1. US Genetics Diagnostics Markets
March 2006
SUPPLEMENTAL INDUSTRY RESEARCH
2006 MaRS Emerging Technologies Briefings
Extracted from Frost and Sullivan Market
Engineering, October 2005

2. Slide 1MaRS Emerging Technologies Briefings - February 27th, 2006 Event (Supplemental Industry Research)
Genetic Diagnostic Applications
Genetic Diagnostic tests fall under 3 applications:
1. Pharmacogenomic testing
2. Prenatal Newborn testing
3. Predisposition and Diagnostic testing
This report defines the genetic testing market as the sales of test kits, reagent and
home brew test revenues. Revenue numbers do not include the instrumentation
used to perform the tests and reference laboratory testing revenues
Tests classified for infectious diseases are considered a separate segment of the vitro
diagnostic market and are not discussed in this report.
Extracted from Frost and Sullivan Market Engineering,
October 2005

3. Slide 2MaRS Emerging Technologies Briefings - February 27th, 2006 Event (Supplemental Industry Research)
Pharmacogenomic testing
 Pharmocogenomic tests are preformed on human DNA to assess the efficacy, safety
and therapeutic concentration of a therapeutic treatment. They are performed wto
determine the clinical course of therapeutic treatment and clinical drug trials.
Revenues do not include drugs or therapies prescribed because of testing results
 Market Size - $95 million (US)
 Forecast (2011) - $468 million (US)
 CAGR (2004-2011) - 26%
 Barriers
 Rapidly evolving science hinders establishment of clear regulatory rules
 Limiting potential drug’s market size discourages Pharma industry adoption
 High cost and uncertainty about reimbursement
 Drivers
 FDA encouraging incorporation of pharmacogenomic testing in clinical development
 Adverse and ineffective drug reaction drives clinician acceptance
 Pharma industry’s desire to gain FDA approval for rejected or dangerous drugs drives market
adoption
 Competition
 Major players : Abbot Diagnostics and Roche Diagnostics
 Others: smaller companies involved through alliances such as Celera and Gentris
Extracted from Frost and Sullivan Market Engineering,
October 2005

4. Slide 3MaRS Emerging Technologies Briefings - February 27th, 2006 Event (Supplemental Industry Research)
Prenatal and Newborn Testing
 Inherited disease screening is the largest segment of the genetic testing market.
Current serum protein tests to assess the risk of a disease are not as reliable or
sensitive, often giving false positives or negatives. Early detection significantly
improves the ability to effectively manage or treatment various genetic diseases
 Market Value - $335 million (US)
 Forecast (2011) - $796 million (US)
 CAGR (2004-2011) - 13%
 Barriers
 High Cost and uncertain reimbursement deters patients and clinicians
 Ethical concerns and Invasive nature of fetal tissue collection
 Drivers
 CDC and American college of Obstetricians and Gynecologists recommends testing to all couples
planning pregnancy
 Expiry of Roche’s patents on PCR will decrease cost and increase competition
 Increasing superiority of genetic screening for accuracy and number of targets
 Currently Cystic Fibrosis test is the strongest driver of applications total market
growth
 Competition
 Major Players: Abbot Diagnostics and Bayer Diagnostics
 Others: medium companies with few key products such as TM Bioscience
Extracted from Frost and Sullivan Market Engineering,
October 2005

5. Slide 4MaRS Emerging Technologies Briefings - February 27th, 2006 Event (Supplemental Industry Research)
Predisposition and Diagnostic
 Genotyping assays have permitted the association of genetic variation with disease
incidence. Various platforms are being developed to prognose and diagnose a
variety of diseases. Early detection and profiling can significantly improve patient
outcomes
 Market Value - $100 million (US)
 Forecast (2011) - $268 million (US)
 CAGR (2004-2011) - 15%, with cancer testing predominating
 Barriers
 Uncertainty and privacy issues regarding insurance
 Ethical issues pose significant restraint
 Biomarker detection becomes difficult with more complex diseases
 Drivers
 Early detection is a primary factor affecting cancer survival rates
 Intellectual property patents allow companies to develop niches
 Competition
 Major Players: Abbot Diagnostics, Roche Diagnostics and Johnson&Johnson
 Others: medium companies with few key products like Myriad Genetics and Third Wave Technologies
Extracted from Frost and Sullivan Market Engineering,
October 2005

