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Berkeley Lights Ramps up Partnerships With Thermo Fisher Scientific, Bayer Deals

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NEW YORK – Berkeley Lights is accelerating its partnerships business, which the company hopes will allow it to grab a piece of the savings customers are seeing by adopting its workflows.

In the last month, the firm announced nonexclusive partnerships with Thermo Fisher Scientific and Bayer to apply its optofluidics platform for cell-based assays to problems in viral vector cell line and crop trait development, respectively.

In a conference call with investors this week, Berkeley Lights officials described how such deals represent new opportunities for the Emeryville, California-based firm, and are likely to make up an increasing share of the firm's total revenues in the future.

While financial details for the two recent deals have not been disclosed, Berkeley Lights CFO Kurt Wood said they are worth a combined $30 million up front, with potential for future milestone and commercialization payments.

Berkeley Lights now desires to "create biological assets," CEO Eric Hobbs said, and capture more value from the benefits created by the firm's technologies. To this end, the company will be offering certain workflows exclusively on a subscription or services basis. The viral vector workflow, for example, will only be available through subscriptions, he said, and the firm will only provide services, not instruments, to Bayer.

"The successful completion of this partnership [with Thermo Fisher] will transform how viral vectors are developed and manufactured at industrial scale," he said. "I can't sell a Beacon [instrument] for a high enough price to actually capture the value that's created … as we continue to add high-value capabilities, we'll limit access to some of these workflows."

Berkeley Lights missed the consensus Wall Street estimate for both revenues and EPS in Q2, and shares of the company dropped as much as 15 percent in Wednesday trading. But the deals are an encouraging sign, William Blair analyst Brian Weinstein wrote in a research note. "We actually view today's update as positive," he wrote. "This evolution helps customers gain access to the technology while allowing Berkeley Lights to better participate in the longer-term value its workflows are enabling."

Building partnerships has been a goal for Berkeley Lights since the beginning of the year. The company has more than doubled the size of its business development team, but officials declined to provide a headcount.

Berkeley Lights' workflows, including antibody discovery and cell line development, are making life a lot easier for some customers. On the call, an analyst noted that one customer told him the cell line development workflow had cut down a three-month process to just one week. "This is pretty typical," Hobbs said.

In addition to limiting certain workflows to subscriptions or services, milestone payments and royalties from Thermo Fisher and Bayer could enlarge the company's slice of the pie. But the deals are also intended to provide "a nice stable recurring revenue and establish deep roots" with the customer, Wood said.

With Thermo Fisher, Berkeley Lights will collaborate on a workflow to accelerate and improve the development of stable adeno-associated viral and lentiviral vector producer cell lines. The companies hope to overcome limitations of transient expression by improving yield, consistency, and quality of cell and gene therapy products.

The effort will build on Thermo Fisher's experience in viral vector manufacturing and Berkeley Light's Opto Assure cell line development workflow.

In May, following the release of Berkeley Light's first quarter results, Hobbs told investors that the firm had struck a "$17 million deal with a global leader in the gene therapy space to adopt the Berkeley Lights platform to enable the selection and manufacturing of stable viral vector producer cell lines." Whether that deal was in fact the Thermo Fisher deal is unclear. Berkeley Lights did not immediately respond to a request for comment.

At that time, Hobbs noted that the Berkeley Lights technology "will make it possible for the first time to execute multiparameter functional tests, including viral capsid and genomic titers, without losing the live biology. Once developed, this will allow us to select stable clones in one to two weeks that will be used to create stable master cell banks, similar to what is being done in cell line development for antibody manufacturing."

The Bayer deal will "set foundations for future high-throughput screening services," Hobbs said. The company has developed new screening capabilities that improve throughput by one to two orders of magnitude, he added.

Berkeley Lights officials noted that the firm had three placements ordered during Q2 but had not shipped those until the beginning of Q3. The firm is still on track to deliver workflows developed for synthetic biology firm Ginkgo Bioworks later this year, as announced in January.

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