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BioInform Telecom Prepares For Relaunch as Discovery Shop


Those despairing that the biotech market has lost some of its luster in the last few years can take heart in the recent decision by telecommunications firm Direct Wireless to rebuild itself as a drug discovery firm. Compared to the embattled telecom sector, which appears to have gone south for good, drug discovery has offered the struggling firm a relative aura of optimism that guided its choice to ditch its original business plan and start over from scratch.

Computational biology is proving to be the key component in Direct Wireless’ makeover: The company first signaled its intention to morph from its original model with the acquisition of bioinformatics consultancy the Barnhill Group, and followed up a week later by acquiring bioinformatics software firm Fractal Genomics.

“This is just the beginning of the technology portfolio,” says Stephen Barnhill, founder of the Barnhill Group and president and medical director of the new company, which was slated to relaunch under the name Health Discovery Corporation. “We’ll be looking for technology both in the analytical space and in the bioinformatics space,” he adds.

Barnhill, a pioneer in the use of neural networks and support vector machines for life science research, holds a number of patents in artificial-intelligence-based machine learning techniques and diagnostic discovery. Prior to founding the Barnhill Group, he was founder and CEO of Barnhill Clinical Laboratories, which was eventually acquired by Quest Diagnostics.

Direct Wireless was originally founded to develop a new wireless communications technology. But the company needed an additional $10 million to commercialize it — an amount that proved unattainable for the over-the-counter publicly traded firm to raise in the telecom freefall. CEO Bill Williams opted to change direction by acquiring the Barnhill Group’s assets and placing Barnhill at the helm of the new entity.

Working within the shell of an OTC firm gives the nascent company several advantages, Barnhill says. “Because it’s a public company, there are ways of raising capital to do this kind of research and we’ll be pursuing some of those in the future.”

Fractal Foundation

One of Barnhill’s first moves as head of the new firm was to acquire Fractal Genomics, a San Francisco-based software startup founded by Sandy Shaw, a former bioinformatics specialist at the University of California, San Francisco.

The company’s Fractal Genomic Modeling software, which Shaw describes as “a combination of clustering and modeling at the same time,” is able to model patterns of similarity in large biological databases using a mathematical method based on fractal geometry. The software can be used to reverse-engineer genetic networks using less computation than other methods, Shaw says, and is particularly useful for time-series data.

Starting with Better Data

Despite its strong foundation in computational biology, Barnhill stresses that Health Discovery Corporation will not rely solely on bioinformatics. “To me, the computational piece doesn’t start with data,” he says. “If you’re going to really do this right, the computational piece starts with the problem, and our computational biologists and mathematicians will get involved right from the inception of the identification of the clinical dilemma that’s to be studied.”

The company plans to make experimental design a key part of its partnership strategy, advising its clients on “how many specimens they need for clinical significance and statistical significance, … what disease types they need to be, the range of the disease, the stage of the disease, to make that discovery for them,” Barnhill says.

This focus on data generation as well as data analysis should set the new firm apart from its computational competitors, he says. “Other computational companies are really taking the ball from the data, and it’s like the old computer adage: garbage in, garbage out.”

An expanded version of this article originally appeared in the September 8, 2003, edition of BioInform.


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