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In Applied Science Restructuring, Roche Exits Microarrays, Bundles 'Sequencing Solutions,' R&D

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As part of a restructuring of its Applied Science unit that includes shuttering its NimbleGen microarray business, Roche will integrate its 454 sequencing platforms and Roche NimbleGen sequence capture products more closely under a new business group called Sequencing Solutions.

The company, which made its plans public earlier this month through announcements to staff members and partners, is laying off about 120 Roche NimbleGen staffers in the US, Iceland, and Germany, as well about 20 employees at 454 Life Sciences in Branford, Conn., and 20 related to its cellular analysis business at its Penzberg, Germany, site.

The company will also invest additional R&D resources into "disruptive technologies," including sequencing, and will continue existing sequencing development partnerships with IBM, DNA Electronics, and several academic collaborators.

According to Dan Zabrowski, head of the Roche Applied Science unit of Roche Diagnostics, the restructuring is not related to the company's failed bid for Illumina earlier this year but rather resulted from an earlier decision to focus on those areas and products where Roche has a chance to become either the market leader or second to the leader in the market, and to become more profitable overall.

"To achieve this, we need to focus our resources in specific growth opportunities," Zabrowski told In Sequence last week. "We had been working on this plan for a period of time [and] were actually ready to implement it earlier but decided to wait as a result of our decision around Illumina back in January."

The Applied Science group reported about CHF 740 million ($809 million) in annual revenues in 2011, a 3 percent decline compared to 2010. Its genomic analysis business, which consists of 454 Life Sciences and Roche NimbleGen, decreased 11 percent year over year (IS 7/2/2012).

After reviewing Applied Science's product portfolio, the company decided to exit the Roche NimbleGen microarray business, with the exception of sequence capture products, by the end of 2012 (see this week's BioArray News). In addition, it will shed its Cellavista and xCELLigence cellular analysis systems, while integrating the remainder of the cell analysis business with biochemical reagents.

Roche NimbleGen's sequence capture products — the solution-based SeqCap EZ Library and the Sequence Capture Arrays — will be consolidated with 454's sequencing portfolio under a new business called Sequencing Solutions, though both brands will be retained "for the foreseeable future," Zabrowski said.

"We felt that instead of having multiple groups and organizations potentially thinking about different parts of the sequencing system, we wanted to consolidate them into a single business," he said. Sequencing Solutions will be led by 454 president Thomas Schinecker, but 454 will remain in Branford and Roche NimbleGen will retain its Madison, Wis., site while its facilities in Iceland and Germany will be closed.

About 20 employees at 454 were laid off as a result of the restructuring because the company had "too many people with a certain skill set" at that site that did not fit its future needs, Zabrowski said.

No further restructuring of the Applied Science organization is planned, he said.

Existing sequencing customers will remain largely unaffected by the consolidation. "What the customer will see is a much more integrated approach in our dialogs with them," Zabrowski said. "So instead of one Roche person potentially having a discussion about our GS systems and then another having a discussion with them about sequence capture, we would be focusing on having a holistic discussion with our customers in terms of what their needs are."

As part of the reorganization, Roche is integrating research and development at Applied Science's three R&D sites more closely, installing Adrian von Sigriz as a global leader for R&D. "In the past, each of the three sites in Madison, Branford, and Penzberg operated in an autonomous way in regards to R&D," Zabrowski said, "and we felt by globalizing the organization, we can more effectively support all of our product areas, and also, more importantly, create additional funding for early innovation products."

In Madison, Wis., Tom Albert, a former NimbleGen Systems executive, will lead early research into "disruptive technologies" that can either enhance or complement Applied Science's existing businesses. For example, he will work closely with scientists at 454 to look for new technologies around sequencing, but will also consider complementary areas, such as proteomics. Albert's team will likely involve scientists from all three R&D locations.

In addition, Albert will have a "sufficient amount of funding" available to pursue academic collaborations "with thought leaders in different technologies that we find interesting," Zabrowski said. While he did not disclose the funding amount, he said that it should be sufficient to invest in between 20 and 30 academic collaborations.

Besides restructuring Applied Science's R&D, Roche will also bring additional senior marketing experts on board and will develop "contemporary tools" for conducting e-business, he said.

Regarding its sequencing technology, in the near term, Roche will continue to improve the performance of its GS FLX+ and GS Junior platforms and to develop a "complete workflow solution" around applications where the technology offers advantages, focusing in particular on targeted gene sequencing, virus sequencing, metagenomics, de novo genome sequencing, and transcriptome sequencing.

As previously stated, Roche plans to extend read lengths for the GS Junior further and develop automation solutions for library preparation and emulsion PCR, which will become available later this year and early in 2013 (IS 4/17/2012).

For the GS FLX+, the company will launch a number of improvements that will address problems that some customers have had with achieving long reads (IS 4/17/2012).

Roche also plans to expand its menu of sequencing assays in HIV, HBV and HCV resistance testing, and HLA typing.

Mid term, the company will continue its collaboration with DNA Electronics to develop a semiconductor sequencer that is based on electrochemical detection, which has been ongoing since 2010 (IS 11/2/2010). Zabrowski said that the partners, who have been working on ion sensitive field effect transistor, or ISFET, technology, are "making very good progress" and are facing "critical milestones" this year, though he declined to provide a timeline for commercialization. "We're excited about the project and we're working very closely with Chris Toumazou and his team at DNAe to be as aggressive as possible in bringing that product to the marketplace," he said.

Long term, Roche will continue to evaluate and develop new sequencing technologies, Zabrowski said, for example through its ongoing collaboration with IBM on solid-state nanopore sequencing and with Stuart Lindsay at Arizona State University on nanopore readout (IS 10/11/2011).

Roche will complement these projects with others, either through its internal research organization or through "an aggressive partnering strategy with companies and labs that may have very interesting new innovative technology," Zabrowski said.

Roche still sees its collaboration with IBM as a "long-term project" with a timeline to commercialization on the order of five years, he said. "Certainly the technical challenges of pushing the limits on nanopore technology have been fully appreciated by both ourselves and our partner IBM," he said. "IBM has put significant resource behind the advancement of that technology, and even though it is still considered an early, high risk project, we are very enthusiastic about our collaboration with IBM."

The company is still evaluating which sequencing platform it might eventually take to the diagnostic market. "We certainly think an IVD for clinical sequencing is very important. We want to capture that market, taking advantage of the breadth and depth and experience we have in IVD development, and our global commercial reach," said Zabrowski. "We are in the process of evaluating that question right now, both with our existing pipeline as well as the potential of external opportunities."

While the company believes there are "certain elements" of the 454 sequencing workflow — which includes sample prep, the sequencer itself, and the assays — that could be CE-marked, it does not plan to CE-mark either of the GS platforms at this time.

Asked whether Roche would consider pursuing the acquisition of Illumina again in the future, Zabrowski said that Roche "continues to hold Illumina in very high regard, but unfortunately, the discussions were not constructive."

"But frankly, we will continue to aggressively look at all different options in the sequencing space," he said.

At the end of this year, Roche plans to disclose details for a second phase of its strategic plan for Applied Science, during which it plans to invest further in its existing businesses — custom biotech, qPCR, reagents, and sequencing — and to "continue to look for complementary business opportunities," Zabrowski said.

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