Leicestershire, UK-based BioStatus, which holds the IP to the increasingly popular DRAQ5 far-red nuclear dye, knows it has a valuable technology on its hands.
Just how valuable, however, remains to be seen, as the company continues to entertain acquisition offers from potential suitors, CEO Stefan Ogrodzinski told Cell-Based Assay News last week. However, BioStatus is waiting to receive what it perceives as fair value for a nuclear-staining reagent that may halve the time it takes to conduct high-content image-based screening on popular instrument platforms such as GE Healthcare’s IN Cell Analyzer and Evotec’s Opera.
DRAQ5 is fast becoming the industry standard for staining nuclei. Its utility stems from the fact that it emits in the far red, and therefore provides clean spectral separation from many of the more popular dyes — such as GFP and its variants — that are used in high-content or high-throughput cell-based screening to tag specific proteins.
In fact, the value of DRAQ5 is enough that since BioStatus was founded in August 2000 with a small amount of grant funding from UK agencies, the company has shunned VC cash, relying instead on revenues from the dye to support its growth, Ogrodzinski said.
“Our business model is not a catalog model,” he said. “We’re not tagging fluors to chemicals. We are finding [a] small number of key reagents that are killer, and we’ve definitely got one in DRAQ5.”
As such, Ogrodzinski said that several companies have expressed strong interest in DRAQ5. “Invitrogen want[s] it desperately,” he said. “I could say that other companies want it too. We’ve talked with Amersham [now GE Healthcare], Invitrogen, BD … because there are huge applications clinically, environmentally, in drug discovery, you name it. If it’s got a nucleus, then DRAQ5 fits, it seems.”
As company policy, Invitrogen and GE Healthcare do not comment on potential acquisitions. Cell-Based Assay News was unable to contact Becton Dickinson for comment in time for this article.
In fact, Ogrodzinski said, BioStatus was the subject of an acquisition offer from an unnamed “big company” in early- to mid-2004, “which we rejected because we think we can go on a little further, and also we think that the value pertained to us was not that large, in our eyes.” Ogrodzinski declined to comment on the proposed acquisition price.
“So we thought we’d explore marketing and selling our reagents,” Ogrodzinski said. “We’re a small company, and we try to keep our costs down, but we’ve concentrated on exemplifying the technology. There are more than 50-odd papers around DRAQ5, and people are, I think, now well-rehearsed in the opportunities and possibilities for that reagent. Now we need to go get on the radar screen in terms of turnover, and that’s what we are pursuing.”
Ogrodzinski added that BioStatus would likely be coming out with complete assay kits using DRAQ5 “shortly,” though he declined to provide specific details, or whether the kits might be manufactured by BioStatus or through a licensing agreement with a larger company — or even under the auspices of another entity that would acquire the company.
“I assume we will exit via trade sale, at some point — it’s already there on the table,” he said. “We haven’t really concentrated on sales and marketing to this point, but there exists a huge opportunity for the ‘sharks’ to come in and get us to that stage, so that’s something we’re considering at the moment.”
The reagent would likely have value to cell-based assay instrument manufacturers and reagent providers alike. Ogrodzinski provided GE Healthcare and its IN Cell Analyzer 3000 as an example.
“If you look into [GE Healthcare’s] literature, it will give you two options,” he said. “You can use DRAQ5, for example, and you’ll be able to do [it] on a 96-well plate, and run it straight through. However, if you use the [blue DNA stain] Hoechst, you won’t be able to use all the wells in the 96-well plate, and you’ll have to run it twice.
“So while [GE Healthcare] doesn’t actually recommend outright to forget Hoechst, and forget the UV laser you just bought on the machine, and say use DRAQ instead — it’s sort of in there,” Ogrodzinski said.
Helen Longvill, a spokesperson with GE Healthcare’s biosciences division, told Cell-Based Assay News this week that the company actually recommends both DRAQ5 and the blue-emitting Hoechst DNA stain to its IN Cell 3000 customers. However, BioStatus maintains that Hoechst’s spectral overlap with popular green-emitting dyes makes it a less attractive option.
