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Canon Shareholders OK Plan to Start Selling Chips; Core Labs Still Skeptical


After years of flirting with the idea, Canon may soon enter the microarray market.

Shareholders of the camera giant last week approved an amendment to the firm's articles of incorporation that will enable Canon to move forward with its plans to produce and commercialize its own line of DNA chips.

The participants of the annual shareholders' meeting in Tokyo added a platform to the company's charter that now allows the "production and sale of pharmaceutical products," under which microarrays are covered as a legitimate part of the firm's business.

"The approval by our shareholders of the amendment of the company's articles of incorporation is important," wrote Canon spokesperson Richard Berger in an e-mail to BioArray News following the shareholders' meeting. "It paves the way for us to commercialize a product in the future."

The move represents a new step forward for the company, which for the past five years has been racking up array-related IP in the US and toying with the idea of entering the market with budget microarrays produced with its Bubble Jet printing technology.

Similar news of Canon's impending entry to the market was heralded in 2003 [see BAN 5/9/2003] as well as in 2001 [see BAN 7/20/2001].

Despite these earlier public gestures, Canon again managed to generate buzz with the shareholders' decision to include biotech as a space for Canon products in the future. However, Canon is remaining mum about its new venture.

Most of the information that Canon was willing to disclose is years old, and the company preferred not to disclose how and when it will officially launch its product, or in fact what kind of product it would be.

"Unfortunately, I am only able to offer you a limited amount of information at this time," Berger told BioArray News last week.

Still, all evidence points to the notion that Canon will have the clinical diagnostics market in mind when it launches a product. The earliest scientific articles published about its technology show that the company has known for at least five years that its chips could be used to diagnose and treat cancer. Because of this thinking, Canon in 2000 had initially printed p53 microarrays. The p53 gene codes for a protein that regulates the cell cycle and functions as a tumor suppressor.

Canon then participated in the DNA Diagnosis System for Clinical Use, a development project sponsored by Japan's New Energy and Industrial Technology Development Organization (NEDO). According to Canon, the company was working with NEDO towards developing a microarray for diagnosing colon cancer.

Berger would not comment on whether Canon was moving to commercialize a product based on the study, and only stated that the NEDO study was finished at the end of March 2004.

Due to its past involvement in developing in vitro diagnostics for NEDO, all arrows seem to be pointing in that direction for Canon's commercial launch. Another known fact is that Canon believes that by printing its chips using its Bubble Jet printing technology, for which it holds IP in the United States, it can shave costs off the traditionally expensive product and potentially grab a chunk of the fiercely competitive Japanese chip market.

The company is counting on its core printing technology to reduce costs. The Bubble Jet technology involves heating bubbles in a tube of liquid and expelling the liquid through nozzles in order to print on a surface.

According to analysts at Japan's Nikkei Business magazine, the Japanese microarray market is expected to double from 10 billion yen ($93.2 million) in 2005 to 20 billion yen by the end of the decade. Frost & Sullivan last year estimated that the global microarray market would grow to $937 million by 2010. Theta Reports in 2002 estimated the global IVD market would grow from $34 billion in 2005 to $42 billion by 2010. No matter how you slice it, it is an enticing marketplace for a large company such as Canon that wishes to diversify its product lines.

Skeptical Labs

If Canon decides to enter the research market as well as the IVD space, it might find some of the environment unwelcoming: While the prospect of cheaper microarrays may make microarray core facilities sit up and take notice, many who run such labs were skeptical in the face of a commercialized platform from Canon.

"I couldn't care less at this point for the near term," said Richard Bookman, the director of the DNA Microarray Facility at the University of Miami.

Bookman said that Canon's success "might be one more supply-side factor driving down prices," but that he doubted the viability of a commercial launch.

"They should talk to Motorola," he quipped. Canon "might learn a few things about tech companies going into biotech. Is there one example of a heavyweight non-life science tech company making money in biotech selling disposables?" Bookman said.

Motorola, a communications provider, developed what is now GE Healthcare's CodeLink bioarray platform before handing it over to Amersham Biosciences in 2002 for $20 million (see BAN 8/2/2002). Amersham was acquired by GE last year (see BAN 4/14/2004).

While some are skeptical about Canon's ability to commercialize the product, others are wary of waiting for a budget microarray.

"We've heard about other ventures that were meant to revolutionize the field but never launched, like Phalanx of Taiwan," said Jim Woodgett, the scientific director of the UHN Microarray Center at the University of Toronto.

A consultant for Phalanx told BioArray News last month that Phalanx' chips would be out this year.

"Just making a good chip is not enough to break into the market at this stage. For Canon to think that they will be able to compete with Affymetrix in the basic research market is somewhat na෥ at this stage in the game," added Shawn Levy, director of the Microarray Shared Resource at Vanderbilt University in Nashville.

While users said they thought Canon's chances of capturing a chunk of the market by waging price-warfare were slim, they were more optimistic about its chances to market a chip for the IVD market.

"The [idea] that they will be using the chips in clinical diagnostics is bold and one that will be interesting to watch," said Levy.

Chris Barker, director of the Genomics Core Lab at the J. David Gladstone Institutes in San Francisco, agreed, saying that while the general microarray market is probably a lost cause because of Affy's dominance - analysts say it owns about 70 percent of the market - clinical diagnostics presents a less challenging front for a product launch.

"There is a very real opportunity here, if they haven't waited too long to jump into the field, and they may have," said Barker. "It depends on exactly how they attempt to implement it. The devil is in the details regarding whether this will be a good or bad move for Canon."

Welcome Competition

Even though prospective Canon customers appear unconvinced of the firm's chances in the marketplace, many still welcome the competition and look forward to the days when the company will follow through on its pledge to produce affordable arrays.

"I think it's potentially a good thing," said Kyle Serikawa, the manager of the Center for Expression Arrays at the University of Washington in Seattle.

"Inkjet technology still seems the like cheapest and most flexible way to produce a lot of tailored arrays quickly. Now that the FDA has approved microarrays for diagnostic work,the need for cheap microarrays is going to grow." (see BAN 1/05/05)

"I actually think its great news," said Francis Barany, a professor of microbiology at the Sanford Weill College of Medicine of Cornell University, and a consultant with Applied Biosystems.

"Competition is always a good thing for a field," he said. "It's going to make everybody work harder to produce higher-quality products as they compete for the marketplace. At the end of the day the basic researcher and the clinicians win."

"I think it's very exciting that a huge company like Canon is entering the field. They make great cameras. If they can use some of that technology, in much the same way that Agilent has been using its HP technology in printing its arrays, this is going to be great," Barany added.

He said that while Motorola serves as an example of a big company that failed to develop a successful microarray product, GE has been more successful with the CodeLink platform, and could equally be seen as an example for Canon.

"The advantage of large companies is that they can afford to burn hundreds of millions of dollars until they get it right. And if this is going to become the multi-billion dollar market that all indicators say that it's going to become, then it's not surprising that the big guys want a piece of the action," Barany said.

— JP

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