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Norway's ArcticZymes Opens US Office; Expects Continued Growth in 2012

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By Ben Butkus

ArcticZymes, a Norwegian life science research tools firm specializing in cold-adapted and heat-labile enzymes for use in molecular biology and diagnostics, this week opened its first US office in the outskirts of Philadelphia.

The company is betting that its new digs will help it better serve its US customers, who are already responsible for most of its revenues, Jan Buch Andersen, managing director of ArcticZymes, told PCR Insider this week.

In addition, ArcticZymes believes its expanded US presence — along with a recently restructured distribution deal for its best-selling product and the expected introduction of new sample-prep products in the coming months — will help it achieve record revenue growth in 2012, Andersen said.

Tromsø-based ArcticZymes, formerly known as Marine Biochemicals, in late 2008 began transforming from an operating division to an independent but wholly owned subsidiary of Norwegian biotech firm Biotec Pharmacon in order to sell enzymes identified and isolated from Arctic Sea organisms as part of an exclusive partnership with the University of Tromsø.

Due to the unique source of ArcticZymes' enzymes, they tend to exhibit a high degree of specificity at low temperatures with a higher degree of heat lability than similar enzymes, and thus can offer several advantages for applications such as dephosphorylation of biological molecules, PCR product clean-up, and RT-PCR contamination control.

In 2010, Andersen indicated that the company had quickly doubled in size in its short time as an independent subsidiary, and that it had begun formulating a plan to sell its enzymes directly to end users as opposed to a prior B2B strategy (PCR Insider, 4/1/2010).

In fact, ArcticZymes disclosed this week that it grew both in terms of employees and revenues between 2008 and 2010. In 2008, the company logged product sales of about NOK12 million (about $2.4 million at the end of 2008); in 2009 it recorded NOK17.6 million in sales; and in 2010 it brought in receipts totaling NOK21.6 million.

Although it was too early this week for ArcticZymes to provide 2011 financial results, Andersen said that this growth curve did flatten a bit in 2011, primarily because of a large, one-time sale of the company's best-selling product, shrimp alkaline phosphatase (SAP), at the end of 2010.

However, the rest of ArcticZymes' products, including its Cod Uracil-DNA Glycolase (Cod UNG) and its Double-Stranded-Specific DNase (dsDNase) continued to experience rapid growth in 2011, according to Andersen.

In addition, the company now has nearly 20 employees, compared to nine in 2010, so it again essentially doubled its headcount in 2011.

Andersen said that ArcticZymes expects even better numbers in 2012. "We have very aggressive budgeting for this year. We now have two and a half years of sales figures … so we can see how every single account has been doing, allowing for more reliable budgeting.

"We are looking at a figure [for 2012] that is substantially higher than for 2010 … and we are still looking at good profitability — not in the range we were before [becoming an independent entity], but that's because we state the figures differently than we did with Biotec Pharmacon."

ArcticZymes is opening its new US office both in response to its recent growth and in anticipation of new growth, particularly in the US. Andersen said that about 90 percent of ArcticZymes' sales were derived from just a handful of large US customers, who use the company's enzymes both in research and molecular diagnostics applications.

"My conclusion is that I see a market with a small amount of customers generating a large amount of revenue, and thus there is a large amount of potential customers," Andersen said. "Since the larger part of our sales is in the US, the need for a local presence became imminent in order to sustain further growth."

ArcticZymes' new office, which began operations this week, is based in Plymouth Meeting, a little less than 20 miles north of Philadelphia. In conjunction with the opening, the company hired Brent Spoth as its business development manager for the Americas (see People in the News, this issue).

Another reason ArcticZymes expects 2012 to be a banner year is a deal it and parent company Biotec Pharmacon made in September with Affymetrix that allowed ArcticZymes to begin selling its SAP product directly to customers. Prior to the agreement, Affymetrix had exclusive rights to sell the product dating back to a 2003 agreement between Biotec Pharmacon and USB, which Affymetrix later acquired.

"That worked for some years, but we started to … feel that after Affymetrix [acquired USB] that [USB's] focus changed somewhat," Andersen said. "We were getting a little concerned about customers buying bulk amounts of SAP in particular from Affymetrix. Therefore we approached Affymetrix … and ended up agreeing that it would be better if we also got the opportunity to sell SAP on our own. We now feel more comfortable taking on that challenge."

In return, Affymetrix received a long-term supply of SAP for its own products "at competitive prices;" and non-exclusive rights to market, distribute, and sell the product on its own or in combination with other products, until December 2017. The original exclusivity deal would have expired in 2012.

"It is a very important, recognized product for us, and we can now start to focus on the customers that have not been a key focus for USB and Affymetrix," Andersen said.

The upshot, he added, is that ArcticZymes expects to see a "huge impact" in terms of revenues from SAP sales. "We've already closed agreements that will secure a reliable supply to four or five larger accounts, and some have included SAP in new product development," Andersen said. "We have very high expectations for this." Andersen declined to identify new SAP customers due to the early nature of the agreements.

Lastly, ArcticZymes has a number of new products on the horizon, primarily in the area of sample prep, such as RT-PCR contaminant removal. These products are a result of the company's continued partnership with the University of Tromsø to scour the Arctic Sea for new enzymes and product candidates, an effort currently supported by a three-year, NOK14.4 million grant from the Research Council of Norway that began in April 2011.

"We have taken on three new staff in R&D to work on that project," Andersen said. "And we have a dedicated product-development platform on top of the research activities that we have with the university."

"This is actually our savings in the bank," he added. "We have a metagenomic library with 178 lipolytic enzyme clones that have been characterized. Out of these 178 clones, there are 30 new enzyme families. That means there is a very high diversity of new gene families. And you see that already with our [commercial] enzymes — the DNAses are completely unrelated to other DNAses. That goes generally for all our enzymes."

Andersen said that the most imminent product launch, in the area of contaminant removal for molecular biology, would likely be within a few months. "We are still in the patent preparation stages, but the investments we've been making in product development, together with these bioprospecting projects, are starting to pay off now," he said.


Have topics you'd like to see covered in PCR Insider? Contact the editor at bbutkus [at] genomeweb [.] com.

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