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Essen to Develop Own Cell Assay Prods To Lessen Dependence on Royalty Revenue


BOSTON — Following several years of supporting itself primarily on product royalty revenues — including royalties from Molecular Devices for the IonWorks high-throughput patch-clamp platform — Ann Arbor, Mich.-based Essen Instruments now hopes to develop, manufacture, and market its own instruments for cellular analysis to pharma and academia, a company official told Cell-Based Assay News last week.

Essen began its new strategy at IBC's Drug Discovery Technology conference, held here last week, by launching IncuCyte, a non-invasive, live-cell imaging system. At 8 inches high, the instrument is designed to fit inside existing laboratory incubators, provide quality control of cell culture, and perform basic kinetic assays such as cell proliferation, cell morphology, and eventually, cell migration, according to Brad Neagle, the company's vice president of engineering and operations.

Up until now, the company has sustained itself on royalties from Molecular Devices for sales of IonWorks — which Neagle and Essen co-founder Kirk Schroeder invented earlier in the decade — and on minor revenues from a product called Pipeline, a sterile dispenser for cell culture media and reagents. IncuCyte, however, is the company's first true stab at a potential big revenue generator, Neagle told CBA News.

"Most of our technology to date has been licensed out to someone like Molecular Devices," Neagle said. "[IncuCyte] is, right now, our flagship that we're going to produce on our own, and we intend to go forward with future products that we'll produce on our own. We're not going to continue to license out all our technology."

"Most of our technology to date has been licensed out to someone like Molecular Devices. [IncuCyte] is, right now, our flagship that we're going to produce on our own, and we intend to go forward with future products that we'll produce on our own."

Essen hopes to leverage the expertise and reputation of Neagle and Schroeder, who have a long history of developing products for cellular analysis, including two of the more well-known platforms on the market today — the IonWorks high-throughput patch-clamp system and the FLIPR fluorometric imaging plate reader, both of which are currently sold by Molecular Devices.

Neagle and Schroeder founded a company called NovelTech in Ann Arbor a little more than 10 years ago to develop the product now know as FLIPR, in collaboration with Upjohn. According to Neagle, NovelTech designed, built, and shipped approximately 15 FLIPR units before Molecular Devices acquired NovelTech in 1996.

Neagle and Schroeder then moved to California and worked at Molecular Devices for a few years, where they continued to develop new versions of FLIPR.

However, Neagle said, he and Schroeder "got the itch" to go out on their own again, and moved back to Ann Arbor in 1999 to found Essen. The company's first product was IonWorks.

"Again, we licensed that technology," Neagle said. "Because of some issues with IP there, we partnered with Molecular Devices, and they ended up being the one that took that to manufacturing, and are now selling it.

"So we started in 1999, but for the first three years, we were kind of underground, because we were doing development of IonWorks," he added. "And even for some time after that, we didn't have a product of our own — we were basically developing technologies to license. Now we're coming out with our own products, and we plan to build and manufacture them ourselves."

Neagle said Essen developed IncuCyte in response to an often-ignored need for quality cell culture in cell-based drug screening.

"As we were developing the IonWorks, we found that cell culture was such an important part of things," Neagle explained. "The instrument can only do so much, and the cells are almost an equal part of the whole equation. You're developing this very complicated instrument, and day-to-day performance isn't consistent unless your cell culture is consistent.

"One of the things we wanted to do was to be able to quantify cell culture, and make it more scientific, rather than subjective," he added.

Neagle said IncuCyte will cost around $45,000. It is designed to fit in existing incubators, minimizes temperature perturbations, and automatically monitors cell culture over time using phase-contrast imaging, "so there is no labeling or addition of any kind of reagents that would affect any other downstream analysis that you're going to do with your cells," Neagle said. Algorithms are applied to the resulting images to create kinetic growth curves over several days.

In a sense, Essen is looking to bring low-end cellular analysis capabilities to the incubator, as opposed to developing a cellular analysis platform that has cell incubation capabilities.

"That's what saves a lot of the cost because it doesn't require some of the costs associated with taking these vessels in and out of the incubator, and it doesn't have to duplicate the temperature and CO2 control that your incubator does anyway," Neagle said.

Essen will target the pharmaceutical market for quality control of cell culture applications, and the academic market for researchers who desire an inexpensive, bench-top instrument for performing very basic assays such as cellular proliferation.

Neagle declined to disclose other areas Essen might be exploring. However, he said that the company will remain in the cellular analysis space because "that's where our experience lies, and that's where most of our partners have been in the past."

Whether future products succeed, Essen still has its IonWorks royalty agreement with Molecular Devices to fall back on, although the financial details of this arrangement are undisclosed.

It is unclear what the value of its IonWorks royalty agreement is to Essen because Molecular Devices does not break out the number of units sold or revenues for its individual product lines. However, it is safe to say that Molecular Devices owns a large portion of the high-throughput ion channel screening market between IonWorks and the PatchXpress instrument the company brought on board with its acquisition of Axon last year. Furthermore, Molecular Devices seems to be focusing more on further developing IonWorks rather than PatchXpress, because it recently released a new version called IonWorks Quattro.

Jan Hughes, vice president of worldwide marketing for Molecular Devices, last week confirmed that Molecular Devices has honored its royalty agreement with Essen up to and following the IonWorks Quattro release, and will continue to do so for the foreseeable future.

— Ben Butkus ([email protected])

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