By John Russell
October 14, 2009 | If there is a genomics services boom coming – and Gene Logic and its India-based parent Ocimum Biosolutions are counting on it – few pairings seem better poised to take advantage of swelling demand. Gene Logic was an early genomics pioneer and experienced both the exhilarating thrill and wrenching angst of the wildly gyrating nascent genomics services market. Now it seeks to turn its hard-won wet lab strength, rich reference databases, and broad informatics expertise into profit.
Recently, Ron Hencin, VP, BioResearch Sales, talked with Pharma Services News editor John Russell about Gene Logic’s plans for the future, its increased confidence and growing reach resulting from being part of Ocimum, and the rapidly changing genomics services market and competitive landscape.
JR: Covance raised many eyebrows with its acquisition of Rosetta which many see as a nibble into the genomics services space. What’s your take on the competitive landscape?
Hencin: I’d say that’s more than a nibble. I think they bit pretty hard. As you’ve pointed out there has been steady growth in the kinds of services being offered as well as the number of players; but if look closely, there still aren’t that many in this space, probably six-to-eight players that are significant. There are a lot of smaller niche players.
I think that the CRO entry is a logical extension of their business and it will have a significant impact on our business either through our partnering discussions with various CROs which we have ongoing. There is always the possibility of other players being acquired by CROs. It’s really depends on whether their perspective is we can get at this as a service offering and if they want take over the economic burden of running that operation or just form alliances.
Covance obviously went the way of acquiring a group that wasn’t doing commercial services outside of Merck. If you look at the Rosetta organization, it was not competitor in any real respect to the Gene Logics or EAs (Expression Analysis) of the world. How much they are going to remain focused on Merck and how much Covance is going to branch into broader spectrum genomics support for the clinical trial market will be interesting to watch. It seems to me that their commitment to Merck, on the order of $145 million over five years, is going to tie up a lot of Rosetta capacity. I’m not sure what they could do commercially.
JR: Are CROs your customers as well?
Hencin: Not directly. The way the market has worked typically - and I think this is true for most services providers - is that we are contracted by the sponsor organization rather than by the CRO. We work as part of the clinical trial team with the CRO. I don’t see any of the service engagements for genomics being subcontracted from a CRO. That could change.
JR: Gene Logic was an early pioneer and that survived the stormy early years of genomics. Perhaps you could give us the elevator snapshot of Gene Logic’s journey?
Hencin: We really arose over a ten-year effort to build large scale reference databases in gene expression not only for target discovery across all major therapeutic areas and biomarker discovery but also for toxicogenomics and predictive modeling. During the process we expanded into becoming a full service provider - from the bio-repository supporting clinical trials, to the point of training collection sites, and through the management of samples with a software infrastructure. [The infrastructure] can also manage clinical data by forming clinical data repositories in association with clinical studies.
When we were acquired in 07 by Ocimum we gained a significant advantage in that we are now a global organization. We have labs in Hyderabad India where we currently do some gene expression profiling and spotted array on Affymetrix, but we are developing a five-acre campus there and have a laboratory under construction which will mirror capabilities here in the United States. [That facility] will support the growing clinical trial market in India. There’s over 200 pharmaceutical companies and literally hundreds of clinical trials there. It’s difficult and expensive to transport samples out of India and so we believe there’s a growing market for providing genomics services in India and the Asia Pacific market.
JR: What is the main Gene Logic sales proposition today?
Hencin: They key differentiator as a service provider is that we have the historical quality and experience of dealing with literally hundreds of thousands microarrays not only to build our own database but also in servicing major pharmaceutical companies. We also provide all of the platform technologies – Agilent or Affy or Illumina – pretty much across the board.
We have software tools for gene expression analysis as well as for genotyping and a very robust LIMS system that is 21CFRpart 11 compliant and is the backbone for our service organization. This is not just from a sample or a laboratory process management perspective but also as a ‘software as a service’ (SaS) model. We can establish repositories of data, maintain them, and have customers access them remotely. So it’s a unique combination of wet lab elements around informatics, data management as well as the actual generation of laboratory data.
JR: Doesn’t Gene Logic also have some domain expertise?
Hencin: Yes. We have a principal focus internal is the central nervous system and we have probably the largest CNS database ever compiled (6400 samples) and are now profiling across most of the major psychiatric disorders as well as the CNS diseases such as Parkinson’s disease, Alzheimer’s. We’re also looking for marker sets that help us perform diagnostic assays in certain of these disease areas.
JR: Is the lab CLIA certified?
