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OutsourcingFor 12 years, CBI on Genomics Roller Coaster

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In the 12 years since he co-founded Commonwealth Biotechnologies — better known as CBI — Tom Reynolds has been through just about every up and down that genomics has had to offer. The former manager of a DNA core facility at Virginia Commonwealth University teamed up with three university colleagues in 1992 to launch the company. “We just decided that we’d go out into the biotech world,” he says, adding that they began “without any real startup funds — we did it out of our own pockets.”

From contacts in the field, Reynolds used his experience at the DNA core to kick off the company’s first service, DNA sequencing and synthesis. “We worked ourselves into about half a million dollars a year of revenue, and were profitable for the first four years of our existence,” he says.

Eventually, CBI went out in search of additional funding. With a mezzanine round of $3 million from local sources in Richmond, Va., the company got into shape to have an IPO in 1997. That brought in $6 million, and the state kicked in $4 million more to build a 32,000-square-foot facility in Richmond. By 2000, the company’s stock soared from around $7 to $30.

Those were the good days. With the flood of funds came a mandate to expand services and rapidly grow the company. “We were growing, spending more than we made,” Reynolds says. In addition to becoming certified for GLP, forensics, and other specialty work, CBI added peptide chemistries, genomic and proteomic expression, and related biodefense services to its repertoire. “We were spending a lot of money on developing the company,” he adds. “We actually spent all the money.”

By then, funding was tougher to come by — as the bubble burst, CBI’s financial avenues closed. The company’s annual report for 2002 indicates that it had an accumulated deficit of nearly $9 million, and went so far as to say, “There is substantial doubt about the company’s ability to continue as a going concern.”

But two years later, Reynolds says, things are looking up again. With the growing trend toward outsourcing, “we are approaching at least half a year now of profitability,” he says. “Work’s showing up on our doorstep.” A recently announced biodefense contract worth $1 million highlights one of the factors responsible for CBI’s upswing: an increased demand from the security sector. Before 9/11, Reynolds says, about 10 percent of the company’s revenue came from biodefense work such as rapid strain identification; now, that number’s up to 50 percent.

CBI doesn’t have the highest sequencing capacity, but can do microbial genomes, Reynolds says. Customers range from top-10 pharma to university researchers to government labs, and Reynolds says they’re lured by the company’s comprehensive service offerings — from synthesizing a gene through to designing an antibody assay based on that gene’s protein characteristics.

The ups and downs continue for CBI. One Tuesday in March, the company’s stock shot up so high it was one of the biggest Nasdaq gainers that day. “By Wednesday we were heading back down,” Reynolds says. Either way, up or down, he adds, “We just sit back and look in amazement.”

— Meredith Salisbury

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