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AS CF Market Heats Up, Tm Hopes Its New IVD Will Rival Third Wave, Celera

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Competition in the multiplexed cystic fibrosis screening market is heating up. Tm Bioscience this week received clearance from the US Food and Drug Administration for its cystic fibrosis genotyping test as an in vitro device, while Third Wave Technologies is making a grab for a larger share of that space with last week's belated release of its CF microfluidics card.

"Some [competitors] do screening, and some do diagnosis — we do full diagnosis for each SNP and carrier screening for each SNP," said Greg Hines, Tm Bioscience CEO. It will be two to three months before the company's IVD is on the market, after packaging and software are ready, said Hines. The test, which is the first multi-analyte genomic IVD for CF to be cleared by the FDA, runs on the Luminex xMAP bead-based multiplexing platform.

Both Third Wave and Tm Bioscience are looking to unseat the acknowledged market leader in CF genetic screening, Celera Diagnostics [and its partner Abbott Laboratories], and each has its own angle of attack. With the InPlex CFTR microfluidic card released last week, Third Wave is aiming to broaden its reach by capitalizing on an easier-to-use, higher-throughput format of its existing Invader CF ASR. Tm Bioscience, on the other hand, seems to be trying to outclass competitors, hoping that IVD clearance, along with diagnostic capability, becomes the field's standard. The company currently sells CF ASRs.

Nanogen is also an impending player: the company withdrew its CF test in late 2004, and in a conference call with investors last week, Robert Saltmarsh, the company's CFO, said the company would release an improved version of the product this year.

"If there are FDA-approved devices in the marketplace, there are a lot of pressures on companies like ours to supply them or service them," said Paul Billings, Lab Corp's senior geneticist and vice president for biotechnology and healthcare strategy. "It depends a little on our contracts," he said. Contracts with managed-care companies often influence the company toward adopting FDA-cleared tests, and contracts that must comply with Centers for Medicare and Medicaid Services regulations often mandate the use of an FDA-cleared test, if one is available, Billings added.

Lab Corp currently performs CF testing via the homebrew route, Billings said. He declined to disclose whether Lab Corp purchases ASRs from an outside supplier. Quest could not be reached for comment before press time.

Celera has "Quest [Diagnostics] and Lab Corp, and that's about all they've got," said Tm's Hines. Those two customers comprise more than 50 percent of the [molecular CF screening] market, he said. Aside from those two major players, Celera's tests are not widespread, he added.

"Celera has customers all over the world, including Quest and LabCorp," said David Speechly, a company spokesperson. Celera's CF test has received the CE Mark in Europe, he added.

The CF-screening market is the largest genetic screening market in the US, and it's growing, said Lab Corp's Billings. "The vast majority of testing in the United States is prenatal screening," he said.

"Somewhere between 500,000 and 1 million [CF] screening tests are done in the United States on an annual basis," he said. "Diagnostic testing is a small market. Cystic fibrosis occurs in about 2,000-3,000 Caucasians in the United States annually," with a lower incidence occurring in other ethnic groups, he added.

Tm Bioscience's Hines predicts that the market will respond to the clearance granted his company's CF test. "Now that the IVD is out, it may grow to about 2 million" tests per year, he said. Hines did not elaborate.

It is difficult to glean the precise amount of the market each company hopes to capture with their products. "We have more than 100 clinical customers, most of whom desire to perform CFTR testing," John Puisis, Third Wave's CEO, said during a conference call last week with investors. The company reported $500,000 in CF-test revenues for the first quarter of 2005, which did not include InPlex sales, and Third Wave expects sales to "ramp up" during the second quarter, he said.

The slowdown Third Wave's InPlex experienced in the recent quarter did not impact the company's full-year revenue guidance target, said Hise. Puisis told investors in a March conference call that the company expects to pick up 40 to 60 InPlex customers by the end of the year. In the recent May conference call, Puisis said the company expects revenues to be on the "low end of $10 million — $15 million dollars. Concerning 3M's supply delay, the firm and Third Wave have been "working on the issue for the last couple of months," Maneesh Arora, Third Wave's senior vice president of commercial operations, told investors during the call. The delay was blamed on a quality-control and manufacturing issue, but the company had not set exact roll-out dates.

