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Inproteo Spins Out Two Companies in Two Years: Will Money Keep Flowing?

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In the two years since it launched with $12 million in seed money, Inproteo — a proteomics consortium consisting of Purdue University, Indiana University, and Eli Lilly — has taken in $3 million in licensing revenues, applied for 34 patents, spun out two companies, and is aggressively looking into launching a third company.

This week, both of Inproteo’s Indianapolis-based spinoffs — Tienta Sciences, which launched Oct. 1, 2003 to market multipurpose protein analysis slides, and Prosolia, which started up 10 days later to market a mass spec back-end tool — were finalists in a life sciences business competition sponsored by Purdue. Tienta this week also received its first product order for its slides. Now both Inproteo and its progeny are on the lookout for new ways to expand.

“We’d like to actually extend the boundaries beyond Indiana,” Cynthia Helphingstine, Inproteo’s vice president of business development, told ProteoMonitor. “We’re very happy working with the Indiana universities and definitely want to continue that, but we realize that as we grow, we want to work with the best people who can solve a particular gap that we’ve identified as a market need.”

Inproteo, formally the Indiana Proteomics Consortium, launched in April 2002 with $6 million from Lilly and $3 million each from the universities involved, after hiring PricewaterhouseCoopers to conduct a market analysis that identified gaps in the proteomics market that Inproteo could fill (see PM 7-29-02, 12-16-02). Inproteo then funded scientists to develop technologies that the consortium could use to build an IP portfolio and launch licensing deals and spin-outs. “I think what’s unique in our business model is we have the expertise to — if it makes sense — launch a company,” Helphingstine said. “We have people who are experienced running small businesses … as opposed to a university, for example.”

A problem with the model, however, Helphingstine said, was that it did not include earmarked funds for starting up new companies. Instead, Inproteo is using the $3 million it’s earned in licensing fees to help with the start-up costs. It is also using the licensing money to build up credibility “in the sense that we may be able to get other technologies from Lilly or from other companies, that we can develop,” Helphingstine added.

But while Inproteo can provide seed money and guidance to its spin-outs, it does not have the marketing power to take the companies to the next level. “[W]e’re definitely looking for exit strategies at some point,” Helphingstine said. “We see ourselves as launching these things, getting them from that technology in the lab to the early commercialization — [but] we also realize there may be different groups of people, whether it’s a large instrument company or whatever, that will probably either build it into a second company or into a business unit,” she said.

At least one of the start-ups is already headed down that path: Prosolia — which is commercializing a mass spec module developed by Graham Cooks at Purdue — is currently in “late-stage negotiations with a major company in the market about entering into a joint development agreement,” Helphingstine said. She would not name this potential partner, but Cooks told ProteoMonitor last September that he was working on the technology, which he called “ion soft-landing,” as an interface to modified versions of Thermo Electron’s quadrupole and ion trap mass specs (see PM 9-5-03). “Thermo Finnigan supports the work in my lab,” he said at the time. “I’ve had a relationship with them — a research support sort of relationship — for many years.”

Prosolia is still in the early stages of development. A CEO, John Campbell, has been appointed, and two patent applications have been filed, but the company is still run mostly by Inproteo and the members of Cooks’ labs, and no product has yet been released. Cooks’ technology is a method of landing ions on a protein chip or other surface without destroying them, after mass spec has separated them. This preservation method allows the ions to be used for further studies, such as drug discovery. The method can also be used as a way of purifying small amounts of material, Cooks has said.

Tienta Sciences is further along in its development than Prosolia, with 10 patent applications and a more complete management team in place. The company is opening a development lab for validation and application development in West Lafayette, and at Pittcon last month it released its first product: a multipurpose “spectrum slide” for use in analyzing a single protein sample by Raman spectroscopy, infrared spectroscopy, and mass spectrometry. “With this technique we can do things like identify proteins; we can identify which amino acid is phosphorylated in a protein; we can identify carbohydrates attached to the protein; we can determine the conformation of a protein; and we can determine if the sulfhydryl groups are reduced or hydrolyzed,” Ray DeGrella, vice president of development and operations for Tienta Sciences, said. He said the spectrum slide is an optically-flat stainless steel plate coated with a thin hydrophobic layer. The product is based on technology developed by Dor Ben-Amotz at Purdue.

Although the company did not receive its first official order until this week, it has already given sample slides to the FDA and is working with the agency to study drug counterfeiting, Helphingstine said. She added that Tienta has also given slides to Purdue’s food science group and “their commercial contacts,” for work on nutrition.

Inproteo is now investigating whether to spin out a third business based on a high-resolution MALDI-TOF system that Jim Reilly at Indiana University has developed. Helphingstine said that the consortium is applying for a grant to help with the cost of making a prototype of the system. Reilly will present his technology — which “us[es] photofragmentation in combination with mass spec,” according to Helphingstine — at the ASMS conference in Nashville next month. “We haven’t started another company yet — I can’t rule that out, I also can’t say it’s going to happen instantly,” she said.

Inproteo is hoping that this cycle of funding technology development and then spinning out companies will produce revenue soon: If it doesn’t, the money may run out. “Our founders put in money in one-third aliquots for three years, and we’re just starting our third year of funding, so at the end of this time next year, we need either our same investors to put in additional money, or we need to raise some money ourselves,” Helphingstine said. “So hopefully Tienta and Prosolia will a year from now be a lot farther along, and we’ll have a pipeline full of both technologies and companies.”

— KAM

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