By Monica Heger
This story was originally published Feb. 6.
Genomic Health said this week that it is launching a wholly owned subsidiary that will focus on integrating genomic sequence data into medical practice for patients with common and rare genetic conditions.
The subsidiary is intended to capitalize on the company's investment in next-generation sequencing and bioinformatics over the last several years and will mark the company's first commercial activity outside the oncology market.
The new business is expected to be established by March 1 and will start providing commercial services in 2013. Randy Scott, who has served as Genomic Health's executive chairman, will remain a board member and take on the role of CEO at the new subsidiary. Kim Popovits, Genomic Health's CEO and president, will assume the role of chairman of Genomic Health's board.
The company plans to invest up to $20 million in the subsidiary over the next two years. In 2012, the business is expected to incur an $8 million net loss.
The new venture will focus on commercial applications of the human genome and will leverage both Genomic Health's internal research and development activities as well as the expertise of third parties.
During a conference call to discuss Genomics Health's fourth-quarter earnings, Popovits said that "this is an ideal time" to launch the subsidiary, and that the company has "been gearing up for it for the past several years" with its investment in next-generation sequencing.
The company did not disclose details about the types of products and services it plans to launch or what disease areas it would focus on, but did say that it would have commercial offerings by 2013.
Steve Shak, the company's chief medical officer, explained that "certain products can be made available quickly because the discovery has been accomplished."
He said that product and service launches would be on a "tiered" approach, with some areas taking "time to flesh out."
Scott further hinted that one likely focus would be on clinical interpretation of genomic data.
"The goal is not to do a whole lot of early-development discovery work," Scott said. Instead, the focus will be to "bring that genetic information to patients who need it in a clinically relevant and meaningful way."
"Managing the human genome is enormously information technology intensive, and you can imagine that the typical medical office has very little resources for being able to do that," he said.
Genomic Health adopted next-gen sequencing as part of its biomarker discovery process a little over two years ago and has said that it plans to eventually move its molecular diagnostic platform from quantitative RT-PCR to next-gen sequencing.
Scott said in this week's call that the company plans to translate this investment in next-gen sequencing and bioinformatics to genetic diseases outside the field of oncology.
He added that the subsidiary would address a broad range of issues related to clinical sequencing, such as identifying clinically relevant mutations, connecting mutations to therapies, and providing information on known mutations.
The company declined to disclose what sequencing platform or platforms it plans to employ in the new business. So far, most of its sequencing work has been done on the Illumina HiSeq, but Scott said that the company would be "evaluating all the various sequencing technologies," including desktop sequencers.
While the new venture marks Genomic Health's first efforts outside the realm of cancer, Popovits maintained that cancer would still be the company's primary focus. Aside from Scott, no other Genomic Health employees are expected to move over to the new business.
Genomic Health's 2011 fourth-quarter revenue increased 13 percent to $53.4 million from $47.1 million in the fourth quarter of 2010, while full-year revenues increased nearly 16 percent to $206.1 million from $178.1 million in 2010.
Cash and cash equivalents and short-term investments at Dec. 31, 2011, were $100.5 million, compared with $76.8 million at Dec. 31, 2010.
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