Medical Device Link.

Originally Published IVD Technology November/December 2002

In Person

Joining forces

In molecular diagnostics, alliances could be the key to future market success.

Stacey Sias, PhD, is vice president of business planning at Celera Diagnostics (Alameda, CA). She can be reached at Stacey.Sias@ celeradiagnostics.com.

Even before the completion of the Human Genome Project, there was a tremendous amount of buzz about how molecular diagnostics were going to change the diagnostics industry and how the market would soon see a huge explosion of molecular diagnostic products. Such rapid progress has not occurred, however, and, so far, the molecular diagnostics market has not come close to reaching its potential.

Despite the difficulties that many companies have encountered in molecular diagnostics, Celera Diagnostics (Alameda, CA) has a plan to become successful. A joint venture between Applied Biosystems (Foster City, CA) and Celera Genomics (Rockville, MD), Celera Diagnostics has been actively reaching out to find potential business partners. In June 2002, Celera Diagnostics formed an alliance with Abbott Diagnostics (Abbott Park, IL) to develop and market in vitro molecular diagnostic products. And in October 2002, the company reached an agreement with Quest Diagnostics Inc. (Teterboro, NJ) and Laboratory Corp. of America (LabCorp; Burlington, NC) to collaborate in establishing the clinical utility of laboratory tests based on molecular markers.

The collaboration with Quest Diagnostics will support current and future disease association studies at Celera Diagnostics that seek to identify genetic markers associated with cardiovascular disease and diabetes. The collaboration with LabCorp will support disease association studies for Alzheimer's disease, breast cancer, and prostate cancer. Celera Diagnostics also announced a collaboration with Bristol-Myers Squibb (New York City) to study genes that may be useful in the diagnosis and treatment of cardiovascular disease and diabetes.

IVD Technology senior editor Richard Park spoke with Stacey Sias, PhD, vice president of business planning at Celera Diagnostics, about the joint venture's alliance with Abbott Diagnostics, working with FDA, and her views on the molecular diagnostics market.

IVD Technology: How would you characterize the business and technology relationships among the three entities: Applied Biosystems (AB), Celera Genomics, and Celera Diagnostics?

Stacey Sias: As a joint venture, we are in a unique position because we have access to the technology expertise of AB, and the discovery and bioinformatics capability of Celera Genomics. So together, we have a competitive advantage in molecular diagnostics with the strengths of those two businesses, combined with what Celera Diagnostics brings, we can play a significant role in the diagnostic market.

This was a vision that was created by Applera Corp., your parent company. Was there anything in particular that led it to create an entire company that is geared toward and has a primary focus on diagnostics?

In the summer of 2000, Roche Diagnostics licensed to Applera its PCR technology in the human IVD field, giving us another tool in addition to the technology and instrumentation from AB and the bioinformatics capability from Celera Genomics. With these foundational pieces in place, and the diagnostic expertise at Celera Diagnostics, we knew we could build a successful business. We next had to decide on the direction for our new business, which we ultimately determined was first to focus on actionable, unmet needs in molecular diagnostics.

So with the pieces there, such as the tools, the expertise, and the knowledge, it was a matter of bringing these factors together, and it made sense to start an entire company.

That's right. We had all the pieces to do it, along with the expertise and the financial backing of AB and Celera Genomics. The opportunity was there, and we felt that we were the group to run with it.

What have been Celera Diagnostics' product development efforts up to this point?

We currently have a number of products. The ViroSeq HIV-1 genotyping system is used to detect drug resistance in the HIV-1 virus genome, and is currently under review at FDA. We have developed analyte-specific reagents (ASRs) that are used to analyze genetic mutations in the gene that has been associated with cystic fibrosis. We have developed a human leukocyte antigen research-use-only kit that is used for transplantation rejection testing. And we are also developing ASRs to monitor viral load and to genotype hepatitis.

What other products is Celera Diagnostics currently developing and planning to develop in the future?

We have undertaken a number of disease association studies, and we have already started a study for Alzheimer's disease. We also recently announced some clinical sample acquisition arrangements in the area of cardiovascular disease. So those are some of the first studies that we will be performing.

Overall, we plan to perform about four to six studies per year. From those studies, we will identify markers, validate our findings, incorporate the results into new tests in collaboration with reference labs, and then ultimately bring the tests to market.

Forming Alliances

Why was the alliance with Abbott Diagnostics formed in the first place, and how did it all come about?

The opportunity for us to work with a leader in the diagnostic marketplace was appealing to us from the beginning. Abbott is a very strong player in the market, and for us that meant we could focus more of our energy and our dollars on discovery and R&D efforts, rather than simultaneously trying to build sales and marketing. We felt that if we could work with a company that was already established in the marketplace with a strong molecular diagnostic presence and a worldwide organization, then we could get our products out to the market more quickly and focus on what we really wanted to do, which is to identify targets and develop tests that improve human health. We thought finding a partner was the best way for us to accomplish this.

Was it a case of Celera Diagnostics being a new player in this field, trying to gain some expertise or experience and to learn that knowledge from a more established and bigger player like Abbott Diagnostics?

We already have the knowledge and the expertise. It's rather a matter of building the network, the distribution channel, and the customer relationships. With a new business, there are a number of ways that can be done. Some companies follow a business model that requires it to build on its own sales and distribution infrastructure. We felt that it would be advantageous to partner with an established diagnostic leader.

What have been the results of this alliance so far in terms of product development?

The ViroSeq HIV-1 genotyping system by Celera Diagnostics (Alameda, CA).

