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Konica Minolta Aims to Use Ambry to Expand Precision Medicine Footprint

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NEW YORK (GenomeWeb) – With its recent agreement to acquire Ambry Genetics for $1 billion, Japanese digital technology firm Konica Minolta is looking to move more heavily into the life science space, with a particular emphasis on precision medicine.

According to Kiyotaka Fujii, president of Konica Minolta's global healthcare business, the deal, announced last week, gives the company a vehicle for commercializing its high-sensitivity tissue testing (HSTT) immunostaining technology as a tool for both pharmaceutical trial work and, down the road, clinical pathology. Additionally, Fujii said, it will make Konica Minolta a major player in Japan's genetic testing market, which he said is currently underserved.

The acquisition agreement calls for the company's Konica Minolta Healthcare Americas (MHUS) subsidiary to pay Ambry $800 million upfront. Of this, 60 percent will be paid by MHUS, with the other 40 percent coming from the Innovation Network Corporation of Japan, a sovereign wealth fund of the Japanese government. The remaining $200 million will be paid in increments, based on achievement of certain financial metrics.

Aliso Viejo, California-based Ambry is one of the largest US genetic testing firms, competing against the likes of Myriad Genetics, Invitae, and GeneDx. According to a January report from the Wall Street Journal, the company had been looking for potential acquirers since at least the beginning of the year and had hired the firm Intrepid Investment Bankers to evaluate its options. WSJ sources put the potential value of the company at that time at $1.6 billion or more.

Fujii said Konica Minolta viewed the deal as part of its move to diversify its traditional office equipment business, which, he noted, "is not necessarily a high-growth business."

According to its website, business technologies currently contribute about 80 percent to the company's, healthcare 9 percent, and the industrial sector 9 percent.

"So we'd like to diversify by getting more into the medical space," he said. Within healthcare, Konica Minolta already has a global presence in areas like imaging, offering, for instance, X-ray and mammogram equipment as well as informatics tools around medical image management. The Ambry purchase, however, is aimed at expanding its precision medicine footprint.

Konica Minolta's precision medicine business currently centers on its HSTT technology, which uses fluorescent phosphorintegrated dot (PID) nanoparticles to improve protein quantitation in tissue pathology. Fujii said that compared to conventional visualization approaches, like 3,3' diaminobenzidine (DAB) staining, the PID method provides more precise, linear quantification.

He provided the example of measuring patient PD-L1 levels to determine whether they are a candidate for cancer immunotherapy.

"The current [DAB-based] methodology is not very linear and is very inaccurate," he said. "You can basically tell if there is a lot of expression of PD-L1 or not very much. So it is very binary."

In comparison, the PID nanoparticles, which bind to the antibodies used for protein detection, "quantify [protein expression] in a much more linear fashion," Fujii said, adding that this lets researchers stratifying patients by protein expression "design cut-off points in a much more granular fashion."

This could prove useful in, for instance, drug trials, where the ability to more precisely stratify patients could improve success rates or expand the potential size of the patient cohort likely to benefit from treatment.

Fujii cited the example of a recent cancer trial in which the HSTT technology found that roughly 50 percent of patients expressed a protein target at levels that made them good candidates for treatment, while conventional pathology methods had put that number at around 10 percent. "So it was a dramatically different cut-off point," he said.

Fujii said that the company saw in Ambry "a vehicle to monetize this protein technology." He noted that while Ambry has traditionally focused on patient testing, the company's recent move to expand its somatic tumor testing positions it to compete for pharma business.

"We think that if we can offer the [HSTT] protein detection technology with their somatic offerings, we will strengthen their business in the pharmaceutical area," he said, noting that with the deal, Konica Minolta aims to expand its presence in the US pharma market.

"Our priority is US pharma," he said. "I think the US market is by far the largest and we have to be successful and recognized in that market."

Ambry's established clinical business also potentially provides Konica Minolta with a vehicle for moving its HSTT technology into the clinical pathology market, though Fujii said this is a less immediate goal.

Ambry expanded its clinical facilities at the beginning of 2016 with the opening of what it termed its "Super Lab." As GenomeWeb reported at the time, the 65,000-square-foot facility expanded the company's lab space more than four-fold and was designed to accommodate up to a nine-fold growth in test volume.

In addition to expanding its testing capacity, Ambry also improved turnaround times, bringing them down to around 14 to 21 days for large cancer panels and to between six and 10 days for its BRCA 1/2 test.

Fujii noted that this sort of proven scale was something Konica Minolta was looking for as it pursued acquisitions in the precision medicine space.

"We were not interested in, as our first [precision medicine] acquisition, buying a small technology company," he said. "We were interested in a big, scalable service company with strong science and technology behind it. One of the attractive things Ambry has is a very modern, scaled lab, and we would like to create a super lab that can test genomics and proteomics. It will be a major part of our strategy to leverage their existing state-of-the-art lab."

In addition to viewing Ambry as a vehicle for commercializing its HSTT technology, Konica Minolta also plans to use the acquisition to establish itself in Japan's genetic testing business. According to Fujii, the country currently lacks large genetic testing firms and awareness of genetic tests like BRCA 1/2 lags behind that in the US and Europe.

"We don't really have a scaled, proven genetic testing company in Japan, which is one of the reasons we were very interested in making this acquisition," he said. "Right now, [genetic testing] is done in a small-scale distributed manner, but no one has an accumulated database and the bioinformatics [of a firm like Ambry]."

Fujii added that this drove the Innovation Network Corporation's decision to invest in the deal. "The Japanese government would like to promote this type of service in Japan," he said.

He added that Konica Minolta plans in the near future to open a lab in Japan to handle its genetic testing business in that country.