Febit, the German start-up whose entry into the microarray field was eagerly anticipated, has gone bankrupt and shut down its operations just months after commercializing its first product.
The Mannheim-based firm had pocketed slightly more than half of a €30 million ($30.3 million) round of private financing in late 2002, the company’s third, which was expected to help Febit launch its first product and increase staff from 75 to 120 employees.
But shareholders in the privately held firm could not agree on a strat-egy to move the company forward or how they would split the potential return on investment, according to Febit CEO Cord Stähler.
Stähler told BioArray News in an e-mail exchange this week that there was “a conflict between early-stage investors and founders on the one side and late-stage investors on the other side.”
He noted that the third round of financing was divided into tranches, and the firm had received roughly €17 million of the €30 million until it ceased operations.
Febit had developed the Geniom One microarray machine, which according to the firm, could synthesize custom oligo arrays, perform experiments, and scan arrays all within the confines of the instrument. The firm had promised to launch the product by the end of 2002, but efforts to work out the bugs delayed the product’s introduction by a year.
The first shipments went to customers in Europe, and the company had been planning to set up facilities in the United States this year before it introduced the instrument here. Instead, Febit was forced into insolvency proceedings and approximately 100 employees lost their jobs at the beginning of July.
Stähler told BioArray News that the Geniom One technology was sold by the receiver in the insol-vency proceedings, but he declined to name the entity that purchased the product and said that details of the agreement are confidential. Attempts to reach Febit’s Heidelberg-based insolvency lawyer, Christopher Seagon, were unsuccessful.
“We still have customer requests, and the instrument at the DKFZ [German Cancer Research Center in Heidelberg] is still running after more than three months without any support,” Stähler said.
Jörg Hoheisel of the DKFZ confirmed Stähler’s statement in an e-mail to BioArray News, noting, “I do use the instrument still, and it is going strong.”
Upon launching Geniom One last December, Stähler told BioArray News, “This is a major step in the life of the company … It took us five years to the date to develop that instrument, and five generations” of prototypes. (see BAN 12/17/2003)
The fifth-generation instrument allows users to synthesize eight arrays in parallel, and includes major improvements in the accompanying software, according to Stähler.
The current generation of Geniom One instruments is designed to produce chips that have 48,000 features and are subdivided into eight separate arrays that can be used in parallel experiments. Each array consists of 34-micron pixels that use 30-mer oligos. The system, which requires as little as 30 micrograms of input sample to generate data, produces the chips, performs the experiment, and provides a result in the form of an array image.
Febit did not provide pricing information on the instrument. However, the company told BioArray News in 2002 it was available for early access customers at a fee of $300,000 per machine, as well as $1,000 per chip cartridge.
Peer Stähler, Cord’s brother and chief scientific officer of Febit, had revealed that the firm was devel-oping applications for the system including 3’ end oligos, which “opens the arrays for molecular biology-like assays such as primer extension and mini-sequencing,” as well as developing assays for the instrument for specific organisms. “We validated a bunch of human genes, so that the complete human genome will be available for Geniom One users,” he told BioArray News at the time of the platform’s launch.
The company’s main goal for this year was to achieve “reasonable sales,” Cord Stähler had told BioArray News. For sales to be reasonable, he said, they must be significantly more than €1 million — which would “really show that people are interested in our product and buy it.”
Shareholders in the company included 3i, Heidelberg Innovation, TechnoStart Venture Capital, Marco Polo Investments, First Ventury, and Grazia Equity. The third round of financing was led by Infineon Ventures, the venture capital arm of Febit’s technology partner Infineon Technologies, and EMBL Technology Fund, a fund established by the European Institute for Molecular Biology. Infineon did not respond to requests for comment on this article.
Stefan Herr, managing director of EMBL Ventures, told BioArray News, “The majority of the VC investors did offer further financing of about €10 million, but could not agree on terms with the founders. We have fully written off our investment.”
EMBL had received a beta version of Geniom One from Febit in May 2002. The lab was going to test the instrument in several research projects in its genomics core facility.
“My brother and I absolutely believe in the product and its market potential,” Cord Stähler said. “I am confident that the Geniom One will find its way to the customers requesting it soon.”