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Predictive Diagnostics Seeks Financing to Continue Operations as LSBC Shuts Down

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With financial troubles causing corporate parent Large Scale Biology Corp. to shutter its operations, Predictive Diagnostics is seeking new financing that will enable it to continue its operations.

A recorded message at Predictive's main number currently states: "Effective December 23, 2005, Predictive Diagnostics, Inc., has ceased operations. Calls to this number will not be returned."

However, Daniel Tuse, vice president of business development at Predictive, told ProteoMonitor in an e-mail this week that the company is not out of business, or shut down.

"We are continuing our operations as our parent company, LSBC, explores various reorganization options," Tuse said. "We are in fact entertaining various scenarios for financing PDI and are negotiating new revenue-generating contracts. In fact, we have been pleasantly surprised by the level of interest in PDI from various corporate and financial entities. We hope to provide additional detail regarding our operations in the weeks to come."

Guy della Cioppa, a former senior vice president of business development at Predictive who left the company in June 2005, said the fact that Predictive is continuing its operations despite LSBC's demise is "a good sign for the field."

"The field is red hot, and I would imagine that's the one area of operation that [LSBC would] want to rescue," he said.


"We are in fact entertaining various scenarios for financing PDI and are negotiating new revenue-generating contracts. In fact, we have been pleasantly surprised by the level of interest in PDI from various corporate and financial entities."

Della Cioppa added that he was surprised when LSBC announced on Dec. 22, 2005, that they would terminate all their employees the following day.

"We'd been listening to [LSBC's] financial calls and following all their filings with the SEC, and it appeared that they had a sound financial plan to raise significant additional capital through the sale of stock," della Cioppa told ProteoMonitor this week. "So we were very surprised to see that not go forward. … We were completely taken by surprise like everyone else, including the employees."

In the days leading up to the LSBC's closure, Vacaville, Calif.-based Predictive employed eight people in its management team, according to the company's website. In addition, the company employed a few ancillary staff, according to John Rakitan, the firm's former senior vice president and general manager.

Besides Rakitan and della Cioppa, three other officials left Predictive in June 2005, and later founded Advanced Ideas in Medicine, a new company that like Predictive, focuses on proteomics-based diagnostics for the early detection of cancer (see PM 12/23/2005). The departures were voluntary, and were not tied to layoffs at Predictive, according to both della Cioppa and Tuse.

Predictive Diagnostics has a number of collaborations with companies and institutions that are using its flagship biomarker amplification filter, or BAMF, software to identify mass spectrometer pattern profiles that could serve as biomarkers for diseases.

Among these collaborations, the company has been working with PerkinElmer and the Rush Alzheimer's Disease Center to validate a panel of blood biomarkers that could distinguish Alzheimer's patients from controls. PerkinElmer's BioXpression biomarker platform also uses the BAMF technology.

Predictive has also been working with the University of Utah to identify biomarkers for the early diagnosis of pregnancy-related complications, and with the Wake Forest University Baptist Medical Center to validate a blood test for multiple sclerosis.

Bill McKenzie, the leader of strategic collaborations for molecular medicine at PerkinElmer, said that he had no comment about the fate of Predictive Diagnostics other than to say that the work that has been started with the company in validating Alzheimer's disease biomarkers will continue.

"We don't control any interest in what Predictive does," said McKenzie.

Officials at the University of Utah and the Rush Alzheimer's Disease Center could not be reached in time to comment about the status of their collaborative projects with Predictive.

Next Steps

During an LSBC conference call on Aug. 9, 2005 that coincided with the release of the company's 2005 second-quarter earnings report, LSBC officials said they were looking to "separately finance" Predictive. Further details were not disclosed.

Asked if his new company, Advanced Ideas in Medicine, would be interested in acquiring Predictive or its BAMF technology, della Cioppa said, "I don't think we'd be a logical acquirer of that asset. … We've invented an entirely new technology that doesn't use BAMF and doesn't require BAMF."

Despite LSBC's closing on Dec. 23, 2005, Predictive issued a press release five days later announcing that it had received a "key patent" from the US Patent and Trademark Office covering its biomarker discovery and diagnostics technology. The inventors listed on the patent, No. 6,980,674, were Norman Anderson and N. Leigh Anderson, the principals of the Washington, DC-based Plasma Proteome Institute.

While the press release claimed that BAMF is "an example of the technology covered by the newly issued patent," the patent made no mention of the terms "BAMF" or "biomarker amplification filter." It appeared to cover 2D gel technology (see IP Roundup).

"We looked at the patent, and we don't understand why they would associate [Predictive's] technology with that patent," said Gershon Wolfe, the former senior vice president and chief scientific officer of Predictive and another Advanced Ideas in Medicine founder. "There's absolutely no mention of BAMF in that patent."

Della Cioppa said that he knew of some pending patent applications covering the BAMF technology, and that a patent had been issued about two years ago for a technology similar to the BAMF technology.

In April 2005, della Cioppa told ProteoMonitor that Predictive had spoken with the US Food and Drug Administration twice about its BAMF technology. He said he believed the FDA would be ready to approve a BAMF-based test, as long as the test could reproducibly classify blinded samples with sensitivity and specificity.

â€" Tien-Shun Lee ([email protected])

The Demise of LSBC

In early November 2004, LSBC's third-quarter revenues nosedived 58 percent, to $500,000 from $1.2 million in 2003 (see ProteoMonitor's sister publication, GenomeWeb News, 11/4/2004).

A year later, a quarterly report filed by LSBC with the US Securities and Exchange Commission expressed "substantial doubt" that the company would be able to continue its operations.

"Our cash balance was $85,000 at Sept. 30, 2005," the report read, "and we have incurred negative operating cash flows of $7,406,000 during the first nine months of 2005."

Around that time, LSBC had a cash balance of $3.9 million, and a net operating loss of $14.5 million for all of 2004, according to other SEC filings. Hoping to bolster its share price to maintain its listing on the Nasdaq exhange, LSBC on Dec. 9, 2005, announced a one-for-five reverse stock split.

However, two weeks later, LSBC announced that it would cease operations the following day "as a result of a lack of cash and liquid assets." LSBC's common stock stopped trading midday on Dec. 22, 2005 after the company's announcement. Shares were halted at a price of $1.41.

The next day, the company laid off all of its employees, including 55 in its Vaca Valley Parkway plant and 23 in its Owensboro, Ky., facility.

â€" Tien-Shun Lee ([email protected])

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