“Essentially, we’ve been able to halve assay times by using DRAQ5, and that’s going from 12 weeks to about six weeks for the typical high-throughput cell-based assay,” Ogrodzinski said. “There’s documented evidence for that with AstraZeneca and Merck, in particular using Norak’s [now Molecular Devices’] Transfluor assay. The DRAQ5, we believe, is also ideally suited to any GFP assay including many of the Redistribution assays [from] BioImage.”
Len Pagliaro, BioImage’s vice president of business development, corroborated Ogrodzinski’s statements. “It is a very valuable tool,” Pagliaro told Cell-Based Assay News this week. “The main role of DRAQ5 is as a nuclear counterstain, and [as] a red dye, it’s well-separated spectrally from the green of GFP. That’s a big advantage because you can then image both channels — the red channel and green channel — truly simultaneously, depending on the instrument platform.
“On platforms like the IN Cell and Opera, you can image them truly simultaneously; not one and then the other, but exactly at the same instant,” Pagliaro added. “That’s a big advantage because then you read each well faster, and if you read the well faster, you have higher throughput. So it’s a fairly simple thing in that they just made a red nuclear stain … but it turns out it’s not such a trivial thing — people have been trying to make a red nuclear stain for a long time, I think.”
Pagliaro also said that the DRAQ5 dye was likely the leading reagent on the market for nuclear counterstaining applications.
In fact, Ogrodzinski and Pagliaro both told Cell-Based Assay News that the companies were currently talking about how BioImage’s GFP-based Redistribution assay and DRAQ5 might fit together as products, though both declined to provide any further detail.
BioStatus’ challenge now becomes building name recognition for its product by continuing to develop its reagents into widely marketable products.
“The sexy thing in drug discovery is the assay — that’s what people are focusing on,” Ogrodzinski said. “You won’t go to a conference to hear about a DNA assay that halves your assay time. You might hear about it when you hear about the assay.
“It’s like the pick and the shovel in the gold rush — they’re not very sexy things, but if you don’t have them, it’s a little bit more difficult to get the gold out,” he added. “With DRAQ5 … you can actually do so much more. And that’s why we really want to brand the assay kits to give us a little more recognition profile.”
To that end, BioStatus is already developing the next generation of far-red dyes to stain organelles other than the nucleus, and, in a slight departure from its previous product offerings, a thermoreversible dye called CyGel that may allow users to conduct cell-based assays on suspension cells in a solid media.
Drug discovery might not even be the most fitting application for BioStatus’ small line of reagents. BioStatus already has a partnership with the “optical biochip” consortium, a group of UK researchers led by Wales University College of Medicine professor Paul Smith, who is also a co-founder of BioStatus and scientific advisor to the company. This partnership will primarily explore the use of DRAQ5 on laser-emitting chips for potential use in point-of-care diagnostic assays, although miniaturized drug-discovery assays are in the works as well (see related article in this issue, “UK ‘Optical Biochip’ Consortium Leveraging BioStatus Reagents …”).
In fact, Ogrodzinski said, the DRAQ5 and associated products might eventually fulfill their potential best in the veterinary, not human medicine market. The company and optical biochip consortium have also initiated a collaboration with an undisclosed large veterinary biotechnology company for the use of DRAQ5 as a testing agent for mastitis in cow’s milk.
“One of the largest markets is the detection of mastitis in cow’s milk, worldwide,” Ogrodzinski said. “The volume and the market size actually dwarves the clinical, the high-throughput, etc.
“But then you have to ask yourself: ‘What are we as a company?’” he said. “In essence, it’s still the same technology for DRAQ5 in detecting DNA in the somatic cells that cows excrete in milk — it’s just that because milk is a very opaque liquid, having far-red emission is very advantageous. To pursue these different markets is quite a task for us, and the challenge we face is what to focus on.”