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Jrgen Bauer and Colleagues on Buying Axaron s iGentifier Platform

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At A Glance

J rgen Bauer, CEO, Gentana

Experience

December 2000-June 2004 — Program head, then manager, business development, Axaron Bioscience

June 1998-December 2000 — Head of genetics and molecular biology, Department for Research & Analysis, Lesaffre Development, Marcq en Baroeul, France.

April 1994 - May 1998 — Research scientist, Nestec, Nestlé Research Center, Lausanne, Switzerland.

Education

1994 — PhD, University Frankfurt/Main, Germany.

1990 — Diplom-Biologe, Johann Wolfgang Goethe University Frankfurt/Main, Germany

 

Within the next 30 to 45 days, J rgen Bauer, Thorsten Storck, and Achim Fischer will become the owners of Gentana, a Heidelberg, Germany-based company being spun out of Axaron.

The three former managers at Axaron are investing in Axaron’s iGentifier technology, buying the rights and licenses in a deal that is expected to close at the end of August.

Storck, director of technology at Axaron Bioscience, is the chief operating officer while Fischer, the inventor of the iGentifier technology and former head of new technologies at Axaron, is chief science officer.

BioArray News caught up with Bauer, who is CEO of the company, to talk about the management buyout and the company, which is operating with 11 employees as the final details of the spinoff are completed.

What is Gentana’s business focus?

We are going to provide to life science companies analytic methods in the area of molecular biology. More particularly, we develop and market functional genomic technologies and provide them to our customers. We focus on gene-expression profiling analysis and analytical technologies with a method allowing profiling of all eukaryotic organisms independent of whether there are sequences known. We have an open-expression profiling method: You start with RNA; the RNA is translated into cDNA; and then fragmented cDNA is separated using capillary electrophoresis. Then you can compare cDNA fragments from one sample with cDNA fragments from another.

What is the advantage of this method?

There is no need for physically available material besides the RNA beforehand. So, if you want to do expression profiling with an array, in general, you need some fragments available beforehand which you put onto the array. To set up the array, you need some sequence information or cDNA fragments. You link them to the surface and that’s how you prepare the array and then you can use this array to do your expression profiling analysis. Our technology platform doesn’t need such a setup. You just start with the RNA and just do the expression profiling analysis using our technology, which is a combination of differential display, and tag sequencing.

Can this technology do the multiplex, highly parallel analysis that you can get using microarray analysis?

We can do multiplex and high-throughput analysis. The advantage of our technology, compared to other open profiling technologies, like SAGE, is that we run these analyses on capillary electrophoresis. There are machines with up to 96 capillaries, and even more are possible.

Who will buy this?

We mainly intend to market the iGentifier expression profiling [system] to companies and institutions in the life science area, with the first focus on seed agro companies, and on food and feed companies, especially on companies that do research and development in these areas.

Why have you selected the agricultural area?

There are many organisms that are of economic interest, and which are not sequenced, and there are no arrays available. There are many non-model organisms of high interest for which these companies can do expression-profiling analysis without the costly setup you would need to establish an array for your crop of interest.

Could you give me an example of what those species might be?

Corn would be one example. Another group would be organisms such as plant pathogens, which are of interest for the agrochemical industry and also for the seed industry, and of course, worms, insects, and pathogens.

We are targeting the market that is not covered by arrays. So, we are in a niche, and in the same way we compare to other open expression profiling methods. We are not really competing [with them], they were just not made for high-throughput expression profiling analysis. From the processes they are made for a small number of analyses and not really high throughput. Compared to arrays, we see certain differences and advantages for the iGentifier, for instance in respect for the identification of new genes. In terms of sensitivity, reproducibility, we see certain advantages compared to array technologies.

Are you speaking to any particular microarray platform, or across the board?

Affymetrix has become reproducible, or I think their quality has increased over the past years, so it’s more difficult to compare iGentifier with them. The advantages are when compared to the home brew arrays and there we see a clear advantage in terms of different technical expectations.

