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Kreatech to Grow Product, Sales Efforts to Face Ever-Growing Molecular Cytogenetics Market

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Encouraged by demand from molecular cytogeneticists for its fluorescent in situ hybridization probes and microarray labeling kits, Amsterdam-based Kreatech Diagnostics will add resources to its direct sales channels in Europe and is developing its own microRNA array product line, according to a company official.

Harald Berninger, director of sales and marketing at the Dutch firm, told BioArray News last week that the activities are part of Kreatech's makeover from a biotech specializing in FISH probes and labeling kits, to a molecular diagnostics company with expertise in oncology, hematology, and constitutional disorders.

Kreatech Diagnostics was rebranded from Kreatech Biotechnology in 2007 to take advantage of what Berninger called a "convergence" in the 19-year-old firm's main product lines. The company's core technology is its Universal Linkage System, an enzyme-free labeling method that couples a monofunctional platinum complex to a detectable molecule of choice, such as DNA, RNA, or protein.

Kreatech's current product menu includes ULS labeling kits for comparative genomic hybridization, miRNA, and gene expression, as well as ULS-powered FISHBright labeling kits for FISH applications. Last year, Kreatech introduced its line of Poseidon repeat-free FISH probes, co-developed with Immunicon, now part of Veridex.

Berninger said that because of market trends, both of its core product lines now fall under the umbrella of molecular cytogenetics. "The molecular cytogenetics market is moving towards new methods like arrays, but, in addition, people still want to confirm the data obtained on arrays with a cellular assay using FISH probes," Berninger said. "The markets for our two businesses, FISH and microarray labeling, are converging and we are positioning ourselves in one distinct market, the molecular cytogenetics market."

To better serve that market, Kreatech is now developing a more "complete" product for its customers doing miRNA experiments. The company already offers a ULS labeling kit for miRNA, but Berninger said that the company is interested in selling a kit that contains an array.

"We are trying to see if we can bundle our labeling module with an array that can look at particular questions in a cytogenetic context," Berninger said. He said that the company is now weighing whether the array component of its kit will be internally developed or manufactured by a partner company.

Either way, if Kreatech does introduce an miRNA array kit, it will be entering a market with a number of entrenched players, including Exiqon, Agilent Technologies, Illumina, Invitrogen, Febit, and others. Despite this level of competition, Berninger said Kreatech's entry would be done as part of its efforts to reach molecular cytogeneticists.

"Our offering would focus only on things that address molecular cytogenetics, particularly in oncology," Berninger said. He said that Kreatech already has a "powerful labeling method with a 15-minute labeling procedure and with fewer steps than any other methods" that can "potentially work with miRNA from all organisms," distinguishing it from other products.

"Our labeling method is not dependent on modifications of miRNA. It could potentially expand the reach of miRNA studies into different organisms," he said. Kreatech's miRNA array kit is currently "in transit," Berninger said, as the firm weighs making its own array versus bundling its kit with an external product. Berninger did not provide a launch date for its miRNA array kit.

As part of its efforts to expand its molecular cytogenetics product line, Kreatech has also been working with Salt Lake City-based BioMicro Systems. In 2007, BioMicro began distributing Kreatech's array labeling kits to customers in the US and Canada. Kreatech also began selling and supporting BioMicro's line of MAUI hybridization and wash instruments in the Netherlands, Belgium, Luxembourg, France, Germany, and Switzerland at that time.

BioMicro CEO Mike Feldman told BioArray News in an e-mail last week that the two companies are "collaborating to develop synergies to target the cytogenetics markets with BioMicro's instrument and microfluidics capabilities" and Kreatech's labeling and probe technologies.

"We see that BioMicro's hybridization and washing systems have the potential to also be used in the cytogenetics space, therefore, co-developing new products and specific applications is also on the agenda," Berninger said. He declined to further elaborate.

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Sales Expansion

According to Berninger, around two-thirds of Kreatech's sales last year were attributable to its FISH business, while the remaining third came from the company's ULS microarray labeling kits. Due to increasing demand for both, the company has decided it will add personnel this year to its direct sales channels in France, Germany, Switzerland, Austria, and the Benelux countries.

"In the countries where we are already direct, we are strengthening our forces," said Berninger. "We have reached critical mass with the sales volume so we can add headcount."

Berninger declined to break out precise sales numbers, but said that the firm's FISH business has grown 60 percent last year. He also said the company will make "a few hires" to boost its presence in those countries, but did not elaborate.

"As a small company, we can quickly adjust our structure to certain market needs," Berninger said. "We have a matrix structure; we have an array sales manager who works as a key account manager to guide our sales people to the right targets, set up workshops and give technical seminars," he said.

Kreatech has also signed on distributors in 15 countries over the last year to build up its international presence, "especially in emerging markets," such as India and China, Berninger said. In the US, BioMicro distributes its array labeling kits, while Raritan, NJ-based J&J company Veridex is responsible for marketing its FISH business.

Veridex last August acquired Immunicon, which previously acted as a distributor for Kreatech's FISH kits in the US. Immunicon was also a key investor in Kreatech, and its acquisition therefore gave Veridex a stake in the company. Other investors include Life Sciences Partners, a European venture capital firm with offices in Amsterdam and Munich; Alafi Capital, a Bay Area VC; and Capital-C Ventures, a biotech VC based in the Netherlands.

'One-Stop Shop'

Berninger said that the Kreatech's FISH and labeling kit sales will pay for the expansion of its sales and marketing team, but that its plans to expand into the miRNA array business may require additional investment from its backers. The miRNA array "market has more potential but it requires investment," he said. "We are still VC-funded and would, of course, if a major investment is required, talk to our investors about certain possibilities."

From a strategic vantage point, though, Kreatech sees its two businesses as complementary, and is trying to drive adoption of both product lines. "The array business is currently the smaller part of the business, but we believe it has a particular strategic importance for us as this market converges with molecular cytogenetics," Berninger said.

"In the short term, we can drive revenues with the classical [FISH] side of things," Berninger said. "If we are able to offer a complete solution for arrays and FISH probes, we could become a one-stop shop for molecular cytogenetics," he said. "It will not be that FISH decreases and people use more arrays, it will always be a mix of methods in answering diagnostic questions."

Beyond miRNA, Kreatech is also looking at different ways to boost its array labeling kit business. He said the firm continues to look for deals, such as the partnership with BioMicro, where it sources products for resale in the markets where it is direct. Berninger said that such deals give its array business "more muscle."

Berninger added that Kreatech is also interested in "furthering its relationship" with Agilent. Kreatech currently provides the labeling component of Agilent's array CGH platform and recently added specific labeling kits for use in high-throughput, 96-well experiments.

"We have strong partners and we are also carrying out sales and marketing ourselves because there are customers using other platforms and homebrew methods," Berninger said. "ULS-labeling is independent on the size of DNA," he said. "This is important for formalin-fixed, paraffin-embedded samples, which don't label very well with enzyme-based methods. "With this effect, you can also lower cost in multiplex array experiments," he added. "So, we have several arguments for our technology."

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