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After a Year of Heavy R&D Investments, CMDX Shifts Focus to Sales & Marketing

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Following a year of intense R&D activity, CombiMatrix Molecular Diagnostics is now laying the groundwork to broadly market newly released molecular diagnostics in North America and abroad, according to the firm's new CEO.
 
Mansoor Mohammed, who took over the the position following the departure of Matt Watson last month, told BioArray News this week that the firm is now making “strategic” sales and marketing hires and is considering distribution agreements for its growing portfolio of array-based tests abroad.
 
Among these products is a new version of the company’s Constitutional Genetic Array, launched this week, and the HemeScan test, launched last week, which is an array comparative genomic hybridization assay designed to detect prognostic markers in chronic lymphocytic leukemia.
 
The test, the third for CMDX, is the first of a series of tests that will bear the HemeScan brand; a second HemeScan assay is due in May for an undisclosed condition.
Last year the subsidiary debuted two diagnostics: the Constitutional Genetic Array Test for diagnosing congenital abnormalities and a test for distinguishing benign from malignant melanomas in skin cancer patients.
 
Mohammed wrote in an e-mail this week to BioArray News that CMDX is in a solid position to begin focusing on selling these tests as its R&D group continues to validate new ones.
 
According to Mohammed, CMDX did not want to establish its presence in the market as a one-test shop, and the company decided to wait until it had a comfortable number of tests in its menu before proceeding to commercialization.
 
"We made the strategic decision to complete a more comprehensive test menu before embarking on a truly national sales and marketing initiative," he wrote. "By building this solid foundation prior to a national marketing roll-out, it is our deliberate goal to distinguish ourselves from being a "one-platform/one-test" laboratory.
 
“We have now completed what we believe is a test menu that defines CMDX's unique position in the industry, and we are, in fact, for the first time, actively engaged in recruiting high-caliber sales and marketing personnel to launch our national initiative," he wrote.
 
Mohammed wrote that CMDX expects to hire four “strategically placed” sales representatives in the next two months. He also said the firm is mulling international deals that could make the tests available in foreign markets.
 
CMDX does not sell tests for use in other labs, but it does offer genetics labs access to its diagnostics through its ”tech only program,” in which it receives samples from clients, runs the tests, and provides clinicians with data for their own interpretation. It is through this program that CMDX could arguably serve clients anywhere.
 
"On the international front, we have recently received several requests from very reputable entities for various geographic distribution rights and I am carefully considering these proposals to ensure that we align ourselves with the most appropriate international partners," Mohammed wrote.
 
CMDX’s position and outlook is in contrast to parent CombiMatrix, which was forced recently to cut personnel and investments in its businesses that target the R&D market for array products. The company has taken these steps in an effort to divert resources to its molecular diagnostics business, which it views as the more promising of the two.
 
Last month during a fourth-quarter earnings call, CombiMatrix CEO Amit Kumar said that an inadequate sales and marketing staff hobbled the firm’s ability to gain significant market share in the R&D segment. He said officials at CMDX could avoid these missteps by making strategic investments in sales and marketing.
 
“We have never had the resources to market effectively our products in [the R&D] market, especially against much larger and better financed competitors,” Kumar said. “As a result, our revenues in this market have been modest, and have declined as a part of recent actions taken by the company" (see BAN 2/27/2007).
 
Coupled with the cutbacks in R&D was a considerable growth in R&D expenses, mostly related to funding CMDX. In the fourth quarter of 2006, CombiMatrix spent $2.8 million on R&D, an 87-percent jump in R&D costs compared to the same year prior. For the full year 2006, R&D costs rose 64 percent to $9.5 million.
 
"Our R&D spending at CMDX through 2006 reflected the first stage in the development of our company, that is, generating a robust competency in a diverse but relevant spectrum of diagnostic platforms," Mohammed wrote. "We have now completed this phase in our development. While we will prudently continue with strategic R&D initiatives, there will be a clear and deliberate shift to commercialization and marketing efforts through 2007."
 
More Tests to Follow
 
According to Mohammed, CMDX plans to launch several new tests, with one slated for launch in two months. Mohammed wrote that CMDX Medical Director Shelly Gunn is currently leading final clinical validations on "at least three other relevant hematological malignancy tests."
 

"We have now completed this phase in our development. While we will prudently continue with strategic R&D initiatives, there will be a clear and deliberate shift to commercialization and marketing efforts through 2007."

Mohammed declined to comment on what conditions those tests will target, but Kumar told BioArray News in October that the firm had tests related to bladder, kidney, and prostate cancer in the pipeline (see BAN 10/17/2006).
 
CMDX also last week signed a deal with Toronto's Center for Applied Genomics to include autism markers validated by the center on a future generation of its Constitutional Genetic Array Test.
 
Mohammed wrote this week that CMDX would obtain these markers sometime in the third quarter. The company released an updated version of the CGAT, which was initially launched in the third quarter of 2006, this week (see products).
 
Like the HemeScan CLL test, many of CMDX's future tests are expected to use bacterial artificial chromosome arrays instead of the oligonucleotide arrays sold by parent CMBX.
 
Mohammed explained that the company currently favors BAC arrays in its diagnostics, which are also used in array-based genetic testing by rivals like Signature Genomic Laboratories and Baylor College of Medicine, rather than oligos, which Oxford Gene Technology uses for array CGH-based genetic testing.
 
Mohammed explained that BAC arrays are easier to verify by existing diagnostic technologies, such as fluorescent in situ hybridization, which in turn will give the arrays a more reliable image in the marketplace, he added.
 
"While oligo arrays and qPCR approaches are obviously the two most relevant options for expression-based tests, we strongly feel that BAC arrays are currently the most appropriate array platform for the detection of clinically relevant copy number changes," he wrote. "I think it is critical that as array technologies are incorporated into routine clinical diagnostic practice, the data generated should be amenable to rapid and routine confirmation through existing complementary technologies such as FISH.
 
"Moreover, the sheer data volume generated through oligo arrays, an order or two of magnitude more than BAC arrays, requires complex data normalizing algorithms, which calls into question its feasible integration into routine clinical practice at this time," Mohammed wrote.

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