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Genetic Analysis Remains Strength for Affymetrix, While Gene Expression Business Downtrend Stabilizes


NEW YORK (GenomeWeb) – With its gene expression business continuing to slow down, Affymetrix's genetic analysis business was the main growth driver for the company in 2014, company officials said on Wednesday. 

On Wednesday, the firm reported a slight improvement in total revenues for the fourth quarter, while full-year revenues were up 6 percent year over year. While Affy did not provide details about the growth in genetic analysis for the fourth quarter, President and CEO Frank Witney said on a conference call that year over year, that business was up 40 percent for full-year 2014. 

The genetic analysis business has been a fast grower for Affy for several quarters and has taken particular importance for the firm, while its legacy gene expression business continues to stall. In 2014, gene expression revenues were down 15 percent and its share of total revenues slid to 21 percent from 26 percent in 2013. 

Affy CFO Gavin Wood added on the call that gene analysis is anticipated to grow in the mid-teens in 2015 year over year, while gene expression is projected to fall 10 percent. 

Within genetic analysis, genotyping saw especially sharp growth, 47 percent for full-year 2014, driven by several biobanking deals forged by Affy, including the UK Biobank project, the US Department of Veterans Affairs' Million Veteran Program, and the China Kadoorie Biobank project, Witney said. 

He also noted a deal reached in November with Toshiba and Tohoku University for use of Affy's Axiom platform to develop a microarray specifically for the Japanese population. Toshiba launched the service in December with plans to conduct population genotyping studies in Japan.

"We're in active discussions on several new biobank projects and our pipeline of opportunities looks strong for 2015," Witney said. 

Further, now that Affy is in the third phase of its strategic plan to restore growth at the company, it intends to look for tuck-in acquisitions targeting the genotyping, as well as translational single-cell markets, he said. 

Ag-bio also proved to be a strong segment for Affy throughout 2014. Helped by the launch of the Axiom-384HT product in 2013, ag-bio grew from a "very modest level" at the start of 2014 to more than 25 percent of the quarterly genotyping revenue by year's end, said Witney. 

"We believe that this is very early days for ag-bio genetics, and this will be a very important growth driver for us for years to come," he said on the call. 

In the clinical segment within the genetic analysis business, cytogenetics — the second-largest part of genetic analysis — grew 28 percent year over year for Q4 2014, and 22 percent for full-year 2014. Witney said that the market transition to the CytoScan Dx chromosomal microarray analysis test is "progressing well," though its penetration into the European and Asian market remains relatively low, and, "Looking ahead, geographic expansion is the number one priority in our clinical business." 

In October Affy signed an agreement to supply arrays and instruments to Ariosa Diagnostics for use in that firm's Harmony non-invasive prenatal test. Subsequent to the deal, Ariosa was acquired by Roche. Witney said that little has changed resulting from the acquisition and "our project is proceeding forward just as it [did] all along. We're in the process of developing instrumentation that will allow the decentralization, if you will, of the Harmony test, and it's business as usual for us." 

Lastly, he called attention to the Powered by Affymetrix program, saying that the company has more than a dozen partners, including Veracyte and GenomeDx, that are actively marketing or developing products through the program and driving strong sales growth. 

Gene expression leveling off 

In the gene expression business, revenues were down 24 percent in Q4 2014 year over year to $19.5 million from $25.6 million. Witney said that the decline was partly due to a tough comparison in the year-ago figure, and noted that in Q4 2013 Affy ran a "very successful" promotion for the Affy Human Transcriptome Array, "which drove the year-over-year" change. He added that in spite of the drop-off, the business continues to stabilize, evidenced by the fact that gene expression revenues for all four quarters of 2014 were approximately the same.

"It's been a while since that's been the case," he said, adding that Affy sees "lots of applications" in validation work that would use its gene expression products in 2015.  

Lastly, Affy COO Andrew Last provided an update on the company's development of a next-generation cartridge array-based system. The company is eyeing the clinical market for the platform, which would improve workflow efficiencies and reduce labor costs, compared to current platforms. The firm has not disclosed the specific timing of a launch but Last said "it's definitely not 2015."

For a detailed report on Affymetrix's Q4 financials, please see this article.