Advice of Counsel addresses the question of whether genomics companies are using new business models and deal structures to commercialize their technologies.

IPOs of start-ups whose technologyies have applications in the clinical diagnostics arena are few and far between; rarer still are those actually developing clinical diagnostics as their primary activity. We examine the past year's IPOs of companies whose technology has some implication in diagnostics.

Wrapped in a modish genomic gown, in vitro diagnostics are back in fashion. No sooner has Applera (formerly PE Corp.) announced a major new initiative in diagnostics than diaDexus files for an IPO. But these aren't your grandfather's diagnostics companies: they start life with huge pharmaceutical subsidies in terms of genomic data and financing.

New technologies enable the rapid processing of genetic information, but since gene data isn't associated with specific diseases and diseased tissues, in and of itself it isn't clinically useful. A new breed of start-ups aims to provide both the phenotypic and genotypic sides of the equation by creating databases of patients and patient samples. Still unclear is how much drug firms will pay for disease-associated gene data; genetics firms are taking various approaches to monetizing their databases, from focusing initially on high-value diagnostics to creating true target-discovery businesses, to selling their data along with associated software and services. There are also ethical issues to hammer out. The new companies must take care to protect patients' rights. They must consider the need for explicit consent to use the information collected from patients, especially when they are participating in research whose purpose is as yet undefined.