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WaferGen Pushing Target Enrichment, Biomarker Validation Plan Following Financing, Restructuring

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Fresh off of a $15 million private placement and restructuring transaction intended to simplify its capital structure, WaferGen Biosystems has shifted its focus to position itself as a provider of tools to supplement next-generation sequencing.

Specifically, the company plans to use its recent funding and newfound financial flexibility to increase sales and marketing efforts for its SmartChip real-time PCR system as a tool for target enrichment upstream and biomarker validation downstream of NGS, microarray analysis, or other molecular discovery methods.

"We see ourselves as a company that provides all the auxiliary products, and services that support those products, around targeted next-generation sequencing, especially in the clinical space, where accuracy is paramount," President and CEO Ivan Trifunovich told PCR Insider.

WaferGen commercially launched its SmartChip real-time PCR system in August 2010, originally positioning the platform as a tool for highly parallel gene expression profiling studies. The system comprises a nanodispenser module for sample dispensing; consumable chips with as many as 5,184 wells loaded with target-specific primers; and the SmartChip cycler, which performs PCR thermal cycling, data collection, and amplicon melting.

Amid flagging sales, though, the company began repositioning the SmartChip system as a tool to help NGS users, and also began offering contract research services based on the technology platform.

This year, WaferGen has begun to gain some traction from these initiatives. In January, the company said that it, along with collaborators in Jo Vandesompele's laboratory at the University of Ghent, had developed a highly sensitive PCR-based target enrichment workflow on the SmartChip system (PCR Insider 1/10/2013).

Further, in February WaferGen inked a co-marketing agreement with Qiagen KK, Qiagen's Japanese subsidiary, to jointly promote the SmartChip system with Qiagen's PCR assays and, eventually, sequencing products (PCR Insider 2/21/2013).

Most recently, WaferGen launched SmartChip TE, a commercial product for NGS target enrichment that the company vetted in proof-of-concept studies in collaboration with Ghent University, and which has been adopted by commercial clinical sequencing providers such as BGI and Ambry Genetics (PCR Insider 5/9/2013).

Trifunovich told PCR Insider last week that several other clinical labs have "positively evaluated" the technology for target amplification, although he was not at liberty to disclose their identities.

"This whole notion that doing single-plex individual PCR reactions gives you a much cleaner product, which then results in more accurate sequencing, is proving to be true," Trifunovich said. "We are very excited, and we are hopeful that especially in 2014 we are going to be quite successful in terms of capturing some key accounts and people basically putting this into the day-to-day workflow."

On the flip side of this application, WaferGen has been working to promote SmartChip as a useful tool for biomarker validation. The company has not publicly disclosed many early successes, a la the target enrichment application, but Trifunovich said the company nevertheless sees great potential here.

"People realize that sequencing is great, but especially for the clinical level performance, people still don't feel 100 percent comfortable just reporting the result," he said. "A great number of clinical labs are actually confirming the results. They find mutations; they confirm with genotyping; they are doing RNAseq, they're confirming with qPCR gene expression."

Trifunovich did underscore a paper published last week in Science Translational Medicine, in which researchers primarily from the University of Pittsburgh Medical Center conducted microarray analyses to identify peripheral blood mononuclear cell gene expression profiles predictive of poor outcomes in idiopathic pulmonary fibrosis. In order to confirm the performance and prognostic significance of candidate genes in a more clinically feasible platform, the researchers used a custom, multi-sample, high-throughput qRT-PCR assay using the 5,184-well WaferGen 5K SmartChip.

Another initiative in this area was the establishment of a nano-qPCR core laboratory in March at the Salk Institute for Biological Studies (PCR Insider 3/14/2013). A major focus of that facility, which features a SmartChip system, will be on designing and testing libraries of assays targeting receptors and transcriptional regulators for important functional pathways, thereby interrogating entire regulatory networks in a highly parallel fashion.

Now the company is seeking to amplify its sales and marketing efforts around these application areas, hence the recent private placement and debt restructuring, the details of which can be found here.

Trifunovich said that WaferGen essentially accomplished two things with the financial moves.

"One, we now have a lot of gas to go and execute our business plan; and two, we have simplified our cap structure," he said. "In the past, we had outstanding securities in terms of convertible debt and convertible preferred shares. That basically complicated [things] …for investors to really understand and value the common shares when they're sitting below two tiers of additional securities."

Now, he said, WaferGen has converted all of its preferred securities into common shares so that only those shares in the company remain outstanding.

The company also restructured $5 million of debt to its Malaysian subsidiary, thereby extending the period of time it has to make good on the debt.

"In one fell swoop, we provided funding for the company … to invest in and execute the business plan, and we simplified the cap structure on all fronts," Trifunovich said.

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