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Xpogen Retools Flagship Product with Hopes for More Success the Second Time Around

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When the market for bioinformatics software took a dive last year, many once-hopeful startup companies were forced to reinvent themselves — or perish. Xpogen is one of them: Early last year, the Cambridge, Mass.-based company marketed its first product, BioinformatiX Engine, as a tool for analyzing gene expression data, offering a broad range of publicly available and proprietary analytical techniques and data management capabilities. But the product did not catch on, attracting only a handful of beta-testers. That’s when the company, last fall, took a good look at its assets, examined the market, and decided to strip its product down, focusing on only one proprietary element, the so-called relevance network algorithm, a clustering tool.

The result is PathlinX 2.0, which Xpogen launched this week, a “very much scaled-down version of the same product with a focus on the core intellectual property,” according to Michael Griffin, the company’s president and CTO. PathlinX, which builds on the patent-pending relevance network algorithm the company exclusively licenses from Children’s Hospital in Boston, can analyze any type of quantifiable data, ranging from gene expression to phenotypic and clinical information, Xpogen claims. It analyzes pairwise relationships, brings up both positive and negative correlations, and visualizes them as a web-like network. “Whereas the competition basically throws a tremendous amount of data back at the user, our product reduces the amount of data that the user sees, and gives only statistically supported relationships,” said Griffin, allowing researchers to extract biologically relevant associations. Moreover, the product is easy to use, he claimed, and Xpogen is hoping to license it to biotechnology and pharmaceutical companies doing data-intensive research.

It remains to be seen whether marketing bioinformatics software is still a viable strategy, but Xpogen is already having better luck with its revamped product than it did with its previous incarnation. Concomitant with its product launch, Xpogen announced its first two customers, the Beth Israel Genomics Center — a beta-tester of the old product — and Genstruct, a company offering “knowledge assembly” software, and said that several others were about to sign on. By the end of the year, it hopes to have a few dozen customers on board, and to launch the next version of PathlinX, which will include an experimental design function. For 2003, a new product is planned that will “look at higher-dimensional relationships,” said Griffin.

For now, the jobs of the company’s 18 employees seem secure: after raising $1.5 million in private equity in a seed round last November, which was initiated before the change in direction, Xpogen just closed a $2 million series A round last month. Both rounds of funding came from a “low-profile” group of private investors, according to Rob Halpern, Xpogen’s VP of business development and marketing.

— JK

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