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Ciphergen s CEO Talks about Bringing Mass Specs to the Masses

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At A Glance

Name: William Rich

Age: 58

Position: President and CEO, Ciphergen Biosystems

Prior Experience: PhD, University of North Carolina at Chapel Hill

Postdoctoral research, Duke University

Co-founder of chromatography company Dionex

Spent four years at pharmaceutical company Sepracor as senior vice president and general manager

 

Were you one of the co-founders of Ciphergen?

In sort of an odd sense I was. The company began under another name, Abiotic Systems, and we did a restart in 1995 and renamed it Ciphergen. I was a founder, then, of Ciphergen. The original plan for the company was to license technology from Rockefeller to do what was called protein ladder sequencing, and to try to develop a business from there. It turned out the technology was not able to be commercialized, so we had to restart the company and find some new technology. That new technology was licensed from Baylor College of Medicine. It was called SELDI or surface enhanced laser desorption ionization time of flight mass spectrometry. The actual licensing agreements were signed in 1997.

What made you focus on proteins at a time when everyone was talking about genomes?

We recognized that after the genome was sequenced, it was inevitable that people needed better tools to look at proteins, because the tools to look at proteins were very old. We had a number of approaches we were working on for protein analysis, and SELDI became one of the key technologies that we brought in to accomplish that.

Focusing on protein analysis was quite far-sighted back then…

Quite dangerous, looking back at it. Far-sighted or dangerous, depending on your viewpoint. We were lucky, I guess, to be fortunate enough to have emerged somewhat successfully from there.

Can you briefly tell me the history of Ciphergen?

We began to prototype the products and services and to solve problems with them. We were doing a variety of applications and services and problem-solving, and selling different things to different people during this period. And then we began to see that if we started solving customers’ problems in their laboratories, at least in part, that they could see the value of the technology, and began to build the business around that idea. It became clear to us by 1998 that there was a tremendous opportunity to sell directly to biologists, who were doing their work at the benchtop, because all of the large mass spectrometry companies were doing a great job at selling to the core facilities, which became the core proteomics facilities. So we began to expand the business further around that idea.

In 2000, we were lucky enough to be able to go public, raise a considerable amount of money, and that same year we began to formally expand our services capabilities and set up biomarker discovery centers. We have built a number of these centers since then and really expand the service component of our business, and have now expanded that into doing a lot more biomarker discovery for our own account.

Was it difficult to convince biologists or clinicians to use mass spectrometry?

Yes. [Laughs.] It was sort of the make-or-break issue, the whole strategy. Could we really get people who had no experience in mass spectrometry — a lot had not a tremendous amount of strength in protein analytical work, either — to be able to take on this technology and be successful with it? We knew it was going to be difficult, so when we began doing it, we spent a lot of time and money and made sure that biologists were hired and trained to use SELDI. And then they went out and solved problems in the laboratories, and we did a lot of collaborative services as well to show people that you could be successful with the technology. And then [biologists and clinicians] began to buy the products and services as a result of those efforts. We expanded the organization that way: We now have over a 100 people around the world, who are doing this kind of work, either in our biomarker centers or directly in our field sales organization. We continue to do that solutions-driven selling strategy. As people have become successful, and papers are beginning to come out now in rather significant numbers, from very good journals, that indicates that you can be successful with the technology, and of course that drives other people to become more interested in it, and hopefully helps us be successful.

What made you shift from being an instrumentation company to becoming almost a diagnostic company?

We were looking during these early years to understand whether the technology was enabling or whether it was just a nice productivity-enhancing tool. If you are enabling, that means you can discover things that are otherwise not easy to discover. And it gives you an opportunity, then, to forward-integrate the business to diagnostic products and potentially therapeutic products. As we now think the technology is enabling, we have started moving forward to these biomarker centers, to develop a diagnostic business, and possibly therapeutics.

Will you always sell instruments as well?

The next thing we see coming is the diagnostic business, and of course that business is a huge consumable and systems business itself, besides selling tests.It really is very complementary to the tools business.

Yesterday you announced an agreement with Novartis. How important is that to Ciphergen?

That’s very important to us. We discovered during the development years that clinical development in pharmaceutical companies could conceivably be improved pretty dramatically if they had better markers. We have worked with Novartis and other pharmaceutical companies to demonstrate that we can in fact find markers and develop predictive assays in toxicology and efficacy and in clinical trial stratification using a protein approach as opposed to just a gene approach. Novartis is now becoming committed to working with Ciphergen, our biomarker centers, as well as buying systems to develop the use of this technology in their clinical development areas, and expanding its use in a number of their clinical trials and their clinical development processes. We see that as being the first step, a very important step, in ultimately developing what I would call a “theranostic” business, which I think could develop from this kind of large collaborations with pharmaceutical companies.

Looking at the development of proteomics companies in a more global sense, where do you see them going?

I think that what we did early on is recognize that the early money in proteomics was going to come from biomarkers, not from drug discovery enhancements or development, and I think that’s proving to be true. And I think people who have tried to jump into doing drug discovery as a primary objective, using proteomic platforms, just had to face the fact that it’s going to take a long time, perhaps, for proteomics to deliver in the drug discovery area, compared to the biomarker and diagnostic and theranostic areas. We were talking about biomarkers before anybody else was, and now I see lots of companies talking about biomarkers. That’s part of it.

The business is [also] a very cyclical business, and I don’t claim to predict the cycles, but usually, what goes down will come up, and vice versa. It takes time. But the genomics companies in general are having the same problems right now. There is a huge investment that pharma has made in tools and new technology development, and they have had trouble demonstrating that any of that investment has really sped up drug discovery and new drugs in a very convincing way. I think [pharma’s] investment in drug discovery has been moderated compared to drug development. Again, that’s where we have focused our efforts. If you have something for drug development — as opposed to drug discovery — I think you are perhaps in a little bit better economic situation at the moment.

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