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Orchid Blossoms

This article by Barbara Fox was published in U.S. 1 Newspaper on November 18, 1998. All rights reserved. The study of DNA (known as gene sequencing or genomics) used to be a laborious paper and pencil affair. So were the discovery and screening of new chemical compounds, done with beakers and test tubes. All have been radically speeded up by the use of computers.

Orchid Biocomputer, based on College Road, aims to take these research methods -- making or screening new compounds and sequencing DNA -- and miniaturize them, using the "lab on a chip" technology devised during its incubator stage at Sarnoff. It was already doing the screening when it spun off from Sarnoff last year, but it revved up its DNA sequencing efforts when it bought Maryland-based Molecular Tool (MT) in September.

By next March, when Orchid moves into its new headquarters at 303 College Road, it plans to increase its workforce to 100 people, 70 on College Road (including move-ins from MT) and 30 that will remain at Sarnoff. In the meantime, it maintains temporary spaces at Deer Park Drive and 101 College Road, plus at MT's lab in Maryland.

"We are a platform technology company," says Donald R. Marvin, Orchid's chief financial officer. "We have two platforms, and while they both work on silicon chips, they are different approaches: high throughput chemistry, underpinned by a collaboration with SmithKline Beecham, and the genomics platform, which had some early seeding by grants through the Sarnoff Corporation. Molecular Tool galvanized those efforts."

Both of Orchid's platforms are part of the new initiatives in bioinformatics, which can be loosely defined as a combination of computer science with biotech. Bioinformatics is a natural for Central New Jersey. With its Sarnoffs, Lucents, Siemens, and NECs (to say nothing of Princeton and Rutgers universities) it is rich in the lore of silicon chips. On the biotech side, it has the pharmaceutical mammoths right in the neighborhood or less than an hour up the road, and one of the important combinatorial chemistry firms, Pharmacopeia, has 275 employees on Cornwall Road and Eastpark Boulevard.

And new companies, such as Physiome Sciences, with its virtual heart, seem to pop up all the time (U.S. 1, May 13, 1998). Nevertheless, anything brand new comes with uncertainties. For instance, another promising genomics firm, SEQ Ltd., has had to veer sharply from its original plans (see story on page 54) and send its chief scientists off in new directions. But that Orchid Biocomputers bases its work on microfluidics, miniature labs on a silicon chip, is a great advantage, according to Science magazine, which quoted Canadian chemist and chipmaker Jed Harrison: "Microfluidics are improving rapidly because they are building on the foundations of the stunningly successful microelectronics industry. The huge accumulated expertise in etching tiny patterns in ceramics and mass-producing chips gives these little labs a big advantage that competing technologies just don't have."

The "killer ap" would be for Orchid Biocomputer to use genetic structure to organize patients into subgroups to easily identify what patients should take what drug. Instead of just blindly prescribing a drug on the "wait and see if you get side effects plan," a doctor would use your DNA report to determine which drug would work best for you.

With the purchase of Molecular Tool, Orchid Biocomputer put a good many of its eggs into the basket of one method, "single nuceleotide polymorphism (SNP) analytic chemistry and genetic bit analysis (GBA)." An SNP variation is a change in a single base pair at a particular position along the DNA strand. Changes in an SNP sometimes signal the growth of a cancerous tumor or the development of bacterial resistance to antibiotics. The GBA measures the differences in SNPs between different patient samples.

Molecular Tool has been doing its GBA analysis for eight years. It had a low profile because it was not a stand-alone company but was part of a commercial firm, GeneScreen, that made its money doing paternity tests. "Their technology was robust," says Marvin, referring to the company's patent position. "We happen to think it was a jewel in the rough."

When purchased by Orchid Biocomputer for a combination of stock and cash (presumably Orchid dipped into its just-acquired pot of $27.5 million in private financing) Molecular Tool could look forward to using Orchid Biocomputer's microfluidics chips to realize GBA's potential.

The deal went down quickly, partly because Marvin had worked with one of Molecular Tool's directors before, and partly because an Orchid shareholder firm (Neomed Innovation of Oslo, Norway) was urging it on. "From start to finish, it was 12 weeks," says Marvin. "We got in early, did our due diligence, and were fairly pleased by what we saw. We had been fairly active in looking at other companies, but for every 10 or 12 you look at, one makes sense."

