CombiMatrix ended a busy second quarter last week with a new diagnostic partner and $2.9 million extra in the bank.
The company announced that it will co-develop a point-of-care diagnostic with Swiss semiconductor giant ST Microelectronics. Separately, CombiMatrix said it closed a direct stock offering for $2.9 million.
CombiMatrix said it will also launch its Benchtop custom array synthesizer for research use by the end of this year, and that it is on track to deliver a pathogen-detecting chip paid for by contracts with the US Department of Defense by 2006.
Combi's new partner ST will be picking up the tab for its most recent collaboration.
According to Stefano LoPriore, the business development manager of the Swiss semiconductor giant's microfluidics division, ST was interested in partnering with CombiMatrix because of its use of electrochemical detection to read array results.
ST already has a microarray prototype that it has made available to MobiDiag, a Finnish diagnostics company launching a series of array-based tests for sepsis, but that platform uses an optical reader.
LoPriore told BioArray News last week that ST plans to move its semiconductor technologies into the point-of-care diagnostics space, and that "one of the technologies that may be an enabler for this is electrochemical detection."
"We buy the chip from the semiconductor [manufacturer] for a very low price, we put a little biology on it DNA in our case and we sell it for 10 to 20 times the price of the chip and it gets used once and thrown away, so the customer has to buy another one."
"What ST has developed is an approach to doing the sample preparation and amplification with their lab-on-chip system, and what we are going to put together with that is the microarray application which does detection," explained CombiMatrix CEO Amit Kumar.
According to a statement from ST, the company is looking to integrate Combi's technology with its In Check lab-on-chip, a system that uses PCR for DNA amplification on a custom microarray printed on a silicon substrate.
ST's current platform uses optical detection, which LoPriore said would not be adequate for bed-side testing due to the larger size of its scanning and analysis equipment. CombiMatrix's technology would allow ST to make its chip available at the point of care, LoPriore said.
Rob Hodges, product development manager at ST, said last week that the firm has "had a relationship" with CombiMatrix "for some time," but declined to elaborate.
ST and CombiMatrix seem to have a general idea of where their research might lead, however.
"A lot of the areas that point-of-care diagnostics will address are things like cancers, things like infectious diseases that are hard to be diagnosed, and need to be diagnosed away from a central laboratory," explained Kumar.
LoPriore also mentioned infectious diseases, but said that the collaboration was not bound by any particular application.
"At the moment we are doing activities on the infectious diseases applications; [but] in principle there's no reason why we should be limited to this," LoPriore said.
Hodges told BioArray News that ST's microarray R&D teams, which are based in Milan and Catania, Italy, would be working with scientists at CombiMatrix.
Kumar said that the "initial plan is to evaluate the feasibility of putting these two things together, and, if that's successful, [we'll] go forward and start thinking about real commercialization opportunities."
According to LoPriore, ST is completely subsidizing the preliminary collaboration and whatever emerges will be ST's to sell and distribute.
"It will be an ST product. For the preliminary evaluation we are picking up the cost," LoPriore said.
'Interested in This Kind of Technology'
ST Microelectronics first started to make public gestures that it had an eye on the array-based molecular diagnostics market two years ago, but the company only recently resurfaced with the silicon-based platform that it is supplying to MobiDiag, and now its partnership with CombiMatrix.
Coincidentally, ST's moves come at a time when Siemens, another large European semiconductor company, is making similar overtures towards the array market.
Early last month, Munich-based Siemens purchased the entire biochip portfolio from Infineon, itself a Siemens spin-off, for an undisclosed sum in an effort to marry its semiconductor business with the emerging market for biochips.
According to Mohammad Naraghi, senior vice president of business development at Siemens, the purchase of Infineon's biochip assets was part of his company's "effort to develop biochips for diagnostics."
"We have had activities to develop biochips for a couple of years now," Naraghi said. "This [acquisition] has enriched our IP and assets in this field."
CombiMatrix's Amit Kumar said that his company has had "many discussions with semiconductor companies" including Intel, but said he could not provide further details.
He said that "semiconductor companies are interested in this kind of technology" because of the potential for large returns on their investments.
"What the semiconductor companies are seeing," Kumar explained, "are opportunities to sell into this market products based on their manufacturing infrastructure that have high margins and are growing very fast, and, because of the reuse issue, it's a continual stream of products that they keep selling into that market," he said.
"In our case, we buy the chip from the semiconductor [manufacturer] for a very low price, we put a little biology on it DNA in our case and we sell it for 10 to 20 times the price of the chip and it gets used once and thrown away, so the customer has to buy another one," Kumar added.
Strengthening the Balance Sheet
In the midst of putting the partnership together with ST, Acacia, CombiMatrix's parent company, raised $2.9 million by selling 1,300,444 shares at $2.25 per share through a registered direct offering to a small group of institutional investors that Kumar said have "expressed interest in the molecular diagnostics space."
Kumar said the money from the offering would fund the molecular diagnostics subsidiary CombiMatrix launched in May, which will be run by a nucleus of ex-US Labs officials.
Kumar would not name the investors, who "choose to remain anonymous," but said that they were impressed by the rise in value of Affymetrix's stock, which has increased by roughly 70 percent over the past year. Shares of Affy were trading at $55.32 as of noon on Monday, up 67.6 percent from $31.22, its closing price on July 6, 2004.
"Affymetrix has been doing well in terms of their stock performance, so I think a lot of interest is moving into this sector," Kumar said.
He added that his "company is growing" and that CombiMatrix will probably hire more employees in the coming year, mostly to fill sales and marketing positions.
Justin Petrone ([email protected])