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Affymetrix Looks to Ag-bio, NIPT to Drive Future Revenue Growth

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NEW YORK (GenomeWeb) – The agricultural biotechnology and non-invasive prenatal testing markets could become significant revenues drivers for Affymetrix, company officials said this week after the firm released its third quarter financial results.

While Affy launched its Axiom-384HT product only a year ago aimed at the agbio space, uptake of the product fueled, in part, a sharp boost in the company's genotyping business during the third quarter, the company said. Additionally, the technology will be adopted by Ariosa Diagnostics as that company shifts to microarrays as the basis for its NIPT offering.

During the conference call, Affy officials said that genotyping revenues were up 46 percent year over year, helped by "solid growth" in agbio applications, which comprised about 25 percent of Affy's genotyping business during the third quarter. The firm declined to break out revenue figures for the agbio business, but Affy President and CEO Frank Witney said that the company has made "tremendous progress" in the space during the year, largely due to the availability of the Axiom-384HT product, "which allowed us to provide more cost-effective products and new [and] improved throughput for our customers."

Thus far in 2014, Affy has designed twice as many custom genotyping products as in 2013, with agbio products outpacing human applications by a two-to-one margin, he said, noting a recent agreement reached by the company with an international agbio consortium. The group is using a custom Axiom design to improve the efficiency of food breeding programs and to bridge the gap between molecular genetic research and breeding, as well as to develop a validated pipeline for biomarker-assisted breeding.

The adoption of genetic tools in the agbio space remains in the early stages, he said, but with the global population estimated to increase by more than 30 percent by 2050, the agricultural production capacity will need to ramp up by about 70 percent.

"One way society can meet such aggressive production targets is by leveraging genetics to increase productivity, providing Affymetrix with many new commercial opportunities," Witney said.

Shift to microarrays for NIPT?

In addition to targeting the agbio space, Affy has leveraged the Axiom-384HT technology for other "large, fast-growing markets," such as NIPT. Earlier this month the company announced a deal to supply Ariosa with arrays and instruments for its Harmony NIPT. That followed a study by Ariosa in which the company said it had developed a microarray-based method for Harmony, based on Affymetrix's GeneChips.

As part of the deal, Ariosa will use Affy's Axiom-384HT format as "its platform of choice" for the Harmony NIPT, Witney said. He added that microarray-based NIPTs will simplify the workflow, improve accuracy, facilitate a kit decentralization strategy, and allow a broader global adoption of NIPTs. Affy anticipates Ariosa will convert Harmony to an Affymetrix microarray platform from an NGS platform in January 2015, he said.

Witney said he had no insight into when a meaningful shift to microarray technologies from NGS, in general, could occur. He also declined to comment on a timeline for a US Food and Drug Administration approval for a microarray-based Harmony test, or when the Centers for Medicare and Medicaid Services may make a reimbursement decision for such a test.

Whether other NIPT players will follow Ariosa's lead is unclear, and not everyone agrees that microarrays are the future of NIPTs. During Illumina's third quarter earnings conference call, CEO Jay Flatley brushed aside the notion that customers would replace NGS for NIPT with microarrays. Illumina's NIPT business is based on its sequencing technology and several other NIPT firms, including Sequenom and Natera, also use Illumina's NGS technology for their tests.

"We have done a very close evaluation of how well you can run NIPT on arrays, and we are convinced that you can't achieve the same quality with arrays that you can get on sequencing," Flatley said.

Witney also said that the Axiom-384HT product has applications for human genotyping. While the technology was originally developed for the agbio space, it can be used for human applications without having to make changes to the technology, and he pointed to Affy's recent deal with Peptide Groove for HLA typing of human samples as an example. The Oxford, UK-based company has "advanced algorithms for HLA genotyping by arrays, so that would be a good application that we're looking at in the 384 platform," he said.

Genetic analysis up sharply

Sales for Affy's genetic analysis business unit grew 40 percent in the third quarter year over year. Within that business, along with a growing ag-bio business, "a significant ramp in volumes" from biobanking projects helped lift genotyping revenues. They included projects such as the UK Biobank project, the US Department of Veterans Affairs' Million Veteran Program, and the China Kadoorie Biobank project.

Recently, the firm held a workshop at the American Society of Human Genetics conference during which researchers from several major biobanks presented on their research, and Affy remains "optimistic on a long-term market potential for biobank projects," Witney said.

Affy's other two business units are eBioscience and gene expression. In eBioscience, core flow cytometry and immunoassay revenues rose 6 percent in Q3 2014 and life science reagent revenues were flat from the year-ago quarter.

Also within eBioscience, Quantigene revenues were soft during the quarter, Witney said, while ProcartaPlex, the fastest growing part of Affy's immunoassay business "is quickly becoming a material revenue stream for the company," as it grew more than 40 percent year over year in Q3 2014.

Quantigene assays are used for a different purposes including determining copy number, validating copy number variants, biomarker discovery and validation, and other applications. ProcartaPlex immunoassays are for the multi-analyte detection of secreted proteins and run on Luminex xMap technology.

Meanwhile, the gene expression unit saw a 15 percent drop year over year in revenues during the quarter, in line with trends that Affy saw in the second quarter. For the year to date, the business has declined 12 percent, the middle of the company's expected range for the full year, Witney said. Gene expression revenues represented about 21 percent of Affy's total revenues, down from 27 percent in the year-ago period.

Despite the gloom around the gene expression business, though, Witney said there are indications that it is stabilizing. The business generated $18.5 million in revenues during Q1 2014, $17.1 million in Q2 2014, and $18.2 million in the recently completed quarter.

However, he cautioned that Affy has a tough comparison for the fourth quarter as gene expression generated $25.6 million in revenues in Q4 2013.

As the end of 2014 approaches, the second phase of Affy's strategic plan to restore growth at the company will also reach its conclusion, Witney said.

"Our top priorities during this phase have been to return the company to growth, to achieve sustained profitability, and to strengthen our balance sheet," he said. "In the third quarter, we continued to make significant progress toward all these goals."

As the firm heads into the third phase of the plan, it will stay on its translational/clinical track, where it sees robust opportunities in products for tumor profiling, as well as prenatal and postnatal testing. In cytogenetics, Affy will continue increasing its footprint in ag-bio and "is putting our toe in the water in direct-to-consumer" testing, Witney said. He also noted the single-cell biology space as a growth opportunity with Affy's flow cytometry products.

During the third phase, the firm is also eyeing small tuck-in acquisitions. Witney said Affy is actively evaluating "smallish … and additive" potential deals, though he declined to provide details.


For a detailed report on Affymetrix's Q3 financials, please see this article published by GenomeWeb Daily News.

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