For a company whose original aim was internal drug discovery, BioImage sure has the makings of a major tools provider for drug screening — a posture solidified by two major deals inked last week.
BioImage, headquartered in Denmark, announced on Sept. 7 that it had signed a research agreement with drug maker Organon, in which BioImage will profile certain Organon compounds at its Copenhagen research facility using a series of its Redistribution fluorescence cell-based assays.
And earlier this week, BioImage granted Merck “the freedom to use BioImage’s Redistribution technology in its drug discovery research.”
Financial terms were not disclosed for either deal. However, BioImage plans to add revenue from the collaborations to recent venture capital raised to help support the private company’s internal drug discovery business, according to Len Pagliaro, BioImage’s vice president of business development.
Calls to Organon and Merck were not returned in time for this publication.
BioImage, which was originally spun out from pharmaceutical firm Novo Nordisk, was going to be strictly focused on drug discovery, said Pagliaro. “We didn’t originally start out with a business model of selling assays at all,” he said. “Our business model was to have this core technology, and to use it to do drug discovery. At the same time, we didn’t want to become a CRO.”
Pagliaro added that several companies approached BioImage but “weren’t ready to buy assays because two or three years ago the instruments weren’t really out.”
Instead, BioImage decided to do some profiling in house on a fee-for-service basis as a first step toward collaborating with drug-discovery companies. The instrumentation now exists, and Pagliaro said many companies license BioImage’s assays for their own use.
“Our biggest source of revenue currently is from licensing the technology,” Pagliaro told Inside BioAssays. “Fee for service is growing, and it’s growing pretty quickly, but it’s still not at the same place.”
As many small, privately owned drug-discovery companies are aware, drug development is expensive. And a plethora of companies continue to try to support the financial burden of drug discovery with assay tools or instrumentation platforms that can generate revenue. Of course, come NDA time, it certainly doesn’t hurt if the efficacy of the compound is supported by data from well-validated, widely used cellular assays.
BioImage certainly fits this profile, as the intellectual property it owns related to Redistribution covers most assays that investigate the translocation of proteins in cells using GFP, one of the most widely used fluorescent markers in cell biology.
Currently, BioImage’s drug-discovery programs focus on inflammation and oncology. None of these programs have made significant headway; the company sporadically parses out announcements to update progress in this area.
In May, for example, BioImage announced that its leading clinical candidate “demonstrated both tolerability and efficacy” when administered orally in a mouse xenograft model of prostate cancer — the company’s first news release regarding the progress of its drug discovery programs in at least four years. Pagliaro said the company currently has about 260,000 small molecules in its compound library.
Meanwhile, BioImage continues to generate revenue from its assay technology, particularly the Redistribution assays. Two weeks ago, in fact, instrumentation company PerkinElmer announced that it was developing a suite of assays with BioImage that would be compatible with the company’s Envision HTS reader. (See Inside Bioassays, 9/7/2004).
And GE Healthcare, in an effort to secure as many different assays as possible for high-content, cell-based screening, sublicensed the Redistribution assay to offer customers of its HCS instrumentation platform. (See Inside Bioassays, 6/15/2004).
Pagliaro noted that BioImage conducts all of its fee-for-service assays on one platform: GE Healthcare’s IN Cell Analyzer.
“The reason we have those is because of our early relationship with Amersham,” Pagliaro said. “Two or three years ago, there wasn’t much competition on the market. There’s the [Cellomics] Array Scan, of course, which is a good instrument, but it’s really designed as a profiling instrument, not as a screening instrument. Now there’s a lot of competition though.”
Pagliaro said it was the initial relationship BioImage forged with IN Cell’s former manufacturer — Amersham Biosciences — that clued the company in to just how valuable an asset its assay technology was.
“Almost four years ago, we started a relationship with Amersham, which expressed a lot of interest in the assays,” Pagliaro said. “And we thought that this would be a great way to generate revenue with technology that we already have, and it would be good external validation of the assay technology.
“It really raised the bar for the level of validation for any of our assays, turning them from good research tools into good high-throughput screening tools, which is a big step,” he added.
As far as the future is concerned, Pagliaro said the company might eventually go public, but it’s not something that’s currently in the works.
“Right now, we’re very well-funded, with more than a year of funding under our belt,” Pagliaro said. “Other possibilities include pursuing another round of funding, and maybe some merger and acquisition activity.”
He also said that the company is still learning the ropes when it comes to doing both drug discovery and selling its assays and services to other companies for the same purpose.
“The downside is that there can be conflict of interest,” Pagliaro said. “Ideally you can separate the revenue-generating side from the internal drug discovery.
“We’ve done that to a degree already, and our plans for the next year involve separating those out quite a bit more,” he said.