Applied Imaging Corp. created a subsidiary directed at detecting circulating tumor cells (CTCs) in peripheral blood samples.

To be called Circulating Tumor Cells Inc., the business will focus on researching, developing and commercializing new technologies and products to improve cancer diagnosis and treatment. San Jose, Calif.-based Applied Imaging, which develops automated imaging systems for the analysis of chromosomes in cancer and prenatal disorders, said clinical findings suggest that even a small number of CTCs in blood may be indicative of a growing problem.

"There does seem to be evidence out there that would tend to support that finding circulating tumor cells in blood could be indicative of metastasis from a primary tumor," Barry Hotchkies, Applied Imaging's chief financial officer, told BioWorld Today. "It could prove to be very helpful in the diagnosis and staging of patients."

Applied Imaging said analysts estimate a $500 million annual market for CTC detection technologies. And the company believes its system could prove better than current CTC detection, which typically relies on extracting tissue samples from bone marrow for testing. That method has proved time-consuming, expensive and uncomfortable for a patient, it said.

"We believe there is a large potential market at this point," Hotchkies said.

Applied Imaging's approach to isolate CTCs initially involves the use of RosetteSep, a non-magnetic reagent technology developed by StemCell Technologies Inc. in Vancouver, British Columbia. Then Applied Imaging employs its Ariol cellular imaging and analysis system to detect and characterize those CTCs. The technique's potential has been demonstrated in preclinical testing, and early clinical trials could be aided by existing Ariol use in research centers and companies for research purposes.

For Applied Imaging, the decision to further the CTC technology through a subsidiary made good business sense.

"This is moving away from our traditional business," Hotchkies said. "It provides transparency to our investors of what we're doing . . . and provides a basis for bringing in employees whose focus is 100 percent on circulating tumor cells."

CTC is hiring management and staff to oversee the continued development and refinement of its technology. Three to five employees will be hired in the next several months, after which the staff will ramp up. Initially based at Applied Imaging's headquarters, CTC will be fully funded by Applied Imaging at the outset, though Hotchkies noted that external investors and partners could be included in the future.

"Part of bringing these people in," Hotchkies said, "is to enable us to develop a timeline [for added product development] so that we can go out and talk to our investors and shareholders about that."

Applied Imaging is transferring all relevant intellectual property for detecting and analyzing CTCs to the subsidiary, which will spearhead further development of the Ariol CTC platform and reagent test kit. Going forward, such development will include optimizing cell-separation reagents and protocols, generating clinical data through additional patient trials, increasing the level of automation for CTC detection and analysis and developing partnerships to accelerate the technology's commercialization.

On Wednesday, Applied Imaging's stock (NASDAQ:AICX) fell 4 cents to close at 89 cents.

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