SHANGHAI – Wuxi Pharmatech Inc., of Shanghai, is another step closer to becoming a one-stop shop for drug development with the acquisition of Nextcode Health, a genomic sequencing and bioinformatics company with operations in the U.S. and Iceland.

Wuxi paid $65 million in cash for Nextcode, a spin-off from parent company Decode Genetics, of Cambridge Mass., after Thousand Oaks, Calif.-based Amgen Inc. bought it for $415 million in late 2012. The new entity will be called Wuxi Nextcode Genomics.

In the past few days, genome companies have proved themselves a hot commodity with big pharma: the Roche AG billion-dollar acquisition of Foundation Medicine Inc. is a whopping endorsement for its tumor-profiling capabilities while 23andme Inc. has announced two deals in a week, first with Roche and then Pfizer Inc., for its genetic testing services and data. (See BioWorld Today, Jan. 13, 2014.)

However, Wuxi is the only contract research organization (CRO) to have invested so heavily in the field of genomic sequencing, a field it has been going after for some time.

"With the huge unmet medical needs in diseases with a genetic component and the rapid advances in genomics and bioinformatics, now is the right time for Wuxi to make a strategic investment in this field, and Nextcode is the right partner," said Ge Li, chairman and CEO of Wuxi Pharmatech.

A fast-growing CRO, Wuxi got its start doing early stage small-molecule drug discovery work but has evolved its service offering. No matter whether small molecule or a biologic, the firm seeks to help its global customers develop drugs at all stages in the discovery and development process.

That whole-solution approach has made Wuxi a top 10 global CRO with expected total revenues for 2014 to approach $675 million.

In 2011, it established the Wuxi Genome Center and in March last year purchased the Illumina Hiseq X Ten sequencing system. Known for its ability to deliver full coverage human genomes for $1,000, the Illumina system gives Wuxi the ability to sequence 18,000 genomes per year.

According to Wuxi, it is the only CLIA-certified clinical genomics lab in China.

Already equipped with substantial genome sequencing capabilities, it is the bioinformatics aspect of the Nextcode deal that is the most valuable to Wuxi because Nextcode offers something Wuxi doesn't already have: access to Decode's database of genetic information based on the sequencing of 350,000 genomes from Decode's population-scale data mining of Iceland. The database and computational systems around it, including the whole-genome sharing Nextcode Exchange platform, should bring insights into the medical implications of the genetic mutations being discovered by sequencing.

Access to the database comes in the form of a five-year licensing agreement inked more than a year ago between Nextcode and Decode.

According to a source at Wuxi, the database was crucial to the deal; it allows vast amounts of sequencing data to be stored and queried rapidly using proprietary algorithms to find the medical implications of certain sequencing data and the predilection for particular diseases.

The bottleneck is no longer the sequencing of the data but how to translate the sequencing data into medical diagnoses to treat disease.

Decode is a frontrunner in understanding the link between genome and disease susceptibility and is credited with uncovering the risk factors for dozens of diseases, including heart disease and various cancers.

For researchers and clinicians working for Wuxi's corporate clients, they will be able to store, visualize and analyze genetic data at a base-by-base resolution, in real time use a browser-based system for global sharing.

But for the first time in its 14-year history, Wuxi will also be branching out from its B2B model to reach consumers, selling to doctors and patients directly. Although the firm has not yet developed tests for sale, there is the possibility Wuxi will do so globally.

"This new venture of Wuxi Nextcode Genomics will create important new genomic and bioinformatic products and services to help make personalized treatment and medicine a reality," said Li. "It will also enable doctors to provide better treatments to patients."

Under the new structure, Nextcode headquarters will move from Cambridge, Mass., to Shanghai and retain operations in Rekyavik, Iceland. Founders of Nextcode and former Decode executives Hannes Smarason and Jeffrey Gulcher will stay on as chief operating officer and chief scientific officer, respectively, at the new entity, Wuxi Nextcode Genomics. The arrangement will also bring to Nextcode's doorstep a long roster of Wuxi clients.

"In Wuxi, we have a superior partner with strengths, including CLIA-certified sequencing and leading global pharmaceutical customers with a strong need for companion diagnostics, that are highly complementary to those of Nextcode," said Smarason and Gulcher.

Wuxi founder and chairman Li will be CEO and Wuxi's Edward Hu will be chief financial officer, while Hongye Sun will be chief technology officer; responsible for VP informatics will be Hakon Gudbjartsson.

In October, Wuxi signed a partnership deal with Foundation Medical offering use of its labs to provide clients in China access to the Foundationone genetic assay for cancer profiling. The deal springs from China's tight regulations that forbid human samples to leave the country, meaning that genetic samples have to be sequenced here. It is unclear how that deal will fare given the week's news announcements, now that Foundation is majority owned by Roche, and Wuxi has acquired Nextcode.

This is Wuxi's second acquisition of a U.S.-based company in less than four months, giving it a more substantial footprint stateside.

In October, it acquired Xenobiotic Laboratories Inc., a CRO providing bioanalytical, drug metabolism and pharmacokinetic services to the pharmaceutical, animal health and agrochemical industries. The company was founded in 1987 and has facilities operating to GLP standards in Plainsboro, New Jersey and Nanjing, Jiangsu Province, China.