Nearly eight months after bickering among investors caused Germany's Febit AG to pull the plug on selling its Geniom One microarray spotter and analyzer, the firm has reemerged with a slightly tweaked name, a much leaner team, and enough euros in the bank to relaunch the Geniom system this summer.
Cord Stähler, the former CEO of Febit AG and now CEO of the new company christened Febit Biotech, told BioArray News this week that the company has received "significant" funding from German investors Dietmar and Oliver Hopp — the former founder of global business software provider SAP — and will be shipping its revamped Geniom system within the next few months. The company initially launched the system in 2003, but stopped selling it when it filed for bankruptcy last fall.
Stähler declined to say how much the Hopps invested in Febit Biotech, but confirmed that "it's a major investment. They are now the majority shareholders. They have more than 50 percent of the company." The Hopps had also invested in Febit AG.
The reemergence of the company came as a relief for Febit's erstwhile customers. But Febit customers told BioArray News last week that the delay had slowed down their research and had them worried about where to find chips and other consumables for the systems, which cost roughly $300,000 apiece.
The remaining shareholders in the company are Febit Biotech's staff, managers, supervisory board members, as well as German investment group TechnoStart, the only other investor left over from Febit AG, which Stähler said has a 10-percent to 15-percent share in the new company.
According to company officials, the funding came just in time to rescue Febit from being acquired by undisclosed American or Asian investors.
"The precise timing [of this deal] allowed us to prevent the acquisition of the Geniom platform by foreign investors from the US and Asia and to keep this promising business in [Germany]," Christoph Hettich, a counsel for the parties involved in the creation of the new company, said in a statement.
Dietmar Hopp also expressed an interest in keeping the company in Germany as one of the reasons for his investment.
"There is a growing need for marketing and development of high tech companies in Germany, particularly [biotechs]," the SAP founder said in a statement.
According to Stähler, Febit Biotech will now begin operating out of Heidelberg, Germany — the neighboring city to its old headquarters in Mannheim — with a team of 15 to 20 people that will have "all the skills from R&D to production to service and sales" that the new company requires to take care of its existing customer base.
Despite its eight-month lag in operations following bankruptcy, Febit still claims customers at the Zurich, Switzerland-based Functional Genomics Center, the Estonian Genome Project in Tartu, Estonia, and the Center for Biological Sequence Analysis at the Technical University of Denmark in Copenhagen.
"It was very unfortunate of course that the company [went bankrupt], but the only real issue we had was that it has been hard to get services and equipment for the machine if the company didn't exist," said Henrik Bjørn Nielsen, the co-director of systems biology and gene expression at the Center for Biological Sequence Analysis at Technical University of Denmark.
Nielsen said that because CBS had stocked up on consumables from Febit, it hadn't yet run out of equipment for experiments, but had been "very worried" that the company might not reincorporate.
A New Stragtegy
Stähler said that the difficulties among investors that caused Febit's first incarnation to declare bankruptcy wouldn't be an issue this time around.
"The old company went out of business because of a major disturbance [among] the shareholders, but nothing to do with the business itself or the products. It was a strategic insolvency, or battle [among] the shareholders," he said.
In an interview following the announcement that Febit AG was going bankrupt last October, Stähler told BioArray News that there was "a conflict between early-stage investors and founders on the one side and late-stage investors on the other side" over the strategy the company should pursue, and how any returns would be divided among investors.
"We are [no longer] doomed to generate revenues because we have a big investment held to our backs,"
Stähler said that there was a great deal of pressure to rapidly grow the company, then approximately 100 employees strong, in order to generate the kind of sales that would quickly pay back the €30 million Febit owed its investors — 3i, Heidelberg Innovation, TechnoStart Venture Capital, Marco Polo Investments, First Venture, and Grazia Equity. Only TechnoStart remains a shareholder in Febit Biotech.
Now, Stähler said that the company's business strategy has changed because Febit only serves two investors now, rather than half a dozen.
"We are [no longer] doomed to generate revenues because we have a big investment held to our backs," said Stähler, who, with other members of Febit AG, bought back the company's Geniom assets when they were divided in German bankruptcy court.
"We bought the business and then we bought part of the infrastructure as we had only ten employees at that moment. We had [a] hundred before, so we only bought part of the equipment," he said. The remainder of the company, mostly infrastructure like office equipment, was doled out to some 70 different interests, according to Stähler.
"All we need [to do] now is to set up the company that can provide all the fundamentals we need to run the business, and then grow if we see we are successful in selling," said Stähler. "The business [is] based on the platform."
Same Platform, New Applications
The Geniom One system, which includes a desktop synthesizer and analyzer, will be commercially available this summer. It will be the fifth generation of an instrument that the company has developed, Stähler said.
The Geniom One system enables users to synthesize eight arrays in parallel, run the experiments, and analyze the data with the accompanying software (See BioArray News 10/13/2004).
The system is designed to produce chips that have 48,000 features that can be used in parallel experiments. Each of the eight arrays contains 34-micron pixels that use 30-mer oligos.
Stähler said that the system requires as little as 30 micrograms of input sample to generate data, produce the chips, perform the experiment, and provide a result in the form of an array image. In comparison, some rival platforms, like Agilent, offer 60-mer oligos, and NimbleGen, another competitor of Febit's, boasts more features than the German biotech.
However, while the platform remains unchanged, Stähler said the revived company is planning to add some applications to the existing system that can be integrated into installed Geniom systems. .
Stähler said that the company will also begin producing double-stranded oligos for experiments. According to its website, Febit Biotech is also considering de novo sequencing and genotyping, on-chip PCR, and melting curve kinetics as new applications for its system.
Stähler also didn't dismiss the company's previous pledge to expand its operations to the US, but said that any American operations would depend upon the success of the system in Europe.
"I think realistically that [by the] end of the year, early next year, we will show up in the US," he said. He stressed that the company's first obligation was to its existing customers.
Indeed, the company has some catching up to do with its current customer base. Ralph Schlapbach, director of the Functional Genomics Center in Zurich, said that his organization acquired the system only a few months before Febit closed shop, and that they had yet to optimize the Geniom One system for their research.
"It kind of just slowed us down," Schlapbach said of Febit's absence.
"We lost a half year, [a] year in processing these specific applications where we really need the flexibility in terms of probe design and turnover rate for new experimental designs [that the Geniom provides]," he said.
"We would hope that they now achieve full functionality and full ability of the system within the shortest possible time."
Stähler also expressed confidence that Febit's lapse in operations hadn't left his firm behind in the European market.
"There seems to be no Europe-based competition," he said, noting that companies like NimbleGen and CombiMatrix that also provide custom array services and tools do not directly compete against Febit Biotech. "NimbleGen provides a centralized service," Stähler said, and, as CombiMatrix' vice president Bret Undem told BioArray News this month, his company has a "big gap" in its distribution network in Europe.
— Justin Petrone ([email protected])