Gail Dutton

Push into emerging markets and to acquire new technologies was evident.

The economic headwinds that are buffeting economies around the globe are causing many tools and equipment manufacturers to scrutinize their strategies, according to the companies GEN spoke with during J.P. Morgan’s 30th Annual Healthcare Conference in San Francisco January 9–12. Smaller companies with novel technologies seemed the most optimistic, along with those setting their sights on emerging markets or upon novel technologies that address unmet needs.

Highlights from GEN’s Week in San Francisco

Covance plans to “grow through increased outsourcing penetration,” Joe Herring, chairman and CEO, reported. “We see the industry going from a 40 to 50 percent outsourcing model to 80 percent outsourcing in the next 10 years. That provides a great opportunity for us. Our goal is to arrest IT spending and enable our workforce to leverage IT and increase productivity in the laboratory and clinical businesses.”

Covance is consolidating and automating its IT operations and is expanding its talent pool. Financially, Herring acknowledged the headwinds of a poor foreign exchange rate, approximately $400 million in cash mostly stranded in Europe, and declining backlog as Lilly and Sanofi contracts are completed, although Genzyme and other subsidiaries are being added to the Sanofi alliance.

NanoString rolled out its second generation nCounter® visual gene-expression analysis system in 2011, followed in December by the clinical validation of its PAM50 diagnostic assay for breast cancer. It also gained a $20 million series D financing as part of a $1 billion GE initiative to develop molecular and oncologic diagnostics.

“The FDA took a strong interest in our products,” CEO Brad Gray told GEN. “We gave a seminar—not a pre-IND meeting—to educate the FDA about how our technology works before talking with them about specific assays.” Building upon that interest, NanoString plans to continue to drive adoption of research-only products and pursue clinical studies to bring diagnostic assays to the FDA. That includes increasing its collaborative work to develop additional diagnostic products through the biomarker discovery and validations of its research collaborators.

“All of our technology relies upon molecular bar codes that allow visualization of nucleic acid sequences under a microscope,” Gray noted. “We’ve developed more than 800 unique bar codes,” that function as probes by attaching to specific DNA sequences. “It is more precise than microarrays and at least as good as PCR but has the advantages of multiplexing (to identify multiple different pathways simultaneously), precision, and simplicity. There are no enzymes or amplification.”

GEN-Probe sees unique opportunities for best-in-class assays for women’s health, infectious disease, transplant diagnostics, blood screening, and genetic testing. “Three product launches are under way now and a couple more are expected,” Carl Hull, chairman and CEO, told the audience at the J.P. Morgan conference. “Our core sexually transmitted disease business is expanding in the EU and U.S., and the U.S. launch of the Panther® systems for smaller labs is going well.”

The second-generation version of Panther adds real-time PCR capability, offering full-automation package to smaller labs. “Our optimal strategy to automate real-time PCR assays will launch in 2015,” Hull added. “We have U.S. approval for the Tigris® system for human papilloma virus and other sexually transmitted diseases. Two more important products are pending at the FDA,” including a new instrument to further automate molecular testing from liquid-based cytology specimens. The liquid-based cytology platform announced at the conference is expected to be available in 2013. “We see opportunities to catalyze growth in emerging markets,” Hull added, noting China’s multiyear project to screen its blood supply using nucleic acid testing.

Saladax Biomedical is developing and commercializing novel diagnostic assays to deliver on the promise of companion diagnostics and personalized medicine. The efficacy of managing doses through blood-based assays is in trials with Myriad. “The data shows that active dose management results in reduced toxicity, improved outcomes, and longer progression-free survival,” Edward L. Erickson, president and CEO, told GEN.

Saladax has 13 assays in development addressing therapeutic dose management in oncology, where dose management traditionally is based upon body weight rather than upon drug metabolism. “One has a CE mark in Europe and registration in Australia, and it is sold as a service in the U.S. by Myriad. Two more products are coming in the second quarter of 2012,” Erickson stated. “The company also is moving forward on last September’s multiyear deal with Bristol-Myers Squibb to develop and commercialize diagnostic assays for the early detection of Alzheimer disease. We also entered into a deal with Ortho Clinical Diagnostics with milestone payments. Commercialization would yield royalties on the diagnostic but not the drug.”

