Bio-Rad Buys Ciphergen’s Proteomics Technology

Ciphergen retains exclusive rights to develop clinical diagnostic uses

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PROTEOMICS IS EXPECTED TO BE ONE of the most active areas in molecular diagnostics and Bio-Rad Laboratories, Inc. has just staked a major claim to a promising proteomic technology.

In a transaction announced on August 18, 2006, Bio-Rad will acquire the proprietary proteomics instrument business of Ciphergen Biosystems Inc., which includes the SELDI technology (Surface Enhanced Laser Desorption/Ionization), ProteinChip arrays, and supporting software.

Cash Plus Equity

Bio-Rad will pay about $20 million in cash and will invest $3 million to acquire equity in Ciphergen, which is based in Fremont, California. Once the deal is closed, probably in first quarter 2007, Bio-Rad will manufacture the SELDI instrument line and will sell this technology to the life sciences market for use in discovery, characterization, and validation of proteomic markers. Ciphergen retains the exclusive rights to use SELDI and its associated technologies in the diagnostics marketplace.

Ciphergen President and CEO Gail S. Page said the sale will allow Ciphergen to transform into a specialized diagnostics provider. “This is a strategic transaction which plays to the strengths of both parties,” said Page. “From its inception in 1952, Bio-Rad has been organized around the study of proteins. It has an established customer base and annual sales of more than $1.2 billion. They are well-positioned to manufacture and distribute SELDI instruments and related products to more than 70,000 customers worldwide, particularly in the life sciences arena.

“This transaction frees Ciphergen from the responsibilities of manufacturing and distribution,” continued Page. “It allows us to focus on developing diagnostic assays for clinical use. Our initial focus is on ovarian, prostate, and breast cancer. We are also actively developing some cardiovascular tests.”

Timing of this sale was related to Ciphergen’s need to make its limited capital stretch further. “Simply stated, Ciphergen did not have the money necessary to develop manufacturing, expand sales of this technology to the life sciences market, and still support the research needed to bring our most promising assays through regulatory approval and into general clinical use.” explained Page.

Ovarian Cancer Assay

Ciphergen expects its first assay will enter clinical use by year’s end. “The test is an index derived from seven ovarian cancer markers to discriminate ovarian cancer from benign pelvic masses. The markers also appear to perform better than other tests in detecting early stage ovarian cancer,” explained Page. “Ciphergen is currently working with Quest Diagnostics in their efforts to commercialize this marker set under the analyte specific reagent (ASR) regulations. At the same time, Ciphergen is working to obtain FDA clearance for the test kit.”

“The sale to Bio-Rad positions us to be a specialty diagnostics provider,” observed Page. “Bio-Rad is our anchor for efficient manufacturing, as well as distribution of SELDI systems to the life sciences community. In the diagnostic market, Quest Diagnostics anchors our commercialization strategy.”

Ciphergen was founded in 1993. In 1999, it began selling its ProteinChip System, Series PBS II. In 2000, it raised $81.8 million in an initial public offering (IPO). In recent years, it has entered into research collaborations with such institutions as The Johns Hopkins School of Medicine, M.D. Anderson Cancer Center, University College London, and the University of Kentucky to develop its diagnostics pipeline.

Cost Of Development

Simultaneously carrying the burden of the instrumentation business and developing its proteomics technology for clinical diagnostics required Ciphergen to spend plenty of cash. For the first six months of 2006, Ciphergen reported revenues of $12.3 million and a net loss of $13.2 million. As of June 30, 2006, it had cash and investments totaling $20.6 million. By selling its technology to Bio-Rad and keeping rights to develop diagnostic tests for clinical use, Ciphergen has reduced its ongoing capital demands.

Proteomics is proving to be the hot technology area in the drive to genetic medicine. Market researchers at Strategic Directions International, Inc. have published numbers that put the global genomics market at $4.9 billion sales in 2005. For protoemics, in 2005 the global market was $3.1 billion.

Strategic Directions predicts genomic growth rates averaging 2% per year. By contrast, it predicts proteomic growth rates averaging almost 9% per year. It means proteomics is expected to grow four times faster than genomics during the coming years.

Multi-Marker Technology For Protein Analysis

CIPHERGEN’S TECHNOLOGY IS BASED on protein separation, detection, and bioinformatics to discover multiple markers that form the basis of new assays. The system has many potential applications in the markets of both life sciences/research and clinical diagnostics.

SELDI (Surface Enhanced Laser Desorption/Ionization) technology enables selective protein retention on ProteinChip Arraysurfaces by means of distinct chromatographic surfaces. There are additional arrays designed for “covalent coupling of antibodies, DNA, RNA, receptors or other ‘bait’ molecules onto the array surface.”

Crude biological samples such as serum or tissue extracts are applied to ProteinChip arrays. By adjusting the binding and washing conditions, the researcher can selectively capture proteins on the array’s chemical surface. Ciphergen’s ProteinChip Reader analyzes the array, using “laser desorption and ionization of proteins from the array surface, and detection by time-of-flight mass spectrometry(TOF-MS).”

Data produced by ProteinChip Systems are analyzed using sophisticated bioinformatics software, and protein levels “can be quantitated by plotting peak intensity values against peptide or protein standards.”

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