By Randall Osborne
West Coast Editor
Less than three years after Incyte Genomics Inc. and SmithKline Beecham plc formed the genomics company diaDexus Inc., the company bagged a private placement of $102.5 million in Series C preferred stock.
"We set out on the road with a $40 million target," said Sharon Tetlow, diaDexus' vice president of finance and chief financial officer. The money will let the Santa Clara, Calif.-based firm "open the fire hose" and blast ahead with its work in cancer, while exploring the use of biomarkers in other disease areas.
Tetlow said diaDexus has "an immense amount of intellectual property" it wants to test in tissue. "We have a set of products that are ready to go into human serum validation," Tetlow said. "It's quite a number of them, and there's no reason you can't parallel-track all of these. The mandate investors have given us is to do it faster."
DiaDexus, focused mainly on cancer detection, has been limited by resources and staff, she added. Only 30 employees, including contractors, are on the payroll, but Tetlow was interviewing Tuesday.
The company was founded in 1997, when Incyte, of Palo Alto, Calif., and London-based SmithKline invested $10 million and $15 million, respectively, thus forming a double-barreled database weapon. Incyte's databases were combined with those available through SmithKline's 1993 alliance with Human Genome Sciences Inc., of Rockville, Md. (See BioWorld Today, Sept. 4, 1997, p. 1.)
Under the terms of that arrangement, diaDexus scientists draw from Incyte databases directly, and SmithKline's bioinformatics researchers have access to HGS' database of gene sequences.
Diagnostics discovered under SmithKline's rights to the HGS database are contributed on a product-by-product basis to diaDexus, officials explained when the deal was made. Incyte and SmithKline each hold a 50 percent equity interest.
"That's all going very well," Tetlow said. "We spent the first year and a half putting our nose to the grindstone, and developed what we think is a flush pipeline in cancer," she said, adding that DiaDexus' most advanced marker is for atherosclerosis, derived from work with SmithKline. "We're very close to a product."
A new area of research will be drug-resistant infection and microbial disease, also powered by the SmithKline connection, she said.
"The beauty of the diaDexus model is that these antigens can be useful for detecting disease, and for monitoring or calibration of therapeutic treatment, and many of them will be used for therapeutics, like monoclonal antibodies or vaccines," Tetlow said.
The financing proves investors are far from bored with genomics, despite market events of recent weeks, Tetlow said.
A "sea change" is about to happen, with medicine shifting from "one size fits all" to more specific approaches made possible through genomics, she said.
"The market can be fickle, but it's several steps removed from the magic that's taking place," she said, adding the transformation will be apparent "even in humble old cancer" - and particularly in the area of early detection.
No blood tests exist for spotting cancer, except prostate tumors, she noted, and the insidious disease often is far along before symptoms are blatant. DiaDexus' lead scientist in cancer recently developed an ache in his side, Tetlow said, and surgery revealed colon cancer that had advanced to other organs.
"The irony is infuriating," she said.
Prudential Vector Healthcare Group acted as sole placement agent for the financing, co-led by BA Venture Partners, which is the venture partnership funded by Bank of America and American Express Financial Corp.
Incyte's stock (NASDAQ:INCY) closed Tuesday at $79.25, down $12. HGS (NASDAQ:HGSI) ended the day at $80.25, down $9.562.