gene-expression applications on the sequencer, dubbed the Genome Analyzer, and declared at two investment conferences this spring that over time, sequencing technology could render traditional array-based gene expression obsolete (see BAN 6/19/2007, BAN 6/5/2007).

“There is a perception I think in the financial community that sequencing is a competitive technology; in our mind, it is quite complementary.”

However, Batty claims that next-generation sequencing technologies will actually complement Affy’s arrays rather than make them obsolete. “Some of you may have heard that digital expression or sequencing represents a threat to microarray technology,” he said. “From our perspective it is a technology that is actually quite complementary. If you think about all of the SNPs that are going to come out of this sequencing activity, think about how Affymetrix is going to take those SNPs and put them on arrays on a more cost-effective basis in order to pursue the science in the applications that we see in routine use.”
Doug Farrell, Affy’s head of investor relations, also fielded questions about Affy’s interest in sequencing at Bear Sterns this week, calling the segment„”one of the most misunderstood areas in the investment community. The products that we sell all have content generated with [sequencing] technologies,” he said.
At both Thomas Weisel and Bear Sterns, Farrell said Affy does not think it is the right time for the firm to follow Illumina and pick up a sequencing platform because next-gen tools are still too immature, too expensive, and too far from the clinical market to attract any investment by Affy.
“It’s clearly the early days of that market. [Imagine] if you had gone out in the first four years of gene expression and tried to acquire an asset to compete with Affymetrix,” Farrell said at Thomas Weisel, where he was again asked about sequencing. “Well, those companies are largely gone. There is a perception I think in the financial community that sequencing is a competitive technology; in our mind, it is quite complementary,” he said.
Farrell said that it made more sense for Affy to take the information generated by the sequencing community and then repackage it in a more affordable array format, rather than sell a sequencer itself.
“Many of these sequencing technologies are running at roughly $100,000 per experiment,” he pointed out at Bear Sterns. “We are able to put that on a chip for a $400 to $500 experiment; it’s a very value-driven proposition for the customer.”

“We think that [sequencing] actually will be a discovery tool. The throughput, the cost, makes it very unlikely it will be used in the clinical arena, which is where our business is headed for the most part,” said

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