Skip to main content
Premium Trial:

Request an Annual Quote

Proteome Systems, Charles River Labs Start Contract Research Joint Venture

Premium

Proteome Systems CEO Keith Williams says his company was never all that interested in offering proteomics contract research services — in fact, whenever any potential partner approached him in the past about teaming up to offer fee-for-service research, “we always just turned the business down, because it was my belief that nobody in this space really knew how to get the pricing right and provide a fast turn-around service.”

But now Proteome Systems has reconsidered, and in quite a big way. Last week, the Sydney, Australia-based drug discovery operation and manufacturer of proteomics technology announced that it had teamed up with Charles River Laboratories to launch a joint venture (JV) offering contract research services to the pharmaceutical industry, with a combined initial investment of $6 million. Proteome Systems’ change of heart, Williams said, was simply the result of finally finding the right partner. “It seemed like a marriage made in heaven because it’s a space we weren’t going to operate in anyway,” Williams said.

Thus far, Charles River appears to be taking on much of the work. The Wilmington, Mass.-based pharmaceutical research service company ponied up $4 million for the startup, while Proteome Systems offered $1 million. The two companies also pledged another $1 million in the form of a working capital loan. The new company, called Charles River Proteomics, will absorb Proteome Systems’ platform of 2D gel and mass spectrometry instrumentation into its own laboratories in Worcester, Mass. Proteome Systems will help train the Charles River scientists brought from within and outside the company to run the proteomics research lab, as well as provide new technology to the service lab on an early access basis.

According to Williams, the JV will offer more than just protein identification services. The emphasis will be on differential display analysis, he said, but the new company will also offer services in biomarker discovery and toxicology analysis. Proteome Systems’ technology platform brings together instrumentation from a wide spectrum of manufacturers, including Shimadzu Biotech, Millipore, IBM, Thermo Finnigan, and Sigma-Aldrich, to provide the component pieces of its 2D gel electrophoresis-based mass spectrometry analysis platform. Williams added that the JV’s 10,000 square-foot laboratory will also serve as a demonstration facility to market Proteome Systems’ proteomics platform to potential customers.

And despite doubts that pharma and biotech companies would commit heavily to contract proteomics analysis, Charles River and Proteome Systems are rumored to already have at least one contract lined up for the new JV, said John Lindsay, a managing director of proteomics consulting firm SciMarket Strategies, who is familiar with the deal. “I think they have a significant player lined up, or they probably wouldn’t have gone forward with this,” he said.

But there still remain many challenges for any venture into the contract research business. Margins are tough, insiders say, and keeping up with a rapidly advancing proteomics technology can require significant investments in training scientists to perform the research, and in purchasing new equipment. “[Potential customers] will want access to the most sensitive mass specs, and Charles River will have to recruit a lot of those mass spec people,” Lindsay said.

But Williams is confident that his company’s technology, and the systems it has in development, such as the chemical inkjet printing technology for performing assays on proteins blotted onto membranes, will keep the JV’s customers satisfied. He also sees no potential conflict of interest with Proteome Systems’ intention to sell its technology directly to big pharma and biotech customers. “Some [companies] will insist that they bring the technology in-house, and others will be really keen on out-sourcing,” he said.

Compared to other companies offering similar types of services, such as Oxford Glycosciences or Proteomic Research Services, Williams said the JV between Proteome Systems and Charles River will have the capacity to undertake large projects without requiring customers to grant “reach-through” rights to downstream products. In addition, Lindsay said Charles River has been quite successful in marketing its services in small molecule discovery and animal model testing to pharma and biotech customers.

Charles River Proteomics is currently 80 percent owned by Charles River, and 20 percent by Proteome Systems, in proportion to their initial cash investments. In addition, Proteome Systems has the option until March 2003 to increase its equity position to 40 percent, while Charles River can, beginning in January 2006, purchase all of the equity. The new business is expected to be fully operational in March 2003, and to begin contributing to Charles Rivers’ earnings in 2004, the company said in a statement.

— JSM