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Diagnostic Approvals Top List of Microarray Industry s 2004 Events

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The year 2004 was an eventful one for the microarray industry, punctuated by the first European Union and US approvals for a microarray-based diagnostic instrument and test -- pushing the industry one step closer to personalized medicine.

The pursuit of molecular diagnostic applications for microarray technologies picked up steam over the past year, and Affymetrix, the microarray field's dominant player, beat its competitors to the punch with EU and US approvals for its GeneChip System 3000Dx. The US Food and Drug Administration announced the clearance of the instrument -- a modified version of the firm's GeneChip platform for gene expression and genotyping applications -- on Dec. 23, along with approval of Roche's CYP 450 AmpliChip, the first FDA-cleared test to run on the system (see brief, p.8).

The firms, which have a $70 million, 18-year partnership dating back to January 2003, received EU clearance of the GeneChip Dx and CYP450 AmpliChip in early September (see BAN 9/8/2004).

The approvals mark a significant advance for the industry as competitors try to stake a claim in a molecular diagnostics market that is currently valued at roughly $20 billion. It may also be viewed as validation of microarray technologies as the industry continues to grapple with standardization issues.

M&A Activity

While molecular diagnostics is viewed as the key driver of future growth for microarray firms, a handful of acquisitions and mergers took place during the year as key players sought to expand their offerings, bolster their positions in the gene-expression and genotyping spaces, and target future applications for their technologies.

One firm that looms as a potential competitor to Affy in the molecular diagnostics field is Nanogen, the San Diego-based microarray and in vitro diagnostics firm, which recently completed the purchase of Epoch Biosciences for roughly $97 million (see BAN 9/15/2004).

The firms have several complementary products in the molecular diagnostics field. Specifically, Epoch's MGB Eclipse Probe System, including recently launched analyte-specific detection reagents, complement Nanogen's NanoChip molecular biology workstation. Both products are used for analyzing gene expression in vitro, detecting SNPs and other mutations, and identifying infectious organisms.

In addition, Nanogen will soon launch its NanoChip 400, a microarray-based molecular diagnostics platform (see BAN 11/3/2004). The firm has had a difficult time penetrating the clinical diagnostics market and believes that the launch of the NanoChip 400, combined with the acquisition of Epoch Biosciences, will provide it with the ability to make greater inroads.

Agilent, the No. 2 player in the microarray field, has had a busy year in its life sciences unit as it has sought to expand its reach in the systems biology field. One of the keys to this strategy was the late-August purchase of bioinformatics firm Silicon Genetics, the maker of the GeneSpring gene expression data-analysis and -management software.

Other highlights for the year for Agilent included the launches of whole-genome arrays for human, mouse, and Arabidopsis thaliana research applications, and a collaboration announced in June with the Translational Genomics Research Institute. Under that pact, TGen agreed to work with Agilent on benchmarking and optimizing its comparative-genomic hybridization microarrays and data analysis tools (see BAN 6/9/2004).

Meanwhile, Lynx Therapeutics, the cash-strapped provider of the Massively Parallel Signature Sequencing technology, announced a pending merger with privately held UK-based firm Solexa. The firms had initially discussed a possible combination as far back as March 2002, but instead they opted to form a closer relationship in March 2004 through the joint purchase of DNA cluster technology from Swiss firm Manteia in a bankruptcy auction.

They expect the merger to close in the first quarter of 2005. The partners have not settled on a name for the new entity, but they said it would continue to be publicly traded under the "LYNX" ticker symbol on the Nasdaq SmallCap Market.

Although the merger has yet to be consummated, the firms' scientists have been working together on developing its first product based on the DNA cluster technology (see BAN 11/17/2004). The instrument is expected to be launched in late 2005 and have utility in the DNA sequencing and gene-expression fields.

Another major acquisition during the year was Molecular Devices' purchase of the market's leading scanner manufacturer Axon Instruments in a deal valued at approximately $140 million (see BAN 3/24/2004). The purchase followed an announcement in March that Axon would collaborate with Affymetrix to develop a high-throughput instrument to scan GeneChips in multiwell-plate formats, based on Axon's ImageXpress instrument. Affymetrix purchased three of the ImageXpress instruments as part of the deal.

In a move to consolidate its intellectual property position, privately held NimbleGen purchased the assets of Light Biology, a Dallas-based start-up that developed a maskless microarray manufacturing process. That was just one of several key events for NimbleGen in 2004, during which the firm inked a pact to supply Affymetrix with custom NimbleExpress arrays, launched custom services utilizing its ENCODE (Encyclopedia of Complete DNA Elements) array, and raised $12.75 million in a series F private financing announced on Nov. 1 (see BAN 12/1/2004).

Whole-Human-Genome Chips

Start-up Phalanx Biotech Group made waves with an announcement in 2004 that it would offer its whole-human-genome microarrays at an introductory price of $100, significantly lower than the average price of $500-$600 for other firms' whole-human-genome chips (see p.1 for an update on Phalanx). The company's pricing strategy -- designed to bring in academic customers who may not have been able to afford the technology -- is likely to put pressure on some of the established competitors to lower the price of their arrays.

The Taiwan-based firm will be commercializing its arrays after a head start by Affymetrix, Agilent, GE Healthcare, Applied Biosystems, and Telechem. Illumina has plans to introduce its whole-human-genome array next year, and has said that it also may offer its product at a steep discount.

