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Aclara Reinvents Itself Again With Diagnostics Focus as Revenues Creep Up, eTags Catch on

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Two years after dumping microfluidics for protein labeling, and one year after completing a dramatic consolidation that cut two-thirds of its staff, Aclara BioSciences is looking to reinvent itself yet again with a dive into diagnostics.

“We think there’s a very exciting opportunity in the area of targeted therapeutics,” Tom Klopack, CEO of Aclara, told ProteoMonitor this week. “If you [go to] a doctor with a deadly disease, the doctor has a half dozen drugs that [each] work on one in 10 people — how does he prescribe those? We’ve been working with companies and structuring collaborations around being able to provide a diagnostic tool that would allow a test on real patient samples to sort patients for a clinical test.”

Aclara has not yet developed any such test, but diving into a new market head first is nothing new for the Mountain View, Calif.-based company. Aclara started up in the early 1990s as a spin-off from the University of California, Berkeley, with the mission of developing microfluidic technologies. But by 2001, Klopack said, “the realization was that the company did a good job of solving problems that the market just didn’t care about.” Aclara’s chief technology officer, Sharat Singh, who had a background in diagnostic development, had been pushing the company to develop biological applications for its microfluidics technologies.

In August 2002, the company announced it would abandon microfluidics altogether — and lay off 50 of its 180 employees — to focus its efforts on eTag, a novel fluorescent labeling technology for nucleic acids and proteins. ETags consist of standard fluorescein molecules with different tails attached that change the mass-charge ratio of each tag so that they run at different rates in a capillary electrophoresis reader. The tags can be attached to antibodies, peptides, and ligands for protein interaction studies. When an interaction occurs, a scissor element cleaves the tag, making it smaller and differentiating it from the unreacted tags in a mixture. The intensity of the signal can also be used as a quantitative measurement of how many molecules have reacted. The tags are sensitive enough to provide signals for small quantities of protein in formalin-fixed tissue as well as fresh tissue, Klopack said.

Following this focus switch, Aclara had trimmed its staff to around 60 by early 2003. “The goal was to have the company look like a venture-funded, focused company pushing a particular technology that we’d demonstrated technically and started to see commercial opportunities,” Klopack said.

By the time Klopack joined Aclara in early 2003, he said, the company was shipping product and had several collaborations under its belt. But revenues and losses continued to be ugly in year-over-year comparisons through 2003, before finally showing an upswing in the first quarter of this year. Aclara reported revenues in the first quarter of 2004 of $597,000, compared with just $179,000 in Q1 of 2003, and losses of $4.7 million, compared with $6.8 million a year ago. Klopack credited “rigorous cost control” for slashing the burn rate, and a refocusing of sales on protein expression applications rather than on gene expression, for the increase in revenues. Proteins are “where we really think we have a unique advantage,” he said.

In addition to concentrating on proteins in general, in 2003, Klopack started looking for what he called a “killer application” for eTag, which he thinks he has now found in cancer therapeutics. The company is now looking to slowly expand — it will hire several new members on its executive team and will then “build up those functions” under them, Klopack said. But there is no plan for the company to make a push to break even anytime soon. “Our focus is really to establish a leadership position and get after that opportunity as fast as we can,” he said. “And what that means is, we’re going to invest to grow the top line, and to get into very big, high-visibility applications quickly, rather than continue to push for slowly growing sales and keeping cutting expenses.”

Whether such an ambitious investment will pay off has yet to be seen, but Aclara did find some success with its first attempt at reinvention. The company has sold its eTag assay systems to Pfizer, Genentech, GlaxoSmithKline, Vertex Pharmaceuticals, and Procter & Gamble Pharmaceuticals, and it has a number of research and infrastructure collaborations — including one with Lawrence Livermore National Laboratory for use of eTags in detecting bioterror agents — as well as an agreement with Amersham Biosciences (now GE Healthcare) in which Amersham provides capillary electrophoresis equipment to Aclara for reading out the eTag signals, while promoting the use of eTag assays with its equipment. The assays are particularly attractive to pharma companies working with whole cell systems and pathway analysis, Klopack said, because of the tags’ ability to query many pathways in a cell at the same time. “Say you’ve made 1,000 chemical compounds around a particular entity that look pretty good for a drug,” Klopack said. “Now you want to see the effect of those chemical entities, not just for a particular target in a cell, but to see it across a very broad [set] of pathways. We can easily design a multiplexed assay that looks through a variety of different proteins in a pathway.”

As a first step in its more recent foray into targeted cancer therapeutics, Aclara has formed collaborations with a variety of academic and government institutions — including Vanderbilt University, Cedars-Sinai Medical Center, the University of Southern California, the NCI, Princess Margaret Hospital in Ontario, Canada, and the Tokyo Metropolitan Institute of Medical Science — to look at tissue samples from patients treated with different therapies and to try to predict in a blinded retrospective study whether the patient should have responded to the therapy. The company will present preliminary results from these studies at the American Society for Clinical Oncology meeting in New Orleans in early June.

Now Aclara is in discussions with “four or five companies” that Klopack described as large pharmas and biotechs to form collaborations for developing targeted cancer therapeutics. These would “look like typical biotech collaborations — multiple-year programs, [in which] we retain the diagnostic rights, [and] we would plan on a having a diagnostic that would go into the market in conjunction with the drug, very much like the Herceptin/Hercep test that Genentech pioneered six to seven years ago,” he said.

In addition, Aclara hopes to market directly to doctors panels of assays that can test for a variety of receptors involved in a disease pathway, for help in developing personalized drug regimens for their patients.

The ultimate winner in all these endeavors will end up being the pharmaceutical industry, Klopack said. “The advantage of doing this is the drugs that you’re providing will get used faster across different indications, and also be used over longer periods of time, keeping people alive,” he said.

— KAM

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