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BioArray News Catches Up with CapitalBio CEO Jing Cheng

Jing Cheng
Chief executive officer
CapitalBio Corporation

Name: Jing Cheng

Title: Chief executive officer, CapitalBio Corporation

Professional Background: In addition to serving as CEO and chief technical officer of CapitalBio, Cheng also is the director of the National Engineering Center for Beijing Biochip Technology and a distinguished professor at Tsinghua University. He also serves as general advisor to the Chinese Ministry of Science and Technology, and is a member of the country's National Drug Review Board. Cheng sits on the board of directors of CapitalBio subsidiaries Wandong Medical Instruments in Beijing, Aviva Biosciences in San Diego and Chipscreen Biosciences in Shenzhen, China.

Education: BSc, electrical engineering, Shanghai Tiedao University; PhD, forensic sciences, University of Strathclyde, UK.

Separated by the Pacific Ocean and 16 time zones, CapitalBio's headquarters near the Chinese capital of Beijing are a long way from the microarray epicenter of the San Francisco Bay Area. But that hasn't stopped the biochip company from plowing ahead with an ambitious agenda with an eye outside of its home market.

Last year the company launched a competitively priced scanner in the US, announced an HLA typing service, and entered into a strategic partnership with Affymetrix. This year the company is pledging more products, more services, and more revenue. To get a better picture of where CapitalBio is headed, BioArray News spoke with the firm's CEO, Jing Cheng, last week.

You launched the LuxScan 10-K Confocal Scanner in the US in February 2005 (see BAN 2/23/2005). How has that launch been going and have you initiated sales in Europe and South Korea [as promised on your website]?

We have launched in South Korea, Europe, and America. Sales are picking up. In fact David Sun [CapitalBio's senior vice president of business development and marketing], was just [in South Korea] recently to talk with a potential distributor. So the interest is really big.

There have got to be at least 20 new technologies you are working on listed on your website. Which ones are we going to see this year or next year?

For services we already have SNP analysis, comparative genomic hybridization, and mutation detection, as well as gene expression monitoring. Very literally now, we are launching a microRNA array service for the community in China.

If any customers outside of China have an interest [in these services] we can certainly help them.

How is your miRNA array similar to existing miRNA arrays in the market in Europe or in the US?

I would say that technology-wise it should be pretty similar. It's just miRNAs that you are putting on a chip, although the content may vary. [For example], we have several users that are doing stem cell research. So their microRNAs of interest are provided to us. And we have released the common ones to serve the community — many in the cancer research arena.

But back to our services. We also have a transcription-finder profiling chip which we developed ourselves. This one tells the customer how many TFs were activated in a single moment for the cells that are of interest to them under environmental stimulation. This has just been started for human. Very soon it will also be available for yeast transcription factors.

This one is the first [service] we have [initiated] to investigate at the protein level. The second one to follow on this is a promoter chip that can tell the user, for any one of the TFs they are interested in, how many different promoters that a particular TF will bind to in a single moment. The promoter chip was developed with our [subsidiary] Aviva Biosciences in San Diego. We are the exclusive provider in China for this technology and it works well with our TF chip.

Other [products] include an antibody chip that we have developed for the detection of small molecules, mainly antibiotics and other drugs.

For the expression arrays, we have developed a genome-wide, oligo-based microarray for silkworm. Our partners in China have sequenced the whole genome of the silkworm and published their data [and] we have taken all their information, designed the oligos, and put them on a chip. The results have come out really nice. So this is sort of a model organism in China.

Will this serve industrial purposes?

Yes, it's a very unique one. Ordinarily, model organisms do not have too many industrial uses. But this one has a significant impact on [the Chinese] economy. The government has funded the research.

Who is handling the informatics for these new services?

We have the corresponding informatics that we have developed by ourselves. We have a very big informatics department, about 40 people.

Are you doing any diagnostics work?

On the diagnostics side, in two or three months at the most, our protein microarray for autoimmune diseases will be approved by the Chinese government for diagnostic purposes. It detects 11 different [autoimmune-related] promoters.

Could you see CapitalBio bringing this chip through American and European regulatory agencies in the future?

Yes, most definitely. Our strategy is to first, do it in China, then we move to the US. For example, our LuxScan, we have already received clearance from the Chinese Food and Drug Administration. It has also received its CE Mark in Europe. Now we are in the middle of the process with the US Food and Drug Administration for diagnostic use.

So the chip will just follow the same path.

