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JP Morgan Healthcare Conference, Day 3: Quidel, Affymetrix, BD, Luminex, Myriad Genetics, PerkinElmer

SAN FRANCISCO (GenomeWeb News) – The third day of the JP Morgan Healthcare Conference featured several molecular diagnostics companies covered by GenomeWeb Daily News, as well as well-established tool firms Affymetrix and PerkinElmer.

Below are capsules from the third day of the conference.

Quidel

The molecular diagnostics space is a new one for Quidel, which has historically played in the immunoassay market. But in its goal to become a broader-based diagnostic company, the firm is building out its molecular diagnostics business, CEO Doug Bryant told investors.

In late December, Quidel received its first clearances from the US Food and Drug Administration for its molecular tests, one for human metapneumovirus and another for influenza A/B. Currently, Quidel's MDx business comprises three programs – assay development for a handheld device co-developed through a partnership with BioHelix forged in 2009; the development of real-time assays; and the development of its Wildcat integrated platform.

The company currently is conducting clinical trials on an assay for Clostridium difficile for its handheld device, called AmpliView, and will begin trials for an assay for methicillin-resistant Staphylococcus aureus shortly, Bryant said.

Meantime, Quidel anticipates launching its Wildcat platform sometime next year. It is conducting clinical trials for four assays for the platform, including C. difficile and herpes simplex virus. After the initial four assays, it will embark on trials for six other assays, including one for enterovirus.

The company is targeting revenues of $100 million by 2013 with its MDx business contributing $25 million to that. That figure has been raised slightly more recently, Bryant said.

"By 2015, we will be a molecular company," he said.

The segment of the MDx market Quidel is targeting represents about a $760 million opportunity, he added, contingent on the launch of the Wildcat.

Affymetrix

About six months into his second go-round at Affymetrix, Frank Witney provided a 180-day progress report for the company.

Since Witney took over as CEO of the company during the summer, Affy has restructured its business, cutting R&D headcount by 20 percent as well as implementing cost-saving steps in SG&A operations, resulting in cost reduction of about $10 million.

The firm also has made changes to its management team with additions to its commercialization, regulatory, and global market operations, and moved on plans to shift from the gene expression market to the validation market and the cell and protein assay space.

The gene expression business, which Witney acknowledged as being challenged, is expected to fall sharply moving forward after once comprising more than 40 percent of the company's total revenues.

Moving ahead, further efforts will also be made to expand into the applied markets and emerging geographies such as China, India, and Brazil, where Affy "has not done a good job" of establishing a strong presence, Witney said.

As he's stated before, a key strategy as Affy tries to improve its struggling business will be to target the cytogenetics market, of which Witney said "we're very bullish." During the third quarter, Affy launched its CytoScan HD, and Witney today called it the best product on the market for cytogenetic analysis, offering unprecedented coverage and resolution.

Clinical trials for CytoScan are expected to begin in March, followed by a submission to the US Food and Drug Administration in the middle of this year.

Witney has also spoken in the past about tapping into the next-generation sequencing space, by incorporating its arrays into the NGS workflow. Today, he said that Affy is in the early stages of talks with potential partners for use of the firm's arrays for validation purposes.

Finally, Witney spoke about the company's pending purchase of eBioscience. The $330 million deal was announced in November with a closing targeted by the end of 2011. In late December, though, Affy delayed the closing to January and, earlier this week, pushed it back again, saying it aims to close on the acquisition by the end of the quarter.

An investor has also filed a lawsuit against Affy related to the deal.

Witney declined to comment on the lawsuit, saying only that Affy continues to work on closing the deal. If and when completed, it would provide the company with cell-based assays and protein assays, which Affy believes is a high-growth market.

eBioscience has a "small but incredible" molecular diagnostic portfolio around cancer, and when folded into the firm could make up about 22 percent of Affy's total business, he said.