Good Start Genetics achieved one of the first clinical uses of advanced sequencing, Don Hardison, president and CEO, told GEN. “Rather than looking for specific mutations, we look at the entire gene of interest to report on mutations.” Because the technology meets the standard of care and provides a panel of up to 22 tests at costs equivalent to existing single-mutation tests, Hardison foresees no difficulty in acceptance from payers.

Alere connects diagnostic devices to people, and is moving to cell phone and internet-based reporting, according to Ron Zwanziger, chairman & CEO, speaking at the J.P. Morgan conference. Alere™ NAT Analyzer, which identifies HIV-1 and HIV-2 subtypes, “provides results in 30 minutes with a setup time of less than 30 seconds. The global market for HIV viral load analyzers is projected to be $1.8 billion by 2015, up from $540 million now.” Clinical trials will begin this year for Africa, and in 2013 in the U.S. and EU.

The Alere iNAT for isothermal amplification targets the hospital market, providing DNA and RNA sequence detection within 15 minutes. Trials for influenza will begin in the first half of this year, with commercialization expected in 2013. Alere plans to commercialize the DC4 analyzer for HIV positive patients in the U.S. and EU, after its recent launch in Africa. The Alere Heart Check System, the world’s first fingerstick, home-testing BNP meter, will begin trials to determine the effectiveness of regular monitoring to reduce hospitalizations. Additionally, “We’re running large-scale trials in New Jersey and Hawaii, testing the concept of connecting disparate IT systems and information around individuals, so when data comes in, physicians are more likely to make correct decisions and get better outcomes,” Zwanziger said, adding, “we’re also looking for acquisitions.”

PerkinElmer plans to break the sequencing bottleneck, focusing on basic environmental needs for emerging markets and introducing disruptive technology for mid-level markets, Rob Friel, chairman president and CEO, reported at J.P. Morgan. The company is working with Russia’s Ministry of Health to improve and harmonize prenatal screening throughout the country through diagnostic screening and digital imaging. “In Egypt, we are working with officials to build one of the largest newborn screening labs in the world.” Infectious disease automation and liquid handling is being deployed in Brazil to detect HIV and in Angola for sickle cell disease in infants. In China, PerkinElmer is working with tier two and three hospitals to screen for hepatitis B.

The company is also invested in environmental health, around identifying contamination from air, water, food, and soil. PerkinElmer technology helped test soil in Japan for radiation after the Fukushima nuclear disaster. During 2012, the company plans to continue to improve the sensitivity and speed of its technology to grow emerging markets.

Affymetrix plans to stabilize its gene-expression business, build its cytogenetics business, maintain high single-digit growth in reagents and expand market share in target genotyping, according to Frank Witney, Ph.D., president and CEO, speaking at J.P. Morgan. “We’re working to move into downstream application and to integrate recently acquired ParAllele BioScience’s products into our portfolio. Opportunities are in translational medicine, cytogenetics, and life sciences diagnostics, with the focus on cancer and inflammation.”

Challenges for the coming year include a lessening dependence upon assays, as the genetic expression business is expected to decline from 43% to 30% of revenues. “We’re growing new applications, and we put specialists in place to focus on the expression business, who can talk seriously about our products,” he countered, citing in-licensed reagents and the launch of a microarray and the new PrimeView™ low-cost cartridge array. Dr. Witney envisions growth in genetic analysis and powered by Affymetrix business segments as well as the cytogenetic and agricultural biotech markets, with geographic growth expected to be high in China and Brazil.

Waters is divided into two divisions, one for liquid chromatography and mass spectroscopy and the other for physical testing using thermal analysis rheometry, biocalorimetery, and similar technologies. “This is a smaller market but is growing rapidly,” Douglas A. Berthiaume, chairman, president and CEO, told the crowd at the J.P. Morgan conference. This year Waters expects to benefit from the 2011 introduction of several products including the Unifi™ system, Synapt® G2-S, and the Acquity® UPLC. “Fiscal concerns raise some caution throughout the life sciences industry, and we are evaluating whether to change strategies. Emerging markets show growth opportunities, particularly in China, Brazil, Taiwan, and Korea.”

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