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Looking to Refocus on Core Array Business, Affy Transfers CLIA Lab to Navigenics

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Affymetrix recently decided to hand over ownership of its Clinical Laboratory Improvement Amendments-compliant lab to direct-to-customer genetic-testing firm Navigenics as part of a strategy to refocus on being a platform provider.

The move comes as an increasing number of drug makers outsource their molecular diagnostic research needs to CLIA labs.

An Affymetrix spokesperson told BioArray News this week that Affy transferred ownership of its 10,000-square-foot Clinical Services Lab in Sacramento, Calif., to Redwoods Shores, Calif.-based Navigenics earlier this year.

The lab certified was CLIA compliant in April 2007 when Affy began to offer clinical trial and patient testing via gene expression monitoring, genotyping, chromosomal copy-number analysis, and other molecular diagnostics (see BAN 4/24/2007).

Affy said this week that it initially founded CSL because it "began seeing microarrays becoming a platform of choice in clinical settings and wanted to help qualify the use of the technology in this environment, as well as provide CLIA services on Affymetrix products to Affymetrix partners and customers."

The spokesperson said that those goals have now "been achieved as demonstrated by the success of Roche and Pathwork Diagnostics, which both have [US Food and Drug Administration]-cleared microarray-based tests on the market, and [Laboratory Corporation of America], one of the nation's largest CLIA lab service providers, which has leveraged microarrays as components of laboratory-developed tests."

Roche currently sells its AmpliChip CYP450 for drug metabolism monitoring, and Sunnyvale, Calif.-based Pathwork Diagnostics last year began selling its Tissue-of-Origin Test, which determines what type of cancer cells are present in a malignant tumor (see BAN 8/5/2008). Both diagnostics are based on Affymetrix's GeneChip platform.

Burlington, NC-based LabCorp last year began offering testing for chromosomal abnormalities using Affy's Cytogenetics Solution. The testing giant previously had offered its molecular cytogenetic services on PerkinElmer's Spectral Genomics platform (see BAN 1/29/2008).

'Rise in Demand'

Affy's spokesperson said that in recent months it has "noticed a rise in demand [for] CLIA lab services, including increased outsourcing to CLIA lab service providers from large pharma and biotech," a trend confirmed by the expansion of services companies like Applied Microarrays and Expression Analysis (see BAN 2/17/2009).

"Our strategy in this area remains the same as it has always been," said the spokesman. "Affymetrix wants to enable the broader adoption of microarray technologies in all relevant markets, including clinical settings."

One of the ways Affy intends to do this is by "manufacturing high-quality, high-value products that can be leveraged not only by researchers, but also by CLIA lab service providers as individual components of laboratory developed tests."

Affy therefore sees "supporting the current increasing demand for CLIA lab services as a growth opportunity … and it is consistent with our strategy to help the validation and testing markets leverage the value of our microarray technologies."

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Affymetrix has spent the last year retooling its business by acquiring firms that will enable it to "cast a broad net across this whole field of genetic analysis,” according to CEO Kevin King. Over the course of 2008 it acquired Cleveland-based USB for $75 million to capture more customers' reagent spending; it bought Bay Area startup True Materials for $25 million to develop scalable low- to mid-multiplex genotyping assays; and it spent $72.7 million to pick up Panomics, which specializes in lower-multiplex DNA and protein assays (see BAN 12/9/2008).

Affy Chief Financial Officer John Batty told investors at Barclays Capital Global Healthcare Conference in Miami Beach, Fla., last week that the firm is executing against a strategy of retooling its array platform, entering "new, high growth markets," and building operating leverage by downsizing its operations.

Affy launched its automated high-throughput GeneTitan platform last September as part of its efforts to upgrade its array offering. GeneTitan enables users to run assays on strips of up to 96 arrays in a microtiter plate format. Affy first debuted gene-expression arrays for use on GeneTitan last fall. Batty said that the company expects to launch genotyping arrays by the third quarter (see BAN 9/30/2008).

In terms of entering new markets, Batty said that the Panomics acquisition has opened up a market that Affy previously was "unable to serve" of low- to mid-multiplex assays competitive with RT-PCR. Batty estimated the market for such downstream applications is worth about $3 billion annually.

Overall, he estimated that the total genetic analysis market that Affy addresses is worth $5.5 billion a year.

Batty also said that Affy is on track to complete its restructuring plans, and that the company is on schedule to transfer all of its array manufacturing from California to its Singapore plant by the end of the second quarter.

Most of its reagent manufacturing has in the meantime been consolidated at USB, now called Affymetrix Ohio, and Affy has outsourced its instrument manufacturing to an undisclosed third party.

Batty did not touch on the transfer of ACSL to Navigenics during his talk.

All in the Family

Navigenics' DTC service uses a custom version of Affy's SNP 6.0 genotyping array, and the two firms have close ties. Navigenics' Chief Operating Officer Sean George was formerly vice president of marketing at Affy; General Counsel Stephen Moore previously held the same position at Affy; and board member Sue Siegel, who is now managing the firm, was formerly president at Affy.

Siegel assumed her co-management duties together with fellow Navigenics director Dana Mead following the departure of Navigenics CEO Mari Baker earlier this month (see BAN 3/3/2009).

Cynthia French, who joined Affy as vice president of its Clinical Services Laboratory in 2006, was named chief scientific officer at Exiqon last June. Exiqon bought Tustin, Calif.-based diagnostics firm Oncotech last year, rebranding it as Exiqon Diagnostics in October. Exiqon Diagnostics offers tests through its CLIA-compliant lab (see BAN 10/21/2008).

According to the Affy spokeperson, in selling ACSL to Navigenics, the Santa Clara-based array vendor wanted to return its focus to its "core business objective of being an enabler for the broad adoption of microarrays across all genetic analysis markets, including CLIA lab services, to help all individuals benefit from understanding their own DNA."

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