Hines declined to break down sales of Tm's CF ASR to date, but he offered some detail. "We had an installed base at the end of Q1 of about 33 CLIA-approved labs that were servicing this market." About 50 or 60 labs service the whole market, he said.

Industry observers noted, however, that the realities of the CF screening market can be more sluggish than either player is counting on. "The really big-volume places like Quest and Lab Corp are probably locked into technologies already," said Michael Watson, executive director of the American College of Medical Genetics. What's more, "people aren't using [genetic or genomic CF testing] on the front end [in newborn screening] — they're using it on the back end after immunoreactive trypsinogen, and some of those places just follow up with a second IRT, while most, I think, are following up with a DNA array," said Watson.

Along with the American College of Obstetricians and Gynecologists, ACMG developed the commonly accepted gene panel used to screen for CF.

We're Number Two!

Tm and Third Wave each sees itself as the major contender for the CF-diagnostics market, but for the moment Third Wave seems to have the advantage — the company announced its first InPlex sale last week, and it seems confident that demand will grow quickly. "When you peel it all away, there is one major competitor, and they're in a few large accounts," said Puisis during a conference call with analysts and investors last week, possibly avoiding mention of Celera by name. "We see our customer base wanting CF [tests]. There are a few other technologies — a handful — that are not a sustainable solution," Puisis said. "We see a lot of noise, but we don't see a lot of competition," which should allow the company to "displace larger accounts" and service new customers "immediately," he added.

A potential downside for Third Wave is the possibility of another 3M-produced supply delay. Another couple of months spent getting the manufacturing process right might anger customers. 3M produces the cards housing eight Invader-style assays, but clinical products are "new to them," and Third Wave wanted to make sure everything worked well, said Third Wave's Maneesh Arora during the conference call. "A lot of it had to do with some tooling calibrations that they had done on their end," an issue of reproducible production, he said.

Then there is the murkier issue of regulation. "It's against the law in the United States to sell a home-brew reagent on a card, and with software, unless it's FDA approved or for investigational use only; the lab cannot use it to generate a patient report," Tm's Hines told Pharmacogenomics Reporter, referring to Third Wave's product. "If they're selling [the card] as an ASR, then they're doing it illegally," said Hines. When sold as an ASR, multiplexed tests can only include primers, he said.

"In ASRs, we believe we're acting in a manner consistent with FDA regulations," said Rod Hise, Third Wave spokesperson, "and our policy is to provide software to customers only upon their request."

The FDA Center for Diagnostics and Radiological Health said it was not aware of any issues with the Third Wave product, according to a spokesperson. Roche, the first company to achieve clearance for a multi-analyte genomic test as an IVD, originally attempted to go the ASR route, but was thwarted by the agency, which frowned on using an ASR to interrogate several genes and alleles.

There is a minefield for Tm to navigate, too. While Luminex's bead-based multiplexing xMAP platform is flexible, allowing users to design their own assays, it is perhaps less-well-known for clinical genetic testing. "It's in [many] research and clinical labs now, but it's used only by a few companies for genetic testing," said Hines. The CF market leader is Celera Diagnostics, he said, "and we'd be number two."

The flexibility of the xMAP platform may even work to Tm's disadvantage. Like other "value-added resellers" partnering with Luminex, Tm buys the platform, adds reagents, and sells it to customers, said Harriss Currie, Luminex CFO.

Optionally, Tm can find [Luminex] platforms placed by other resellers and sell reagents necessary for the company's test to the end user, possibly broadening the company's market, he said. "In theory, [the xMAP] is an open platform. Some guys that sell the platform don't want somebody else accessing 'their instrument,' so they oftentimes protect where they place those instruments so you don't confuse the customer-vendor relationship with multiple vendors placing different kits on the same instrument," said Currie. However, it has been done successfully by other resellers in the past, he added.

— CW

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