Becton Dickinson

Company President and CEO Vincent Forlenza outlined several mid-term growth drivers in the BD Diagnostics segment highlighted by the BD Max color open system launched in May 2011.

A test for methicillin-resistant Staphylococcus aureus on the platform has been launched in Europe and will be launched later this year in the US, Forlenza said. In addition, assays in women's health and for testing transplant patients for immunocompromised states are planned.

Investments continue to be made into its BD Viper XTR and Viper LT systems, he added, and the company is developing an automated test for human papillomavirus. BD plans on starting its clinical trials for the HPV test this year.

The company also continues development of its SurePath Plus molecular pap test with an eye toward clearance from the US Food and Drug Administration, and BD Biosciences plans to launch a cell sorter product directed at genomics and proteomics research, Forlenza said.

Luminex

In his presentation, President and CEO Patrick Balthrop reaffirmed full-year 2011 revenues of between $180 million and $185 million and said that the company is investing "heavily" into the development of its own assays as a growth strategy.

Currently, that part of its business represents about 25 percent of Luminex's total business – 75 percent of its revenues comes from partnerships with other companies – but Balthrop said that assay development is a high growth driver for Luminex, and the recent purchase of Eragen Biosciences further expands its development capabilities.

Jeremy Bridge-Cook, senior vice president of the Assay Group at Luminex, said that EraGen's MultiCode chemistry makes it "quite easy" to design an assay, and provides advantages in sensitivity and specificity. It also provides the company with chemistry in the real-time space, something Luminex had not had, he said.

The company said when the deal was announced that it expected EraGen to contribute between $5 million and $7 million in revenues to Luminex for 2011 and to be dilutive to earnings. Balthrop said that that has turned out to be true. He added that he continues to expect the purchase to be accretive to earnings in 2012.

Balthrop also said that uptake of the firm's Magpix system, which was launched in 2010, remains strong and over the next five years Luminex expects it will be the company's top-selling multiplex analyzer.

Myriad Genetics

CEO Peter Meldrum told investors that the firm currently has 13 tests in its pipeline to go along with the nine already on the market. The next product targeted for commercialization is a melanoma diagnostic test, which Meldrum said addresses a $200 million market.

He emphasized the firm's efforts to grow its business in Europe, following the recent opening of its European headquarters in Zurich, Switzerland, and sales operations in Germany, France, Italy, and Spain. He said Myriad's current European sales force is six or seven people and is expected to grow to around 11 by the end of the year.

In addition, Meldrum noted the firm's efforts in obtaining reimbursement for its tests. Thus far, three of its tests are being reimbursed there, including BRCAnalysis, which is being reimbursed at €2,500 ($3,200) versus $3,000 in the US.

Meldrum estimated Myriad will bring in revenues of between $445 million and $465 million in 2012 with earnings per share of $1.20 to $1.25.

PerkinElmer

Robert Friel, chairman and CEO of PerkinElmer, said he has received a lot of questions from investors suggesting some confusion about the firm's acquisition strategy and the supposed disparate pieces it has added over the past year.

PerkinElmer was the most acquisitive company in the life science tools space in 2011 with seven purchases in total during the year, including four companies offering bioinformatics-related products. But its biggest deal was the $600 million acquisition of Caliper Life Sciences late in the year.

Friel presented a slide Wednesday that showed the variety of capabilities the Caliper acquisition brought the firm and the complementary technologies that would broaden its offerings in the molecular space. Those capabilities include sample prep for next-generation sequencing, molecular imaging, and the potential to expand its prenatal testing franchise into molecular technologies.

Friel also noted that the acquisitions in 2011 added $5 billion in addressable markets. The firm currently has annual revenues of $2.1 billion, but Friel said he'd like to hit $3 billion by 2014.

He noted that PerkinElmer isn't likely to make any acquisitions over the next couple of quarters as it integrates Caliper, but the company will look for opportunities in the second half of 2012.

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