The new management team at Tripos Discovery Informatics intends to make the most of the company’s new status as a privately held, standalone software firm, Jim Hopkins, the firm’s newly appointed CEO, told BioInform this week.
Hopkins, who took over the helm of Tripos after the company last week sold its software business to Vector Capital, said that “the opportunities are great for the new Tripos.”
He said he plans to “rehabilitate” Tripos’ flagship Sybyl software, and that the company has renegotiated the timeline for a $5 million services contract with Wyeth that had languished in recent months.
Hopkins added that the company will be profitable in its first year of business “as a result of the way the deal was structured and the good products we’ve got, and I’m looking forward to growing the business.”
Hopkins said that the company’s relationship with the buyout boutique Vector Capital, which has a track record of resurrecting struggling firms in other vertical markets, should help guarantee its future success.
Vector’s poster child is the graphics software provider Corel, which it acquired in 2003, restructured, and then guided through an IPO last year.
Hopkins, who was on the Corel board when the company was acquired, said that Vector was able to resurrect the firm through a combination of streamlining, product innovation, and M&A.
“It’s Vector’s view and mine as well that we can do something similar with this company,” he said.
In the case of Corel, Vector “did the things it took to get that company to run smoother and to focus tighter on its core competencies. They got it running well, they bought additional companies that had products that were either similar in nature or sold into the same kinds of customers so that they could leverage their market presence better, and through all those activities they got it up to the size where they were able to take it back public again, and then made another large acquisition after they took it back public,” he said.
Tripos, Hopkins noted, has been “undercapitalized for most of its existence.” Now he said, “for the first time, [we’ve] got a set of owners that have fairly deep pockets.”
While noting that Vector doesn’t “throw money at everything,” Hopkins said that the company “at least has the money, if the opportunity comes along, that they can invest to create value. They’re pretty good at doing that.”
Hopkins said that Vector’s “deep pockets” should be particularly useful in the discovery informatics market, where pharmaceutical firms have been steadily consolidating.
“Our customers have gotten fewer and bigger,” he said, “and it gets more and more difficult for small companies to effectively deploy resources to support these huge multinational companies, so you need a bigger footprint yourself.”
Vector, he said, should provide Tripos with “the ability to put the capital to work and maybe build a bigger company a little quicker than you could through just trying to do it through organic growth.”
The Product Line
In addition to growth through acquisitions, Hopkins said he plans to focus the company’s energies around product development — particularly for the company’s Sybyl molecular modeling platform.
“My perception is that the backbone of the company for years has been the product line built around Sybyl,” Hopkins said.
However, he noted, when Tripos moved toward a hybrid business model that combined chemistry services with its legacy software business, “it sort of defocused the company a little bit and they didn’t continue to put as much effort into the value proposition around Sybyl and the customer relationships as they may have done in the past.”
Hopkins said he wants to “rehabilitate” the company’s efforts around Sybyl. In particular, he said the company needs to improve the product’s user interface.
“We’ve got a generation of scientists out there that have used it already, that have used it very well, but for someone who’s younger, perhaps, and hasn’t developed an affinity for a particular set of tools yet, they’re not going to be quite as conversant with the user interface on this as they are with something that looks a little more like Microsoft Windows,” he said.
“Our customers have gotten fewer and bigger, and it gets more and more difficult for small companies to effectively deploy resources to support these huge multinational companies, so you need a bigger footprint yourself.”
Other product lines are under review. While Hopkins said that the new company plans to fully support and develop the recently launched Benchware Discovery 360 and Benchware Notebook products, “I don’t know if we’ll carry on the breadth of the product line for the Benchware line that they had,” he said.
Overall, he said, “I think the company has a broader product line than they really need at this point in time,” though he added that the new management team has not yet determined which products it will discontinue.
Hopkins noted that for any products the firm decides to phase out, “we will work out an arrangement with [customers] to make sure they have a way to continue to use the product if it’s embedded in their way of doing things, and find a way to provide them support.”
Hopkins said that Tripos has renegotiated the timeline for a $5 million services contract with Wyeth that has suffered a series of delays and cost overruns since the companies signed the agreement early last year.
“I think the relationship is good now,” he said. “We went through a process as part of the Vector acquisition of replanning the project, we’ve set some new targets, and we changed how the specifications work in terms of when some things might be deployed.”
New Freedom as a Private Company
Hopkins said that the company’s new status as a privately held firm offers a number of advantages for its management, employees, and customers.
For one thing, he said, “I don’t have to be concerned over any one particular month over another when it comes time to report the financial numbers.” As a result, he said, “I don’t have to scramble to try to make the deal of the day at the end of the quarter, which doesn’t do us a good service, or the customer either.”
Another advantage, he said, “is that it costs even a small company like Tripos hundreds of thousands of dollars to be a public company” — costs like auditing fees, directors’ and officers’ insurance, and other expenses that the newly unfettered firm will no longer have to worry about.
The company’s status as a standalone software firm should also eliminate a number of “distractions” that plagued the company’s previous management, Hopkins said.
“We can focus very tightly on customers, products, and markets, which is what ends up producing bottom-line results and lets you grow a business.”