Skip to main content
Premium Trial:

Request an Annual Quote

Viaken s Backers Bet that Biotech and Pharma Businesses Will Outsource IT

Premium

GAITHERSBURG, Md.--"When you think about what research computing will look like in five or ten years, do you really think a pharmaceutical company will be able to make enough of an investment to house it all?"

That's a rhetorical question that Keith Elliston, CEO of Viaken, has posed to illustrate the promise of his company's plan to be an "application service provider" to the life sciences industry. Elliston and his backers--three East Coast venture capital firms that put up $3.7 million last month in Viaken's first financing round--are betting heavily that the answer is No.

Elliston, whose resumé lists titles including Worldwide Head of Bioinformatics and Genomics at Bayer, Scientific Director at Merck, and Chief Scientific Officer at Gene Logic, founded Viaken in June 1999. Since then, he has run the company on seed money contributed by himself and his partner, Jim Serum, who previously spent 26 years managing the scientific instrument and bioscience businesses of Hewlett-Packard.

Their mission is to remotely house and manage information technology to support life science companies' entire product discovery processes. Viaken will "enable molecular medicine where information technology is the dominant enabling factor," Elliston told BioInform. And it will do this via the internet.

The company's investors, who have experience with internet and ASP businesses serving other industries, said they were struck by the potential for an ASP model in life sciences. Tom Smith, a partner with Mid-Atlantic Venture Funds in Reston, Va., and a Viaken board member, cited popular management theory that says companies should outsource tasks that distract attention from the main business. "Pharma and biotech are prime examples of industries that need to focus on their core competency, which is not IT," he said. "The technology and the applications are getting more and more Byzantine and more difficult to assess and implement. It makes a lot of sense for them to outsource."

Mark Levine of GCI Venture Partners in Washington also found Viaken's opportunities more compelling than ASP plays in other industries. The IT demands of genomics research dwarf more run-of-the-mill uses for an ASP, he said. "The complicated software, the rapidly changing scientific environment, demands for computing power, the importance of building and maintaining quality databases, and needs for security and scalability" make the pharmaceutical and biotech industries ripe for outsourcing to an ASP, Levine argued.

What's more, Elliston claimed, Viaken is "in a space where there is essentially no competition."

The turnkey ASP

That's not to say Viaken is first to take the "service provider" approach to research informatics. Compugen, DoubleTwist, and eBioinformatics all offer internet-based hubs where scientists can access various vendors' tools, data, and services. Indeed, DoubleTwist's last financing round raised ten times more money than Viaken's.

But Elliston said the businesses are too different to draw comparisons. DoubleTwist has "a lot more than a ten-times-harder job than I do," he quipped.

For one thing, Viaken isn't developing software or content like Compugen, DoubleTwist, and eBioinformatics are. It's reselling and hosting software applications such as GCG's SeqStore and InforMax's GenoMax. Those companies, as well as Hewlett-Packard, Oracle, and Synomics, are Viaken's first partners.

Elliston said he aims to set up similar relationships with top software, data, and content providers in the field. "We've designed our company not to be competititve with any software companies," he said.

Nor is Viaken trying to sign up hundreds of thousands of individual user-members the way the research portals are. Instead, it's hawking "full-service hosting" contracts at rates upwards of several hundred thousand dollars per year, payable in monthly or quarterly installments. Elliston counts 1,200 biotech and about 100 pharmaceutical companies as his target market.

The idea is that biotech companies with little or no IT infrastructure can rely on Viaken to house and maintain their hardware, software, and databases, while benefiting from the costs being shared among all of Viaken's customers. Elliston claimed that each would be able to access state-of-the-art technologies and services--with a level of security that exceeds requirements of most Fortune 50 companies--for as little as half of what it would cost to do it in house.

Because Viaken is expecting any day now to close its first deal with a life science company, Elliston said he used the recent financing round to raise just enough money to service his first customers and employ his 40-person staff. "We don't have to put a lot of money into R&D and we don't need to concentrate on marketing," he said, "I have a customer pipeline that's bigger than I can deal with without any marketing." By year's end he expects to sign on at least nine more customers.

To explain the demand, Elliston pointed to companies such as Merck, Pfizer, and SmithKline Beecham that are already using terabytes of disk space to store research data. Sequence databases are doubling in size now every six months, he remarked. "Two years ago it was every nine months. Two years before that it was every twelve months." Once companies need to store whole genomes, proteomics, and expression data, the doubling time will get even shorter, he predicted.

The chore of keeping a staff in place to manage that information will also become overwhelming for pharmaceutical companies, Elliston wagered. "David Searls [bioinformatics director at SmithKline Beecham] will tell you it takes 50-70 people to mount a credible bioinformatics effort," he noted.

Mid-Atlantic's Smith predicted that a pure technology company such as Viaken would have better luck attracting and retaining qualified IT staff than pharma and biotech companies.

Added Elliston, "Look at what it takes to put together a bioinformatics group: data center space, personnel, and support infrastructure to make the data useful and usable for scientists." Those things are all Viaken needs in order to enable customers to efficiently access their data without worrying about building and maintaining their own IT infrastructure, he claimed. And providing that access is what Elliston said his company was named for: Via, the Latin for path, and ken, old English for knowledge.

--Adrienne Burke

Filed under

The Scan

CDC Calls Delta "Variant of Concern"

CNN reports the US Centers for Disease Control and Prevention now considers the Delta variant of SARS-CoV-2 to be a "variant of concern."

From FDA to Venture Capital

Former FDA Commissioner Stephen Hahn is taking a position at a venture capital firm, leading some ethicists to raise eyebrows, according to the Washington Post.

Consent Questions

Nature News writes that there are questions whether informed consent was obtained for some submissions to a database of Y-chromosome profiles.

Cell Studies on Multimodal Single-Cell Analysis, Coronaviruses in Bats, Urban Microbiomes

In Cell this week: approach to analyze multimodal single-cell genomic data, analysis of bat coronaviruses, and more.