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Amid Flat Q4 Array Sales, Agilent Plans New Expression Chips for 2010

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By Justin Petrone

In an effort to expand its share of the gene-expression market, Agilent Technologies will next year launch new expression arrays and kits that offer the ability to run more samples per slide using less input material.

Separately, the Santa Clara, Calif.-based company also reported a 9-percent drop in fourth-quarter revenues for its Bioanalytical segment, including a 7-percent decline in life science receipts, which it attributed to weaker spending by its pharmaceutical and biotechnology clients.

Microarray revenues for the three months ended Oct. 31, the end of Agilent's fiscal year, were "roughly flat" compared to the same period last year, though the firm said it is "well-positioned" in the array market.

Alicia Burt, director of microarray marketing at Agilent, told BioArray News this week that the firm is in the midst of some "very large development projects" involving its array product portfolio, which includes chips for gene expression and microRNA expression profiling, comparative genomic hybridization, target enrichment, DNA-methylation profiling, and chromatin-immunoprecipitation-on-chip experiments.

The first projects to come to fruition will be for customers who currently use its gene-expression arrays, Burt said. Specifically, Agilent expects to debut in January a new Quick Amp labeling kit for gene-expression profiling that will require around half the amount of sample input material compared to the current kit.

Agilent is also preparing to launch its first SurePrint G3 gene-expression arrays by March 2010. Agilent has released three chips this year in its new, million-probe G3 format for surveying copy number variation (see BAN 3/3/2009, BAN 4/7/2009). The new G3 expression arrays will offer users the ability to run eight samples on eight, 60,000-probe arrays per slide, Burt said. Agilent currently offers gene-expression arrays that enable users to run four samples on four arrays of 44,000 probes.

Additionally, Agilent is "refreshing the content" on its whole-genome human, mouse, and rat arrays, using the "latest builds of the genome," Burt said.

Both its new, higher-density gene-expression arrays and lower-input labeling kits could help Agilent take market share from rivals like Affymetrix, Illumina, and Roche NimbleGen. While the overall market for gene-expression arrays has plateaued, Agilent is looking to attract new customers by enhancing the performance of its chips and reducing cost per sample.

"We continue to see growth in gene expression, but the overall market for arrays is not necessarily growing," Burt said. "I would say that right now it's more of a market share game," she said, involving competitors like Affymetrix, Illumina, and Roche.

She acknowledged that the exit of other players like Applied Biosystems and GE Healthcare from the expression microarray market, plus the adoption of commercial platforms by researchers that previously used home-made arrays, has provided Agilent with opportunities to grow its expression business.

According to Burt, the "biggest drivers for expression arrays are content, performance, and price per sample." The new product launches are intended to give the firm's portfolio a boost in these categories. In terms of the low-input Quick Amp labeling kit, sample requirements will be reduced by about half, and there will be a "significant price reduction for the customer," Burt said. Agilent's current Quick Amp kits require 50 nanograms of sample.

Meantime, Agilent has a "major revolution in gene expression arrays underway," Burt said. The company is "refreshing content of the arrays based on the latest builds of the genome for mouse rat and human, using the same probe selection used for previous builds" of its arrays, she said.

The "refreshed content" will be available in the new 8x60K format and the existing 4x44K format, Burt said. Customers that use Agilent's G3 arrays are required to upgrade to the latest version of the firm's DNA Microarray Scanner to scan the higher-density chips. Launched last year, the scanner enables users to to scan array images at up to 2-micron resolution (see BAN 6/10/2008). Customers with older scanners can access the new content via the 4x44K arrays, Burt said.

According to Burt, Agilent's gene-expression customers vary from academics, who are likely to be attracted by the G3 expression chip's refreshed content, to pharma and biotech customers, who are looking for higher-density, multi-sample expression arrays.

"The demand is certainly there. There is pressure for us to deliver the 8x60K arrays," said Burt. She said that Agilent currently has 10 customers who are using the 8x60K arrays in an early-access program.

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A 'Very Difficult Year'

Separately, Agilent last week reported a 9 percent fall in fourth-quarter revenues for its Bioanalytical segment, including a 7 percent drop in life sciences sales.

The slowing sales in Agilent's Bioanalytical segment contributed to an overall 21 percent drop in company-wide Q4 revenues and an 89 percent decline in net income.

For the fourth quarter ended Oct. 31, 2009, Agilent's Bioanalytical group reported revenues of $544 million compared to $594 million for Q4 2008.
Within the Bioanalytical group, Q4 life sciences receipts totaled $256 million, down 7 percent from the year-ago period, with spending by pharma and biotech customers down 8 percent; and sales to academic and government accounts off 4 percent year over year.

Agilent CEO Bill Sullivan said that 2009 was a "very difficult year" for Agilent, but noted there were "some signs of thawing in the worldwide pharma market." He told analysts in an earnings call that Agilent is in a "solid position going into the first quarter of 2010" and is "well positioned in [liquid chromotography] and [mass spectrometry], as well as in sample prep, microarrays, informatics, and lab-automation solutions."

Sullivan added that Agilent "continues to see order momentum in new technologies such as LC/MS and microarrays," and said that there has been "strong demand" for its SureSelect target-enrichment kits for use with second-generation sequencing.

Chief Financial Officer Adrian Dillon said during the call that "microarray revenues were roughly flat to a very strong year-ago period while orders continued to be up double digits compared to last year." Agilent did not provide further details of its microarray business.

According to the firm, weakness in the Bioanalytical segment was most pronounced in the US and Europe, where sales were off 12 percent and 11 percent, respectively, from one year ago; while sales in Asia were generally flat.

Fourth-quarter income from operations for the Bioanalytical group was $109 million, $27 million below last year's results.

In addition, the company said that its planned $1.5 billion acquisition of Varian is now anticipated to close early next year. The company said in July that it had expected the acquisition to close by the end of this calendar year (see BAN 7/28/2009). Agilent did not provide a reason for the delay.

Meantime, revenues for the company's Electronic Measurements group dropped 18 percent to $641 million; while revenues for the Semiconductor and Board Test segment fell 25 percent to $43 million year over year.

Overall, Agilent's Q4 revenues fell 21 percent to $1.17 billion from $1.48 billion year over year; while its net income plummeted 89 percent to $25 million, from $231 million, year over year.

Sullivan said that "while it seems clear that we are past the worst of the global downturn, the pace of recovery is expected to be slow and to vary considerably by market and geography."

He added that the company has taken "restructuring actions to achieve $525 million of annualized savings by mid-2010." Agilent announced in March that it would restructure and downsize its Electronic Measurement businesses, eliminating some 2,700 jobs in the process, although the cuts did not affect the Bioanalytical segment.

Agilent's R&D spending for Q4 fell 12 percent to $150 million from $170 million; while its SG&A expenses increased by 1 percent to $413 million from $408 million in Q4 2008.

As of Oct. 31, Agilent had cash and cash equivalents of $2.48 billion.

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