Adding funding to a growing drug discovery business, Celera Diagnostics entered a long-term alliance with Abbott Laboratories to develop, manufacture and market a range of in vitro molecular diagnostic products.

"Our alliance with Abbott should better position Celera Diagnostics to participate in the $700 million molecular infectious disease testing market," Celera Diagnostics President Kathy Ordonez said during a conference call.

While the agreement involves the Celera Diagnostics unit, some analysts regard the deal as further signaling a shift into drug discovery by Celera Diagnostics' parent, Rockville, Md.-based Celera Genomics Group. The diagnostics firm is a joint venture between Celera Genomics and the Applied Biosystems Group, of Foster City, Calif., both units of Applera Corp.

"After completing the sequencing of the human genome well ahead of schedule, Celera has now turned its attention to drug discovery," SG Cowen analyst Eric Schmidt wrote in a research note. "Celera's 50 percent interest in Celera Diagnostics provides a second driver of value. Through this joint venture, Celera and its partner, Applied Biosystems, will combine ABI's leading instrumentation platform with Celera's genomic content to develop novel molecular diagnostics."

Celera spokeswoman Lori Murray called the agreement separate from the relationship between the diagnostics group and its parent, saying it has no impact on the genomic business's drug discovery plans.

"Celera Diagnostics will still be working with Celera Genomics to develop protein markers and immunoassays, but that is separate from the Abbott alliance as well," she told BioWorld Today.

The alliance is designed to develop molecular diagnostic products to detect and manage infectious diseases and chronic conditions such as cardiovascular and autoimmune diseases, central nervous system disorders and cancer. Ordonez pointed to Abbott's intellectual property rights in hepatitis B, which she labeled "the most rapidly growing sub-segment of this market," as a key element of the deal.

"This business partnership builds a very tangible bridge between gene-based research and new products beneficial to human health," Applera CEO Tony White said during the conference call.

The companies, which will evenly split expenses and profits, will devote approximately 250 scientists and engineers to the project to identify diagnostic markers.

Alameda, Calif.-based Celera Diagnostics will focus primarily on genetic marker discovery and validation, as well as assay development. Abbott Park, Ill.-based Abbott will focus on product development, sales and marketing, eventually serving as the worldwide distributor for most resulting products.

Relevant Abbott and Applera technologies and patents will be available, including instrumentation from Applied Biosystems and genomic data and analytical tools from Celera Genomics.

"The alliance will also benefit from other key intellectual property owned or licensed by Abbott, including patents for PCR, diagnostic assay markers, molecular beacon assay formats and multiplexing techniques," Ordonez said.

A joint review board made up of members from both companies will manage the alliance.

"The arrangement with Abbott appears to be a strong one for Celera Diagnostics in that it should allow the company to continue to focus on what it does best (discovering novel markers) while leveraging one of the industry's best distribution platforms," Schmidt said.

But its activities will not include the development or commercialization of proteins, immunoassays or products in the research or pharmaceutical market.

Other terms were not disclosed, though Celera expects the deal to add immediate value.

"Several months ago, Celera Diagnostics advised that it expects to reach profitability late in fiscal 2005 or sometime during fiscal 2006," Ordonez said. "We believe this new alliance with Abbott better positions our company to meet this outlook and that it adds substantial long-term value to our diagnostics enterprise."

Celera Genomics' stock (NYSE:CRA) gained 27 cents Tuesday to close at $11.76.

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