6. Slide 5MaRS Emerging Technologies Briefings - February 27th, 2006 Event (Supplemental Industry Research)
Challenge 1-2 years 3-4 years 5-7 years
Lack of Healthcare providers education hinders test
uptake
High High High
Healthcare conservatism impedes testing uptake High Medium Low
Absence of precedent restrains pharmaceutical
industry to use pharmacogenomics tests for drug
development
Medium Medium Medium
Obtaining FDA approval for pharmacogenomic testing
poses significant challenges for companies
Medium Medium Low
Large volumes of testing by home-brew techniques
continue to limit the sales of kits
Medium Medium Low
Divers population mandates the need for ethnically
comprehensive genetic panels
Medium Medium Low
Hospital Laboratories are reluctant to adopt new
molecular procedures
Medium Medium Low
Top industry Challenges for US genetic
markers market from 2005-2011
Extracted from Frost and Sullivan Market Engineering,
October 2005

7. Slide 6MaRS Emerging Technologies Briefings - February 27th, 2006 Event (Supplemental Industry Research)
Strategic Solutions to Challenges
 Implement Clinician education at all levels
 Invest in direct to consumer advertising
 Address the issue of cost
 Develop Prenatal tests that allows to use of fetal DNA from maternal
Circulation
 Market Genetic tests as superior to protein prescreening
 Meet end user needs by offering tests on automated platforms
 Offer panels that provide high detection rates for all ethnic groups
 Obtain FDA approval for genetic tests
 Promote the passage of anti-discriminatory legislation.
Extracted from Frost and Sullivan Market Engineering,
October 2005

8. Slide 7MaRS Emerging Technologies Briefings - February 27th, 2006 Event (Supplemental Industry Research)
Key End Users of Genetic testing
 Over 1400 molecular pathology labs in the US, with bulk of genetic testing being
provided by a few big labs. Creating partnership with any of these large labs
secures significant market share
 Large Labs:
 Quest Diagnostics
 LabCorp
 Genzyme
 Medium Labs:
 Mayo
 ARUP ( Associated Regional and University Laboratories Pathologist)
 MD Anderson
 Regional clinics and hospital Laboratories
 Key End User product feature requirements:
 Clinical Practicality of test
 Strong client portfolio and relationship with laboratories
 Result turnaround time
Extracted from Frost and Sullivan Market Engineering,
October 2005

9. Slide 8MaRS Emerging Technologies Briefings - February 27th, 2006 Event (Supplemental Industry Research)
Platform Comparisons
 Important issue in genetic testing market is deciding which testing platform or
technology will have highest adoption rates in Clinical labs
 Technology issues are throughput, sample concentration, procedure sensitivity and specificity
 Economic issues are costs of instrument and reagents, current platforms available in the lab, and
ease of use of the procedures
 Genetic testing looks for genetic marker such as Single Nucleotide Polymorphism
(SNP) , Restriction Fragment length Polymorphism (RFLP) or short tandem repeat
(STR)
 Theoretically any marker can be identified through any of the platforms
 Real- Time Polymerase Chain Reaction ( RTPC)
 Capillary Electrophoresis
 Micro-array
 Multiplexing Instruments
Extracted from Frost and Sullivan Market Engineering,
October 2005

10. Slide 9MaRS Emerging Technologies Briefings - February 27th, 2006 Event (Supplemental Industry Research)
Platform Comparisons:
Capillary Electrophoresis
 Electrophoresis Platform:
 A method of detection for specific gene sequences using gel electrophoresis
 Currently high availability of electrophoresis instrumentation in labs means that kits
designed for this platform should have the most rapid uptake.
 Least expensive- $15K US for state of the art equipment
 Electrophoresis also offers low costs per tests - kit cost $80/patient
 Versatile in number of different application
 Important platform for low margin test like Cytochrome P450, where US labs do not
expect high customer demand, so don’t want to invest in higher costing platforms
 Major disadvantage is labor intensity
Extracted from Frost and Sullivan Market Engineering,
October 2005

