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Arrayit's Potential as a Blockbuster Companion Diagnostic

The pharmaceutical industry can be a volatile place to invest, with share prices relying on successful clinical trials and ongoing regulatory compliance. In many cases, companies could reduce these risks by properly vetting clinical trial participants and patients in order to ensure that they are treating the right patients. The personalized medicine movement could help in this regard with the growing popularity of so-called companion diagnostics.

Demonstrating a Market Need

On February 25, 2013, Affymax Inc. (NASDAQ:AFFY) shares lost approximately 85% of their value, falling from $16.52 to $2.42 per share in a single day, wiping away more than $500 million in market capitalization in the process. The move came after the company voluntarily pulled its anemia drug, Omontys, used to treat kidney dialysis, following news that 50 adverse reactions were discovered in 25,000 patients treated, including at least five deaths.

The problem observed in these 50 patients was hypersensitivity – a sometimes-fatal condition that arises when the body’s immune system reacts to certain drugs or other intrusions, like bee stings, according to the Wall Street Journal. Since a relatively small patient population was tested in clinical trials, these side effects went unnoticed until the drug was exposed to a larger patient population, thereby leading to significant and unexpected shareholder losses.

Ways to Improve Outcomes

Companion diagnostic tests are molecular assays that measure levels of proteins, genes or specific mutations in order to provide the right treatment to the right patient. In Affymax’s case, companion diagnostics could be used to ensure that the patient being treated was not hypersensitive to Omontys. This would thereby avoid adverse events, while providing the convenience-related benefits compared to Amgen Inc.’s (AMGN) Epogen.

Arrayit Corporation (ARYC), already a leader in the microarray industry providing specialized solutions, has also branched out into the molecular diagnostics business to provide these tools. With the industry’s only printing technology that can deposit any kind of molecule and host up to 100,000 patient samples on a single microarray, the company is uniquely positioned compared to industry competitors like Affymetrix Inc. (NASDAQ:AFFX).

Creating Value for All Parties

In the earlier example of AffyMax’s fall, Arrayit’s technologies could be used in order to expedite Omontys’ return to market. The company’s blood cards could be used to sample blood from 25,000 patients at the point-of-care, which could then be input into its VIP technology for low-cost targeted genotyping. Meanwhile, its H25K could be used to perform whole genome expression profiling, while peptide microarrays could be used to test for patient antibodies.

Essentially, Arrayit’s role as a companion diagnostic could help companies like AffyMax get products like Omontys back on the market more quickly. And the same technology could be used to ensure patients are properly enrolled in clinical trials, confirm the right patients being treated with approved drugs, and assist other pharmaceutical companies in regaining regulatory compliance after a drug has been found unsafe in certain populations.

Potential Investment Opportunity

Arrayit Corporation (ARYC) represents an attractive investment opportunity given its unique technology platform and potential in the pharmaceutical industry. Moreover, its patent protected technology remains the only platform amenable to cost-effective screening of the human population, with the ability to run thousands of patient samples at a time with 100% accuracy provided that the tests are performed correctly.

For more information, see the company’s website at, www.arrayit.com, or read their SEC filings at, http://secfilings.com/SearchResults.aspx?ticker=ARYC

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Disclosure: The subject security is a client of Emerging Growth, LLC. For full financial disclosures for all Emerging Growth, LLC clients, please visit http://secfilings.com/Disclaimer.aspx