In a major shift of its business strategy, troubled Ciphergen Biosystems is refocusing its resources from tool vending to proteomic biomarker discovery and downstream diagnostics alliances.
The company, beset by plunging revenues and declining stock prices (see accompanying charts), is betting that the winds of proteomic biomarkers are changing, and that they will take the firm's fortunes with it.
According to Ciphergen officials taking part in a conference call with investors and analysts, pharma is hooked on biomarkers. And its appetite will likely grow as drug makers, intoxicated by the lure of personalized medicine, continue to incorporate more proteomic and genomic markers applications into their discovery and development regimens, company officers said. Another bright spot is the US Food and Drug Administration, which recently said it is "open minded" about reviewing proteomic biomarkers (see 7/7/2005 PGx Reporter).
Ciphergen "intends to capture a significant portion of [the pharmaceutical industry's] protein-based biomarker investments" by providing its SELDI protein chip and deep-proteome technology to drug makers through "pharmacoproteomic partnership programs," said Bill Rich, Ciphergen's CEO, during this week's conference call. Less discussed was the company's goal of bringing prototype assays through FDA clearance and marketing them.
Ciphergen said it hopes to achieve these goals with a mostly two-pronged strategy adopted as part of its reorganization. But if the broader biomarker-discovery market is any indication, the company has its work cut out for it.
On its face, the restructuring will save Ciphergen around $2 million each quarter beginning in the fourth quarter when the company will lay off approximately 20 percent of its workforce. Sales and marketing will bear the brunt of the lay-offs with a workforce cut of about 30 percent. That department accounts for about half of the company's employees. R&D, manufacturing, and general and administrative departments will be the next most heavily affected by the downsizing.
The New Ciphergen
Under the company's new structure and plan, its former discovery business will work with drug makers and others interested in biomarker services using its recent agreement with Bayer as a model. At the same time, its diagnostics business will try to get its prototype assays cleared by the FDA. Such assays would be commercialized by Quest, Rich and Page said. All the while, Ciphergen hopes to sell its platform to researchers smitten by its assays.
The company this week also promoted Gail Page, who headed the diagnostic division, to president and chief operating officer.
"The Bayer deal represents the potential for expanded pharmacoproteomic translational proteomic partnership revenue programs," said Page during the conference call. "We see a major trend as pharma companies are now preparing to invest heavily in biomarker services for pharmacoproteomics," she said. The companies are working with "a range of leading pharmaceutical companies" in similar deals, she added.
In its agreement with Bayer, announced in June, the companies will work to identify biomarkers and develop an assay that may be used in Bayer clinical trials in cancer. Ciphergen plans to use its SELDI-TOF-MS platform to analyze patient samples from Phase II trials at its Pharmaceutical Biomarker Discovery Center lab in Malvern, Pa.
The companies hope to identify biomarkers predictive of response to an undisclosed Bayer compound currently in development. Financial details of the agreement were not disclosed, but Ciphergen said they included upfront fees and milestone payments. In the call, Page described these upfront fees as a testament to the traction that Ciphergen has achieved so far as a pharma ally, which she said will lead to additional collaborations.
Ciphergen also has internal R&D programs. Its lead discovery program centers around its work in Alzheimer's disease, and it is "currently in discussions with several leading pharma companies to use our [Alzheimer's disease] assay to validate their drugs in clinical trials as a possible surrogate marker for response and possible pharmacodiagnostic product," Page said during the call.
Ciphergen officials paid less attention to the company's diagnostics business during the conference call. "The source of any diagnostic test comes from customers, our own clinical biomarker discovery centers, and from major academic [Biomarker Discovery Center] collaborators, such as Johns Hopkins and MD Anderson," said Rich.
The strategy for that business unit is "built around" the company's alliance with Quest, which will help commercialize and validate assays to usher them toward analyte-specific reagent status or FDA clearance.
Late last month, Quest obtained working control of Ciphergen after it bought 17 percent of its shares, and said it will develop three undisclosed assays selected from Ciphergen's pipeline. "It is fair to say that both companies will play a role in clinical validation, but as far as what the outcomes there will be in terms of a product, it just doesn't make sense for us to start speculating," Quest spokesperson Gary Samuels said at the time.
"We think that proteomics technology will be very important in patient care in the long term," Samuels said. "We feel strongly enough that we put our money where our mouth is." Quest was not ready to reveal further details beyond the alliance, but "what we want to tell people is that there's more to come," he said.
"We see a major trend, as pharma companies are now preparing to invest heavily in biomarker services for pharmacoproteomics."
Page said during the conference call this week that the release by Ciphergen of a solid proteomic diagnostic would entice other customers. "In addition to generating revenue from the launch of diagnostic tests themselves, we believe the validation generated by the launch of an initial test will act as powerful proof â€¦ to drive the demand for Ciphergen collaborative services and products in the translational research community," she said.
A Proteomic Renaissance?
Ciphergen's metamorphosis comes at a time when drug makers have begun "aggressively incorporating various biomarker strategies into their drug-development program, driven both by the FDA and an increased recognition of the value of linking therapeutics and diagnostics," Rich said during the call.
Indeed, Felix Frueh, associate director of CDER and head of the FDA's Interdisciplinary Pharmacogenomics Research Group, told Pharmacogenomics Reporter in July that more companies have been filing proteomic biomarkers with the FDA, specifically in the pre-investigational new drug application phase at the FDA's Center for Devices and Radiological Health.
"What we have seen at CDRH is predominantly genomics. But we're starting to see proteomics as well," Frueh said. "I wouldn't know the ratio, but it's twice genomics to proteomics at this time. I'm talking the new kind of proteomics, like mass-spec tests, not ELISA tests."
Frueh said that proteomic biomarkers may have a home in the Voluntary Genomic Data Submission pathway, which is part of the agency's pharmacogenomics data-submission guidance. "There is no reason why there should be any difference," he added. "Take that further to the [VGDS guidance], I don't see a reason why voluntary submissions for proteomics could or should be any different than they are for genomics. In other words â€" and we've been talking about this â€" you could imagine some kind of process where you exchange 'G' with 'X,' so it would not be a VGDS but rather VXDS, and that 'X' could stand for â€¦ 'Exploratory.'