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Despite Drop in Q2 Genoptying Revenue, Affymetrix CEO Sees Additional Opportunities

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NEW YORK (GenomeWeb) – Despite a drop in its genoptyping revenue for the second quarter, Affymetrix officials this week pointed to several opportunities that it believes will drive growth in its genetic analysis business.

The Santa Clara, California-based microarray and genetic analysis products firm has diversified its business over the past few years, and late last year completed a strategic plan aimed at restoring revenue growth and profitability. It has in recent years, through acquisitions, new product launches, and alliances, reduced its reliance on gene expression-related revenues while pushing into new markets.

Though its Axiom genotyping arrays and services revenue had been driven in recent quarters by alliances with biobank projects, Affymetrix President and CEO Frank Witney said on a conference call following the release of the firm's second quarter results that he expects genotyping revenues to be lower in the third quarter as a project with the UK Biobank wraps up.

The firm said that Q2 saw the last major tranche of revenues from that project. But with several project extensions and other biobanking projects in the pipeline, Witney said he expects the genotyping business to return to overall growth in the fourth quarter of this year.

In addition, the firm's genotyping project with the China Kadoorie Biobank has received funding to process another batch of samples, Witney said, and the firm signed a deal to genotype a National Institute of Drug Abuse biobank run by RUCDR using the BioRealm Smokescreen array, which is based on Affymetrix's Axiom BioBank array.

And while Affymetrix saw double-digit revenue growth for its Axiom microarray products and services in both the Americas and the Asia-Pacific region in Q2, it was "offset by a tough quarter in Europe," Witney said, noting that genotyping revenues dipped 3 percent to $17.2 million in Q2 2015.

However, "The number of opportunities is increasing," he said. "We can get into discussions we couldn't have two years ago. One of the real benefits of winning the UK Biobank project was it gave us strong credibility in this market. It takes a while to win these projects but we're certainly feeling very good about opportunities ahead of us."

Ag-bio was another area of growth for the firm, where revenues leapt 24 percent over the prior year period to represent 30 percent of total Axiom revenue. The firm expects this growth to continue and be bolstered by the recent acquisition of Eureka Genomics, which makes custom high-throughput genotyping arrays that use next-generation sequencing technology for readout.

Witney said that the acquisition allows the firm to reach a lower price point per assay, giving customers more options to choose from. "Having this technology opens new markets," he said, adding that he expected the market for low-plex ag-bio applications to double, reaching $100 million. "This assay is highly complementary to the Axiom genotyping platform."

Strategy for single-cell biology

Another emerging opportunity for Affymetrix is the single-cell analysis market, and a key part of its strategy for that market is based on the firm's eBioscience business. Affymetrix acquired the flow cytometry firm for $315 million three year ago.

"The focus at [eBioscience] has expanded beyond the traditional markets of academic flow cytometry and immunology applications into a broader approach that includes translational research, immunotherapy, infectious diseases, and single-cell biology," Witney said. He outlined a three-pronged approach to Affymetrix's strategy to grow the business.

The first was to push the core flow cytometry and immunoassay applications, which grew nearly 6 percent, helped by a 20 percent growth in pharmaceuticals business in the quarter. "It's primarily an academic business, so pharma represents an important growth driver," Witney said.

Second, the firm has looked to tap into "megatrends" such as immuno-oncology. "PrimeFlow is benefitting from significant investment in immunotherapy programs and the request for biomarkers to be use in stratifying patients," Witney said, referring to the PrimeFlow RNA Assay, which was launched in December 2014. He said the PrimeFlow product was "very appropriate" for use in immuno-oncology and that the opportunities for the firm were "very large."

The last part of the strategy was to combine genomics and proteomics. Witney noted that the PrimeFlow RNA Assay measures both RNA and protein, and that the firm launched the new WT Pico Target Prep Kit out of its Expression business that allows researchers to do transcriptome mapping with small numbers of cells or even map at the single-cell level using the Fluidigm C1 platform. "What people want to do is genomics and proteomics at single cell level particularly in tumor heterogeneity," he said.

For a recap of Affymetrix's second quarter financial results, see this article published earlier on GenomeWeb.

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