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BioFire Diagnostics to Become MDx 'Hub' for BioMérieux Following $450M Acquisition

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BioMérieux's planned acquisition of Salt Lake City, Utah-based BioFire Diagnostics for $450 million plus undisclosed debt, announced earlier this week, will give the French clinical diagnostics firm a US-based "hub" for molecular diagnostics that it plans to not only keep intact but grow over the coming years, executives from both companies said.

The crown jewel of BioMérieux's acquisition is BioFire's FilmArray, a fully automated molecular testing system that uses PCR and melt-curve analysis to simultaneously test for multiple infectious agents in about an hour.

FilmArray already has US Food and Drug Administration clearance and CE marking for respiratory disease and sepsis panels, and BioFire is developing three more infectious disease panels for the system. As such, BioMérieux immediately gains a so-called "syndromic" molecular diagnostics platform with regulatory clearance to complement its existing molecular biology strengths, which include nucleic acid extraction and more specialized applications such as monitoring infectious diseases in immunocompromised patients.

Meantime, by tapping into BioMérieux's comparable larger international sales and marketing force — which includes distributors in more than 100 countries — BioFire hopes to more broadly disseminate FilmArray to better compete with similar products from the likes of Luminex, Nanosphere, and GenMark Diagnostics.

In addition, the companies are betting that BioMérieux's wide-ranging expertise in clinical diagnostics and infectious diseases will be a source of continued innovation for the FilmArray product in the future.

"BioMérieux has an incredible worldwide presence and deep knowledge of bacteriology, virology, infectious disease, and industrial microbiology, and all of this is a synergy," Kirk Ririe, founder and CEO of BioFire Diagnostics, told PCR Insider. "The plan is to launch the five panels [for FilmArray] that we've been discussing for the last few years: respiratory and sepsis, which are both launched; [gastrointestinal disease] on its heels, which is in clinical trials now and doing very well; and following that, meningitis and pneumonia panels, which are in development."

Ririe added, "There is a long list of potential applications that can go onto the same platform. The plan is to leverage that deep knowledge at BioMérieux and come up with a broader class of offerings for the platform."

The relationship between BioMérieux and BioFire Diagnostics began in 2010 when the companies signed a little-publicized agreement to develop a molecular biology platform for industrial applications. At that point in time, BioFire was called Idaho Technology and specialized in using its PCR and melt-curve analysis expertise to develop products primarily for biodefense and applied markets.

But since that time, BioFire Diagnostics has transformed more than its name, moving deeper into the molecular diagnostics space with the development and launch of FilmArray and associated test panels over the last three years.

The company's first clinical test, the FilmArray Respiratory Panel, received FDA 510(k) clearance in May 2011 for the simultaneous detection of 15 respiratory viruses. A year later, the FDA granted 510(k) clearance for five additional pathogens. The Respiratory Panel also has CE marking and is commercially available in Europe.

And in June, BioFire received FDA clearance for its second test, the FilmArray Blood Culture Identification panel, a 27-target assay that the company says can identify more than 100 sepsis-causing pathogens. This test also has CE marking.

Concurrently, however, the privately funded company — which had subsisted mostly on government grants — was mulling its options for gaining additional market penetration for FilmArray.

"There comes a point in every company's life when you say, 'What do we do to take the next step? Do we go IPO? Do we raise a bunch of private equity, or do we scope out what an acquisition might look like?'," Eric Gorrell, general counsel, corporate secretary, and head of investor relations at BioFire, told PCR Insider.

"About a year and a half ago we came up with a plan … and basically had a bidding process going on for quite some time," Gorrell added. "BioMérieux came in really early, and really often, and really strong. They convinced us that … they needed a strong center of molecular diagnostic excellence in the US. The keys to the deal were that they were going to leave us intact, in Salt Lake City, leave all the management in place, and pretty much commit to our employee base that we're not only going to keep you in Salt Lake, but we're going to grow. Two years ago we had about 275 employees. Probably by the end of this year we'll be at 600."

Jean-Luc Bélingard, chairman and CEO of BioMérieux, told PCR Insider that "absolutely [BioFire's Salt Lake site] is not just going to remain intact, it's going to grow. It's going to be the hub. We have other [molecular biology] sites within the company, and very clearly Salt Lake will lead the charge as far as our molecular initiative is concerned."

Bélingard added that BioMérieux's mission "is to contribute to healthcare with innovative technologies. And we're convinced that the better we contribute to healthcare, the better our financial performance will be. This is a shared mission statement that we have with BioFire. The contribution of FilmArray to healthcare is second to none. We are leaders in microbiology and infectious disease. Augmenting our contribution to healthcare by adding FilmArray to our product offering was a natural."

Long a top player in clinical diagnostics, BioMérieux has only in recent years begun beefing up its molecular diagnostics business. One of the company's most successful molecular biology products is the NucliSens EasyMag, a platform that uses magnetic and silica-based technology to automate nucleic acid extraction from a variety of sample types and volumes for downstream clinical testing.