11. Slide 10MaRS Emerging Technologies Briefings - February 27th, 2006 Event (Supplemental Industry Research)
Platform Comparisons: RT-PCR
 RT-PCR Platform:
 A method for rapid and simultaneous amplification, detection and quantification of
gene fragments or gene expression
 Slower adoption than electrophoresis due to the cost of machinery - $30K
 Expected to have significant uptake because of prevalence in SNP testing
 Currently many specialty labs like Quest Diagnostics have high RT-PCR usage
 Cost expected to drop as Roche loses patent protection on many of RT-PCR
components, opening the field to competition
Extracted from Frost and Sullivan Market Engineering,
October 2005

12. Slide 11MaRS Emerging Technologies Briefings - February 27th, 2006 Event (Supplemental Industry Research)
Platform Comparisons:
Microarrays (Gene Chips)
 Microarray Platform:
 A method for rapid detection of multiple simultaneous gene fragments or gene
expression. Probes that react to patient’s genetic material are arranged in grid
pattern on glass or plastic platform. Resulting matches constitute a positive test,
which are readily identifiable.
 Most Expensive $150K-$180K + $500 per test
 Reaction indicate particular genetic sequences, such as those related to diseases, or
how people will respond to certain medications. Microarrays also can enable
researchers to see which genes are being switched on and off under different medical
conditions.
 Currently does not have many clinical applications, so drawback for laboratories to
invest in platform
 Roche’s AmpliChip is only FDA approved microarray test for diagnostic use
Extracted from Frost and Sullivan Market Engineering,
October 2005

13. Slide 12MaRS Emerging Technologies Briefings - February 27th, 2006 Event (Supplemental Industry Research)
Platform Comparisons: Multiplexing
 Multiplexing Platform:
 A method for simultaneous detection of specific gene fragments, gene expression,
immune response proteins and enzymes. Multifunction beads are manipulated to bind
and signal the specific presence of a a variety of substrates
 More versatile than microarray
 Allows more variation with regards to type of test - up to 100 assays to be preformed
simultaneously on one sample.
 Slower than competing technologies however
 Multiplexing technology are expected to gain market share. Example is Luminex’
xAMP technology which is currently is partnership agreements with Abbot
Laboratories, EreGen, TM Bioscience.
 FDA awarded its first approval for a CF diagnostic test to TM Bioscience’s multi-
plexing platform based test.
Extracted from Frost and Sullivan Market Engineering,
October 2005

14. Slide 13MaRS Emerging Technologies Briefings - February 27th, 2006 Event (Supplemental Industry Research)
Regulatory Issues
 FDA regulates reagents, kits and instruments sold to and performed by clinical labs.
 Diagnostic tests can be sold as Analyte Specific Reagents (ASR) to highly
sophisticated CLIA-certified labs. FDA exercised restrain in regulating home- brew
tests performed by these labs. No specific clinical, validity or performance claims
are allowed for unregulated ASRs. Potential liabilities if a lab chooses to provide an
ASR rather than a 510(k)-cleared alternative.
 Receiving a 510(k) FDA approval is a significant market barrier:
 Four FDA approved genetic diagnostic tests:
 Roche AmpliChip, used to individualize dosage of antidepressants, antipsychotics,
beta-blockers, and some chemotherapy drugs
 TM Bioscience (Toronto, Canada) TAG-IT assay for detecting cystic fibrosis
 Visual Genetics (Toronto, Canada acquired by Bayer in ‘02) TRUGENE HIV-1
Genotyping Kit, used to detect variations in the genome of the human
immunodeficiency virus that make the virus resistant to some anti-retroviral drugs.
 Third Wave’s Invader assay detects variations in a gene that produces the enzyme
UDP-glucuronosyltransferase, and predicts adverse events.
http://www.fda.gov/cdrh/oivd/index.html
http://www.fda.gov/cder/genomics/default.htm

