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In 2013, Acquisitions, Clinical and Dx Applications Defined Bioinformatics Market

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Because most pure-play bioinformatics companies aren't publicly traded, the sector doesn’t have the financial barometer that things like quarterly earnings reports provide, making it somewhat challenging to gauge growth and speculate about future gains.

However, indicators such as intellectual property acquisitions, venture capital investments, and newly birthed businesses hint at the market’s perceived value and suggest that investors are optimistic about its prospects.

Perhaps the most obvious indicator of perceived value came from instrument vendors, most notably Qiagen, which invested heavily in bioinformatics this year by picking up privately held firms Ingenuity Systems for $105 million in cash and CLC Bio for an undisclosed sum to support both its diagnostic and next-generation sequencing portfolios.

Qiagen has already unveiled plans to bundle the CLC Genomics Workbench with its new Gene Reader sequencer and to launch a new variant analysis product next year to support NGS-based clinical testing and reporting. It began an early access program to test the new product and plans to run a second beta in January before the software launches in Q1 2014.

Illumina, meanwhile, bought NextBio — also for an undisclosed sum — to complement its BaseSpace cloud infrastructure, which offers a mix of internally developed and third-party bioinformatics applications from partner companies for tasks such as genome assembly and visualization as well as space for data processing and storage. Illumina has not yet discussed how it plans to integrate both sets of products or potential new products that could emerge from integration efforts.

Other acquirers included Elsevier, which beefed up its drug discovery and development portfolio with Aureus Sciences' assets; and Thomson Reuters, which bought Entagen, a services firm that targets pharmaceutical and biotechnology companies. Also, Premier Biosoft bought ProteoIQ, a proteomic data-analysis software suite, from previous owners NuSep, an Australian bioseparations company; while NewLeaf Symbiotics, an agricultural biotechnology company, acquired bioinformatics consulting company Intuitive Genomics.

In 2013, customers’ product options also increased as start-ups like Silicon Valley Biosystems emerged from stealth mode to begin selling genomic data interpretation services to clinicians and healthcare providers using a proprietary interpretation pipeline; and Stanford University spinoff Ayasdi launched Ayasdi Iris, a machine learning-based platform that searches for patterns or anomalies in genetic data and displays them as topological networks or shapes. Also, Codified Genomics began offering a variant interpretation service to clinical labs providing whole exome sequencing-based testing that uses informatics capabilities developed at Baylor College of Medicine's Whole Genome Laboratory; and Tute Genomics launched a cloud-based variant interpretation engine based on the ANNOVAR open source software.

There's also growing interest in the space from large technology firms who see potential roles within genomics for their IT services and expertise. Defense contractor Northrop Grumman, for example, has begun cultivating partnerships with universities and other companies in the genomics and proteomics arenas as part of plans to expand its IT portfolio. Previously, the firm has worked with academic and commercial partners to build an immunology database and portal under contract from the National Institute of Allergy and infectious Disease. NIAID renewed the contract earlier this year, awarding an additional $30 million over five years that Northrop Grumman and a Stanford University-led team will use to continue populating the Immunology and Data Analysis Portal.

Also this year, Philips Research began a clinical study involving a prototype of its Platform for Personalized Analytics Applications — software for oncologists to analyze, interpret, and interactively present data from NGS instruments in order to prioritize treatment for cancer patients. Meanwhile, Cerner and Claritas Genomics forged a partnership to build tools for NGS-based diagnostics starting with a laboratory information management system that will be launched within two years.

More software companies means fiercer competition for a finite number of customers, but interference from instrument vendors in particular ups the ante significantly. Pure bioinformatics software and services providers must now compete with firms that can offer products not just for analysis and interpretation but also for pre-analysis steps such as sample collection and sequencing; and who can bundle these solutions into integrated and efficient workflows. Furthermore, Qiagen, for instance, has said it will continue to sell standalone versions of both CLC Bio’s and Ingenuity’s software, products which already have sizable customer bases in market segments such as pharma and life sciences research.

Also, because instrument vendors' revenues don’t depend on sales of software licenses, they have greater flexibility in the ways they choose to peddle these products and can even use them to drive sales of other goods. For example, Qiagen offered free use of Ingenuity's Variant Analysis software as part of its Empowered Genome Community, which provides newly sequenced individuals with an environment within which to share data with one another and tools to interpret it. This has the added benefit of exposing the analysis capabilities of the Ingenuity platform to a much broader range of individuals who could go on to become paying customers.

Moving into 2014, bioinformatics firms hoping to compete may need more creative ways to incentivize customers to choose their products over others. Some companies have begun offering more infrastructure access options. Maverix Biomics, for example, launched two new programs — one to provide free access to data and a second to offer cloud-based analysis services at a reduced cost — hoping to widen the customer pool for its storage and analysis business. Similarly, Bina Technologies launched Bina On-Demand to offer more budget-friendly access to its analysis capabilities for customers who only use the software sporadically.

