Aureon Biosciences, Bayer, Competitive Technologies, Rare Blood Infections, Kaiser Permanente

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KEVIN JOHNSON AND VIJAY AGGARWAL JOIN AUREON BIOSCIENCES

TWO VETERAN LAB EXECUTIVES are back in the business. Kevin Johnson is now the Chairman at Aureon Biosciences Corporation and Vijay Aggarwal, Ph.D. is President and CEO.

The fact that both men chose to join Aureon Biosciences will draw attention to the biotech firm. It is developing anatomic pathology capabilities to support personal predictive testing for certain cancers.

Kevin Johnson was most recently President and CEO of DIANON Systems, Inc., prior to and through its sale to Laboratory Corporation of America in January 2003. Before that, Johnson held various executive positions at Quest Diagnostics Incorporated. Johnson had joined Aureon’s Board of Directors in October 2003.

Aggarwal was previously President of AAI Development Services, a division of aaiPharma, Inc., a company which develops drugs for the pain management market. Aggarwal had served as President of Quest Diagnostics Ventures and had long service at SmithKline Beecham Clinical Laboratories.

Aureon Biosciences is located in Yonkers, New York. It was organized by pathologists and scientists from Memorial Sloan-Kettering Cancer Center and the Albert Einstein School of Medicine. In 2002, it received $15 million in venture capital funding from the Sprout Group and Atlas Venture.

The company is preparing to bring its first diagnostic product to market. It had a Chairman and President who were venture capital executives. They guided the company in its product development stage. Johnson and Aggarwal will direct the company as it obtains regulatory clearance and begins offering its products to the clinical marketplace.

Aureon is using sophisticated software algorithms to evaluate tissue specimens annotated with the patient’s clinical history and outcomes. It simultaneously integrates clinical, micro- anatomic, and molecular views of the patient to develop a predictive model of the disease. Besides prostate cancer, Aueron is also developing products for breast, lung, and colon cancers.

HOMOCYSTEINE PATENT LAWSUIT SETTLED BY BAYER AND CTI

ANOTHER HOMOCYSTEINE PATENT CASE was resolved on October 26, 2004. Bayer HealthCare LLC and Competitive Technologies, Inc. (CTI) agreed to settle out of court.

Terms of the agreement grant Bayer a license to use CTI’s homocysteine patent. Bayer will pay CTI royalties on sales of Bayer homocysteine assays currently run on its ADVIA Centaur® Immunoassay System and its ACS: 180® SE Automated Chemiluminescence System.

The interesting twist to this agreement is that laboratories who buy homocysteine tests from Bayer will be covered by Bayer’s license with CTI. There is also a clause which forgives Bayer’s laboratory customers from paying royalties for past tests performed on the Bayer instruments.

CTI notes that the agreement with Bayer does not cover royalties for methylmalonic acid assays done either in the past or the future. CTI will continue to protect its patent on this assay.

In its November 1, 2004 issue, THE DARK REPORT was first to reveal the letter CTI has sent to as many as 700 hospital laboratories and commercial laboratories. This letter demands a licensing payment and back royalties for all homocysteine testing done since January 1998.

Earlier this year, CTI won a federal court case against Laboratory Corporation of America for infringement of its homocysteine patent. LabCorp paid the court judgement of $6.7 million. This legal precedent probably played a role in Bayer’s decision to settle the case, since LabCorp lost the original case and several appeals.

Although CTI has sent royalty demand letters to hundreds of individual laboratories, its main collection efforts have so far been against the major IVD manufacturers. In public statements on this topic, CTI has specifically mentioned Abbott Laboratories and Axis Shield PLC.

SOME SOLDIERS INJURED IN IRAQ & AFGHANISTAN HAVE RARE BLOOD DISEASE

MICROBIOLOGISTS will be interested in this under-reported, but developing story. Army doctors report that an unusually high number of soldiers injured in Iraq, Afghanistan, and Kuwait are testing positive for a rare and hard-to-treat blood infection.

The infection involves the Acinetobacter baumannii bacteria. At least 102 injured soldiers were diagnosed with the infection between January 2002 and August 31, 2004. These soldiers were primarily at Walter Reed Army Medical Center in Washington, DC, Landstuhl Regional Medical Center in Germany, and three other military hospitals.

The U.S. Army released this information through a report published on November 18, 2004 by the Centers for Disease Control and Prevention (CDC). Army doctors are baffled, because it is not known where the soldiers contracted the infections. Prior to Mideast troop deployments following 9/11, military hospitals averaged about one case of this blood infection per year.

“This organism is very widespread in the environment, and some of these patients are arriving with infections,” said Maj. Paul Scott, a doctor in the Army’s center for health promotion and preventive medicine. A. baumannii is found in water and soil. It is resistant to many antibiotics. Colistin, an older drug with high toxicity, is known to be effective against this bacteria.

KAISER READY TO OFFER HEALTH SAVINGS ACCOUNTS TO 25% OF ITS MEMBERS

IT’S A DECISION DRIVEN BY CHANGES in the marketplace. Kaiser Permanente will offer its HMO members a new option for 2005 that includes a health savings account (HSA) linked to a high- deductible health insurance policy.

Members in Colorado, Georgia, and the Northwest will have access to this option. These markets represent about 25% of Kaiser’s 8.3 million members. The change is driven by growing market demand for lower-cost coverage options. The HSA/high-deductible health plan package is less expensive than traditional health insurance plans for both employers and employees.

One Kaiser executive was particularly candid. “Our customers want to buy it,” observed Arthur Southam, M.D., Senior Vice President of Products and Marketing. “This is a very hard change for Kaiser to have that broad discussion about how the evolution of our product portfolio fits into our core values.” Among other things, Kaiser Permanente hopes its high-deductible health plan options attract new members.

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