15. Slide 14MaRS Emerging Technologies Briefings - February 27th, 2006 Event (Supplemental Industry Research)
Regulatory Issues
 March 2005 - Final Guidance for Industry Pharmacogenomic Data
Submissions, facilitate the use of pharmacogenomic data in drug
development
 April 2005 - Drug-Diagnostic Co-Development — Preliminary Draft
Concept Paper
 Development of in-vitro diagnostics for mandatory use in decision making for drug
selection for patients in clinical practice:
 Identify patients most likely to respond to the drug or exhibit adverse events
 Optional tests in drug development for understanding mechanism or selecting patients
for clinical trials
 February 9, 2006 - New Guidance draft document on Pharmacogenetic
Tests and Genetic Tests for Heritable Markers to shorten development
and review timelines, facilitate rapid transfer of new technology from the
research bench to the clinical diagnostic laboratory, and encourage
informed use of pharmacogenomic and genetic diagnostic devices.
http://www.fda.gov/cdrh/oivd/index.html
http://www.fda.gov/cder/genomics/default.htm

16. Slide 15MaRS Emerging Technologies Briefings - February 27th, 2006 Event (Supplemental Industry Research)
Addenum from OGI
Ontario Companies in Genetic Diagnostic field
Company Name Description
Biomedical Photometrics Inc.
& GeneFocus
Gene Focus has developed state-of-the-art readers for genetic and tissue arrays and biochips based on
patented confocal laser imaging technology as well as imaging system for non-standard microarrays and
liquid biochips.
Chondrogene Chondrogene uses functional genomics to enable early diagnosis and personalized therapeutic
intervention based on disease-specific biomarkers. The applications of this technology is in the discovery
and development of diagnostic and therapeutic products across 4 disease areas: Cancer, Central Nervous
System Disorders, Cardiovascular Disease and Arthritis.
Genesis Genomics Genesis Genomics implements mitochondrial DNA (mtDNA) sequencing technology and bioinformatics to
exploit specific mtDNA data for commercial applications in medical diagnostics.
Genetic Diagnostics Inc. GDI’s Genexus Analyzer platform and Triplex Assay are new platform technology for conducting DNA
diagnostic tests. GDI's platform has an unprecedented ability to effectively and efficiently detect Single
Nucleotide Polymorphisms (SNP's).
TM Biosciences Tm Bioscience is developing Genetic testing on a multi-plex platform for genetic mutations related to
hematology, toxicology, and other debilitating genetic disorders. Companies CF test is the first such test
to receive FDA approval and their technology has been adopted by leading reference laboratory such as
Mayo Clinic and Specialty Labs.
Epocal Epocal biochips combine features lab-on-a-chip microfluidics and microarrays (DNA arrays, protein
arrays, cell arrays) into a single technology.
HealthGene Health Gene offers an extensive menu of state-of-the-art molecular diagnostic tests.
Thanks to Rhonda Tannenbaum of the Ontario Genomics Institute
(OGI) for information

17. Slide 16MaRS Emerging Technologies Briefings - February 27th, 2006 Event (Supplemental Industry Research)
Addenum from OGI
OGI award recipient in Genetic Diagnostic
Researcher Description
Dr. Brent Zanke OGI Applied Health Award – assessment for risk of
colorectal tumours in Canada
Dr.s Peter Liu/Andrew
Emilli
OGI Applied Health Award – Protein expression profiling
platform for Heart Disease Biomarker Discovery
Dr.John Dick OGI Applied Health Award – Development and Application of
Functional Genomics Technologies
Drs. Ulli Krull/Alex
MacKenzie/Paul Piunno
OGI Competition II Award - Nucleic acid diagnostic systems
Dr. Kevin Kain OGI Competition III Award – Quantum Dot Diagnostics:
simultaneous genomic and proteomic profiling of multiple
pathogens at point-of-care
Thanks to Rhonda Tannenbaum of the Ontario Genomics Institute
(OGI) for information