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Birthplace of Amersham s MegaBace Fades, And Piscataway Rises, Under GE Healthcare

The Sunnyvale, Calif., facility that served as the birthplace of Amersham Bioscience’s MegaBace DNA-sequencing technology and other genomics technologies and research is apparently being downsized as part of Amersham’s continued integration into General Electric Healthcare, BioCommerce Week has learned.

The restructuring of the unit marks a coda for an instrument-development organization that produced what could be considered the “bridesmaid” tools of the genomics boom. The tools were highly regarded by customers, but never attained the commercial success of Amersham’s primary rival in the sequencing market, Applied Biosystems. It appears that the MegaBace line missed the growth curve for the industry, which has now leveled off as it reaches maturity.

The Sunnyvale facility, originally the home of Molecular Dynamics, which Amersham acquired for $256 million in 1998, housed R&D and manufacturing units. More recently, the site hosted marketing and management operations for the former Amersham business. Under GE Healthcare’s new direction, the unit’s development workers were offered transfers to Piscataway, NJ.

Details on the transition were unavailable. GE Healthcare officials did not return requests for comment prior to publication deadline so it is unclear if there will be layoffs, or what the exact status of the facility will be.

The Sunnyvale facility’s downsizing is emblematic of the difficulties of aligning cultures in broad-based technology enterprises, and the tension between innovation and short-term profit motives, said Jay Flatley, CEO of Illumina, and the former CEO of Molecular Dynamics.

“The epitaph for the Sunnyvale facility could be focused on the cultural differences in the companies, and the fact that Amersham didn’t have the instrument culture — they were pushing the reagent side,” he told BioCommerce Week. “They used MD to improve the profitability by focusing on the high-margin reagents.”

Flatley said that appears to be the direction the operation is taking under GE Healthcare, which purchased Amersham last year in a $10.3 billion deal.

“I think part of it is that motivation in decision-making right now — that focus on reagents’ higher margins,” he said. “But in the long run, [a] company goes under if you are not innovating any more.”

Molecular Dynamics was founded in 1987 by Bala Manian, a Silicon Valley biotech serial entrepreneur who is director of Quantum Dot, a company he founded. Manian has also co-founded SurroMed, Biometric Imaging, and Lumisys.

Technical Innovators

“We created 25 or 30 products during the history of the company,” Flatley said. “We continued advancements in the imaging of gels, the fluor imager, Storm, which combined radioactivity and chemiluminesense, and made the first capillary sequencer From a market perspective, we should have been the leaders, as we were two years ahead of ABI. But, we relied on Amersham to do the reagents. They were building reagent kits for the installed based of ABI users, and were short-term revenue focused.”

Molecular Dynamics launched the MegaBace 1000 DNA Sequencing System in September 1997 at the 9th annual Genome Sequencing and Analysis Conference. But its technology development programs were not limited to high-throughput DNA sequencing. At the time, the company had 10 companies in an early-access program for a pre-arrayed microarray technology it was co-developing with Amersham Pharmacia Biotech, which produced the reagents and consumables. That system was later integrated into the CodeLink microarray product line that Amersham purchased from Motorola for $20 million in 2002.

Molecular Dynamics “was always a very exciting place to work, focused on building innovative technology,” Flatley said. “We shipped our first product in about six months, and were profitable within the first couple of years. We ran the company on about $2 million a year before it went public.”

Proud Shop

“People who worked there at that time will tell you it was a valuable time in their career, it was one of those places to be in 1997, 1998, and 1999,” said Robert Feldman, who was a section manager in genomics applications for Amersham from 1999 to 2003. “We took a lot of pride in having built that technology and built it first — and that is something that gets lost. The MegaBace technology did quite a bit of work on the Human Genome project — half the clones were sequenced on the instrument — and from that standpoint, it was tremendously successful.”

Feldman is the co-founder of SymBio of Menlo Park, Calif., which provides contract genomics services and uses the MegaBace technology.

He said the legacy of the Sunnyvale site is the talent that has left in the years since to form other technology ventures in the life science tools market.

“Don’t cry for Silicon Valley,” he said. “There are several companies that have their high-end brain trust that came from the company. The people at Molecular Dynamics understood instrumentation. The challenge was in the marketing.”

— Mo Krochmal ([email protected])

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