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New Standard BioTools Management Counting on Better Business Processes to Turn Firm Around

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NEW YORK – A former Danaher executive is betting that lessons learned during his time at the life science conglomerate can help turn around PCR and proteomics company Standard BioTools.

Since taking over as Standard BioTools (formerly Fluidigm) CEO in the spring of this year, Michael Egholm, former chief technology officer of Danaher Life Sciences, has sought to revamp the company's management processes with the goal of bringing the struggling firm to profitability.

Egholm and his team are pursuing a strategy centered on Standard BioTools' mass cytometry technology. To hear Egholm tell it, though, his interest in the firm was driven less by its technology than the fact that it offered a chance to prove out his belief that poor management has hamstrung not only Standard BioTools but the life science tools industry generally.

Egholm left Danaher in the summer of 2021 and began building a team with the aim of finding a life science tools company where they could take charge and implement his management plan.

"The concept of Standard BioTools was actually formed in the absence of Fluidigm," he said. "We didn't know that Fluidigm was going to be the company we used as a jumping off point."

He said that he and his team identified Fluidigm as a good candidate for their ambitions in the fall of 2021. In January 2022, Fluidigm announced a $250 million investment by Casdin Capital and Viking Global Investors. Additionally, it announced the change of its name to Standard BioTools and that Egholm would, upon close of the investment, take over as president and CEO of the company.

Since then, the company has added a number of new members to its management team, including Alex Kim as chief operating officer; Jeremy Davis as chief commercial officer; Mona Abou-Sayed as senior VP of SBS (Standard BioTools Business Systems); Anders Davas as senior VP of global operations; Matt Ritchie as VP of global sales operations; Seiya Ohta as VP of customer and user experience; David Panzarella as VP of commercial operations for the Americas; and Kathy Harrell as VP and controller.

"There have been many, many [life science tools] companies created over the last decade, decade and a half, with billions [of dollars] pouring in, but almost none have become real companies — meaning making money and serving customers well," Egholm said.

In some cases, he said, this is because the companies "are solving a problem that doesn't need solving." Even tools companies with truly useful technologies, however, frequently fail to scale into profitable, sustainable companies, he said.

"Either they get acquired by one of the big guys, or they, like Fluidigm, keep having to go out and raise, $50 million, $100 million," he said. "And the more revenues grow, the more money they lose, and we're no exception. We want to develop a sustainable business model with these exciting technologies. There is a huge opportunity set around this whole universe [of life science tools]. Much bigger than just what we have at [Standard BioTools] now."

The current landscape of small- and mid-cap life science tools firms bears out Egholm's critique. Of the 26 companies in the GenomeWeb Top 40 with a market cap of $10 billion or less, just two reported a profit in their most recent quarterly earnings results.

Egholm attributed this poor performance largely to firms' failures to establish rigorous business practices from the start leading to ongoing waste of money and resources.

"There is this mantra I have heard a lot, that we will grow into our size, but that is an absolute fallacy," he said. "What you will get are sloppy and cumbersome processes, and even should you be lucky and have revenues hitting all the wildest expectations, you will still have sloppy processes."

"You see companies in our space that now have several hundreds of millions in revenue and are still not profitable," he added. "Because they never solved these fundamental process issues."

The management approach Egholm aims to bring to Standard BioTools is based on the Lean Manufacturing and Danaher Business System methods he learned while at that company.

Central to the approach is that "there must be a process for everything," he said. "How you sell; what material you put in front of what customers; how you find those customers. When you get a complaint, how do you send out a field service engineer and does he or she have the right products at hand?"

Regarding Standard BioTools' business and technologies specifically, Egholm said the company plans to lead with its mass cytometry instrumentation going forward, though it does continue to see a niche for its PCR microfluidics tools.

Standard BioTools previously "made a bet on our microfluidics technology versus droplet technology, and droplet technology has since won in that," he said, though he added that the company expects its X9 Real-Time PCR System, which it launched in October, will see uptake among users who may not have access to extensive automation but still want high throughput.

Standard BioTools also uses its microfluidics technology in Olink's Signature Q100 system, which the company manufactures for Olink through an OEM agreement.

The company acquired its mass cytometry technology in 2014 with its $207.5 million purchase of DVS Sciences. Mass cytometry combines capabilities of flow cytometry and atomic mass spectrometry, allowing it to measure large numbers of proteins in single cells with high throughput. Atomic mass spectrometry detects proteins using antibodies linked to stable isotopes of elements, which can then be read with high resolution via mass spec.

The technology competes with traditional flow cytometry, where it offers significantly higher multiplexing than conventional flow assays — though at lower throughput. It also plays in the spatial proteomics space, where the company was among the first to offer highly multiplexed protein imaging in tissues with subcellular resolution.

On the flow cytometry side, Egholm said the company believes its latest instrument, the CyTOF XT, which it launched in May 2021, can perform well in the immune profiling market. He said that the new system offers significant usability improvements over previous CyTOF instruments.

"The prior versions have been very complex to use," he said. "This version is as easy as a standard flow cytometer to use."

With its Hyperion tissue imaging platform, Standard BioTools is competing in an increasingly crowded market, as a number of firms have in recent years launched technologies for highly multiplexed protein imaging.

Perhaps the company's most direct competitor is Menlo Park, California-based firm Ionpath, which similarly uses metal-tagged antibodies and mass spec for multiplexed single-cell protein imaging. Standard BioTools unsuccessfully sued Ionpath for patent infringement in 2019, with a federal court ruling against the firm in 2021 and dismissing its appeal this year.

Other companies including Bruker, Akoya Biosciences, Lunaphore, NanoString, and NeoGenomics offer platforms for highly multiplexed spatial proteomics using technologies ranging from fluorescence to MALDI mass spectrometry to next-generation sequencing-based readout of oligo-tagged antibodies. Each have their advantages and disadvantages in terms of multiplexing, spatial resolution, throughput, and cost, but Egholm said he believes Standard BioTools' spatial proteomics technology has "enormous runway in terms of the number of markers, the speed, and also the cost and footprint."

"What we have now are big boxes that are not cheap, but I can see this easily competing with fluorescence on cost, size, and speed in the future," he said.

Since Egholm and his team took over the company this spring, Standard BioTools has discontinued its laser capture microdissection and flow conductor businesses and downshifted its diagnostics and COVID-19 activity. Additionally, Egholm said during the company's Q3 2022 earnings call that it has made a "significant reduction in headcount," though he did not provide a specific number, and reduced the real estate footprint of its South San Francisco, California, headquarters. It reported a Q3 2022 net loss of $29.4 million, or $.37 per share, compared to a net loss of $13.8 million, or $.18 per share, a year ago. Its third quarter revenues fell 10 percent year over year to $25.6 million from $28.5 million in Q3 2021, mainly due to lower instrument and COVID-19 testing revenue.

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