With a shift in focus toward markets abroad, especially the US, Germany-based protein-structure analysis firm Proteros is looking to build on its core business and expand into new ones.
For most of its history, the firm had put most of its eggs in the European pharmaceutical and biotech basket. But about a year ago, realizing it would have to adopt a more global perspective to continue growing, it upped its efforts to add clients overseas.
Since embarking on its efforts to expand its geographic markets, Proteros’ client mix has gone from being 80 percent European-based to about 57 percent with the balance in the US and Japan. In the US, Proteros has 12 clients, while in Japan it has three.
In recent months, the company has also raised €5.2 million ($7.4 million) in investments for capital projects and product developments and strengthened collaborations it already had with some high-profile companies.
While the company declined to provide details about its finances, Hajo Schiewe, vice president of business development at Proteros, told ProteoMonitor recently that the company is “actually earning money with what we are doing, which is at this point in time quite unusual for a company in the biotech field … We are quite profitable.”
Crystal Clear Business Focus
Co-founded in 1998 by Nobel laureate Robert Huber of the Max Planck Institute for Biochemistry — Huber shared the 1988 Nobel in chemistry — Proteros’ main business is protein-structure analysis.
Its main technology platform is the Free Mounting System, developed by Huber, which is used to improve the fraction power and resolution of protein crystallography, resulting in more information about a protein-ligand structure, Schiewe said.
“If you look at the protein ligand structure, what you want to get out of it is the interaction between the compound and the [pharmaceutical] target, the protein,” Schiewe said. “The Free Mounting System is a tool for improving this resolution and thereby getting protein-ligand structure of a higher quality.”
While a commercial version of the FMS platform is sold by Rigaku, Proteros uses a more advanced version for its in-house work. According to Schiewe, the company’s clients consist of most of the world’s top-50 pharmaceutical firms who go to Proteros with a ligand from which the company generates a protein-ligand complex. The complex is then used by the drug firm for drug-discovery purposes.
“Our goal is to support pharmaceutical companies [and] biotech companies [in] the fields of protein crystallography, to speed up their internal drug discovery or active ingredient discovery,” Schiewe said.
Along with FMS, Proteros has developed the Picodropper technology, which the company uses in tandem with FMS on virtually all its work. With compounds of very low solubility or affinity, generating protein-ligand complexes can be difficult, Schiewe said, because the concentrations are not high enough for the compounds to get into the protein crystals. The Picodropper allows for the ligand solutions to be added to an FMS mounted protein crystal.
“By using only picoliter drops we can apply the ligand directly on the crystal surface, forcing the ligand into the protein crystal,” Schiewe said. “And it’s another tool that helps us to achieve very high success rates when it comes to protein ligands.”
Last year, the company also leveraged its expertise in protein crystallography to launch a custom protein-production services business for screening purposes. For crystallography, proteins need to have a high degree of purity.
The goal of that business, according to Schiewe, is not to become the market leader – that position belongs to Millipore’s Upstate division – but to create proteins according to client specifications that will “behave very well in assays and give better results than most of the proteins which are currently on the market,” he said. “We prefer to focus on proteins which are quite challenging when it comes to production and purification.”
Slice of American Pharma Pie
Key to Proteros as it continues to grow will be developing its operations abroad, in particular the US. As it learned to stand, then to walk, the company focused its attention close to home, forging relationships with pharma and biotech firms in Europe.
Among its clients is country-mate Boehringer Ingelheim. In May, the two companies announced an 18-month agreement to generate and analyze protein-ligand structures of hits and evolved chemical entities from internal Boehringer programs. Proteros will use its technology platforms to maximize data quality and success rates.
Proteros also has a longstanding relationship with another country-mate, Bayer Healthcare. In June the deal yielded Proteros an undisclosed milestone — its first in the alliance — when it delivered captured protein fragments to the drug maker.
However, Proteros knew that it would have to make inroads into the US pharma market in order to support long-term growth. “The biggest [pharma] market is in the US,” Schiewe said, and “the best way to build up a broader client base is to distribute this client base all over the globe.”
“The US companies are more focused on achieving the goal, and it’s no problem if they have to work with an outside partner to achieve it in the best possible way.”
The response from US pharma has been welcoming. While the company’s European clients have a “we-want-to-get-things-done-by-ourselves” attitude, Schiewe said, US companies are open to outsourcing parts of their businesses.
“The US has a little more of a get-it-done attitude, and are more open to some of our strategies than some of the European companies,” Schiewe said, making it easier to strike up collaborations with US firms than with European ones.
“The US companies are more focused on achieving the goal, and it’s no problem if they have to work with an outside partner to achieve it in the best possible way,” he added.
Proteros is also looking to grow its Japanese client base, but said Schiewe, because Japanese companies are reluctant to outsource their operations, the “initial hurdle to get market entry” there is higher than in Europe and the US. “But we will see some growth there next year, based on already ongoing negotiations,” he said.
In July, the company received a €1 million cash infusion when BayBG Bayerishce Beteiligungsgesellschaft, a Munich-based investment firm, made a second investment in Proteros. Because BagyBG is one of the biggest and best-known investors in Germany with a portfolio of around 500 companies, the investment signaled to others that Proteros had legs, Schiewe said. As a result, the company was able to secure another €4.2 million from other investors.
While some investors, particularly venture capital firms, are interested in initial public offerings, with the promise of quick and potentially rich returns, BayBG is interested in ongoing returns on its investments “so they’re the ideal investor for a company like Proteros, which is not aiming at its own drug discovery,” Schiewe said.
BayBG did not respond to requests for comment. In a press release announcing the additional investment, BayBG CEO Peter Pauli cited the unique features of Proteros’ technology and a growing demand for Proteros’ services.
Proteros will use the total €5.2 million to expand its service capability, invest in equipment “to reach a more critical mass, and to really realize an economy of scale … taking on larger projects with more clients,” Schiewe said.
He also said that there would be news soon about work Proteros is doing with Johnson & Johnson but declined to elaborate.
“We have reached a point in our relationship with most of our longstanding partners where we are talking about framework projects, platform projects of significant scale, which justifies a significant expansion of the capacities which we already have,” Schiewe said.