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Bio-Rad Jumps into Digital PCR Space with $162M QuantaLife Buy

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By Ben Butkus

Bio-Rad's $162 million acquisition of digital PCR shop QuantaLife, announced yesterday, is expected to complement and expand Bio-Rad's existing PCR and quantitative real-time PCR portfolio, and may provide the company with an additional feather in its cap as it moves into the molecular diagnostics arena, a company executive said this week.

And, according to at least one industry analyst, the "atypical" acquisition for historically "conservative and risk-averse" Bio-Rad provides the company entrée into a digital PCR market expected to exceed $100 million annually within three years.

The acquisition also gives Bio-Rad the first commercially available emulsion microdroplet-based technology for digital PCR, QuantaLife's recently launched Droplet Digital PCR system, to compete with currently marketed microfluidics-based commercial dPCR platforms from Fluidigm and Life Technologies. Another potential competitor is RainDance Technologies, which shares some emulsion PCR IP with QuantaLife and is targeting early 2012 for a digital PCR platform launch.

Speaking with PCR Insider this week, Brad Crutchfield, group vice president of life sciences at Bio-Rad, said that the company sees QuantaLife and its digital PCR technology as "very important toward expanding" its position in qPCR and PCR in general.

"We do not see [digital PCR] necessarily as a direct alternative to qPCR," Crutchfield said. "Over time we will see people shift to that. But we see it now moving [Bio-Rad] into a broader spectrum of applications and, in a sense, expanding our market capability.

QuantaLife announced the full commercial launch of the Droplet Digital PCR system in late June after having beta-tested the system since late 2010 (PCR Insider, 6/30/11). The system, which sells for approximately $50,000, comprises a droplet generator that divides each biological sample to be tested into 20,000 1-nL droplets that can then be transferred to well plates and amplified using qPCR.

The system also has a separate droplet reader, where the droplets are streamed past a two-color fluorescence detector that reads each droplet as either positive or negative for target nucleic acid molecules; as well as dedicated analysis software.

QuantaLife last month wrapped up a "digital PCR roadshow" to demonstrate the platform to potential customers in various large US cities with strong biomedical research industries. During the show it demonstrated most of the platform's important application areas, such as mutation and rare genetic event detection; copy number variation detection; and single-cell gene expression analysis.

While Bio-Rad is one of the earliest and largest players in the PCR and qPCR space, the Droplet Digital PCR system represents a significant departure from the array of laboratory workhorse-type products that the company currently offers.

Bio-Rad's qPCR instrument portfolio includes the CFX96, CFX384, and CFX Connect real-time PCR detection systems and the MiniOpticon real-time PCR detection system. It also sells an array of thermal cyclers for endpoint PCR, including the recently launched C1000 Touch thermal cycler.

In a research note published today, Jefferies analysts noted that Bio-Rad's acquisition of an "early-stage, emerging asset with significant secular growth potential marks a departure from its perennially conservative and risk-averse nature, which has historically favored targets entrenched in well-established complementary market segment verticals that it can leverage across its massive distribution network."

The Jeffries analysts also viewed the deal as a positive for Bio-Rad, "given that we perceive it adds a compelling, highly differentiated technology offering with significant potential to stimulate [Bio-Rad's] organic revenue growth trajectory."

Jeffries forecast $20 million of revenue contribution and an approximately $15 million operating loss in 2012 for Bio-Rad as it ramps commercial efforts around the Droplet Digital system.

Overall, it said that the dPCR market niche "could exceed $100 million annually within the next three years." Given Bio-Rad's "entrenched distribution channels and strong position" in the approximately $2.5 billion worldwide research PCR market, of which the firm estimates Bio-Rad holds a 10 percent market share, "we anticipate BIO will be able to stimulate rapid penetration of the modality," the Jeffries report noted.

Bio-Rad's Crutchfield also told PCR Insider that the company has been working hard over the past few years to build out its PCR and qPCR reagent portfolio, and as such, the QuantaLife acquisition "comes with a very nice opportunity to deliver applications through these reagents."

Crutchfield added that from a research perspective, "as a lot of sequence data is validated and worked through, I think this will be a very important tool for validating sequence information and potentially using it as an analytical tool to measure specific gene events."

Finally, Crutchfield noted that the Droplet Digital PCR system and QuantaLife's in-house expertise provides Bio-Rad with "an opportunity to do some things in the diagnostics space that a traditional qPCR technology couldn't do."

Crutchfield did not elaborate on potential molecular diagnostic opportunities, but Bio-Rad has been eyeing the space for the past few years. At the 2010 UBS Global Life Sciences conference in New York, President and CEO Norman Schwartz noted that Bio-Rad, which has traditionally played in the immunohematology diagnostics space, was "finding its way" into molecular diagnostics; and previewed the company's first PCR-based molecular diagnostics platform for STD detection.

In January the company launched that test, a multiplex, real-time PCR assay for simultaneous detection of Chlamydia trachomatis, Neisseria gonorrhea, and Mycoplasma genitalium; as well as the Dx real-time PCR system equipped with an on-board barcode reader, for use with the STD assay.

Meanwhile, although QuantaLife has primarily been drumming up interest around research applications with the Droplet Digital system, it has also begun a foray into molecular diagnostics: Last September it disclosed that it had been awarded a five-year, $6 million grant from the National Institute of Biomedical Imaging and Bioengineering to develop microdroplet PCR-based point-of-care tests to detect methicillin-resistant Staphylococcus aureus (PCR Insider, 9/16/10).

Also, in December QuantaLife closed a $17.2 million Series B financing. Participating investors included Mérieux Développement, the healthcare investment company of French industrial holding company Institut Mérieux, which holds a majority stake in molecular diagnostics player BioMérieux. However, QuantaLife vice president of marketing Mike Lucero said at the time that the investment did not include any plans for a collaboration between QuantaLife and BioMérieux (PCR Insider, 12/16/2010).

Bio-Rad's first order of business is moving the Droplet Digital platform into the hands of its extensive sales and marketing team. Crutchfield said that the system will be immediately available through Bio-Rad's US sales channels.

"There are some things like CE Marking in process, but we should be getting this to our European sales organization soon," he added. "Then early next year we'd ramp this to our greater organization in places like Asia. But we'll move fairly quickly to make this product available through our sales organization globally within the next three to five months."

Crutchfield also said that Bio-Rad, whose US headquarters are in Hercules, Calif., plans to continue operating QuantaLife as a separate facility in Pleasanton, Calif., just a few miles down the road.

"The QuantaLife team will stay in Pleasanton," he said. "This is our tradition as a company. We value our own culture … but we also value the entrepreneurial culture that [QuantaLife founder] Bill Colston has created down there. He's going to continue to run this business. It will be part of our greater gene expression business, but certainly we will keep them in Pleasanton.

"We bought a technology, and ultimately a product that's coming to market," Crutchfield added. "But more importantly we acquired 50 or so very talented people, about as smart a group of people as I've seen in one building."


Have topics you'd like to see covered in PCR Insider? Contact the editor at bbutkus [at] genomeweb [.] com.

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