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Diagnosing a Personalized Partnership

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Abbott Labs (NYSE: ABT  ) and GlaxoSmithKline (NYSE: GSK  ) each has something the other needs. Sounds like a good opportunity for a partnership.

Glaxo is developing a cancer vaccine that targets MAGE-A3, a marker that is presented on the surface of some, but not all, tumor cells. The vaccine -- aptly named MAGE-A3 ASCI, for Antigen Specific Cancer Immunotherapy -- only works if the tumor presents MAGE-A3.Currently, this is in a phase 3 trial for lung cancer.

Enter Abbott, which has an instrument -- non-aptly named the m2000 -- that can detect DNA sequences through PCR. The two announced yesterday that they'll develop a DNA test so that patients' tumors can be screened and only those presenting the MAGE-A3 marker will be given the drug. In other words, targeted therapy.

It's a bit of a risk for Abbott to develop a test for a treatment that's still in phase 3 trials, but it could pay off handsomely if MAGE-A3 ASCI turns out to work. Not only will Abbott be able to earn revenue on the tests it'll sell -- assuming the diagnostic test gets past the Food and Drug Administration -- but expanding into cancer diagnostics might also help the company place more m2000 instruments. The machine is currently used mostly for detecting or confirming infectious diseases.

Of course this isn't the first drug-diagnostic test partnership. Dako and Genentech set up a collaboration to develop a HER2 diagnostic test for using Herceptin to treat breast cancer back in 1998, but the number of drugs requiring personalized tests does seem to be growing. For instance, Life Technologies (Nasdaq: LIFE  ) and others have a test for a mutation in K-ras which affects whether Amgen's (Nasdaq: AMGN  ) Vectibix or Bristol-Myers Squibb's (NYSE: BMY  ) and Eli Lilly's (NYSE: LLY  ) Erbitux will work.

Sorry Glaxo, but I think diagnostic-test makers like Abbott, Life Technologies, and Myriad Genetics (Nasdaq: MYGN  ) are a better play on the growth in personalized medicine than the drug developers. The lower development costs and likely higher success rates make them a good choice, especially for risk-adverse investors.

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Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. The Fool has a disclosure policy.

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