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Originally Published May 2000
DNA-chip makers build strategies to break into diagnostics
To fund the development of DNA-chip products for the clinical diagnostics marketplace, manufacturers are turning to alliances with powerhouse corporations.Cliff Henke
Virtually every player in the DNA-chip manufacturing field has forged alliances with powerful companies in the semiconductor, research, and pharmaceutical industries. The fundamental reason behind the collaborations is simple: money. The chip makers are partnering with these companies to generate much-needed early cash flow. Just as important, they will be able to gather critical user feedback for the next stages of their product development.
For many such manufacturers, that next step is to develop instrumentation for the field of molecular diagnostics. The agreements these DNA-chip makers have made may, they hope, provide them with enough capital to break into the diagnostics market. According to Frost & Sullivan, this market is expected to grow to more than $600 million by 2005.1
Microarray Technology
Agilent Technologies Inc. (Palo Alto, CA) has been using its capital resources and enviable visibility (helped by a slick multimillion-dollar multimedia ad campaign) to steadily build its market position in microarray technology. The company sees the enormous potential of these technologies and plans to take a "leadership role in the burgeoning market," according to Agilent president and CEO Edward W. Barnholt. Agilent's strategy for accomplishing that goal is to build its own strategic partnerships and agreements with various companies.
In December of last year, the company announced it had acquired a license to the DNA microarray patents developed by Edwin M. Southern and owned by Oxford Gene Technology (Oxford, UK). The license gave Agilent access to Oxford's ink-jet printing technology, which offers a higher degree of flexibility, speed, and quality in DNA microarray design and manufacturing. After incorporating this technology, Agilent claims it can now design and produce customized oligonucleotide arrays (with each array representing thousands of genes) in a matter of days.
"What makes Agilent's approach different," says Kevin Meldrum, manager of business development for the company's life sciences group, "is that it draws upon the ink-jet technology of Agilent's parent, Hewlett-Packard [HP; Palo Alto, CA]." HP originally developed the capability for its plain-paper copiers and printers.
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Inpharmatics (Kirkland, WA). |
The Agilent-Oxford partnership was further enhanced in February of this year, when Agilent and Rosetta Inpharmatics Inc. (Kirkland, WA) expanded their strategic alliance to include Rosetta's FlexJet DNA microarray technology, which enables the manufacture of many more customized arrays than Agilent could previously have developed. The two companies had earlier agreed to jointly develop and distribute Rosetta's gene expression analysis software platform, the Resolver gene expression data-analysis system.
"This collaboration marries the best gene expression technology with one of the largest manufacturing and marketing capabilities in the life sciences industry," says Stephen Friend, MD, PhD, president and chief scientific officer of Rosetta. "Agilent's plans to open the rapidly growing expression market to a wider group of users will ultimately move DNA microarray use beyond research labs and into medical diagnostics and other clinical applications."
Pharmacogenomics
The growing field of pharmacogenomics is undoubtedly the reason why pharmaceutical giants are joining forces with the chip makers. DNA-chip technologies can be used not only for drug discovery, but also to develop molecular diagnostic tests for determining the best course of treatment for an individual.
"For pharmaceutical companies that spend a half-billion dollars over a dozen years to develop new drugs, cutting R&D time by even a fraction amounts to hundreds of millions of dollars," says Deepak Thakkar, product manager for microarrays at Genometrix (The Woodlands, TX). Conversely, DNA-chip makers that are willing to be paid only a small percentage of that savings can often improve their cash flow by tens of millions of dollars. Such funding can be precious to start-ups starving for income to offset research expenses while they endeavor to prove to skeptical investors that their technologies can make money.
For example, Affymetrix (Santa Clara, CA), maker of the first DNA chip, signed a deal to grant Eos Biotechnol-ogy (South San Francisco, CA) broad access to expression chips made by Affymetrix for the work Eos is conducting in pharmacogenomics.
Similarly, a collaboration between Hyseq (Sunnyvale, CA) and the pharmaceutical division of Kirin Brewery (Tokyo) resulted in Hyseq reaching a key corporate milestone of having 1.2 million gene samples in its library—ahead of schedule. The partnership enabled the company to grow while it learned, says Hyseq CEO Lewis Gruber.
And last year, Gen-Probe Inc. (San Diego), Chiron (Emeryville, CA), and the American Red Cross (ARC; Falls Church, VA) entered into an agreement to develop a semiautomated amplified nucleic acid probe test to help detect hepatitis C virus (HCV) and human immunodeficiency virus (HIV-1) in blood donations. While the ARC says that the blood supply is safer than it has ever been, the Gen-Probe and Chiron nucleic acid test is expected to add an extra layer of safety screening to the blood supply. Under the agreement, Gen-Probe and Chiron will provide instruments and test kits to the Red Cross, which conducts this testing at the organization's National Genome Testing Laboratory in San Diego.
