SmithKline Beecham is gambling that its new 50/50 joint venture with Incyte Pharmaceuticals Inc. for molecular diagnostics discovery can make a viable business solely by developing and commercializing diagnostics. As a result of the deal's structure, diaDexus inevitably will produce some products that identify conditions for which SmithKline is developing therapeutics. However, diaDexus is intended as a separate entity meant to sell diagnostics in a market that may increasingly package tests with specific therapies developed using the same technologies.

As announced last week, SmithKline (Philadelphia, Penn.) will move its entire molecular diagnostics research effort, including about 30 employees, into diaDexus (Santa Clara, Calif.). The new company has exclusive rights to develop tests based on targets and genetic variations that SmithKline identifies through its drug discovery program or through its collaboration with Human Genome Sciences Inc. (HGSI, Rockville, Md.).