Hencin: We do not have a CLIA lab. Everybody asks that question. It’s interesting. There is no such thing as a CLIA lab per se. What CLIA really means is you’ve gone through the appropriate registration for a particular test and once people have a CLIA-certified test they call themselves a CLIA lab, but it’s based on what assays you’re running. We are in the process of validating a CLIA assay which would then make us a CLIA lab. We are completely GLP compliant and ISO2001 compliant.
JR: How much sequencing does Gene Logic do especially given the buzz around next gen sequencing and personalized medicine?
Hencin: We currently do some targeted sequencing but aren’t doing next gen sequencing. We do have collaborations with companies on next-gen sequencing projects. My take on the whole next gen thing is we’re just around the corner from the next, next-gen. We’re waiting to see where the commercial market is going to shake down in terms a real application need for it. There are obviously a lot of these GWA studies for SNPs in which we have been participating on the microarray basis.
I’ve talked to a number of people who feel eventually we won’t need microarrays because sequencing will be so cheap. I’m not sure we are anywhere approaching that yet. You can certainly get information sequencing that you can’t from an array, such as analysis of exons and exon boundaries. Those types of studies will become more routine as the next gen cost goes down. But there will still be an informatics challenge.
JR: How has demand changed in the genomics services sector?
Hencin: There’s certainly a shift away from the early target discovery days when people were searching madly for what kind of mechanistic things we could uncover with expression profiling. That’s still ongoing but it’s not the only thing. I think the shift has really been made to translational medicine. The question now is how can we take what we’ve learned in clinical and preclinical or tox studies and put it into the early phase clinical trials to develop markers to identify efficacy events or adverse events and more importantly to stratify the patients moving into trials to get a better population that’s going to save costs by not having as many non-responders.
The biggest area of growth is in phase one and phase two clinical trials. I see the growth in areas where genomics can be applied in much larger trials and being able to have marker-based diagnostics that you will apply to your population to monitor it during the course the larger trials for both efficacy as well as adverse events. I think that the whole genomic ADME screening market is kind of a no brainer. You have to do this because there will be more of these markers that are almost mandated by FDA as well as pharmaceutical companies.
JR: Can you give us a sense of how the customer base is changing?
Hencin: Well, it’s more stratified. We’ve seen genomics services go from large academic institutions and pharmaceutical companies down to early stage, really virtual pharmaceutical-drug development organizations that have just a few compounds and want to do some expression profiling or some genotyping. Large pharmas are using service providers because it’s cost effective and there’s probably better throughput given the downsizing and closing of core laboratories. They recognize the service provider market is now well established and provides good quality services, not just Gene Logic but others too.
JR: How does that translate into offering different services, or do they all want the same thing?
Hencin: Large customers want you be an extension of their program, but in general I wouldn’t say we’re doing a lot of analysis for them. They have the scientific expertise. We provide a sample-through-data kind of service. Although there are organizations that let go a significant number of their bioinformatics groups. In the last six months we’ve gotten more interest from them in being able to perform or provide bioinformatics analysis support, not only for data we generate but also for internal data. That’s something Ocimum is particularly suited for. We do have a pretty large informatics group in India as well as the folks here at Gaithersburg.
If look at the next level, mid-to-small biotechs, we are doing much more experimental design through informatics analysis. So we help with the design of a phase one study so that it’s appropriate and the appropriate time-points are collected for expression or genotyping. It’s a bit broader application. Then I’ve got virtual companies for which I am their complete wet lab and work with their clinical sites to [collects samples] and provide the complete range of services right through analysis.
JR: Can you comment on the difficult economic environment over the past year and how it has affected the genomics services market and Gene Logic?
Hencin: There was a definite flattening in the market. Throughout the pharmaceutical industry the number of layoffs associated with mergers and reorganization has been pretty phenomenal. That also brought opportunity because many had to outsource. I see that demand accelerating now. I also think a number of organizations the layoffs are either completed or nearing completion. I look for the next two to three quarters to start picking up the pace of outsourcing.
JR: What are Gene Logic’s near-term goals for its services business?
Hencin: Foremost is meeting or exceeding my financial targets. Other areas are growth of what I call master service agreements, becoming a preferred service provider for the leading pharmaceutical industry. Growing that base of committed customers is another. That helps us stabilize the up and down. You know clinical trials come and go; they start and stop and get delayed from a recruitment perspective. You need a significant bowl of ongoing business to be able to control and protect your revenue growth. Establishing more of these long-term arrangements for preferred provider outsourcing is one of our leading goals.
Another goal is expanding the government business sector and working with government agencies and significant non-profit organizations. Another area is expanding in the agricultural and nutriceutical space. We started about two years ago in nutriceuticals supporting genomics efforts there and that’s been a pretty good success for us. We’re now moving into adjacent agricultural business spaces. Those are three bellwethers I’ve set.
JR: Thanks for your time.