Ciphergen executives last week credited ProteinChip sales and the successful integration of its BioSepra chromatography business as major reasons for the strong growth it reported in second quarter revenue, which surged to $14.3 million from $8.7 million in the year-ago period.
During a June 25 conference call, Ciphergen CEO William Rich asserted that the company’s SELDI technology is growing in popularity, noting that 23 more clinical research studies at the recent American Association for Cancer Research meeting cited the use of the tech-nology this year as opposed to last year.
Rich pointed to a lung cancer study conducted at M.D. Anderson Cancer Center in Houston, in which researchers used both Affymetrix’s GeneChip and Ciphergen’s ProteinChip technologies to look for targets in non-small cell lung cancer cells. The study showed that 30 percent of the expressed proteins found in the analysis could not have been predicted had only GeneChips been used, according to Rich.
“On the basis of this work, we hope to convince scientists doing gene expression to incorporate Ciphergen protein expression analysis in their research,” Rich said.
This strategy should work, chief financial officer Matthew Hogan later told ProteoMonitor, because the lung cancer study was only pointing out an axiom that scientists already know is true. “Of course one gene doesn’t make one protein reliably, end of story, so the whole concept is you ought to be doing both if you really want the whole picture … People will say intuitively that of course that must be true, but it’s not until you hit them over the head with a study that was rigorously done that they’re likely to defer on it,” Hogan said.
In addition to promoting protein chips as a necessary complement to gene chips, Ciphergen intends to exploit the biomarker discovery boom as it heads into the second half of 2003. Ciphergen is riding this boom with several collaborations: with the Toronto Medical Laboratories for large organ transplant rejection markers and markers for endometrial, thyroid and lung cancer (see PM 6-6-03); with BioMérieux of Marcy-l’Etoile, France for colon cancer biomarkers (see PM 7-4-03); and with labs in Toronto, Beijing, and Singapore for SARS biomarkers (see PM 6-6-03). A main goal for Ciphergen in the area of biomarkers, similar to its goal in participating in biodefense research (see story p.1), is to “share the downstream value” of any biomarker that might be developed into a marketable test using its technology — in other words, to take in royalties on intellectual property.
As for new technology platforms, Ciphergen is placing its bets on the integration of sorbent technologies with SELDI. Following the acquisition of BioSepra in 2001, Ciphergen has thrown much of its energies into the subsidiary’s sorbent chromatography technology, which grew from a $5 million business at acquisition time two years ago to a projected $50 million this year, according to Martin Verhoef, senior vice president of sales, marketing, and operations. Much of this growth, Verhoef said, came from combining the sorbent technologies with SELDI, and the company has plans to move this further forward. “We [will] offer a full range of protein chip arrays for which purification sorbents are available, so that all scientists from laboratory-skill work to large-scale work can use the SELDI system to predict chromatography purification processes for their protein of interest,” Verhoef said.
Ciphergen also took advantage of its recent release of two new protein-analysis products to take a couple of stabs at products that competitor Bruker Daltonics (now Bruker BioSciences) makes. In describing its new surface-enhanced neat desorption protein chip array — which Ciphergen is marketing as a tool to detect low molecular weight species — Rich said that with SEND “The major problems of MALDI can be eliminated and the great potential of chemoproteomics and metabolomics can also be more quickly realized.” Hogan explained further to ProteoMonitor, “If you’re trying to work with low molecular weight entities, MALDI has got some challenges because when you put this matrix in it, it introduces all kinds of chemical noise.” Hogan said that SEND would eliminate this problem in the context of chemoproteomic research, which requires working with small molecules as binding agents for protein targets. MALDI-based instruments are among Bruker’s most important products.
Rich also specifically mentioned Bruker’s new magnetic bead system for sample preparation as a com-petitor in the market of pre-analysis protein sample selection, which Ciphergen is pushing hard with its SELDI-sorbent combination. Bruker BioSciences has been trying to establish its system as a competitor with SELDI-based systems (see PM 7-18-03), but Rich dismissed the threat. “Bruker’s bead product has substantial limitations in being able to compete with us. We have seen their presence in the market but we haven’t seen any loss of sales at this point,” he said.
Ciphergen’s R&D spending increased in the second quarter, to $7 million from $4.7 million in the same period last year. Second-quarter net losses swelled to $15.6 million from $4.7 million year-over-year. Ciphergen said a contributing factor of the increased loss was $7.3 million in litigation fees paid as part of a settlement with LumiCyte over rights to SELDI technology (see PM 6-6-03). Ciphergen reported approximately $28.2 million in cash, cash equivalents, and investments as of June 30, compared to $42.5 million at the end of December 2002.