We placed our products into the alliance, and Abbott has also placed their HCV and HIV viral load testing products into the alliance. Celera Diagnostics and Abbott initiated a number of disease association studies, and will develop additional products under the collaboration throughout the rest of this year, and into next year and beyond.

One of the earliest tests that we developed through this collaboration is a new version of the cystic fibrosis test. Also, reagents for monitoring viral load and genotyping hepatitis are some other early things that have resulted from the alliance.

What future plans does Celera Diagnostics have with Abbott Diagnostics?

We will continue performing studies in areas such as inflammatory disease, central nervous system disorders, oncology, cardiovascular, and autoimmune diseases. These are some of the focus areas for the alliance.

Is forming an alliance a proper strategy that other new diagnostics companies should consider when coming into a very competitive field like molecular diagnostics?

For Celera Diagnostics, the alliance seems to be working very well, and we feel strongly that we made the right decision. Abbott is a great partner for Celera Diagnostics. For other companies, it depends. Each company has to examine its strengths and decide what role it envisions for itself in the future diagnostic market.

We wanted to focus on developing products that not only have a positive impact on medicine, human health, and the economics of human health, but also an impact on the ability to develop those products as quickly as possible. The alliance strategy was the right move for Celera Diagnostics.

Working with FDA

Celera Diagnostics has submitted a 510(k) to FDA for its ViroSeq HIV-1 genotyping system. What is the current status of that submission, and when do you anticipate receiving approval for that system?

We submitted our 510(k) in July 2001. This past May, we received a set of additional questions from FDA, and we are in ongoing discussions with the agency to address those questions.

What additional questions did FDA raise, and what is the nature of these ongoing discussions with FDA about the system?

FDA has asked for more information about the software that supports the product, and also about a revision to the operator's manual.

How do you think FDA is going to address home-brew tests out in the diagnostics field?

I think FDA established the ASR regulations a few years ago to address home-brew tests.

Was that a good thing? Was it appropriate for FDA to do that?

It's very appropriate. FDA realized there are new tests that are continually being developed that could potentially improve medicine and patient outcomes. Those tests are brought to market by highly skilled reference labs and medical centers. Those labs configure home-brew tests using analyte-specific reagents. The regulations with respect to ASRs seem appropriate.

By increasing the regulatory ante for labs that use ASR products, do you think FDA is intentionally or unintentionally helping to stimulate the production of commercialized products that are more directly regulated?

FDA has tried to find mechanisms for the labs to be able to provide home-brew tests using regulated reagents. Thus, the ASR regulations were established.

The Future of Molecular Diagnostics

What is the outlook for the molecular diagnostics marketplace?

Right now, molecular diagnostics is about a billion dollar market. Based on the studies that we have seen, it's growing at a rate of about 25–30%, which is about five times higher than the diagnostics industry average.

So you view the marketplace positively, and you believe there's a lot of potential for growth and opportunity in molecular diagnostics?

There is a tremendous opportunity for growth right now. Knowledge about genetic diseases is expanding every day. With molecular diagnostics becoming a major contributor to patient management, there is a tremendous opportunity for Celera Diagnostics, the medical community, and patients to use genetic-based tests as a component of patient management and therapy guidance. It's an exciting place right now, and it's an exciting time.

While there is opportunity, there still remain significant problems and obstacles in the molecular diagnostics field. What are those obstacles (e.g., financial, regulatory) that diagnostics companies encounter in trying to do business in molecular diagnostics?

It's true that there are a number of obstacles. You've already mentioned regulatory obstacles. There is a certain amount of competition from other companies that has to be addressed. We have to be cognizant of reimbursement and work with labs in this area.

We also have to work with the reference laboratories to upgrade their technologies and help the labs move forward as we develop new systems and new methods.

Access to relevant intellectual property is an ongoing issue in this industry, to make sure that we have the freedom to use the inventions and the discoveries that we think will impact patient management.

What other problems are out there in the marketplace, and why hasn't molecular diagnostics reached the potential that a lot of people were talking about a couple of years ago?

The easy answer is that developing diagnostic tests and demonstrating clinical utility takes time. The harder answer comes from looking at the way people approach the use of genetic information. At Celera Diagnostics, we built a solid business plan, and we have access to technology and intellectual property, and we possess discovery and product development capabilities.

However, just as important, if not more important, is the decision to focus on a particular disease, indication, or health concern, how we approach those diseases, how we perform our clinical impact and discovery studies, and how we source our samples.

Celera Diagnostics has found a way to overcome these obstacles. How can other diagnostics companies overcome these obstacles in the molecular diagnostics field?

What is needed is a measured approach to diagnostics. It's not a matter of making a lot of reagents and getting them out there, but rather carefully selecting the areas of focus and also understanding the right medical questions to ask that will add medical and economic value.

There is a very broad range of opportunities in molecular diagnostics, and it's important to know which opportunities to focus on and how to develop the studies, build the capability, and identify the right samples, so that when those experiments are completed and discoveries are made, companies can more rapidly demonstrate the medical value of the results. Companies need to focus on this, and that's what Celera Diagnostics is doing.

I would presume that's where Celera Diagnostics has a distinct advantage in having partners and sister businesses like Celera Genomics and Applied Biosystems to refer to and to use their expertise in developing products that meet the needs in certain areas.

We do work with our sister businesses and we look in areas of human health where an earlier diagnosis or a better decision about which drug treatment or drug dosage can make a difference in a patient's life.

Stacey Sias, PhD, is vice president of business planning at Celera Diagnostics (Alameda, CA). She can be reached at Stacey.Sias@celeradiagnostics.com.

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