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Nanogen s NanoChip 400 Menu Could Grow as Fisher Buys Stake in Shop and Acquires Test Maker Athena


The future possibilities for Nanogen's molecular diagnostics business broadened last week when Fisher Scientific spent $15 million to buy a 9-percent stake in the San Diego-based company.

The purchase, which makes Fisher one of Nanogen's lead investors, coincided with Fisher's $283-million acquisition of Athena Diagnostics and a plan by Fisher and Nanogen to develop and sell Athena's tests. Athena, based in Worcester, Mass., makes immunohistochemical and molecular diagnostics for neurological, nephrologic, and endocrine diseases.

In separate statements last week, Fisher and Nanogen said they would "collaborate to expand the use of Athena's proprietary markers and tests." Nanogen CEO Howard Birndorf said the alliance is likely to benefit customers that use his firm's array-based NanoChip 400 System and its line of RT-PCR products.

"With molecular diagnostics, we have two choices right now of how we would introduce products [in collaboration with Fisher]," Birndorf told BioArray News last week. "One would be on the NanoChip 400 — we would probably use that product to add to [the] menu," he said. Birndorf added that it would depend on the actual test. He said other diagnostics could be introduced on its line of RT-PCR assays that it gained through its 2004 acquisition of Epoch Biosciences (see BAN 12/22/2004).

"Fisher has a desire to broaden their horizon in molecular diagnostics [and] we have a tremendous amount of expertise, products, and technology in that area. I think we will be exploring over time with Fisher how to work together to make money."

While Fisher and Nanogen anticipate that their new partnership will result in diagnostics — some of which are in Athena's principal R&D areas — Birndorf declined to speculate on specific tests or indications that may reach the market via its microarray or RT-PCR platforms.

"Athena has number of proprietary markers in the area of endocrinology and neurology and we would look at those to see if there's any way to use markers that Nanogen has in the Athena business or vice versa to expand the market on any given marker," Birndorf explained. But the "Fisher investment is a straight investment right now and we are going to be exploring potential opportunities with Fisher over time," he said.

"Fisher has a desire to broaden its horizon in molecular diagnostics [and] we have a tremendous amount of expertise, products, and technology in that area. I think we will be exploring over time with Fisher how to work together to make money," Birndorf said.

Gia Oei, a spokesperson for Fisher Scientific, said this week that the company views Nanogen's product portfolio as a vehicle for delivering whatever tests come out of Athena. "The investment in Nanogen provides Fisher with not only an even stronger base in molecular diagnostics, but also many of the tools and the instrumentation needed to develop diagnostic tests," Oei told BioArray News.

Oei also offered greater insight to which tests may come through the pipeline in the future. "Athena has a very strong portfolio of patented genetic markers for neurological disorders, such as epilepsy, [Lou Gehrig's disease], and Alzheimer's disease," she said. "The company has a small offering in nephrology and endocrinology, which provides additional growth opportunities," Oei added.

The partnership between Nanogen and Fisher was also fostered by Fisher's former chairman emeritus Frank Jellinek, according to Birndorf. Jellinek, who died in a plane crash in January (see GenomeWeb News 1/25/2006), had also served on Nanogen's board of directors since June 2005 (see BAN 6/22/2005).

The Bottom Line

For Nanogen, Fisher's investment and acquisition of Athena come at an opportune time. The company launched its NanoChip 400 System last October with the clinical market in mind, and Birndorf hinted last week that Fisher's investment has validated its designs for the diagnostics space (see BAN 10/26/2005).

"This is yet another indication that molecular diagnostics for personalized healthcare is gaining momentum ," Birndorf said in a statement. Birndorf told BioArray News that Nanogen is also moving ahead in its plans to submit the NanoChip 400 to the FDA for review by the end of this year.

If the FDA approves the NC 400, it will anchor Nanogen's position as one of the few array companies that are competing in the clinical arena. It will also be symbolic for the firm, which has historically sold its older array-based platform, the NanoChip Molecular Biology Work Station, for research purposes only.

"We are continuing to move forward to file our products with the FDA this year," said Birndorf. "I wouldn't expect an approval [this year] but I would expect that we will file with the FDA this year."

But while the Fisher deal may benefit Nanogen's microarray offering in the long term, the company said last week that it will use the proceeds from the stock sale for "working capital, acquisitions and other general corporate purposes."

The company in April 2004 spent $15 million to acquire Canadian point-of-care diagnostics shop SynX Pharma and bought Epoch Biosciences and its RT-PCR portfolio for $60 million eight months later (see BAN 5/5/2004, BAN 9/15/2004).

More recently, Nanogen last month acquired Spectral Diagnostics' cardiac test business for $7.7 million (see BAN 2/7/2006).

"We have mitigated our risk by not having one product as the make-it-or-break-it product," Birndorf said, referring to the NanoChip 400. He declined to speculate on what kinds of companies Nanogen might be interested in acquiring in the future, but said that the firm will focus on the basics.

"Nanogen will be continuing this year to improve our bottom line. That's our mission — to focus on increasing our revenues and decreasing our loss," he said. "We are continuing with our strategy of building this company into an advanced diagnostics company to focus in the areas of personalized medicine and point of care," Birndorf said.

— Justin Petrone ([email protected])

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