The company also developed the NucliSens EasyQ system that uses nucleic acid sequence-based amplification, or NASBA, and molecular beacons for amplification and detection of infectious disease agents. BioMérieux continues to sell this platform, particularly for HIV viral load detection in resource-poor countries, but "diverted a bit from that business" and instead began trying to "specialize our presence in molecular [biology] to avoid direct competition with big players which would have led to price wars," Thierry Bernard, corporate vice president of global commercial operations for BioMérieux, told PCR Insider.

One of the ways the company did that is by acquiring Argene in 2011, bringing on that company's real-time PCR-based tests for managing viral infections in immunocompromised patients — a business that BioMérieux said it has grown by 31 percent.

"We also have some very long-lasting distribution agreements in molecular biology," Bernard said. "Outside the US we have been the main distributor for Gen-Probe [now a part of Hologic] for many products for many years, and we still are. More recently, especially in the area of tuberculosis, we are working with an innovative German company called Hain Life Science, which has a very good TB product that is used in China, one of the main countries where TB is endemic."

More recently, BioMérieux received PMA approval from the FDA earlier this year for its THxID BRAF Kit for use on the Life Technologies ABI 7500 Fast Dx Real-Time PCR Instrument. This assay is intended to qualitatively and simultaneously detect both BRAF V600E and V600K mutations in late-stage metastatic melanoma tumor samples as a companion diagnostic for GlaxoSmithKline’s Tafinlar (dabrafenib) or Mekinist (trametinib).

And in August the company received FDA 510(k) de novo clearance for Vitek MS, the first clinical mass spectrometry MALDI-TOF-based system available in the US for rapid identification of disease-causing bacteria and yeast.

However, BioMérieux did not yet have a molecular diagnostics platform for infectious disease testing in its portfolio, which is where FilmArray comes in. Of note, in 2010 BioMérieux established a partnership and took a €9 million stake in Swiss diagnostics firm Biocartis, with plans to co-develop assays on that company's molecular testing platform. The fate of that agreement remains unclear. BioMérieux said this week that, along with Biocartis, it intends to review this partnership.

At any rate, BioMérieux has made it clear that BioFire will be the linchpin of its burgeoning molecular diagnostics business, and will now focus on getting its sales and marketing force up to speed with the approximately 15 staffers that BioFire currently has in the US.

"We always specialize our sales force, whether it's microbiology, immunoassays, or industrial, and in those three we specialize down to pharma sales and food sales," Bélingard said. "We will continue to do so. The BioFire people are perhaps more limited in size, but their tremendous added value is that they are fully integrated, specialized, and professional, and that's what we have to mimic to make sure we are not diluting FilmArray into too large a portfolio. This is why we will continue to specialize with a dedicated molecular diagnostics sales force."

In a research note issued this week following the acquisition, William Blair analyst Brian Weinstein noted that, based on meetings with BioFire management and discussions with lab contacts, the investment firm believes that FilmArray is "a simple-to-use technology that has become widely used, though the lack of throughput with the system is the Achilles heel that we are not sure can be addressed by being a part of a larger organization."

As such, Weinstein noted, William Blair believes that FilmArray will eventually be relegated to lower-volume settings, even though it currently has some higher-volume accounts. Thus, BioMérieux's marketing muscle is not expected to affect the potential of some potential competing products, such as GenMark's forthcoming NexGen system, a fully automated sample-to-answer molecular diagnostics targeted at higher-volume settings and intended to replace the company's current hybridization-based XT-8 system sometime in 2015.

However, Weinstein noted, once the FilmArray gastrointestinal panel gains FDA clearance, "we expect the BioFire business to target the Luminex business … which it has already taken share from in the respiratory marketplace … and thus, we see more risk for that company from BioFire, irrespective of its acquisition."

Moving forward, another competitor of the FilmArray platform is Nanosphere's Verigene platform, which uses cartridge-based gold nanoparticle technology for multiplexed nucleic acid tests. Although Verigene has utility beyond infectious diseases, it already has FDA-cleared panels for blood culture and respiratory viruses.

One final component to the acquisition is BioFire's ongoing biodefense business which, while diminishing in recent years, is still a "core component" of the company, according to Gorrell.

"We don't anticipate removing ourselves at all from our biodefense work," he said. "We think it is core to what we do, but it is becoming a fraction of our total annual sales and business. FilmArray dominates that.

In fact, last week, just prior to the acquisition announcement, BioFire learned that it had been awarded approximately $27 million for a third-year option of a previously awarded contract with the US Department of Defense to provide reagents, extraction, and inhibition kits to be used by several military branches.

That award followed a competitive prototyping contract BioFire inked in March with the US Department of the Army for the first increment of the Next-Generation Diagnostics System program, which is intended to produce a system that will provide military healthcare providers with timely and accurate information to guide individual patient treatment and provide battlefield commanders with biological warfare threat information.

According to BioFire Co-founder and COO Randy Rasmussen, the company is now essentially "one of three companies in a one-year fly-off for the NGDS, and we fully expect to win that contract, but that is of course never certain."

Rasmussen added that BioFire is "working very closely with our partners in the Department of Defense … and others, with the full intention of continuing to support those programs, and seeking new programs."

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