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Kathy Ordoñez

In an effort to stem losses from its expensive small-molecule business, Celera Genomics Group (Rockville, MD) has restructured its Celera Diagnostics (Alameda, CA) joint venture. Under the terms of the deal, Celera Genomics, which had equal ownership of the company with Applied Biosystems Group (Foster City, CA), has taken full control of Celera Diagnostics. The company also plans to sell or find partners for its drug-development programs.

In exchange for its share of the business, Applied Biosystems has gained the right to sell instrument platforms to diagnostics end-users. In addition, Celera Genomics will forgive royalties on certain Applied Biosystems products through 2017 and will pay the company $30 million in cash. Celera and Applied Biosystems are subsidiaries of Applera Corp. (Foster City, CA).

“Celera is now better positioned to execute its strategy to develop market-leading diagnostic products and make pharmacogenomics discoveries that should drive its vision of targeted medicine,” said Applera CEO Tony White during a January earnings call. White cited the higher margins of IVDs as an attractive alternative to drug discovery. “Clearly, if you’ve reduced your burn rate very substantially, if your principal product line and business is now diagnostics—which has lower risk and shorter development times—one can conclude that the pathway to profitability is not only a good bit safer, but also faster,” he said.

Since it was formed in 2001, Celera Diagnostics has seen steady year-end revenue growth. However, during the same period, Celera Genomics has often faced steep losses. Although Celera Genomics has slashed expenses by more than half over the last four years, its revenues have also declined.

At the JP Morgan Healthcare conference earlier this year, Celera president Kathy Ordoñez laid out the company’s new focus on targeted medicine. This includes developing tests that can screen at-risk patients for disease, as well as those that can help select proper drugs and monitor their effects. “The result is earlier intervention to delay onset and severity of disease, the right therapy at the optimal dosage for each patient, and better and more-cost-effective healthcare,” she said.

In particular, Celera will be banking on a restructured profit-sharing alliance with Abbott (Abbott Park, IL) to boost profits. In fiscal 2005, revenues from products sold through the agreement totaled $61.7 million, a 34% jump from the previous year. For fiscal 2006, Celera estimates that the alliance will generate $75 million to $85 million in sales. Products marketed through the nearly four-year-old partnership include the HIV-1 ViroSeq genotyping system and analyte specific reagents (ASRs) used to detect cystic fibrosis mutations and hepatitis C (HCV).

Abbott and Celera have also developed a handful of assays for Abbott’s newly released m2000 RealTime molecular diagnostics platform. These assays include tests for monitoring HIV-1 and HCV viral load. In January, a new test for chlamydia and gonorrhea received a CE mark for sale in Europe. According to Ordoñez, worldwide registration for the assays is ongoing. “The introduction of this system sets the stage for additional tests on this platform,” she said. “We expect this product to be pivotal to our future.”

“The alliance is an extremely productive mix of synergies between the two companies,” says David Speechly, PhD, senior director of investor relations and corporate communications at Celera. “The reality is that it’s a coming together of two strengths: Celera’s R&D and Abbott’s knowledge of the industry, its R&D, and its networks around the world.”

According to Speechly, Celera is anticipating that the next wave of molecular diagnostics will center around genetics and cancers. “We are developing what we’re referring to as a ‘genetic risk score,’ which essentially is the constellation of markers that provides a person’s relative risk to having a complex disease event,” he says.

In addition to its ASRs for thrombosis markers, Celera is also developing risk score tests for breast cancer metastasis, stroke, liver disease, and statin benefit.

At the JP Morgan conference, Ordoñez said that much of the work to develop new markers and targets for IVDs will make use of Celera’s existing R&D facilities in Alameda, CA, and Rockville, MD. Just in February alone, Abbott chose four Celera cancer targets for further development. Celera’s intent, she explained, is to grab a leading position in the still-emerging personalized medicine market. “The public has been awaiting targeted medicine for some time,” she said. “And in fact, some people think that it has been too long in coming.”

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