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Guava to Refocus on Life Science Research Markets with New CEO and $7M in VC Cash


Approximately nine months after Guava Technologies and CEO Rajen Dalal parted ways due to divergent business strategies, the Hayward, Calif.-based biotech last week appointed its new CEO, Lawrence Bruder, in an attempt to straighten a ship that according to some former officials had strayed a bit in its course.

Guava also announced last week that it has rounded out its upper management team with two new hires and raised $7 million in private equity financing. Along with recent and upcoming product releases, last week's news underscores the company's intent to refocus resources on "core areas of growth" and pursue profitability in the coming year, Bruder told CBA News last week.

"I see the Guava platform extending out into many areas, but in terms of focusing the immediate resources of the company, I'm focusing them directly on the areas that we can get the greatest impact in life sciences today," Bruder said, referring to the bioproduction, basic research, and drug discovery markets.

"The money is going to be spent primarily to get us to this operational profitability, which is a goal of the company, and we'll get there next year," Bruder also said. "And while we're doing that, we want to continue to accelerate our growth, so we're getting ready to put out additional new products, and also to be able to invest in service and distribution capabilities to be able to expand our business internationally."

Bruder was promoted to CEO from the position of president and COO, to which Guava's board elected him in July (see CBA News, 7/25/2005). Bruder replaced John Walker, who was serving as Guava's interim CEO and chairman of the board. Walker will remain in the latter position.

"You need to be able to understand where you can drive your growth and grow significantly as a business. That core growth area … is really in the life science research, pharmaceutical, biotech, and bioproduction areas."

The developments at Guava are evidence that the company had been planning to undergo changes. One early signal came in February when Dalal parted ways with the company due to what he termed "divergent business strategies." (See CBA News, 2/8/2005). At the time, Dalal, encouraged by positive feedback showing that the firm's flagship benchtop microfludic flow-based cytometry instrument could be used in clinical diagnostic applications, said he wanted to focus the company's resources on further developing the tool for applications such as T-cell enumeration for HIV patient monitoring.

After Dalal left the company, two former officials who wished to remain anonymous confirmed that there was indeed disagreement at the top about the direction in which the company was headed, and opined that Guava may have been stretching itself too thin by putting its resources into too many markets at once. This, they said they felt, put the company at risk for losing sight of its strong suits, which include bioproduction, basic cell biology research, and drug discovery (see CBA News, 7/25/2005).

It seemed as if Guava had acknowledged as much when it appointed Bruder as president and COO in July, as he brought with him a strong background in the life sciences tools industry. Last week Bruder confirmed the company's new direction — or continuation of its original direction — but stressed that Guava would not completely ignore the potential of its instrument platforms in the diagnostic market.

"The problem with any platform like this — and I experienced similar problems when I was in the flow [cytometry] business — is that it can go into all kinds of areas," Bruder said about the company's two main products, the EasyCyte and the PCA (Personal Cell Analysis) system. "You need to be able to understand where you can drive your growth and grow significantly as a business. That core growth area for Guava platforms, in a direct fashion, is really in the life science research, pharmaceutical, biotech, and bioproduction areas.

"There are other areas where we can also grow, but the problem is that if we're focusing a tremendous amount of resources on those, we can potentially defocus our activities in the core areas that are growing," he added.

Guava will continue to entertain the use of its benchtop flow cytometers in clinical diagnostics, but will likely not do so alone, Bruder said. "We are working with partners looking for possible areas in clinical diagnostics — not just HIV, but infectious disease in general, such as HPV, blood banking, oncology — and the Guava platform is very nicely suited to do these types of applications," he said. "But we're not going to do those on our own. We are going to solicit and work with partners that will help us to get there."

Retiring the SWAT Team

The company also said it is fundamentally changing the way it markets its products. Previously, Guava used a "SWAT team" approach to marketing, Bruder said, in which a handful of sales and marketing employees focused on single application areas, such as HIV monitoring.

"We found that was a very expensive and inefficient way for us to get into that marketplace," Bruder said. "In the past year or so we've actually been adding distribution capability, adding partners that can help us distribute our products in these areas, and actually utilizing partners to help us sell these products, so we have more of a localized presence."

Along with a new marketing strategy comes new hires; specifically, Guava last week announced that it hired a new vice president of commercial operations, Todd Christian, and a new vice president of corporate development, Lalit Dhir. Bruder also said that the company has begun rebuilding its sales and marketing staff at a modest clip. "As we see opportunities to add individuals to help us achieve our growth, we'll do that," he said.

Guava's investors have responded positively to the news and have given the company a vote of confidence in the form of $7 million in financing, which the company also announced last week. Participants in the venture financing included existing investors Abingworth Life Science Investment, Granite Global Ventures, HLM Venture Partners, MDS Capital Corp., ProQuest Investments, and Skyline Ventures.

Bruder believes Guava can achieve profitability next year with the help of the new funds, which will go primarily toward further developing new products and expanding its sales and distribution channels. The company already has a strong customer base. Although Guava doesn't reveal its sales figures, Bruder said that it is rapidly approaching 1,000 combined units sold of the EasyCyte and the PCA system since the latter was launched in 2001.

Guava will also look to expand its academic market presence even more in the coming months on the heels of the October launch of the EasyCyte mini, which incorporates a blue laser and therefore expands the palette of fluorescent dyes available for use with the platform. Lastly, Bruder said that the company plans on "significantly" expanding its reagent line to offer customers more complete packages.

"We have a great platform, and a reagent line, but we're looking to significantly expand that reagent line for the systems, and we expect to do that through partnering," he said. "We are talking with potential collaborators in that regard, to be able to provide more application to the system."

— Ben Butkus ([email protected])

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