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With Revenue Dwindling, LSBC Still Hopes to Market Chips in Early 2003

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Despite cash-flow problems and the termination of its research partnership with antibody-manufacturer Biosite, Large Scale Biology still has plans to release antibody chips for use in commercial research by early 2003, LSBC CEO Bob Erwin told ProteoMonitor last week.

But the path to market will not be easy. In November, the Vacaville, Calif.-based company froze its deliveries of proteins to Biosite, which is embroiled in a licensing and patent dispute with rival Xoma. And last month LSBC called off the arrangement with Biosite, saying their investigation into the dispute indicated that no quick resolution was in sight.

Biosite’s quarrel with Xoma over its phage display technology means that LSBC will not be able to use the antibodies that Biosite has already produced since they began working together a year ago, Erwin said. The company has yet to sign an alternative partner to supply antibodies for the proteins collected in its Human Protein Index, despite hiring a slew of business development executives last summer to boost its effort to find partners for its biochip, biomanufacturing, and drug development businesses.

In addition, LSBC lost its most lucrative source of revenue late last summer when its research contracts with Dow Chemical and Dow Agrosciences expired in August. In a conference call to discuss its fourth quarter 2001 results last month, Erwin and other LSBC managers said they had begun cutting costs, although they added that their efforts in product development would not be immediately affected. In the most recent quarter, LSBC’s revenues were $700,000, compared with $5.7 million during the comparable quarter a year ago.

“So far we’re still maintaining [antibody arrays] as a high priority program,” Erwin said. “Biochips are still a top priority for us, and that’s in part because we think that it’s a relatively short-term route to product-based revenues through these distribution and alliance partner arrangements.”

Erwin said that LSBC is actively seeking out other sources of antibodies, including those based on antibody-mimic technologies, but admitted that for some proteins Biosite’s antibodies have always been its first choice.

“In some of the things that we’re doing [terminating the partnership with Biosite] is not a setback at all,” he said. “In other cases, where their particular antibody technology, and even their method of delivering the immunoassays would be the first choice of a customer or the fastest and lowest cost way to get to market, it is a setback.”

According to the initial non-exclusive agreement signed in January of 2001, Biosite was supposed to have supplied LSBC with antibodies to 2,000 to 5,000 proteins over three years.

But Erwin added that several of LSBC’s potential biochip platform providers also have access to some form of antibody or antibody-mimic manufacturing technology, and that the lack of a current partner does not take away from the value of the information contained in the company’s protein index.

“The reason that some of the companies we’re talking to are interested in what we have to offer has to do with the [proteins] that we’re taking out of the [Human Protein Index] and our ability to express full length genes to produce the proteins,” Erwin said. “That’s where we’ve put a great deal of our investment and where a lot of our technical progress has focused over the last 12 months.”

— JSM

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