In a move designed to bridge the gap between ho-hum upstream research and the rarefied world of clinical genotyping and diagnostics, Genaissance Pharmaceuticals has decided to buy all of the genotyping technologies and lab-based diagnostic products made by DNA Sciences.
The $1.3 million acquisition, announced in concert with DNA Sciences’ decision to seek Chapter 11 bankruptcy protection, makes Genaissance the first pharmacogenomics company to offer high-throughput haplotyping services along with a modest suite of commercialized CLIA- and GLP-rated tests.
“We’ve been doing initial associations and now want to transition into clinical-trial genotyping,” Genaissance CEO Kevin Rakin told SNPtech Reporter this week. “This is really what [pharmaceutical] companies are looking for. Hold our hand and partner with us for the whole process. Not just bits and pieces.”
Rakin said Genaissance will begin to use DNA Sciences’ technologies “right away” and expects the transition to be completed in 90 days — or around one month after the acquisition is expected to close.
In some regards, the acquisition can be seen as a logical step for Genaissance. It has a rich track record of helping pharmaceutical companies conduct pharmacogenomics studies, and has a widely used haplotype platform that it has leveraged as a potent aid in drug discovery.
Financially, Genaissance appears to have rounded a corner — but at a price: A restructuring last August that cut headcount by 20 percent, together with an uptick in fourth-quarter revenues, has helped the New Haven, Conn.-based company halve its net loss even as it spent almost 300 percent of its total revenues on R&D expenditures in 2002 — more than any other publicly traded pharmacogenomics company — according to a SNPtech Reporter analysis (see charts, page 6).
“Our goal has always been ... to bring gene variation to drug response,” Rakin said. “As we’re starting to see associations to drugs, the next question is, ‘How do you do the GLP clinical trial work? We could have built it ourselves, but it was easier to acquire DNA Sciences.”
Genaissance seems to have found a bargain in the Fremont, Calif.-based company when it agreed to pay $1.3 million in cash and stock for a suite of technologies and commercialized CLIA- and GLP-rated diagnostics products that compete in a market worth $100 million today, but which is growing exponentially.
DNA Sciences has two major businesses: The company helps pharmaceutical companies perform clinical-genotyping studies, and it has a clinical-diagnostics arm that sells two SNP-based tests to reference labs in the United States. All of the assets of these businesses, as well as a number of DNA Sciences staffers, will now be going to Genaissance. It is unclear whether any of these assets or people will wind up in New Haven. “There are some very good people there that we will be inheriting,” said Rakin.
DNA Sciences currently employs 55 people at its facilities in Morrisville, NC, and California, according to Steven Lehrer, acting president and CEO. The firm early this year shuttered a newly opened space in Cambridge, UK, where five people conducted gene-based candidate discovery. Mark Littlewood, a four-year veteran of DNA Sciences, ran that lab’s DNA purification, banking, and genotyping operations, while Trevor Brett, a company newcomer, oversaw business development. They are both now gone.
Research performed in Cambridge is now carried out in Morrisville. In fact, since most of DNA Sciences’ GLP genotyping takes place in Morrisville, Rakin suspects that facility will “more than likely” remain functional.
One product currently being developed in Morrisville is a diagnostic for long QT syndrome. Though Rakin commended DNA Sciences for its “neat little patent estate” related to this common heart disorder and said that Genaissance intends to “nurture” this product, he stressed that “we need either to partner them [out] or wait for a different economic period.” The fate of DNA Sciences’ Fremont headquarters is uncertain and awaits remarks from a joint transition team, due early this summer.
In a statement, DNA Sciences tried to reassure its myriad collaborators that their interests will be secure at Genaissance. The firm said Genaissance will “fully support” DNA Sciences’ GLP business, which includes the thiopurine S-methyltransferase test, and a test for cytochrome P450 2D6.
Rakin agreed and said his company would “really nurture” DNA Sciences’ collaborations and “provide them not only with DNA Sciences’ capabilities, but now our own capabilities.” DNA Sciences has deals with Merck, GlaxoSmithKline, Bristol-Myers Squibb, and Amersham Biosciences, and a number of reference labs in the United States. “That’s key for us: protecting sand maintaining those relationships,” said Rakin.