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The Year 2003 in Review: Microarray Industry Cashes in While Reaching a Inflection Point

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When Affymetrix reports its fourth-quarter financial results a few weeks from now, the whole microarray industry should give itself a round of applause for a record year, financially speaking.

Affymetrix, the industry leader, is expected to report around $280 million in revenues for the year to round out an estimated $800 million in revenues for the industry in 2003, the biggest year yet for a technology not yet 10 years on the commercial market.

But as the applause recedes, there is no need to break out the victory cigars yet: As much as the industry did to overcome the economic squeeze of 2002, last year clearly highlighted the limitations that microarray technology must overcome if it is to reach the $3.6 billion target predicted by Front Line Strategic Consulting in a report published in 2001.

Back then, the growing microarray market attracted deep-pocketed newcomers like Motorola, Corning, and Agilent Technologies to do battle with the somewhat established manufacturing concerns —Affymetrix, Incyte Genomics, and Hyseq. Today, only Affymetrix and Agilent survive as array players, enjoying the No. 1 and No. 2 positions, respectively, in the pre-printed array manufacturing business, the top tier of the market. For Agilent arrays, 2003 was a year to celebrate growth, with profitability, however, still to come (see BAN 11/26/2003).

The future of the Motorola CodeLink line of bioarrays, sold to Amersham in 2002 for $20 million, is in question pending the completion of the $9 billion acquisition of Amersham by General Electric. CodeLink is considered the No. 3 player in the industry’s top-tier companies (see BAN 11/12/2003).

Enter the FDA

The US Food and Drug Administration, without question, brought a cup of black coffee to the party, demanding hard scientific facts, standard practices and protocols, and reproducibility, if microarrays are to cross over from a well-accepted laboratory research tool to an omnipresent disposable tool in every clinical setting across the world – the molecular diagnostics market, which analysts measure at $20 billion a year. This metaphorical Emerald City shines in the distance as the next market for the technology to territorialize. And certainly, with Affymetrix claiming that “tens of thousands of scientists use its platform,” it appears that the research market is nearing saturation point and growth must come from other applications of the technology. But the FDA signaled this year that the yellow brick road from research applications to diagnostics will be longer and more treacherous than some expected.

There was no bigger story in the microarray industry this year than the introduction of Roche Molecular Diagnostics AmpliChip microarray. In January, Affymetrix announced a $70 million, 18-year technology licensing deal with Roche where it would manufacture arrays that Roche would design and sell. (See BAN 2/07/2003). In June, Roche rolled out the first array from this collaboration, the AmpliChip CYP450. In July, BioArray News first reported the FDA’s response – a letter asking the company’s general manager to come to the agency to discuss the marketing of this array as an analyte specific reagent. Roche and others in the molecular diagnostics industry collaborated in an attempt to suggest a new regulatory niche that microarrays could occupy – an in vitro diagnostic test – but that effort, too, was shot down, and by the end of the year, Roche backed off its marketing effort and, as it said it had always planned, said it would seek regulatory approval for the device as an in vitro diagnostic device (see BAN 11/5/2003).

But that’s not the end of the FDA’s ongoing efforts with microarrays, which include collaborating with industry to create standards, methods for data collection and analysis, and the creation of guidance documents for many processes. At the end of 2003, there is no FDA-approved microarray-based diagnostic test (see BAN 11/19/2003).

The Single-Most Important Technical Milestone?

Shortly after the release of the “final” sequence of the human genome in April, the top guns of the microarray industry, and a second-tier player, NimbleGen Systems of Madison, Wis., entered into a competition to be the first company to create, produce, and commercially sell, a single microarray chip containing probes for the entire human genome (see BAN 10/8/2003). Affymetrix and Agilent all went into the New Year with single whole-human-genome arrays in customer beta tests, but not yet commercialized to the point where one can make a call, or click on a website, to have the product delivered.

Applied Biosystems threw its hat into the microarray arena with a press release issued in July announcing an entirely new system for microarray-based gene-expression analysis, and a single whole-human-genome chip, to be available before the end of the year. The Foster City, Calif., giant of the human genome sequencing world didn’t meet its end-of-year target date, but said it expected to launch its product in January. The company presented details of the product line at Chips to Hits (see BAN 11/5/2003).

Others Coming

ABI won’t be alone when it enters the commercial microarray arena sometime early in the year. In 2003, some of the giants of industry – Mitsubishi, Hitachi, Canon, STMicroelectronics – nodded their heads at this industry as did newly formed entities such as the Phalanx Biotech Group, a Taiwan company created to attempt to reproduce in microarrays the island’s success in semiconductor manufacturing.

