Diagnostics & Imaging Week Correspondent

Epigenomics (Berlin) lost 41% of its market capitalization Friday on news that the Roche Diagnostics arm of F. Hoffmann-La Roche (Basel, Switzerland) was exiting their four-year alliance to develop molecular diagnostic products for colorectal, prostate and breast cancer screening.

The shares plunged to 12.71 (US$3.57) Friday, down 11.90, but recovered slightly during trading Monday to close at 12.83. By early afternoon Tuesday they had climbed up to 12.95.

All rights to and licenses associated with the programs will revert to Epigenomics, which said it would seek another partner for its proprietary technologies, which can provide early identification of cancers based on changes in DNA methylation patterns that can be detected in blood or in other body fluids.

"We're obviously extremely disappointed by that decision on the part of Roche, given that we had very positive and very exciting clinical data we developed over the last twelve months in our colorectal cancer screening program as well as in our prostate cancer screening program," Epigenomics CFO Oliver Schacht said during a conference call.

The colorectal cancer screening program was the most advanced of the three. In a recently completed prospective study involving 561 patient samples, the company was able to detect early stage colorectal cancer with 66% sensitivity at 93% specificity with a test involving Septin 9 and one other biomarker.

Christian Piepenbrock, COO of Epigenomics, said the company had consulted with a panel of clinical experts, which advised that a test offering sensitivity of greater than 60% would offer an improvement on currently available tests involving analysis of fecal blood and fecal DNA. Moreover, the latter suffer from poor public acceptance.

The data were not sufficiently compelling for Roche, however.

"The official reason that they've given is that in their view the clinical data on the colorectal cancer screening to date does not meet [Roche's] internal development criteria for an [in vitro diagnostic]," Schacht said.

The companies had cooperated on the study design, Piepenbrock said. "It was clear from the start how the study would be analyzed. There was no pre-agreed set of criteria that would have to be met for Roche to take a positive development decision — at least not a catalogue of criteria that we know of," he said.

Epigenomics had received between 125 million and 128 million from the collaboration, including up-front, R&D and milestone payments, as well as reimbursement for costs it had incurred. Roche's withdrawal will leave it with an annual shortfall of 13 million to 14 million, Schacht said. "It's a sizeable chunk, there's no doubt about that, but it's certainly only a portion of the overall revenue," he said.

The company reported a net loss of 13.7 million in the third quarter, revenues of 11.2 million and 121.2 million in cash and securities.

Epigenomics now is seeking alternative partners for commercializing its cancer detection tests and is in late-stage negotiations with U.S. reference laboratories. The shape of any future corporate deal may differ from the Roche alliance, however.

"We're not saying we're going to take all the programs together and try to duplicate a Roche deal. I think there are different partners for different indications and different programs that are ideally suited," Piepenbrock said.

In October, Epigenomics disclosed plans to cut 34 positions at its Berlin headquarters by scaling back on research and technology development, software development and administrative functions. By the end of the first quarter, it aims to have 118 people on the payroll in total, with 40 in Seattle.

Its co-founder and CEO, Alexander Olek, resigned in August. The company hopes to appoint a successor by early 2007 if not sooner, Schacht said.

1st Russian order for Calypte HIV tests

Calypte Biomedical (Lake Oswego, Oregon) reported receiving an initial order from its distributor in Russia, Ordynka Investments, for 25,000 of its Aware Oral Fluid HIV-1/2 rapid tests for the over-the-counter market in the Russian Federation. The product, designed for use in non-clinical settings, permits significantly greater access to HIV testing.

Calypte is a manufacturer of diagnostic tests for the detection of antibodies to the human immunodeficiency virus (HIV) for the professional point of care and over-the-counter segments of the market

Vladimir Saveliev, managing director of Ordynka Investments, said, "We are happy to be working with Calypte in the hope to be able to help Russia in its fight against the prevention of the spread of the HIV/AIDS epidemic and this initial order of 25,000 test kits should help the cause."

He added: "In addition to being safe and painless, oral fluid sampling is very efficient and thereby facilitates high-throughput testing in settings such as the military, prisons, schools and universities. Additionally, oral fluid sampling facilitates testing in many settings, such as outreach or prevalence surveys in remote locations, where drawing blood is difficult or even impossible."

Saveliev said his company intends to deliver no fewer than 500,000 tests to the Russian Federation over the next 12 months, and said it is confident that "the need for these products can be [even] greater."

Roger Gale, CEO and chairman of Calypte, said, "While HIV testing in Russia is already extensive, our recently approved Aware HIV-1/2 oral fluid rapid test overcomes several barriers to testing. As a non-invasive test . . . we believe it will form the basis for a quality post-testing counseling system — for prevention as well as treatment."

According to the 2006 Report on the Global AIDS Epidemic jointly published by the Joint United Nations Program on HIV/AIDS and the World Health Organization, there are 940,000 people living with AIDS in the Russian Federation (as of the end of 2005). WHO said the number of people officially registered with HIV increased almost 100-fold in the past eight years, from 3,623 cases in 1997 to about 350,000 cases by the end of 2005.

The 2006 report said Russia now has an HIV/AIDS epidemic that is both the biggest in Europe and said to be the fastest-growing in the world. Calypte said it believes that its non-invasive OTC test can have "an immediate positive impact on the effort to increase diagnosis and treatment of HIV/AIDS in this region."