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Happy to be a Niche Player, SoftGenetics Tackles the Market One SNP at a Time

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John Fosnacht, the founder of tiny software firm SoftGenetics, has a very simple philosophy for his company: “We want to find unique niches in the genetic area where we can make a difference — not try to get into the mainstream, but answer problems that the big guys either can’t afford or don’t want to get involved in.”

This mantra has proved successful for the self-funded firm, which has sold its Mutation Explorer software to 12 research organizations — including NCI, Dana Farber, Johns Hopkins, and Ingenium Pharmaceuticals — since it first released it in November.

Mutation Explorer was developed by SoftGenetics co-founder Cheng-Shang Liu to meet a demand the two saw among customers of their previous employer, SpectruMedix, where Fosnacht served as VP of marketing and Liu was VP of software. Bert Vogelstein, an oncology researcher at Johns Hopkins, was among the first to point out the problem, Fosnacht said. “One day we happened to be in [his] laboratory and he said, ‘You know, everything is almost fully automated in the modern biotechnology laboratory except when you get to the point of looking for mutations or DNA variants.’”

Liu and Fosnacht set out to fill the gap in the market and began development of Mutation Explorer in July of 2001. The resulting software is able to detect SNPs and other mutations by comparing DNA sequence traces from either slab gel or capillary electrophoresis platforms. This approach, which can automatically process up to 400 lanes per minute, is not only higher-throughput than other methods, but also more accurate, Fosnacht said. The closest competing technology, according to Fosnacht, is PolyPhred from the University of Washington, but this approach is “very prone to error,” he noted, because it compares the Phred base calls rather than the raw traces.

Even a Phred quality score of 20 — which corresponds to 99 percent accuracy and is considered a “high quality” call for sequencing — is not accurate enough for mutation detection, Fosnacht said. “Mutations happen one out of every 1,000 [bases], so what you’re doing when you use their program is using an inaccurate ruler. It just cannot possibly be accurate enough.”

SoftGenetics has patented its software, and has found that it easily sells itself based on simple economics. “If you compare it with manual visualization, which is the primary method of today, a good technician will do 40-60 lanes per day, and we can do 400 in a minute, so it pays for itself very quickly,” Fosnacht said. Pricing for the software begins at $3,000 for academic research institutes.

The first version of Mutation Explorer worked on just single-stranded DNA in one direction, and in January the company introduced a new version able to process both forward and reverse pairs. The company now has four additional software developers on board and is tackling mutation databasing as well as a method for detecting heterozygote insertions and deletions — a particularly challenging problem, Fosnacht said, because “if it’s a heterozygote insertion/deletion, all the sequences after that point in the sequence become very jumbled and no one can read it.” The company is currently testing a technology that can continue the analysis after the heterozygote insertion, he said.

Although it’s small, SoftGenetics has found that its niche solutions give it an advantage over some larger players when selling into pharmaceutical firms. “We get in just fine,” he said. “We have a solution for a unique problem right now that nobody else has.”

— BT

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