Major Players, Key Launches

In addition to the regulatory clearances, 2004 was a relatively busy year for Affymetrix, as the firm rolled out new arrays for gene expression, made greater penetration in the genotyping market, and ended a long-running legal dispute with Oxford Gene Technology. The firm launched its 10K and 100K mapping arrays and signed several pacts aimed at growing its genotyping business. It also plans to introduce a 500K mapping array set early in 2005.

Affy also addressed a hole in its gene-expression business by inking a deal with NimbleGen Systems in June, under which NimbleGen will manufacture custom array designs to run on Affymetrix's GeneChip platform. That alliance has already yielded its first commercialized products with the October launch of tiling arrays from the ENCODE project (see BAN 10/27/2004).

Affymetrix also concluded a long-running legal battle with OGT in June, agreeing to a $62.5 million buyout of obligations owed to OGT under a 2001 litigation settlement between the firms.

But as one legal battle came to an end, another was launched two months later, with Affy filing suit against Illumina for alleged infringement of six patents. Illumina President and CEO Jay Flatley told BioArray News that he expects the litigation will take a couple of years to resolve, and that he believes it was initiated to "slow down" Illumina's efforts in the gene-expression and genotyping spaces (see BAN 10/6/2004).

In early 2004, Illumina began beta testing two BeadChip products that would enable researchers to interrogate six separate samples against six whole-human-genome probes on one slide. Unlike other gene-expression players who are migrating into the genotyping market, Illumina already has a strong genotyping business and is taking aim at the gene-expression space. The firm plans to soon launch its Sentrix BeadChips for large-scale gene-expression experiments.

Illumina closed out the year signing a major deal with Invitrogen, under which Invitrogen agreed to distribute Illumina's Oligator DNA synthesis technology worldwide. The alliance is expected to expand Illumina's reach in the oligo market and will enable the firm to concentrate on building its array business (see BAN 12/22/2004).

As Affymetrix's share of the microarray market has continued to stay steady at anywhere from 70 percent to 85 percent -- depending on who is providing the estimate -- other major players in the field have made strides to diversify their businesses. In addition to Agilent's push into systems biology, CombiMatrix made a move to expand its drug-discovery operations through a 33-percent equity stake in Leuchemix (see BAN 10/6/2004), and announced a series of grants and an alliance aimed at developing products for the identification of biothreat organisms.

CombiMatrix also signed a co-marketing deal with Axon Instruments, launched its 12K arrays for gene-expression experiments in July, and followed that with a launch late in the year of its Design-on-Demand arrays, a catalog of gene-expression products for more than 1,400 microbial, eukaryotic, and viral genomes (see BAN 12/8/2004).

In addition to launching its whole-human-genome chip in July, Telechem introduced a number of products for the gene-expression market this past year. One of the most notable was a new 10 ֭ scanner priced at $18,500 -- substantially lower than the price of comparable scanners on the market. The firm was one of several manufacturers to launch new scanners this past summer and fall, along with Tecan, Axon, PerkinElmer, and Applied Precision (see BAN 9/22/2004).

Applied Biosystems introduced its new Expression Array system last spring, and followed with whole-genome chips for human, mouse, and rat research. The company also announced a restructuring in July, which divided the firm into four divisions.

Meanwhile, GE Healthcare launched a line of mammalian whole-genome arrays throughout the year, starting with a human genome chip in the spring and followed by releases of its rat and mouse whole-genome arrays. The unit of GE was formed following the April 2004 acquisition of Amersham Biosciences and its CodeLink microarray platform, which had been purchased by Amersham from Motorola in July 2002.

One interesting trend in the microarray field was the decline of a few German competitors. Febit, a Mannheim-based startup whose market entry was eagerly anticipated, went bankrupt and shut down its operations just months after commercializing its first product (see BAN 10/13/2004). Febit had developed the Geniom One microarray machine, which, according to the firm, could synthesize custom oligo arrays, perform experiments, and scan arrays all within the confines of the instrument. The firm had promised to launch the product by the end of 2002, but efforts to work out the bugs delayed the instrument's introduction by a year.

Friz Biochem, which was developing an electrochemical-based method for reading DNA microarrays, also went belly up. Attempts to uncover what happened to the firm's assets and technology were unsuccessful.

Ebersburg-based MWG Biotech said that it was seeking to find buyers for its microarray and lab automation units as it sought to refocus the firm on its core Genomic Synthesis unit, which makes oligonucleotides, and its Genomic Information business, which provides DNA sequencing services (see BAN 10/13/2004). The firm also announced a massive reduction in its staff from 351 to 140 employees.

Standards & Regulations

FDA officials have continued to state that the agency will likely be flexible on microarray standards in the drug-development process. This view was expressed to BioArray News in August (see BAN 8/4/2004), and recently was reiterated by Larry Lesko, chair of the FDA Pharmacogenetics Working Group and the Clinical Pharmacology Section of the Medical Policy Coordinating Committee of CDER (see BAN 12/8/2004).

The issue of standards has hung over the microarray industry for years and has taken on greater significance as use of the technology has moved further downstream in the drug-development process and its use in molecular diagnostics has become a reality.

The National Institute of Standards and Technology recently announced that it would spend $6.25 million on a program to identify and address challenges in gene-expression measurement, validation, and quality control. The institute has been working on microarray and gene-expression standards for at least a couple of years.

-- EW

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