Indicative Trend

Perhaps the biggest trend coming out of the microarray industry was the creation of a tier of services providers and the rise of the Research Triangle area of North Carolina as perhaps the microarray-services center of the US, with no less than three companies – Paradigm Genetics, Expression Analysis, an Affymetrix-platform based services provider, and ArrayXpress, a startup company (see BAN 4/18/2003) – offering samples-to-data analysis services, alongside of microarray core facilities at Duke, the University of North Carolina, NC State, North Carolina Central University, and Wake Forest University. Paradigm upped the ante in October (see BAN 10/22/2003) when it announced that it would add Affymetrix-platform analysis to its existing Agilent array services.

But the Research Triangle is not alone in services. In Memphis, startup Genome Explorations brought in $1 million in revenues in its first year (see BAN 2/14/2003). In Chicago, former CodeLink executive Scott Magnuson incorporated GenUs Biosystems to provide gene-expression analysis services on the CodeLink platform (see BAN 9/2/2003).

All of this might spell transition for the many home-brew microarray core facilities that constitute the majority of the research market. The mass-produced microarrays are getting less expensive, and are of high quality, undercutting the advantages of the so-called home brew technology.

The Science

Joe DeRisi and Margaret Cam provided two of the scientific highlights of the year. DeRisi, an assistant professor of biochemistry and biophysics at the University of California, San Francisco, and a microarray pioneer who earned his PhD at Stanford in the lab of Patrick Brown, was at the cutting edge of the scientific sleuthing of the SARS epidemic, producing a home-brew oligo-based microarray that identified a virus of the coronavirus family in samples from patients infected with SARS sent from the Atlanta-based CDC (see BAN 4/4/2003).

Cam, director of the microarray core facility at the National Institute of Diabetes and Digestive and Kidney Disorders, co-authored a paper published in the October edition of Nucleic Acids Research that compared cDNA-based microarrays from the big three manufacturers and found “there was very little overlap in the types of data in terms of differential gene expression.” She begged the industry to create standardization so that scientists could more easily get reliable data from experiments (see BAN 10/1/2003).

Meanwhile, microarray scientists as a whole hummed this mantra: “Less is more.” (see BAN 10/8/2003).

Cooperation between public consortia and private providers also came to a head, as these groups shared sequences and produced custom arrays such as Affymetrix’s Barley1 gene (see BAN 7/9/2003) and Agilent’s rice chip (see BAN 11/12/2003).

The Courts

In 2003, Affymetrix only filed four lawsuits after filing nearly 40 lawsuits between 1997 and 2001. Oxford Gene Technology instead took up that role, a year ago filing patent infringement suits against a wide array of companies (see BAN 1/3/2003). By the end of the year, four of those served had settled.

The Technology

2003 will be noted for the coming of the on-chip hybridization chamber and microarrays in a well, as well as a NASA-based technology that amplifies the signal from a microarray image (see BAN 12/17/2003 ). This was the year that Affymetrix introduced its own scanner (see BAN 1/10/2003 ), as well as a new array format only readable on this scanner, setting its customers on an expensive upgrade course. Meantime, Agilent produced arrays with bald spots built in (see BAN 5/2/2003), allowing customers to choose their own probes for those areas.

The Supporting Players

Clearly not all of the players, but some of the industry’s supporting cast to merit mention in BioArray News in 2003, included: Nanogen, CombiMatrix, Tm Bioscience, Graffinity, Sequenom, Lynx Therapeutics, MWG Biotech, Illumina, Axaron, Eppendorf, Schott Nexterion, PamGene, GenoSpectra, Xeotron, Biolog, TeleChem Arrayit, Enzo, Axon Instruments, Accelr8 Technology, Mergen, PerkinElmer, Febit, Qiagen, NuGen, Linden Bioscience, Zyomyx, BioMicro Systems, GeneXP Biosciences, Schleicher & Schuell BioScience, BioForce Nanosciences, Infineon, MetriGenix, Evident Technologies, Genicon Sciences, Molecular Staging, ChondroGene, NanoInk, Space Hardware Optimization Technology, Luminex. Takara Bio, Nanosphere, and Randox.

To the Extreme

Where is Alison Elizabeth Murray (see BAN 1/31/2003 )? An assistant research professor at the Desert Research Institute, near Reno, Nev., Murray is doing gene-expression analysis research in the Antarctic and at the depths of the oceans, as well in the Tuscan countryside. As the year ended, she was onboard the 274-foot research vessel Atlantic on a 23-day research expedition to study hydrothermal vents on the Pacific Ocean floor, likely carrying with her an Axon Instruments scanner on the open seas. Last year, she visited the Antarctic.

— MOK

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