Amersham Biosciences has formally put its hat into the $100 million molecular diagnostics ring as its strategic focus for the CodeLink microarray platform shifts from battling market leaders Affymetrix and Agilent to becoming a contender in the fertile — if nascent — analyte-specific reagent space.
To be sure, Amersham, regarded as the No. 3 microarray maker in the world, will continue to sell the CodeLink platform to researchers even as it tries to tap into the coveted molecular diagnostics marketplace.
The company wants CodeLink to compete in the ASR space with the likes of Affy, which has planted itself in the molecular diagnostic space through a high-stakes collaboration with Roche Diagnostics; Applied Biosystems, which plans to roll out its own chip platform by the end of the year; Illumina, whose own BeadArray-based gene-expression technology, due out this year, will make moves into clinical diagnostics in around three years; and Sequenom; whose mass-spectrometry-based MassArray instrument has already appeared on the gene-expression playing field, and also has designs on clinical diagnostics.
First, however, Amersham said its goal is to move CodeLink into the pharmaceutical market from its current home in the academic proving grounds. That trek will be tough: Andrew Carr, CEO of Amersham Biosciences, conceded during an investor conference call last week that sales of the platform have been “disappointing.”
Amersham’s goals for the CodeLink, whether clinical diagnostics or pharma-based research, are still evolving. After all, the company bought CodeLink last July for $20 million from Motorola after the telecommunications giant opted out of the high-density microarray business. Since then, Amersham consolidated the Chicago and Tempe, Ariz., CodeLink operations into a new 85,000 square-foot factory in Chandler, Ariz.
To date, Amersham’s development in the gene expression and DNA chip arena has been slow and steady. In its second-quarter conference call last week, Amersham said that the $10 million operating loss thus far in its Discovery Systems unit included $7 million in net expenditures for CodeLink. Trevor Hawkins, vice president of development at Amersham Biosciences, said CodeLink product line can be profitable in 12 to 18 months. He would not comment on how much the company has spent on CodeLink since last July other than to say that the $20 million purchase price is being amortized over multiple years.
“CodeLink is making good progress in academic accounts,” Carr agreed in the conference call. “We now need to take it into big pharma and we’re also investigating the move into licensed clinical applications.
“What we expect is that increasingly — I’m beginning to see this now — is that certainly in the academic market customers will begin to adopt the CodeLink platform,” Carr went on. “Then we have to be able to follow that through with some of the larger pharma customers that use these arrays in larger number.
“So, although on one hand we’re disappointed with the rate at which the sales have come through, we’re very pleased with the fact that the features of the product have been certainly confirmed and, in fact, taken further, and we’re beginning to see the build-up in sales, albeit from a small base.”
Specifically, Amersham said it is continuing to develop the platform for gene-expression and protein-expression analysis. The company now has a 40,000-spot array that’s in development as well, Carr said. “Perhaps more significantly, we’re doing a lot of work in statistical analysis on software to improve the stats of the product, which is absolutely vital in measuring the low-frequency RNAs,” he said.
In fact, according to Carr, “quite a number” of customers that are using the product are finding that they can measure genes that they have been unable to measure before on any array platform, “and we think that’s got to be quite important as people go further — to look at the important genes in disease and drug development.”
Asked on the call to define the potential clinical applications for which the CodeLink might be applicable, Carr said that because the sample preparation is a controlled process, he thinks CodeLink “lends itself to an FDA-regulated device.” Asked how the company intends to obtain FDA approval, he said the firm would do so either with some of its own diagnostics products or with an undisclosed third party.
Whatever Amersham’s plans will be to maneuver CodeLink into the clinical arena — let alone begin selling it to pharmas — the company will face evolving regulatory challenges as the FDA continues to define its position on ASRs.
The most recent example of this is the status of Roche Diagnostics’ AmpliChip product, which has attracted FDA scrutiny over its status as an ASR. The Roche unit and Steven Gutman, director of the agency’s Office of In Vitro Diagnostic Device Evaluation and Safety, will soon meet to discuss why Roche has marketed the AmpliChip as an ASR, which may have direct implications for all other chip makers, like Amersham and Agilent, that want to move DNA chips into the clinical marketplace.
Furthermore, the FDA has said it plans to revisit, and perhaps rewrite, the original ASR regulations, originally enacted in 1998; and the agency was presented three weeks ago with a novel suggested draft from Roche and two competitors that sought to create a distinct diagnostic category called in vitro analytical tests. The jury is still out on this proposal; the FDA said it is considering it and will discuss it with industry during an OIVD roundtable meeting Oct. 24.
Meantime, Amersham is planning to conduct studies to compare the clinical applicability of the CodeLink tool with Affymetrix’s GeneChip product — its biggest rival — Erica Whittaker, an analyst with Merrill Lynch in London, said.
Whittaker added that it will be several years before either product has evolved enough to make a significant splash in the diagnostics market. “Proper medical diagnostics is still a long way away for all companies. It could be 15 or 20 years off,” Whittaker said. “You need to know exactly what diagnostics are needed to determine either specific reactions to drugs [or] what sort of diseases you’ll develop.”
Commenting on Roche’s AmpliChip product, which is being manufactured by Affymetrix, she said: “There is a handful of products that will be approved over the next two years, but I’m talking about a significant market where, when you step into a doctor’s office, you’re screened. This market is 20 to 30 years away. And clearly, companies that start early onto this and start developing certain products will develop a head start.”
— KL and MOK