HAMBURG, Germany - With the acquisition of Rapigene Inc. and a strategic alliance with Zeptosens, Qiagen NV (NASDAQ:QGENF), of Hilden, Germany, has paved an inroad into the high throughput SNP analysis market, one of the most dynamic areas of genetic research and medicine.

"To enter this market has been part of our strategy for a long time," Peer Schatz, CFO of Qiagen, told BioWorld International. "We have always been prepared to acquire a technology with extraordinary performance and to step into an outstanding market. With Rapigene, we believe to have identified a company with an incredible potential in the SNP business. Rapigene is the leader in the area of enabling technologies and services for SNP analysis and other functional genomics applications."

Originally, Rapigene's SNP related technology was developed by Darwin Molecular Corp., which merged with Chiroscience Group plc in 1996. Two years later, Chiroscience decided to establish Seattle-based Rapigene as its genomics and nucleic acid analysis subsidiary. Last year, Chiroscience was acquired by Celltech Group plc, of London.

Rapigene has established a portfolio of proprietary technologies in the area of DNA hybridization, DNA mass arrays, and mass spectrometry tags which can be used for genotyping patients as well as for gene mapping, gene expression profiling and differential display in drug target discovery and validation.

Rapigene's Masscode technology attaches hundreds of mass tags generated by combinatorial synthesis to DNA molecules via a photochemical linker, which is then cleaved with light. The tag then is injected into a mass spectrometer.

"The technology represents the future of tagging systems and provides the highest throughput ever," Schatz added. "The sensitivity is in the femtomolar range, and the technology allows massive parallel measurements. The beauty is that it can be used with almost any mass spectrometer already installed in thousands of laboratories." More than 40,000 SNP analyses could be performed per day using a single standard mass spectrometer. "The pharmaceutical industry demands platforms capable of analyzing 1 million genotypes per day and reagent costs of a few cents only, and I am sure this technology is a major step to reach those marks," he added.

'Performance, Precision, Sensitivity"

Rapigene's second core technology is a DNA reaction control system which can be matched with virtually any diagnostic formulation to optimize nucleic acid amplification and probe hybridization. "This buffer system enhances the precision of hybridization events on DNA microarrays by a factor of 100," Schatz said. "So far the lack of precision has been a major hurdle to achieve a higher throughput with both low and high density arrays." He added, Rapigene had developed several other chemical and technical tools for spotting and handling of microarrays: "So there is a huge potential for further improvements of performance, precision, sensitivity and, of course, cost efficiency.

"In combination with some of our products we will be able to offer a powerful integrated platform accessible either as a service or as a part of our product offering."

Qiagen acquired the company for around US$12 million by issuing approximately 154,000 units of its common stock in exchange. The transaction was closed on December 31. Qiagen intends to record a charge of approximately US$4.5 million after tax in its financials for the fourth quarter of 1999 and write off the remaining goodwill and intangibles over 10 years starting this year. "It will nearly eat up our projected net income for the last quarter and dilute our earnings per share in the year 2000 by 2 cents approximately," Schatz added. "However, we expect the first products to enter the market by the end of this year. Already, there is a significant customer demand for Rapigene's services. We project a sales increase of about US$50 million in the next two or three years from this business. My guess is that our market capitalization might increase by US$150 million to US$200 million."

Qiagen, which does not have a U.S.-based research presence so far, intends to expand Rapigene's Seattle facilities as well as its production site in Hilden.

Qiagen's commitment to the genetic analysis market is further enhanced by a strategic alliance entered last year with Zeptosens AG, of Witterswil, Switzerland. The Swiss start-up was founded in the spring of 1999 by two scientists in life science analytics from Novartis Pharma AG who had invented a novel and very sensitive detection technology for use in microarrays. The so-called planar waveguide detection technique is based on the detection of fluorescence labeled molecules that bind to a receptor immobilized on a tailor-made optical waveguide surface. The laser light couples into a waveguiding layer, and an evanescent wave interacts with the surface layer and the adsorbed analyte.

Comprehensive Microarray-Based Analysis

"Using the behavior of light near certain surfaces, Zeptosens' detection technology can detect nucleic acids in amounts of 10^-4 micrograms, so that analysis is possible without performing a PCR first," Schatz explained. "We will be able to develop comprehensive and extremely sensitive microarray-based analysis systems with this technology. Certainly, this will expand the potential of microarrays." He added that the technology could be seamlessly integrated with Qiagen's sample preparation business for applications in functional genomics, toxicology, and pharmacogenomics.

Zeptosens acquired the exclusive worldwide rights for planar waveguide technology from Novartis for all applications including genomics except for the diagnosis of human and veterinary health, for which Bayer Corporation's diagnostics business group holds exclusive rights.

As a co-founder, Qiagen invested approximately SFr2 million in equity capital and holds 20 percent of Zeptosens' shares. In addition, Qiagen will fund the development of nucleic acid detection and analysis products with an additional SFr4 million. In return, Qiagen has received worldwide exclusive commercialization rights. The investment expenditure has already been integrated into the 1999 business projections.

"We are planning to develop instrumentation and consumables and hope to introduce the first product into the market by 2001." Schatz added, he hoped for an additional sales volume of up to $100 million by 2004 from the alliance. "Starting with the Evotec collaboration we have now made several energetic steps to develop novel high-throughput nucleic acid detection, purification and analysis systems, and we are committed to strike further deals in this area soon."