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Exiqon to Divest US-based CLIA Lab to Consolidate Dx Business in Denmark

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By Justin Petrone

Exiqon has decided to sell Oncotech, the Clinical Laboratory Improvement Acts-compliant laboratory services firm it acquired two years ago. The Danish life sciences firm said last week that it chose to divest Tustin, Calif.-based Oncotech as part of an effort to "gain operational and infrastructural efficiencies and to free up human financial resources."

As a consequence of the divestiture, Exiqon said it would seek partners to co-develop and commercialize its miRNA-based diagnostic products. The company has ongoing diagnostic development programs for colon cancer recurrence, identification of cancer of unknown primary, and early detection of colon cancer in serum.

"This decision will help us focus on our core competencies in the area of miRNA and drive operational synergies between our two business areas, Diagnostics and Life Sciences," Exiqon President and CEO Lars Kongsbak said in a statement. "By consolidating operations, we can free up the necessary financial resources for a continued focus on our diagnostic product development efforts."

The shakeup in Exiqon's diagnostics business comes just three months after the firm announced the restructuring of its life sciences unit. At the time, Exiqon pledged to outsource the manufacturing of all of its microRNA research tools, including microarrays, by the first quarter of 2010 (see BAN 9/1/2009).

Exiqon announced its purchase of Oncotech through a $45 million share transaction in November 2007 with the aim of accelerating the establishment of its diagnostics business. Exiqon said that a number of factors made Oncotech an attractive buy at the time. For one thing, it had specialized in diagnostic tests to optimize treatment selection for cancer patients. The company also offered its services to a network of more than 7,000 oncologists and approximately 1,200 hospitals. Additionally, Oncotech operated a CLIA-compliant approved oncology laboratory, a human tumor bank, and a genomic R&D platform (see BAN 11/27/2007).

Kongsbak told BioArray News at the time that Exiqon saw Oncotech's infrastructure and relationship with US regulatory bodies as a vehicle to launching future miRNA-based diagnostics. "Together with Oncotech we will master the entire flow of diagnostic product development including assay development [and] biomarker screening," Kongsbak said. As part of its test development work, Exiqon planned to use its miRcury line of miRNA microarrays to screen through Oncotech’s human tumor bank to develop biomarker signatures. However, the firm did not commit to using its arrays as a diagnostic platform.

In October 2008, Exiqon renamed Oncotech as Exiqon Diagnostics, and earlier this year, Exiqon launched an in situ hybridization assay-based miRNA test designed to detect the likelihood of colorectal cancer recurrence (see BAN 10/21/2008).

The company said at the time that, while Exiqon made extensive use of its line of miRcury miRNA arrays in order to develop its tests, in situ hybridization kits are better vehicles than arrays for delivering the diagnostics to market.

"Eventually, I don’t think we’ll have that many array-based assays available through our CLIA lab," Kongsbak said at the time. "I think it will be in situ locked-nucleic acid- or qPCR-based assays. We see that quite often we only need one or a few miRNAs to be predictive."

Now, while the firm said that it has since strengthened its portfolio and launched new molecular tests, it has decided to consolidate its development efforts at its facilities in Denmark.

Exiqon is not the first array vendor to walk away from a CLIA lab. Affymetrix transferred ownership of its CLIA-compliant clinical services laboratory to direct-to-consumer genetic testing provider Navigenics earlier this year (see BAN 3/10/2009). Affy said at the time that it chose to sell the lab to Navigenics in order to refocus on its core business as a platform provider.

Exiqon will recognize a non-cash loss on divestment and impairment of goodwill of around DKK 205 million ($49.2 million). As a result of the divestiture, Exiqon revised its 2009 revenue guidance down to DKK 80 million from DKK 130 million.

Exiqon expects the divestment to result in annual savings of approximately DKK 60 million compared to 2009. The firm maintained its long-term financial goal of reaching profitability by 2011.

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