I saw you are also working on a chip that enables users to do their research at the cellular level. Can you tell me more about this?

At the cell level, we can do the automatic positioning of the cells on the chip and then culture the cells that have been positioned for a number of days and then introduce a drug and then measure the real-time responses from those cells.

This is an absolutely new chip that we have a patent on [ed. — US Patent No. 6,716,642], issued in the United States. This one is a silicon chip with electrodes.

That's different from what you usually offer.

Yes, we call it an 'active chip.' Actually, in our portfolio we have a number of active chips. It's a magnetic chip, with individually addressable magnetic units in array format on a chip for sample separation as well as for detection. For example, we have magnetic beads attached with different antibodies and this allows the beads to be mixed with sample reagents. So as you put those samples on the chip, the magnetic units will activate, individually or simultaneously.

How has your strategic partnership with Affymetrix been developing?

We have signed two agreements. The very first one is a co-development agreement if you like. So we are responsible for the design and have developed a prototype of a next-generation scanner for Affymetrix's new chip. The format of this chip is totally different from the current one now. The size, the weight, and the pricing will be very different from the current one. But the resolution will be the same as the previous [one].

That has been finished since last August and we have transported two units to Affymetrix for their evaluation. After their evaluation they were very satisfied. So by the end of January, we signed a development and supply agreement with them. Under this agreement we will supply over 100 units to Affymetrix by July 2006. After July we will enter into the last agreement — that's the commercialization agreement. Then Affymetrix will place an order for X number of commercial products to distribute worldwide.

Can you tell me more about your international sales and support team?

We have an official wholly owned subsidiary in San Diego called CapitalBio International. The LuxScan is distributed exclusively in the US and a few major European countries by Alpha Innotech, a bioimaging company. About 10 units have been ordered and placed at different places in the US now [through Alpha Innotech].

Are you seeking any investment at this time?

We are now preparing ourselves for an initial public offering for around 2008. Now we are taking steps to finish up with international financing. Five years ago we finished domestic financing [of $30 million], but now we are looking for international investors and from this year on we will do this.

I read a report in Time Asia that you expect to hit a revenue mark of $12 million in 2008. Is that still accurate?

That's still accurate and conservative, I think. In the past three years we have kept the pace of having 300-percent increases in our revenue annually. This year, according to the deals that have been signed and will be signed we are predicting another 300-percent increase in revenues this year.

You are also working on a doping tests for athletes that you have announced will be ready for the Beijing International Youth Track & Field tournament held this year. How is that developing?

The whole system has been developed and has been tested with real samples from athletes. The only bottleneck for us at the moment is what to measure. We are not an antibody company. We are heavily relying on the supply of good antibodies for those [compounds]. So we have some agreements with other companies to provide us with the science.

You have also been selected to provide test for the 2008 Olympic Games in Beijing. Will there be any difference between what is used this year in Beijing and what will be used at the 2008 Summer Olympics?

I think the methodology will be the same. The only difference will be what category of drugs we will have the test for and we will also have to have an agreement with our collaborator.

In the past we have developed assays for stimulants and narcotics and now we are trying to develop assays for hormones and peptides. The whole assay takes no more than two hours. In the meantime, we are developing a fully automated fluidics station for accommodating the protein detection-based microarrays. We have the prototype in our laboratory.

It's pretty general for use and it's antibody-based.

A lot of people are trying to gauge how big the market for microarrays in China is, where the emphasis is being put. Some have said that a lot of diagnostics work is being done in China. Maybe you can share some of your expertise?

For microarray services, I think the market is limited. Only the research community here will use this service. So, in the past five years, to my knowledge I think that annually it's about CNY 20 million ($2.5 million) or so per year. In the coming years this should double to $5 million to $6 million annually.

However, the consumption for chips in diagnostics and food testing — those will gradually come up. Currently the Chinese FDA has approved close to 10 different products that are either antibody-based or DNA-based microarrays for diagnostic purposes.

Is there anything else you would like to comment on?

I think that CapitalBio will expand in the future from biochips to other areas of life sciences, mainly in the diagnostic arena and biosafety testing. This has already started. Some products will be released later this year.

Additionally, for the next five years our efforts will be in cancer-related chip development, assay development, as well as therapeutic antibody development. We expect to invest quite a lot of money into cancer over the next five years. So we've already done an analysis of stomach cancer. Throat cancer work is now ongoing.

I think it's very practical to think that tests from this work could be cleared by the Chinese FDA in the next four or five years.

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