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With No Tools Unit to Generate Revenue, Ciphergen Bets Its Future on Dx Pipeline

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As Ciphergen Biosystems continues settling into its new iteration as a specialty diagnostic company, it plans to take aggressive steps to bring its ovarian cancer test to market during the year, while forging ahead with other diagnostic products.
 
Last week, in comments accompanying the release of the firm’s fourth-quarter and full-year 2006 earnings results, Ciphergen CEO Gail Page outlined the company’s goals for the year ahead as it continues transitioning from its old business model as a proteomics tool outfit, following the sale in November of its SELDI technology, ProteinChip business, and related technology to Bio-Rad.
 
With its tools business sold, Ciphergen has no revenue stream, so getting a diagnostic test to market is of special urgency to the survival of the company. In its earning release, the company warned it “does not anticipate having revenue until its diagnostic tests are commercialized.”
 
The company’s lead test in development is its ovarian tumor triage test, and last week company officials said it anticipates applying to the US Food and Drug Administration over the next 12 months to bring the test to market.
 
“Our ovarian cancer diagnostic test has already undergone extensive testing and validation. We have analyzed over 2,500 clinical samples from more than 10 tests, the largest proteomic study to our knowledge,” Page said.
 
Two weeks ago, Ciphergen announced it had initiated a prospective clinical trial for the ovarian cancer test to evaluate its ability to differentiate women with the cancer from those with benign pelvic masses. The study would also compare the test to the current standards of care: physical and radiological exams.
 
As part of the trial, Ciphergen will enroll between 700 to 1,000 patients at about 20 clinical trial sites.
 
In December, Ciphergen signed on contract research organization PrecisionMed to support clinical trials of the test in the US [See PM12/21/06].
 
The FDA is in the midst of formalizing draft guidance on in vitro diagnostic multivariate index assays, and Page said that Ciphergen and SELDI test partner Quest Diagnostics are “reviewing the FDA guidance documents … to ensure that our ovarian cancer program is compliant and reaches physicians in a timely manner.”
 
Ciphergen also has plans to commercialize the ovarian cancer test in Europe this year. Ciphergen has performed preclinical trials of the test in Europe and contracted with the Emergo Group for support in getting regulatory approval there. Ciphergen has said it hopes to get clearance from at least one European country in 2007.
 
Ciphergen is also developing tests that detect peripheral arterial disease and thrombotic thrombocytopenic purpura, and Page said that the company will be moving both tests through the development pipeline.
 
The company is collaborating with Stanford University on a PAD test, which will be marketed as an in vitro diagnostic. Ciphergen plans to bring the test into clinical trials and to apply for FDA approval sometime in the second half of the year.
 
“Our blood test would identify individuals who are more likely to have the condition and [allow doctors to] triage them to more sophisticated tests for definitive diagnosis and treatment,” Page said.
 
In addition, Ciphergen and Quest announced in January they would be working together to develop a PAD test to be marketed as an analyte-specific reagent.
 

“We are dedicated to commercializing tests and have distinct capabilities to ensure the diagnostics that we bring to market are successful.”

“We have established a strong working relationship with our colleagues in the marketing and science groups at Quest” to expedite a test to market, Page said.
 
Ciphergen is working with the Ohio State University Research Foundation to develop a TTP test [See PM 02/01/07]. The two parties are “optimizing” the assay for commercialization, Page said.
 
Commenting on the market opportunity for the diagnostics space, Page said that the in vitro diagnostic market “is growing and accounts for 25 percent of all diagnostics or approximately $49 billion worldwide. Not only is [the] in vitro market expanding, the share of molecular diagnostic technologies within this market is increasing. Development of proteomics-based tests will accelerate this expansion.
 
“We are dedicated to commercializing tests and have distinct capabilities to ensure the diagnostics that we bring to market are successful,” she said.
 
Revenue Drought
 
During the quarter ended Dec. 31, 2006, Ciphergen said it had revenues of $1.2 million, an 82-percent dropoff from $6.6 million reported a year ago. The only revenues booked by Ciphergen for the recent fourth quarter were from the sales of instruments and tools during the first six weeks of the quarter before it sold its proteomics business to Bio-Rad, Ciphergen said.
 
Net loss for the three months was $1.9 million, down from $9.2 million due to a reduction in its operating expenses. The company expects operating expenses to continue falling in 2007, Page said, as a result of the company’s shrinking employee numbers. Ciphergen has slashed its workforce by more than 70 percent during the past year to about 40 employees now.
 
The company said it spent $2.7 million on R&D for the quarter.
 
For full-year 2006, revenues fell 22 percent to $18.2 million from $27.2 million in 2005. Net loss narrowed to $22 million, compared to $35.4 million a year ago, a 38 percent decrease.
 
Ciphergen said it had $17.7 million in cash and cash equivalents as of Dec. 31, 2006, compared to $25.7 million during the year-ago period.

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