Orchid’s science hopes to track variations in DNA

SNP Consortium

Orchid and Molecular Tool

Dale Pfost

SNPstream — the Crown Jewel

Possible IPO

Orchid’s Web Strategy: GeneShield

Corrections or additions?

This article was published in U.S. 1 Newspaper on December 8,

1999. All rights reserved.

Balancing the Genetic Code

by Christopher Mario

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Orchid’s science hopes to track variations in DNA

Digits rule our lives. Transpose two numbers in a phone

number: sorry, wrong number. Enter $101 instead of $110 in your


rubber checks. Switch two letters in the HTML of your website: crash


Messing up your digits can lead to trivial and easily fixable problems

like those above, or they can be more serious, like the pesky "19"

lurking in the software of the world’s computers, two little digits

that have some people stocking up on creamed corn and diesel fuel

for a disaster that may or may not happen on January 1, 2000.

But there are another set of digits, far more important than any


You can’t see them. You know absolutely nothing about them. Yet you

have about three billion of them with you right now. Rather than


these digits are expressed as letters: A, C, T, and G, for the


adenine, cytosine, thymine, and guanine, known collectively as the

bases of DNA. These digits or bases are the building blocks of the

genes that make you you.

Now for the bad news: your digits may be out of whack. Switch a few

digits around in your genes, and you could have a much more serious

problem than a bounced check or a crashed computer: you could be


at the end. Digits rule our lives. They can rule our deaths too.

Or maybe not. Work now under way at Forrestal Center-based Orchid

Biocomputer may in the future provide medical science with a way not

only to find out if your genetic checkbook is in the red, but also

to bring it back into balance.

At the heart of Orchid’s efforts is something called SNPstream, an

automated, computer chip-like device that can identify the transposed

digits in genes — which scientists call single nucleotide


or SNPs, pronounced "snips" — quickly, accurately, and

cheaply. If all goes according to plan, these little snip chips may

hold the key to a cornucopia of new medical diagnoses and treatments

— from predicting predisposition to genetically based diseases,

to targeting existing drugs to the individuals for whom they will

be most effective, to identifying the genetic bases of diseases and

developing drugs to treat them.

SNPs are the most common form of variation in genes from individual

to individual. And that’s what makes them so important, according

to Dale Pfost (pronounced "Post"), chairman and CEO of Orchid


"Before about 1990, the notion would have been that there were

all sorts of diversities expressed on the genome, but nothing special

about single bases," Pfost says. "And it’s true that there

are other ways differences are expressed, such as variable repeat

lengths of individual bases, or insertion of deletions of whole hunks

of DNA. But the most common form of variation is in individual bases

flipping from one to another" — an A for a T, a T for a C

— "and any individual human has hundreds of thousands to the

low millions of these variations. And it is now believed quite broadly

that by setting SNPs very well very quickly, one will find many


to improve healthcare."

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SNP Consortium

Pfost is not alone in that belief. In April of this

year, 10 large international pharmaceutical companies and the Wellcome

Trust, a British medical research foundation, in April of this year

established the SNP Consortium, a $45-million public-private


that in collaboration with the Human Genome Project has set a goal

of finding and mapping 300,000 common SNPs.

This blue-ribbon group thinks SNPs matter. A lot. According to the

consortium’s website, "variations in DNA sequence can have a major

impact on how humans respond to disease; environmental insults such

as bacteria, viruses, toxins, and chemicals; and drugs and other


This makes SNPs of great value for biomedical research and for


pharmaceutical products or medical diagnostics. Scientists believe

SNP maps will help them identify the multiple genes associated with

such complex diseases as cancer, diabetes, vascular disease, and some

forms of mental illness."

In other words, finding and understanding the function of SNPs may

very well lead to a revolution in healthcare. They may lead to a new

way of diagnosing and treating diseases, like diabetes, against which

current therapies are inadequate. And perhaps most intriguingly of

all, SNP technology may enable your doctor to predict conditions to

which your personal genetic makeup makes you susceptible, and to


treatments that have been shown to be most effective in patients who

share with you a particular SNP.

But there’s still a lot of work to be done. Nobody knows for sure

how valuable individual SNPs will be in treating and diagnosing


— the science of correlating SNPs and diseases is still in its

infancy, and it may be that most SNPs work in groups, rather than

individually, making the determination of their functions


more difficult. Nobody has yet identified all the 300,000 or so most

common SNPs that scientists figure to be the most likely suspects

in causing disease, rather than, say, determining the shape of your

earlobe. And crucially for Orchid Biocomputer and Dale Pfost, the

science and the market have yet to determine who among the handful

of competitors — including not just Orchid but also such Silicon

Valley companies as Incyte and Affymetrix and Maryland-based Celera

— will have the best SNP mapping technology.

Pfost thinks it will be his. Here’s how the technology developed.