How do you think the microarray industry would react to this?

I do not think that we can expect a strong reaction from the competitor market. We are in a niche that is not served at the moment. We don’t expect a company like Affymetrix would react to this. They depend very much on the sequencing efforts so that they have sequences on which they can build up their chips. We don’t expect them to start pushing forward sequencing projects just because we are there.

Why is this technology being spun out?

The idea came up throughout the second half of last year as Axaron was establishing a new focus in the area of CNS [central nervous system] drug discovery. In the discussions of the new focus of the company, it became clear for the entire management [team] that it would not make sense to maintain the iGentifier platform in the company. There was a totally different market focus, a need for a totally different structure of the company. So we concluded at the end of last year that it would make sense to spin out the iGentifier platform and have the clear focus that Axaron does drug development, and iGentifier does service.

Why did you and your colleagues decide to go with this technology?

First of all, I’m a molecular biologist, and I came from research and development in the food and seed area. At Axaron, I was involved in the sales and marketing activities of our expression profiling services. I very much believe in our competence and in our strength in these expression profiling services. So far, it’s running well, and what we have is highly profitable. For me, it’s a safe services business, that is what I can do and bring in my competence. I believe it’s the way to go for me and for the service area of Axaron.

Have you leveraged your personal finances to do this?

Yes. All three of us have leveraged significant amounts of money, and personal savings, I would say, to start up this company.

What is Axaron and Gentanta’s relationship?

We had to take some money to buy into or to get this area in our hands. I think we got a good offer from Axaron, a special price. We left Axaron [with a] good agreement, and I think the way it went was well done and managed. We can already use the license; we have an agreement that allows us to do the service business now from the beginning. The final agreement will be closed. We are already active, and we are starting a new promotional tour.

Who owns the majority shares of the company?

All the three founders own the shares, and we are the only owners. There are no loans; we are currently closing the contracts concerning license or transfer rights, concerning the iGentifier technology and the IP rights for this technology. There are fixed payments in the contracts [for the transfer].

Congratulations for that. If you hadn’t done this, what would have happened to the company?

It’s hard to say. It’s a question that I don’t really care about any more. We got this offer, we said okay. We believe in the service and the strength of the technology. We had a great team with us. Personally, I wanted to be with this team, I felt we can really get this technology on the market and make an economical success out of it. That’s why I took the risk. We had some experience from the market. We launched iGentifier in the spring of last year, the first responses were good. Some key companies were pilot studies. Our feeling at the end of last year was, ‘Yes, we have a good chance to succeed and establish ourselves in the market.’

How long before you become profitable and the debt you incurred to do this is paid off?

We hope we become profitable in less than 24 months. We are seeking institutional or strategic investors, bridge financing, and, of course, additional funding to push our development.

What are your revenues?

We have revenues but those were made under Axaron, and we are not allowed to publish those.

Would a million dollars a year be a fair goal for your revenues?

We hope for at least revenues on that order of magnitude but, of course, increasing, and much, much higher in fact.

We have the feeling that in the agricultural market, the companies were not always happy with what they have got. We are quite convinced they are waiting for a solid technology without high setup cost and fees, and which offers them a good view into the molecular mechanisms in their organism.

We believe that the iGentifier technology is a solid technology, not too complicated. It’s running, it’s working, and we get the results that we promised. We can’t promise a particular result but the process of getting the result is a solid thing, and we are convinced that that the agro market needs such a technology for the development of new seeds, independent whether they are developed with classical genetics or genetic engineering. Also, the agro-chemical industry needs the compounds and an understanding about the mechanisms of how compounds act. And we believe we can provide help in getting some of these insights on the level of gene expression.

What is your target market?

Our main focus is the European and the American market.

Who is your best customer?

We have customers but they are considered as Axaron’s. They have been informed about the reorganization, but they have not yet officially allowed us to name them. We have global leaders in the seed industry as customers, two of them are in the seed and plant protection area, and one is a US company.

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