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Steve McPhail, Duly Diligent and Market Aware, Tapped as CEO of Expression Analysis

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When Steve McPhail was a consultant, he created such an impressive business plan that the company retaining him then hired him to execute the plan.

Last week, Expression Analysis of Durham, NC, announced that McPhail, 49, had been named president of the firm, which provides microarray analysis services.

He laughed when asked if it was cheaper to hire him, rather than pay him consulting fees.

“It would have been, over time,” said McPhail.

Expression Analysis was founded in 2001, funded by the Howard Hughes Medical Institute and spun out of Duke University, where it provided core microarray facility services to the university. Like Memphis, Tenn.-based Genome Explorations, it offers Affymetrix-based microarray analysis services. Both companies appear to have found a profitable niche in the emerging microarray market.

Genome Expression reported $1 million in revenues in its first year, while Expression Analysis, with 10 employees, earned $1.8 million in revenues last year and projects $4 million this year. The company processed over 2,800 microarray slides last year, using two GeneChip brand systems leased from a vendor.

McPhail was retained in August to conduct research on biotech-nology and pharmaceutical markets. He was then asked to create a 2003 operating plan.

In January, he was offered the position. It didn’t take a lot of research to convince him to accept it.

“I got the opportunity to do great reverse due diligence, to meet the management team and to learn the value proposition and the business model,” he said of the consulting engagement. “I’m convinced that the company has an outstanding business model that will grow over the next three to five years.”

The company processes microarrays and provides additional services such as experiment design, sample preparation, data management and analysis, and statistical support.

McPhail replaces Donald A. Holzworth, the president and CEO of Analytical Sciences, who had been serving as EA’s interim CEO, since Sept. 2001 when ASI began incubating the company. Holzworth will now serve as chairman of the board for EA.

Prior to joining EA, McPhail served as executive vice president and chief operating officer of ArgoMed, a Cary, NC-based medical device manufacturer. McPhail developed and implemented all company and product branding strategies and completed the sale of ArgoMed to ACMI in December. McPhail holds a BS in biology from San Diego State University.

McPhail said the company is targeting pharmaceutical and biotechnology companies who look at expression analysis as adjunct to their core facility, those companies who don’t have the capacity to perform microarray analysis.

“Our facility has been set up for early-stage drug discovery,” McPhail said. “Microarrays have begun to morph into pre-clinical testing, toxicology studies coming out of pharma, and an opportunity that the testing will move into the clinic. Microarray testing throughout the pipeline will offer significant opportunities for growth.”

The tipping point, so to speak, is when microarray analysis becomes regulated by the FDA, he said.

EA is incubated by ASI, a minority shareholder that has a division called mednetics, which can provide 21 C.F.R. 11-compliant communication services.

“That plays well with our core competencies,” McPhail said. “Once the FDA gets involved, it’s not going to be so easy for companies to serve this market.”

ASI, headquartered in Durham, is a statistical contract services company. EA maintains its facilities within the ASI campus.

— MOK

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