There seems to be only good news from Ciphergen these days. Not only has the Fremont, Calif., protein science company been racking up increased revenues and rolling out new products, a recent publication in a top medical journal has added the stamp of scientific validation to the company’s technology, and two prestigious AIDS research institutes have signed on to use it for protein profiling.
“There is a real sense of momentum in the company right now,” said William Rich, the company’s president and CEO, in a conference call last week during which Ciphergen presented its fourth-quarter financial results for 2001.
The company’s revenues for the quarter more than doubled to $7.3 million from $3 million for the same period of 2000. Significantly, these fourth-quarter revenues represented more than 38 percent of the company’s $19 million in revenues for the year. Over half of the fourth-quarter revenues stemmed from sales of Ciphergen’s instruments, which are chip-based mass spectrometry systems that employ surface-enhanced laser desorption ionization (SELDI), essentially a variation of MALDI. BioSepra, a chromatography resin manufacturer which Ciphergen acquired in the second half of 2001, generated another big chunk of the revenues — $1.8 million.
Not surprisingly, Ciphergen’s expenses also climbed in the fourth quarter to $12 million from $8.7 million for the previous year’s quarter, and total expenses for the year — representing roughly even increases in both R&D and sales and marketing — jumped to $41.9 million from $28.1 million in 2000. Net losses for the fourth quarter widened significantly to $7.1 milliom, from $4.9 million in the same period last year, and losses for the year widened to $25.8 million from $20.3 million for 2000.
In 2002, Ciphergen wants to boost its revenues to between $38 million and $40 million. To do this, the company plans to expand its current sales force of 69 mostly MD- or PhD-educated representatives by a third, said Matthew Hogan, Ciphergen’s vice president and chief financial officer.
Protein Biomarker Chip Gets Scientific High-Five
Ciphergen’s most promising horse in the race to profitability appears to be protein biomarkers. The company’s chips, carrying a variety of chemistries resembling those used in protein chromatography, can be used to create protein profiles from tissues, blood, urine or other biological samples. These profiles, even though they do not reveal the identity of the proteins, can serve as diagnostic or prognostic biomarkers, or as markers of toxicity.
Just two weeks ago, an ovarian cancer study in The Lancet proved the power of the approach: using Ciphergen’s system, researchers from the National Cancer Institute/Food and Drug Administration clinical proteomics program identified a set of five diagnostic markers from serum protein profiles of 50 ovarian cancer patients and 50 healthy women. They found that in a subsequent screen for ovarian cancer, this five-marker set had a higher predictive value than the current standard test.
Already the paper — one of the first peer-reviewed studies employing protein profiles as biomarkers — has “led to a strong interest in our technology,” said Rich. But hopes for a monopoly-type position may be premature, because chip-free technologies, like combinations of liquid chromatography and mass spectrometry, can generate protein profiles as well. “These technologies could replace the SELDI, but at this time are theoretical, whereas the SELDI is a real machine that is working,” commented Emanuel Petricoin, one of the authors of the ovarian cancer study.
Immunological Protein Profiling For AIDS Research
In the wake of this publication, Ciphergen announced two new protein profiling collaborations with prestigious AIDS research institutes last week. The collaborations, with the Aaron Diamond AIDS Research Center, which is headed up by famous AIDS researcher David Ho, and the other with the National Institute of Allergy and Infectious Diseases’ Laboratory of Immunoregulation, both involve profiling immunological proteins in long-term non-progressors, a class of patients that have tested-HIV seropositive for decades but who have not developed AIDS.
The Aaron Diamond Center and Ciphergen researchers have already found several candidate biomarker profiles with Ciphergen’s system— although they cannot identify them with this technology alone. Company researchers will continue to work with the HIV scientists to fine-tune the expression profiling, Ciphergen said.
These new partnerships come on top of a collaboration and serv-ices business that Ciphergen saw grow about 10-fold in the last quarter of 2001, compared to the previous year’s quarter. Though this part of the business accounts for less than 10 percent of total revenues, “many of these activities also carry with them certain downstream rights to Ciphergen,” such as rights to future diagnostics or therapeutics, noted Hogan. The agreements with the AIDS institutes, for example, allow Ciphergen to retain some commercial rights to the protein profiling technology.
Technology Pushes Ahead
With little direct competition in sight — startup LumiCyte, founded by a former Ciphergen executive, is developing similar chip-based profiling technology but has a different business plan, according to its web site — Ciphergen is pushing its technology. In December, the company introduced a “biomarker system,” which couples the chip/ SELDI technology with sample handling robots and biomarker pattern software. The company already sold several of these instruments, which have a list price of $187,000, in 2001. “This is a flagship product for us in the clinical proteomics market, and we have designed a full marketing campaign around it,” said Rich.
But the company is also putting some effort into technology improvements. Last month, it unveiled a prototype of a new chip for its SELDI platform, which “potentially enables the analysis of small, low molecular weight drug lead compounds to be screened against protein targets,” said Rich. The new chip’s surface reduces chemical noise, Ciphergen claims, improving quantitation. The company also introduced an interface for tandem mass spectrometers last year, enabling its technology to be coupled with peptide sequencing.
Besides research collaborations, Ciphergen is also getting into protein production (which it calls “process proteomics”) services, starting last year with the scale-up of therapeutic monoclonal antibody production for a European company. “This project went very well, and we are convinced that we can expand our process proteomics service business,” incorporating BioSepra’s technology, said Rich.
Ciphergen appears to have crossed over that invisible line from concepts companies to products-and-revenues ones. If the company’s technology continues to be validated favorably in the academic and private sectors, this upward trend should continue. “We have far more ways to make our revenue targets than ever in the past,” said Hogan.