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Bioinformatics CEOs Discuss the Promise and Pitfalls of the Industry

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Bioinformatics CEO Roundtable Participants

Doug Bassett (DB), VP and General Manager, Rosetta Biosoftware

Keith Elliston (KE), Chairman, President, and CEO, Viaken Systems

Richard Gill (RG), President and CEO, AnVil

Sandip Ray (SR), Founder, President, and CEO, X-Mine

Soheil Shams (SS): President and CEO, BioDiscovery

Dave Snyder (DS), CEO and Chairman, Acero

What happens when you bring the heads of a half-dozen competing bioinformatics firms together in one place to discuss their business? BioInform recently found out by meeting with the leaders of six companies to chat about the challenges and opportunities they face in the months and years ahead. Over steaming bowls of seafood chowder in a room in Boston’s Exchange Conference center, participants took in the view of Boston Harbor while engaging in a lively debate over the future of the sector.

The following transcript of the ensuing conversation has been edited for length.

 

BioInform: Market estimates indicate there’s a great deal of opportunity for bioinformatics, but there seems to be a discrepancy between the financial forecast for this technology and the poor performance of companies in the sector so far. How do you explain this gap and what is your company doing to ensure success?

Richard Gill: At AnVil, we use our proprietary software in in silico drug development, so it’s more broad than bioinformatics or the intersection of IT and biology — it’s about extracting knowledge from biological data. We’re finding that the business is much like it was 10 years ago when pharmaceutical companies were first deciding to outsource clinical trials. The primary issue for the industry is that it has to gain the trust of its clients. You have to show you can provide solutions.

Dave Snyder: [Acero has] Incyte’s [Genomics Knowledge Platform] technology, underlying technology from Secant, and a small professional services group. We have Incyte as a channel provider and an investor. GKP addresses the data integration issue, so it’s solving a problem that has gone unanswered for a long time and the initial feedback has been good. I have to say, as a business and technical guy, that I’m very encouraged by this field.

Soheil Shams: The problem is that the term is vague. Most people, when they talk about bio-IT, are talking about everything from hardware to infrastructure, to databases and storage. At the time I first looked into this market, everything was about sequence analysis. It wasn’t very exciting in terms of the technology you could apply. But now the complexity and size of the data has gone up, and we’re turning to advanced methods of signal processing and a repertoire of computational methods that exist outside of this domain for solutions.

There’s an imbalance of supply and demand. Pharmaceutical companies need to crunch this data, but people with experience doing it are in limited supply. So there’s a huge opportunity for companies like BioDiscovery with both the experience in complex data analysis as well as the various nuances of microarray technology.

Sandip Ray: I’m a Drosophila geneticist by trade and I and Todd Golub at the Whitehead Institute — along with Rob Tibshirani and Trevor Hastie from Stanford — saw fairly early that off-the-shelf methods for extracting patterns from multivariate data would create a bottleneck. Conceptually, X-Mine wanted to create a systematic approach for data mining and knowledge discovery that would be accessible to biologists at a meaningful level … This is exciting. At a time when drug development is increasing in cost, we are in a unique position to impact major diseases sooner and to impact the cost and time factors directly.

Doug Bassett: Rosetta Biosoftware is focused on commercializing enterprise software for gene expression data analysis. There’s a lot of power in synergy and integration, but companies that try to bite off a little more than they can chew risk ending up with a mediocre solution … We’re very involved with standards organizations to make sure we deliver products that are able to work seamlessly with customer and third-party systems.

Keith Elliston: Viaken focuses on informatics from the solutions view. Our infrastructure-based offering is a key technology for smaller customers who are not in a position to hire three people to manage their enterprise bioinformatics system. There’s a dearth of experts in the field who are able to effectively mine data. We help our customers commercialize that data and we’re looking to generate IP of our own in that process.

BioInform: What do you see as the biggest challenges for bioinformatics companies going forward?

KE: The history of bioinformatics has been focused on the top-tier customers — the Mercks, the Pfizers, the GlaxoSmithKlines. Bioinformatics companies who have less than stable valuations right now have serviced only the top percentage of available customers, but these companies already have a strong IT infrastructure, so the level that you have to invest to add value to that customer is very high. Pharmaceutical companies spend only 35 percent of the total bioinformatics investment; the remaining 65 percent is spent in biotechs. So we’re targeting our offering to the right area of the market, but the challenge is that customers in that market don’t know what bioinformatics is or what it can do. We have to get over a tremendous amount of hype.

DS: We were called into a small biotech firm in Montreal that had spent $4 million in the last 18 months on their own integration platform. They did a comparison and came to the realization that ongoing maintenance on the system would have killed them. So you’re right about going after the middle market. It’s amazing to me to see what they’re able to spend, but they’re competing against guys spending big bucks on IT.

RG: How do you blend domain expertise with the technology being offered? It can be enterprise-wide or solutions-based, but the middle ground is dangerous. A lot of people are generating data right now because they think it’s their job. But if you listen to the mature players in the market, they’re saying they want their data interpreted and analyzed and made into knowledge. There’s a business there — the real value is how do you get knowledge out of that data? Right now, there’s an estimated 160 of us in this space — call it companies who don’t want to be called informatics companies. As an industry, we’re doing the client a disservice right now. There’s too many options. There won’t be 160 companies in this space in six months’ time. Out of those 160 companies, how many are announcing deals?

KE: A lot of clients don’t like to talk about hiring bioinformatics companies.

 

BioInform: Are you seeing a backlash from the hype surrounding the human genome project? It seems like investors and the general public expected more than what’s been delivered so far.

KE: I’d say the concern is more that the market valuation of companies will be below their potential.

DB: Our industry is still very young, but we believe that biotechnology software has the potential to take us to that next big point. Our customers are awash in data and desperately need software solutions that empower them to extract meaningful results and discoveries from the integration of the information.

KE: The question is, are you selling your technology to a huge market or are you using your technology to build what the market would build? If your platform technology is unique, then it’s a valid model. Take the example of MSI and Vertex — one sold its technology platform and one used it to build its own products.

RG: I like to think of AnVil as having built a concept car — you are welcome to borrow it and drive it around, but if you want to get past the checkered flag first then the AnVil team should drive it for you.

KE: But how do you get a reasonable return on investment for your investors saying you should look more like a software company? I think two paths will come out of bioinformatics — that path, and the software product path.

DB: It will be challenging for organizations to choose to walk the middle of the road between research collaboration services and bioinformatics software products.

 

BioInform: Which of these two paths are your companies taking?

DB: We sell software to the marketplace. We are not a discovery organization. We’re out there to empower life science organizations.

SS: We provide complete solutions. Initially this meant a fully integrated system that manages and processes the data at every step of an array experiment, but now we see the real need for providing our customers with assistance in using these tools to meet their desired end results.

RG: We develop solutions and our aim is to support solutions. We give clients access to our people and technology and we undertake the work alongside them.

KE: I think it will become black and white, but today it’s not. We’re looking at it more holistically and that’s taking us down the discovery path. MSI/Vertex may be a black and white example, but Millennium started as a platform company and worked further and further down the chain. Now it doesn’t have to partner with anyone.

RG: You forgot the “but” about Millennium — they’re not a fully integrated pharmaceutical company yet. They’ve in-licensed all their major products.

KE: A discovery company and a fully integrated pharma are two different things. Millennium is a good example of the first. I think the pharmaceutical industry will end up something like the auto industry — pharmaceutical companies will put together the components from their biotech partners.

— BT

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