Meanwhile, Agilent is using similar strategies to enhance its position in more-traditional IVD markets. In March, Agilent signed a cooperative deal with PE Biosystems (Foster City, CA) to provide pharmaceutical researchers with a range of liquid chromatography and mass spectrometry products that could not be developed by either company separately. This announcement followed an OEM agreement implemented in October 1999, whereby PE Biosystems will sell, install, and become the first point of contact for service support of Agilent technologies in this market.
Atomic force micrograph of BeadArrays by PE Biosystems (Foster City, CA).
Lab on a Chip
Agilent's market strategy is a "total solution approach" to gene expression analysis, explains Barnholt. This approach is supported by three technology pillars: DNA microarrays; bioinformatics, involving the Rosetta Resolver gene expression data-analysis system; and Agilent's integrated lab-on-a-chip automated bioanalyzer product line. The Agilent 2100 chip-based bioanalyzer was developed with Caliper Technologies (Foster City, CA) through yet another strategic alliance that began in 1998.
Using proprietary microfluidics breakthroughs from Caliper, the Agilent 2100 integrates fluid handling, sample processing, separation, and detection in a miniature chip format. The instrument is designed to enhance the efficiency, productivity, and speed of laboratory experimentation by miniaturizing, integrating, and automating the multiple routine steps in experiments into a single desktop system.
"We use fluorescence detection and, as the fluorescence level is measured, the data are immediately plotted," explains Meldrum. "The data are saved as a digital file, which can even be sent electronically to a researcher who can read it on his or her end with compatible software."
Such capabilities are changing the way research is being conducted, he says. "Until now, molecular biology has been basically a qualitative science. As processes become more standardized, it makes simultaneous comparisons and research from remote locations more and more possible."
"We believe that LabChip technology has the potential
The LabChip uses semiconductor-like microfabrication techniques to build various chip architectures, such as interconnected fluid reservoirs and pathways.
According to Meldrum, Agilent's ultimate aim is to offer custom-ordered array sets that are far less expensive than what researchers pay today for customized microarrays. "The ink-jet technology is very flexible," he adds. "We can put any set of genes on glass slides on a made-to-order basis. Today's microarray market basically consists of home-brew kits and cataloged arrays. As we do more and more collaboration with customers, we'll have enough of a library to allow new customers to mix and match from a larger and larger library of arrays. Eventually, we'll be able to offer customized arrays at a reasonable cost."
Research Partners
Agilent's market strategy also includes a technology access program (TAP), a partnership of sorts with the research community. The program provides selected research customers early and preferential access to the company's DNA microarray technology and the associated analysis software and hardware, prior to the wider-scale commercial launch of these products and services. Features of the program available to Agilent's partners include the following:
- Arrays that are synthesized in situ to customer specifications.
- A laser-based microarray scanner.
- The Rosetta Inpharmatics's Resolver gene expression data-analysis system.
- Access to Agilent technical experts.
The Agilent 2100 bioanalyzer is used by life scientists for the integrated analysis of nucleic acids.
"By providing this technology, we intend to expand the gene expression market and thereby increase the likelihood of new blockbuster drug and bioagricultural developments," says Richard Kniss, senior vice president and general manager of Agilent's chemical analysis group.
Patent Wars
Generally, these partnerships are mutually profitable, but sometimes the collaboration can result in intellectual-property turf wars. For example, the lawsuits involving Hyseq and Affymetrix grew out of collaboration talks held between the two companies. Affymetrix was interested in licensing Hyseq technology for a project, but the deal stalled. In another such court challenge, Incyte Pharmaceuticals (Palo Alto, CA) is suing Affymetrix's strategic partner Gene Logic (Gaithersburg, MD), alleging that Gene Logic infringed three of Incyte's patents for microarray and gene expression technologies when it used them to compile Gene Logic's database of DNA sequences.
The Agilent 2100 integrates fluid handling, sample processing, separation, and detection in a miniature chip format.
This past fall, Gen-Probe, Vysis Inc. (Downers Grove, IL), and BP Amoco (Chicago) settled litigation that began among the firms in 1995, when Vysis was a part of BP Amoco. In the settlement, the parties granted each other various immunities from further lawsuits over contested patents, and cross-licensed other patented technologies. Vysis granted limited licenses to Gen-Probe under Vysis's patents for detecting RNA and selected other infectious-disease diagnostics. In turn, Gen-Probe granted Vysis limited immunity from a patent infringement suit for Vysis's food business.
Conclusion
Bringing a DNA-chip product to the molecular diagnostics market will be an expensive process. By forging partnerships with giant corporations in the research, semiconductor, and pharmaceutical industries, chip manufacturers will raise money to build instruments for use in the clinical diagnostics market.
Reference
1. Strategic Assessment of the Developing DNA Microchip Market (Mountain View, CA: Frost & Sullivan, 1997).
Cliff Henke is a freelance writer based in Southern California.
Photos courtesy of PE Biosystems and Agilent Technologies
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