Competing suitors were product-based firms as opposed to platform-based. "They saw that this made a lot of sense," says Marvin. Everyone at Molecular Tool has been offered a job in Princeton. Michael Boyce-Jacino, MT's former chief scientist, is now vice president of Orchid Biocomputer.

Dale Pfost (pronounced post), the CEO, is the son of an eminent Silicon Valley inventor. He majored in physics at the University of California at Santa Barbara (Class of 1980) and started his first firm while getting his doctor's degree at Brown. He sold the firm to SmithKline, then moved to Great Britain, where he as CEO of Oxford Glyco Sciences he did a turn-around and raised $6 million in private financing. His appointment at Orchid was announced in 1996. SmithKline Beecham had already taken a minority stake in the firm (U.S. 1, January 29, 1997).

Marvin, the CFO, majored in microbiology and biochemistry at Ohio State, Class of 1974, and has an MBA from Iona College in New York. He has worked at Miles Laboratories (now Bayer), Abbott Laboratories, Pepsico, and Boehringer Ingelheim in California, where he helped sell off the diagnostic division. He headed a San Diego-based startup, Diatron Corporation, which tapped fluorescent and clinical optics technology from the Scripps Clinic. In 1994 he sold the firm to a company later acquired by Johnson & Johnson. Two years ago Sarnoff Corp. hired him as a consultant to get Orchid Biocomputer started and helped get Pfost on board as CEO. "Dale and I tag team well," says Marvin, recalling his own start-up, "on financing and corporate development opportunities."

MT's founder, Philip Goelet, is described as a scientist with diversified business interests and also a financial backer; he is now an advisor to Orchid. Orchid Biocomputer's attorneys include Penne and Edmonds in New York and Mintz Levin in Boston. The accounting is being done by KPMG Peat Marwick, with Steve Bromberg the partner on the account and Bob Esposito consulting. Public relations is handled by Noonan Russo in New York. Fit-out is by Bob Auld & Associates (on the office side) and Massachusetts-based Hodess Associates, for the lab and chip fabrication area. In addition to SmithKline Beecham and NeoMed Innovation, the firm's shareholders include OrbiMed Advisors and WPG Farber, both based in Manhattan; Invesco Trust Company of Denver, Motorola Inc. of Schaumburg, Illinois; Oxford Bioscience Partners of Westport, Connecticut; and HealthCap Ventures of Stockholm, Sweden.

If Orchid's platforms fall into the "bioinformatics" category they are also considered part of "pharmacogenomics," the movement to produce drugs in a less expensive, economical way. "We believe we can get more of their compounds through the clinical trials and keep compounds on the blockbuster route as opposed to allowing them to be sidelined or completely abandoned by virtue of a minority subpopulation having an adverse side effect," says Pfost.

The firm will collaborate with pharmaceutical companies on SNP analysis, as it does with SmithKline Beecham and high throughput chemistry, but it also wants to come up with its own products.

Orchid has competitors for its various biochip technologies, and one of them is its parent company, Sarnoff. Others are Affymetrix in Santa Clara, Caliper Technologies in Palo Alto, and Molecular Dynamics in Sunnyvale, California. And not everyone agrees that SNPs are the way to go with gene sequencing. "It's a little controversial as to how much information you get out of SNPs," says Bob Johnston, a biotech venture capitalist.

But shortly after Orchid bought Molecular Tool, the federal government came through with an impressive grant -- $1.9 million to develop the microfluidics chip for SNPs and GBA. The Advanced Technology Program (ATP) of the National Institute of Standards and Technology wants Orchid to find a flexible universal chip that can do customized SNP genotyping. Orchid must also figure out how to automatically capture DNA from a biologic sample and apply it to the chip to do real-time analysis, so hospitals could detect infectious microbes or soldiers could detect weapons of biological warfare.

But the feds have a more lofty goal as well: to eventually shift medicine's focus from therapeutic to preventive strategies, saving millions of dollars now wasted because of misdiagnoses and ineffective therapies. Now there's a challenge worth meeting: They can start by telling people to stop smoking.

-- Barbara Fox

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