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Pyrosequencing Unit of Biotage Shifts Focus to Assays for Clinical Research Market

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A few months ago, Pyrosequencing changed its name to Biotage — adopting the name of a company it acquired. Now, the Pyrosequencing unit of the company is changing its strategy as well.

At the Molecular Medicine Tri-Conference, held last week in San Francisco, Biotage announced that its Pyrosequencing unit, which has thus far been a tool provider in the sequencing and genotyping area would now be focusing on the “clinical research market.”

While the custom genotyping market that the company has focused on thus far has been static lately, the clinical research area is “a very big market; there are lots of labs, it is growing, and it’s [having] a healthy market development” said Martin Winge, the company’s vice president of marketing.

This does not mean that the Uppsala, Sweden-based company will abandon the high-throughput sequencing and genotyping sector all together, he said. Work with current custom sequencing customers will continue, and the comp-any said it plans to “maintain its position” in this area rather than getting out of it all together, but new R&D and marketing efforts will be aimed at the development of clinical laboratory products, such as ASRs, Winge said.

Does this mean that Biotage is going to boldly venture into the regulatory thicket that has tangled up such giants as Roche?

Not right away, said Winge. “This is for the research use market. We want to be clear about that.” The company hopes to forge collaborations with clinically-oriented research institutions such as university hospitals, medical schools, big academic clinics such as the Mayo Clinic and Johns Hopkins, in order to develop these tests further. These collaborations could spawn products that customers “can take into a home brew usage if they have the capacity and the resource to do the clinical validation required for that,” Winge said.

The company could itself step into the ASR arena, but wants to have “regulatory requirements fulfilled” before it gets into this tricky environment, Winge said.

Two areas that Pyrosequencing plans to focus research efforts on are molecular microbiology — especially the area of drug resistance — and CpG methylation, which is important in cancer research that focuses on the regulation of oncogenes. Winge said that the company believed this latter application “is a very hot area.”

The company plans to get into these areas through technology collaborations with academic or clinical partners.

The sales pitch, already unveiled on the company’s website, is that Pyrosequencing “gives the ‘gold standard’ of genetic analysis: the sequence itself.” The Pyrosequencing technology, dubbed “sequencing by synthesis,” is a patented technique that involves pyrophosphate release as new nucleotides are added to a growing DNA strand, followed by degradation of the unincorporated nucleotides.

“We believe we have fundamental advantages in our products and our technology,” said Winge. “We believe the quality of the data that is provided with the technology and the product that we are offering is extremely high value for this type of clinical use.”

This announcement of a shift in strategy is not a 180-degree turn for the company, but rather the latest in a series of adjustments made based on feedback from customers and the company’s own series of acquisition and restructuring moves.

“We have had a presence in this market all along, Winge said. “It has more or less been a natural conclusion leading to what we believe is the company’s best business potential.”

Pyrosequencing, founded in 1997, initially marketed its 96-channel sequencing instruments, and a pyrophosphate-based service, as a rapid alternative to ordinary capillary sequencing. But the company’s marketing strategy for this technology — and the investor confidence that led to the company raising $99 million in a 2000 initial public offering, was riding on the optimistic and erroneous belief that this type of sequencing would be crucial to pharmaceutical drug discovery in the near term.

While capillary sequencers such as the Applied Biosystems 3700s have retained a niche as more genomes get slated for sequencing, the high-throughput genotyping market has yet to materialize to the extent that it was projected to within the pharmaceutical sector.

But as early as May 2001, the company signaled it was moving in the direction of clinical diagnostics, when it received a patent for the use of genetic polymorphic patterns within the angiotensin converting enzyme gene, the angiotensin gene and the angiotensin II receptor type I gene-which are all important in assessing cardiovascular conditions such as myocardial infarction and stroke. Pyrosequencing’s patent also covers the use of polymorphic patterns in the ACE, AGT, and AT1 genes to predict patient response to cardiovascular therapeutics.

At the time, Jerry Williamson, then vice president of global diagnostics, said that the patent established the company “as a player in diagnostics in the cardiovascular area.”

Since then, the company has undergone some major changes. In September 2003, it acquired Swedish neighbor personal chemistry for about $11 million, and fattened its coffers to about $53 million (SEK 400 million). Then, in October, the company acquired Biotage, a Virginia-based subsidiary of Dyax, for $35 million, and changed its name to Biotage. Meanwhile, in August and September, the company announced it was laying off 70 staffers as part of a restructuring that is continuing this year.

This new clinical research focus for the Pyrosequencing unit, following on these changes, can be seen as a way to get the company into the black. In February, the company reported in its interim Q4 results that “the market for genetic analysis remains slow and whole year sales for [Pyrosequencing] remained at the same level as in 2002.”

Overall, fourth quarter 2003 sales of SEK 105 million were expected to be up from SEK34 million a year ago, and net loss was projected at SEK 31 million, down from SEK44 million in the same period.

— KL and MMJ

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