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Roswell Park Sees ROI for BAC Libraries In Licensing Deal with BlueGnome, Others

Roswell Park Cancer Institute, which developed a series of bacterial artificial chromosome libraries that played a key role in sequencing the human genome, now hopes to realize a financial return on its research investment in order to fund ongoing cancer-related research at the institute.
Thanks to a licensing deal for its BAC-11 library with UK-based BlueGnome, which uses the library to produce its CytoChip diagnostic microarray, RPCI is well on its way to fulfilling that goal: Last month the institute reported that quarterly royalty payments from BlueGnome have doubled for the fourth consecutive quarter, and according to BlueGnome, it expects sales of CytoChip as a diagnostic tool to continue increasing.
RPCI did not disclose the monetary value of the royalty payments from BlueGnome.
In addition, RPCI said that it has non-exclusively licensed its BAC-11 library to other undisclosed entities that are using it for either research and development or diagnostic applications, and that it is in negotiations with several additional companies regarding additional licensing opportunities for the library.
The human BAC-11 library was constructed in the laboratory of Pieter de Jong at RPCI in the late 1980s and early 1990s. Comprising approximately 600,000 clones, the BAC-11 library featured prominently in the Human Genome Project both as a means to create a physical map based on overlapping of the physical clones and as a tool to validate the final sequence map.
In addition, the library has been widely distributed for free in the academic community as a genetic research tool. More recently, the library has caught the interest of several commercial entities, including BlueGnome, as the field of cytogenetics has developed.
“Because it’s such a clean library, and so accurate and complete, it was actually central to the human genome sequencing effort,” Richard Matner, director of technology transfer at RPCI, told BTW last week. “There has been a lot of effort put into [the library] over the years from RPCI, so it makes perfect sense from a fiduciary responsibility perspective to maximize the return that can come into our organization to fuel further research in the cancer prevention and treatment areas.”
BlueGnome, a 2001 spin-out of the University of Cambridge, licensed the BAC-11 library last year from RPCI as part of its transformation from a microarray data analysis firm to a full-fledged specialty microarray product and service provider.
Under the terms of the agreement, RPCI has licensed the BAC-11 library for the production of its flagship product, CytoChip, a diagnostic microarray that it envisions being used to investigate the genetic basis of conditions ranging from mental retardation to leukemia.
CytoChip uses array comparative genomic hybridization to compare labeled DNA from a patient to a reference sample from healthy individuals. According to Graham Snudden, founder, director, and vice president of engineering for BlueGnome, the company decided to pursue the RPCI BAC-11 because it was the most widely used tool in academia for determining copy number and balance in a wide variety of applications.
“There are many reasons for that, but basically the BACs … are about 100,000 to 200,000 base pairs long,” Snudden said. “They’re at a size where you get a very faithful hybridization against the target sequence, because they’re very long; and you get a lot of dye binding to them for a nice bright signal, but they’re also small enough so that you can screen at the right resolution for the sorts of changes that are believed to belie presentations like mental retardation.”
According to Matner and Snudden, the BAC-11 library on which CytoChip is based is not patented; rather, it is physical material owned by RPCI and thus was subject to a material transfer agreement.
“Those libraries were developed in an earlier age when places like Roswell would not have patented them,” Matner said. “I worked for 3M for 21 years, and one of the biggest products we invented when I was there, we didn’t patent. There were either trade secrets, or you had manufacturing efficiencies. Patents are just one way to protect.”
Snudden said that RPCI is reaping the benefits of the hard work that was involved in the creation of the libraries — namely breaking genomic sequences into thousands of pieces, replicating them in Escherichia coli, isolating the sequences, and assembling the library.
“They didn’t do anything novel or unusual,” Snudden said. “Anybody else could have done it, but they did it first, and as a result their library became a standard. They made it free to the academic community, but when commercial entities began taking an interest in the library, they required those entities to pay a licensing fee.”
Continued Growth Expected
RPCI reported last month that royalty payments for the BAC-11 library from BlueGnome have doubled for the fourth consecutive quarter beginning with the second quarter of 2006, when BlueGnome introduced CytoChip. Both RPCI and BlueGnome declined to disclose the amount of the initial licensing fee or royalty percentage, but Snudden said that the increase in royalty payments is directly related to product sales.
“Our technology has experienced very rapid uptake in the clinical sector,” he said. “We’ve got several customers that we’ve brought online in the last year, and we’ve gone from doing zero patients to something like 10 patients a week.”
Snudden added that the CytoChip test is marketed as an alternative or supporting test to current methods, which include karyotyping and fluorescence in situ hybridization, both of which are “manual inspection techniques with minimal resolution.”
Snudden also said that BlueGnome currently sells CytoChip in Europe as a clinical diagnostic tool primarily for the post-natal detection of mental retardation and constitutional genetics. BlueGnome is also in the process of seeking CE Marking for the product as a general-purpose IVD in Europe, although it doesn’t require it, Snudden said.