In terms of financial backing for business development and expansion, 2013's investment activity suggests a level of optimism about the market's prospects and a willingness to bankroll the development of both research and clinically-oriented portfolios. Strand Life Sciences and Ayasdi, for example, both received about $10 million each from investors while Syapse and Spiral Genetics raised $3 million apiece in Series A funding rounds this year. French molecular diagnostics firm PathoQuest added nearly $5 million to its coffers from a series B fundraiser; UK-based Desktop Genetics received $582,000 in investments; Eagle Genomics raised $1.6 million in a two-part fundraiser from its investors; and Tute Genomics raised over $1 million from its investors this year.

Clinical and Diagnostic Informatics

Clinical bioinformatics applications aren't necessarily a new development. Companies like Omicia have been selling products for analyzing and interpreting variants in clinical contexts for some time, and informatics underlies the activities of diagnostic test developers like Celmatix and SynapDx. But in the last 12 months, direct-to-clinical informatics activity has intensified — and will likely continue to build in the new year — with a number of historically research-centric software firms either releasing new products for the clinical market or stepping up their efforts to do so in the near future.

SoftGenetics, for example, launched Geneticist Assistant Workbench for tracking, reviewing, storing, and interpreting the results of NGS-based tests developed in collaboration with Mayo Clinic. A similar application — and potential competitor — called the Clinical Genomicist Workstation came from researchers in the Genomics and Pathology Services laboratory of Washington University, St. Louis.

Strand Life Sciences branched out into diagnostics this year, using the proceeds of its $10 million funding round to put infrastructure in place to offer NGS-based diagnostic services first to Indian clinics and eventually globally. Separately, in November, the company began an early access program to test drive a new platform for interpreting and reporting genetic variants to diagnostic testing labs. DNANexus, for its part, launched a platform-as-a-service product that offers clinical testing labs space to run their analysis pipelines and store data; and Spiral Genetics signed an agreement with Omicia that allows both companies to combine their respective products and offer informatics infrastructure for analyzing raw sequence data through to identifying clinically relevant genomic variants.

Meanwhile, Cambridge Mass.-based Selventa elaborated on previously announced plans to tap into the Dx market, promising to begin launching diagnostics-facing informatics products by 2015 starting with tools for autoimmune diseases and then moving on to oncology. Similarly, Golden Helix said that it intends to expand its research-centric business to include focused solutions for customers in the clinical genomics, pharmacogenomics, and diagnostics markets although the firm didn’t say what these future capabilities might look like or when they might make it to market.

Other companies have sidestepped the research software market altogether opting to develop products for more diagnostic-type uses directly. They include Translational Software, which sells software-as-a-service-based interpretation tools to clinical labs running pharmacogenomic tests; Syapse, which offers a web-based tool for NGS-based diagnostics called Syapse for Labs — previously called Syapse Discovery — and a second product called Syapse for Hospitals — previously named Omics Medical Record; and CollabRx whose Therapy finder apps help oncologists select appropriate treatments for their patients and whose Genetic Variant Annotation service provides variant interpretations. Finally, PathoQuest is running a clinical study to test a new infectious disease diagnostic pipeline that includes a cloud-based bioinformatics workflow and sample prep reagent kits.

Contributions from the academic and non-profit arms of the bioinformatics community, meanwhile, coupled infrastructure development with efforts to standardize analysis pipelines as well as data collection, storage, and sharing mechanisms.

Aside from localized efforts such as Vanderbilt's My Cancer Genome, Mount Sinai's CLIPMERGE, and University of Maryland, Baltimore's pipeline for whole-genome sequencing-based microbial diagnostics, the community launched a multinational alliance of healthcare, research, and disease advocacy organizations to establish open standards and formats for storing and representing clinical and genomic data; and application programming interfaces to connect analysis tools to the data. Also, Canada's Public Population Project in Genomics and Society launched the International Policy, Interoperability, and Data Access Clearinghouse to help collaborative research projects meet policy requirements for sharing genomic and clinical data.

Then, in October, the National Institutes of Health allocated $25 million over four year to fund the development of the Clinical Genome Resource (ClinGen), which will be a source of authoritative information on genomic variants that are relevant to human disease and useful in clinical practice. The grants, which are administered by the National Human Genome Research Institute and the National Institute of Child Health and Human Development, will fund efforts to define standards for assessing the clinical validity and actionability of genes and genomic variants; set standards for gathering and depositing data in public resources; and to build the computational tools to support ClinGen's activities.

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