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Orchid and Molecular Tool

In September, 1998, Orchid acquired a Baltimore company called


Tool and along with it Molecular Tool’s proprietary SNP technology,

known as genetic bit analysis (GBA).

"Molecular Tool developed their technology to look at SNPs in

1990," Pfost says of GBA. "The first application was to do

identity and paternity testing, and one of the first commercial


was to do paternity testing for the Jockey Club of America. Because

of the value of stud service and the importance of verification of

a foal’s parentage, it was a valuable technology. They then applied

it to human paternity and other forms of forensic testing."

But as Molecular Tool did it, the technology was slow and expensive

— far too much of both to be useful in broader medical efforts

using SNPs. And in that problem Pfost and his colleagues at Orchid

— one of whom knew two Molecular Tool board members and brought

the companies together — saw an opportunity.

Founded in 1995 as one of the first Sarnoff spinoffs, Orchid was an

early developer of automated microfluidics processors — miniature

chemistry labs that can manage and perform hundreds of chemical


simultaneously on a computer chip-like object made of glass, silicon,

and polymers that’s about the size of a credit card.

These so-called "ultra-high throughput" research

tools, which use pressure and electrical charges to guide tiny amounts

of often extremely expensive chemicals through channels on the chips,

were Orchid’s entire reason for being when first spun off from Sarnoff

with the additional backing of Anglo-American pharmaceuticals giant

SmithKline Beecham.

Now, with the addition of Molecular Tool’s GBA technology, Orchid

has embarked on a related but entirely new voyage. While the company

will continue to refine its microfluidics technologies — in


right now is a multi-level chip that will accommodate 10,000 chemical

chambers — Orchid’s new additional focus combines the speed and

economy of the firm’s chips with the possibly revolutionary potential

of Molecular Tool’s SNP mapping technology.

Or, as Pfost puts it, the marriage of the two companies has united

hardware and software to create what Pfost believes will become


like what "Wintel" — Windows plus Intel — is to the

computer industry: an industry-dominating powerhouse. Just as Wintel

is to desktop computing, Orchid will be in the use of SNPs to develop

and improve diagnoses and treatments for unmet medical needs, Pfost


"It’s not as if our chip doesn’t have an intrinsic value in its

own right," Pfost says of his Wintel metaphor. "But what we

needed to have under our roof was proprietary chemistry to run in

it. We already did chemistry and biology on chips. We had that


in place. What we were looking for was something to go into the chip.

We found Molecular Tool. And now we are in the middle of what will

be one of the most exciting areas of biotechnology for the next 15


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Dale Pfost

It’s probably not where Pfost would have expected to find himself

on the day in the early 1980s when, while a Ph.D. candidate in physics

at Brown, he visited a friend at Harvard Medical School. Walking


a Harvard lab that day, he happened to notice a 96-well plate being

used in a chemistry experiment. Pfost, who had been working in his

own lab on automated systems to inspect microchips using


to move the chips in and out of holders, thought that the two


— moving chips in and out of holders, moving chemicals in and

out of wells — were kind of similar.

Which led to a product called the Biomek, 96 tiny test tubes made

of injection-molded plastic in an object the size of a credit card,

and a company called Infinitek, which he founded in 1982 while still

in graduate school. The Biomek "became a galvanizing industry

standard for automation and experimentation," Pfost says today.

He sold the company to SmithKline in 1985, and stayed with it as a

SmithKline employee, building it into a $25 million business.

From there Pfost went to England, where he had been recruited to start

a business called Oxford Glycoscience, now a publicly traded company

in the UK that does automated drug discovery in complex carbohydrate

research. In 1996, he came to Princeton to help establish Orchid (U.S.

1, January 29, 1997).

And that he has done, shepherding the company through a $27.5 million

private placement, a $16 million lease financing package with a


capital group called Oxford Venture Finance, and a $15 million


with Motorola to enhance the functionality and manufacturability of

Orchid’s microfluidics chips. The company is now raising at least

$40 million in additional financing, and recently opened a new 32,000

square foot facility at 303 College Road that includes the company’s

"Genotyping Center of Excellence," a facility that will be

able to map or "score" millions of SNPs a day by the end of

2000. With nearly 80 employees, Pfost expects the company’s revenues

to be in the "teens of millions" this year, and anticipates

an IPO sometime next year, markets permitting.

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SNPstream — the Crown Jewel

But the crown jewel of Pfost’s tenure at Orchid is certainly


the product of the combined technologies of Orchid and Molecular Tool,

which right now can scan over 25,000 SNP genotypes per day. Yet that

too is just a beginning, because discovering SNP variations quickly

and accurately is merely the first step. Next for Orchid will be the

difficult and still uncertain task of figuring out what those



"Discovering is the beginning, but the fact is, most SNPs won’t

matter," Pfost explains. "Our task is to find the ones that

do, the ones that may account for the variable responses to drugs,

ranging from severe adverse drug response causing hospitalization

or death to complete lack of effect, which can be equally lethal.