“The BAC libraries are extremely valuable, and we take our time making decisions about who we’re going to license these to.”

In terms of the financial return for RPCI, the BAC-11 library doesn’t rank as one of the biggest deals for the institute – that would be the prostate-specific antigen test, which was developed at the institute and for which Matner said it is most well-known. Matner did not disclose the monetary value of RPCI’s annual royalties from the PSA test.
But the BAC-11 could eventually provide a substantial ROI for RPCI. Firstly, BlueGnome intends to begin selling CytoChip in the US where, according to Snudden, the Food and Drug Administration has indicated that the product doesn’t require pre-market approval for its current indication of post-natal testing.
Furthermore, according to BlueGnome, approximately two percent of the world population is afflicted with some form of mental retardation, and more exhibit dysmorphic features. In developed countries, these result in approximately 3,000 karyotype tests per year per one million people, which translates to 3 million to 5 million karyotypes per year worldwide.
The cost of a karyotype varies, Snudden said, but using an assumption of $200 per test, it represents a $600 million to $1 billion market.
“In Europe, our largest laboratories are now running an array-CGH investigation together with a karyotype for every patient coming into the clinic,” Snudden said, adding that BlueGnome expects the trend to continue because of array-CGH’s greater resolution, automation, and turn-around time.
“At the moment, if you’re presenting with genetically based mental retardation, probably about four percent of patients have some sort of diagnosis on the basis of FISH and karyotyping,” Snudden said. “With arrays, you can get that up to about 25 percent. So you go from about four percent of your patients walking away with a diagnosis to one in four, and that’s really what’s driving this.”
BlueGnome also hopes to eventually market CytoChip as a tool for diagnosing cancer, and in particular leukemia, for which it would need regulatory approval. This would not only increase the potential royalty kickback to Roswell, but would dovetail with the institute’s mission of providing research and services for cancer diagnosis and treatment. This market, however, is farther down the road, Snudden said.
“I wouldn’t say that’s where we have our eye,” he said. “It’s just that’s what people are doing, as is pre-natal testing, but we don’t have products in any of those areas.
More Licensees in the Wings?
RPCI’s Matner said that the institute has non-exclusively licensed the BAC-11 library to several other companies that are using it for research and development purposes or are pursuing diagnostic avenues, and it is currently in negotiations with several other companies.
He declined to identify the companies to avoid jeopardizing negotiations, but he said that the institute will likely be announcing some deals for the BAC library in the coming months. In addition, RPCI recently spun out a company called PersonaDx, which is developing an assay for Coignet-Factor to help predict the risk of distant metastasis for patients with solid tumor cancers, and has taken a license from RPCI “that peripherally involves the BAC library,” Matner said.
Matner said that the relative ease of a licensing deal has a lot to do with the licensing company. “The BAC libraries are extremely valuable, and we take our time making decisions about who we’re going to license these to,” he said. “It’s a big deal. You read about these licenses, and sometimes they’re huge and there are multiple lawyers involved. And often you just read about failures. But if you choose the right partner, that becomes irrelevant, and you just move forward, and that was the case here.”

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