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Emerging From Restructuring, Zyomyx Rebrands Its Identity As Services Shop

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Protein chip company Zyomyx has rebranded itself as a services company, creating a new business strategy after laying off 80 percent of its staff and auctioning off much of its equipment.

Instead of bringing its own products to market, Zyomyx will now seek to develop products and technologies on behalf of partners. The company will focus on proteomics, molecular diagnostics, medical devices and other industrial applications of its expertise.

“We can break even now with this new model,” said newly minted CEO Peter Wagner, who had been the company’s chief technology officer before the reorganization. “Partnering is an important part. We’ve gotten a lot of requests and inquiries, so right now we’re in response mode. But we’re also taking pro-active steps to invite everyone to send us their technologies and inquiries.”

Wagner said he expected the company to break even within the next six to 12 months.

All of Zyomyx’s current products will continue to be manufactured without interruption, Wagner said.

“All our customers are telling us that they need our products and that there’s not much of an alternative,” said Wagner. “We will continue to keep manufacturing those [products] and we have enough inventory so there will be no gaps. Everyone who orders chips will get them.”

Last month, Zyomyx laid off over 40 employees, or 80 percent of its staff, and sold about $50 million worth of equipment. The equipment came out of five buildings and included biotechnology tools, semiconductor equipment, optics and laser equipment, information technology equipment and personal computers, according to Don Cowan, the president of the technology auction firm Cowan Alexander.

“We gained a substantial amount of money that allows us to move forward,” Wagner said of the auction. “Our silicon microfabrication room, which was shut down, was especially expensive to maintain, and it didn’t make sense to continue it.”

Why Did Zyomyx Fail?

When asked why Zyomyx had not fared well with their previous platform that emphasized superior surface chemistry for their cytokine protein chips, Steven Bodovitz, the founder of BioPerspectives consulting company who has written a report on protein chip companies, said the company had not placed enough emphasis on chip content and had produced products that were too expensive within a very competitive niche.

“Their product was too expensive for the market,” said Bodovitz. “They emphasized microfluidics and surface chemistry and missed the bigger challenge, which is the antibodies themselves. They had a very high cost platform, compared with Luminex, for example, which has a platform which is much more versatile and much less expensive.”

In addition to competing with other protein arrays, Zyomyx’s product was also competing with traditional ELISA assays, Bodovitz added, and in the end the company’s strategy was not cost effective.

Bodovitz said that with antibody arrays, surface chemistry is important, but the bigger difference in how well chips work depends upon the antibodies. With Zyomyx’s new platform, however, surface chemistry could be very compatible with medical device companies which need that kind of expertise.

“Zyomyx is a leader in surface chemistry, and if they’re talking about supplying surface chemistry to medical devices, those things inherently match,” said Bodovitz.

Wagner said that Zyomyx had been approached in the past by medical device companies asking for help with miniaturized, high-throughput systems that had problems with surface chemistry.

“In most cases, our business model did not allow for us to dilute our R&D to help them,” said Wagner. “But now with our new service model, we can work with them.”

In addition to surface chemistry expertise, Zyomyx also has a number of proprietary detection technologies and the first electronic chip for bioanalysis, which has not yet seen the market, Wagner said.

“We plan on capitalizing on our IPs. That’s another important element in our business plan,” said Wagner. “We anticipate companies saying, ‘We need to take a license from you because you own the patent.’”

Wagner disagreed with Bodovitz that the cytokine array market was too crowded for Zyomyx to compete in. “For us, the choice of cytokines was very good,” he said. “Zyomyx’s product provided the largest number of given cytokines. It was a benchmark product.”

The news of Zyomyx’s restructuring triggered speculation in the proteomics industry that the company took the steps to remain solvent, while grooming itself for a possible suitor. Invitrogen, which is known as an avid acquirer of companies and technologies — and which protein array company ProtoMetrix earlier this year — was on the short list.

Greg Geissman, a spokesman for Invitrogen, said that he could not comment on whether his company would be interested in Zyomyx’s expertise. He could say, however, that Invitrogen has great confidence in protein microarray technology going forward.

Invitrogen’s protein array platform currently consists mostly of a high-density yeast array with 2,800 proteins that covers almost the entire yeast proteome. The company is also preparing to launch a high-density human array by the end of the year.

“We certainly feel that we gained strength with the ProtoMetrix acquisition as far as content for protein microarrays,” said Geissman. “As far as working with Zyomyx, that’s something our business development would have to be involved in.”

— TSL

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