NEW YORK, Oct 28 (Reuters) - Sequenom Inc. (NasdaqNM:SQNM - News) is poised to launch new gene analysis technology that could substantially boost its revenue and turn the little company into a real thorn in the side of its bigger rival, Applied Biosystems Group. Sequenom, based in San Diego, said on Monday it will shortly launch a technology that can measure how active a gene is in a diseased cell compared to a healthy cell. That can give clues as to which genes are implicated in disease. Until now, Sequenom's technology has been used mainly to test large numbers of people with genetic differences to see how likely the differences, known as single nucleotide polymorphisms, or SNPs, are to cause disease or cause adverse reactions to drugs. Now the company said it has found a way to make the same technology work in a new way. It can tell which genes are most likely to be implicated in a disease, and then, which of those are present in the highest proportions in different cells. That can further narrow the search for genes that directly cause disease. Gene expression profiling, as the process is called, opens up a whole new market for Sequenom, whose chief scientific officer, Charles Cantor, was a co-founder of the government's Human Genome Project. Analysts estimate that the existing market for analyzing genetic differences is about $200 million a year, while the market for gene expression is more than $500 million. Both markets are growing rapidly. Right now the biggest-selling gene expression machine is made by Applied Biosystems, a unit of Applera Corp., called the TaqMan. Some users also use it for SNP analysis, but an increasing number are moving to Sequenom's Massarray technology. "I have a TaqMan but I bought Sequenom's system because I can process a lot more samples a lot faster and a lot more cheaply," said Rama Modali, chief executive of Bioserve Biotechnologies Ltd., private company based in Laurel, Maryland, that analyzes thousands of DNA samples to check for genetic differences. Modali still uses his TaqMan for gene expression work, but said if Sequenom's system could do that, too, the chances are he would ditch his TaqMan. "If it is designed the way it is designed for SNP analysis, I could test six genes for expression at once. With the TaqMan I can only do two." Sequenom claims that its expression profiling is more accurate than other systems on the market and allows researchers to measure the absolute number of genes in a cell or sample, rather than a relative number stemming from a comparison of two samples. Still, analysts said Sequenom has substantial competitive hurdles ahead. "The Massarray is a good system, it's very accurate, it's done very well, but it's not the only solution to SNP analysis out there," said Eric Schmidt, an analyst at SG Cowen Securities. "There are probably others who can enter the market and will do very well." So far, Applied Biosystems remains the 800-pound gorilla in molecular genetic analysis. But the company's success was built on it gene sequencers, machines that were used to decode the human genome. They were able to find the sequence of the nucleotides -- known by the letters A,T,G and C -- which are the molecules that make up DNA, our hereditary blueprint. But that business, which in 2001 accounted for nearly 40 percent of Applied Biosystems' revenue, is declining. "It's tenuous whether there will there ever be a sequencing market again, at least of anything like its previous size," said Thomas Flaten, an analyst at RBC Capital Markets. Even so, he said, "If there is anyone known for molecular-oriented tools it's Applied Biosystems." Officials at Applied Biosystems did not immediately return calls seeking comment. To offset declines in its first-time sequencing business, Applied Biosystems is building up other parts of its business. Earlier this year it launched new, prepared kits to help researchers conduct SNP analysis faster. But users still say it's unlikely to be able to do it as fast or in such volume as the Massarray. Sequenom plans to announce details of the launch of its gene expression application on Tuesday, on its company earnings conference call. Last year the two-year-old company had revenue of $31 million and analysts expect it report about $34 million this year. It has sold 85 of its Massarray systems since its inception. .. |