Range of variability in response to medications is amongst the largest

unmet medical needs facing healthcare. And I believe we are in a


to help find the telltale signs in the form of SNPs that will enable

us to identify individuals susceptible to variable responses to


prior to their use."

The SNPstream technology may also provide opportunities to develop

new drugs targeted to specific conditions caused by SNPs, and to that

end, Orchid will provide its technology to pharmaceutical research

firms for use in their work, either by licensing the technology or

by providing the services in Orchid’s facilities. But for now, the

company’s primary commercialization strategy is focused on variable

drug response for a number of reasons.

First, because early research appears to indicate that many such


may indeed be traceable to SNPs. Second, because finding these SNPs

and identifying their roles in specific responses will provide a means

for the company to protect their findings with patents and thus lead

to revenues, most likely in the form of royalties from drug


But most important, variable drug response is a serious problem for

which SNP technology, if effective, would provide the only alternative

to what we have today — which is to take the drug and see what


"We are prioritizing our efforts to be able to make the most


benefits available," Pfost explains. "Adverse drug reactions

lead to 1 million hospitalizations and at least 120,000 deaths


And in terms of lack of efficacy of drugs, well, there’s really no

way to know, but the numbers are much larger."

A number of preliminary studies have indicated a direct link between

individual SNPs and drug response, Pfost says. In one, the


of a family of cardiovascular drugs known as beta blockers in patients

with severe congestive heart failure seemed to be linked directly

to one SNP in the patients’ genes. In another, SNPs appeared to be

important in the failure of about 30 percent of childhood leukemia

patients to respond to new treatments — treatments that are highly

effective for the other 70 percent of patients.

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Possible IPO

More studies will be needed, on these aand a whole host of other


But if Pfost is even close to right about the impact of SNPs on the

future of healthcare, Orchid’s future will be very bright indeed.

And for Pfost himself. His upcoming IPO, if successful, will quite

possibly make Pfost, his colleagues, and Orchid’s investors very,

very rich. For comparison’s sake, consider that two of Orchid’s


traded competitors, Incyte and Affymetrix, have market valuations

of $1 billion and $3 billion respectively. Do the math: you don’t

need to have all that large an ownership stake in a company of such

value to realize a very big payoff.

Which is all very nice, Pfost says, but it’s not what drives him.

"My primary motive is to see technology successfully employed

and improving lives," says the California native, who is 42,


and has a nine-year-old son. "The reason we all work 80 or 90

hour weeks is that what we’re doing does matter. It’s like in school,

you study because you enjoy learning, and the report card is just

a form of `attaboy’ and positive reinforcement. For me, money falls

into that category."

Orchid Biocomputer Inc., 303A College Road East,

Box 2197, Princeton 08540-2197. Dale R. Pfost Ph.D, chairman and CEO.

609-750-2200; fax, 609-750-2250. Home page:


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Orchid’s Web Strategy: GeneShield

It seems like every self-respecting company —


lowtech, and in-between — has a web strategy these days. Orchid

Biocomputer is no exception. But Orchid won’t be selling books or

toys or auctioning off Pokemon cards. No, Orchid will be selling


you really can’t do without: your genes.

Well, not exactly. But at the soon-to-be-launched GeneShield.com,

you’ll find something that no other website can offer, we are sure:

a map of your very own SNPs.

GeneShield will provide direct-to-consumer genotyping on a


basis. With your subscription, you will get a quarterly advisory on

what has been learned lately about your SNPs and how they may


you to certain drug reactions.

Squeamish? Rest easy. No blood will be required. Just purchase your

sample prep box on the website or at the pharmacy. Inside you will

find a few forms to fill out, a Q-tip, and some very simple


swab the inside of your cheek, put the swab in the handy tube


and drop the whole shebang in the mailbox for the very short trip

to College Road.

A few weeks later you will receive your results, along with the


disk and password you will need to access your quarterly updates.

But don’t expect any medical advice: that’s between you and your


who can visit GeneShield’s physician support website for answers to

any questions.

The cost? "Not expensive," says Dale Pfost. "Definitely

within the realm of an impulse purchase."

As for information about SNPs that may predispose you to a certain

diseases, well, GeneShield will be able to provide that too. But Pfost

has a question for you: do you really want it?

"We believe that SNP scoring and testing will become a standard

of medical practice, and we feel the best gatekeepers of that


would be the patients themselves," Pfost says. "But


People are uncomfortable with learning about that."

And anyway, Pfost questions how useful any knowledge of the actions

of individual SNPs will be in predicting disease predisposition, at

least in the near term.

"Not many diseases attributable to single SNPs are known, and

diseases tend to be complex: what one calls a disease is often a very

large family of forms of a disease," he notes. "The telltale

signs may be thousands in number, and some complex combination of

SNPs will probably determine relative risk. Whereas in case of a lack

of efficacy of drug, there are situations where a single solitary

SNP can make a decisive determination."

— Christopher Mario

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