Name Change to Praelux

Livingston’s Goals

Livingston’s Bio

Barry Werth’s Book

Corrections or additions?

SEQ’s Biotech Transplant

This article by Barbara Fox was published in U.S. 1 Newspaper

on March 17, 1999. All rights reserved.

Five years ago someone wrote a non-fiction bestseller

about the hidden drama of a biotech startup, a fly-on-the-wall account

of scientists who staked their fortunes on yet-to-be proven theories

and CEOs doing nail-biting high-stakes deals. The company was Vertex,

based in Cambridge, Massachusetts, and Barry Werth’s "The Billion

Dollar Molecule" provoked lots of interest among Princeton’s biotech

CEOs, who surely yearn to come up with their own billion dollar something.

One of the characters in that book, David J. Livingston, a vice president

at Vertex, has left to take the top job at one of Princeton’s younger

biotechs, a gene sequencing firm founded as SEQ Ltd. SEQ was a protegee

of Princeton venture capitalist Bob Johnston; it was incubated in

Johnston’s office, took rental space at Sarnoff Corporation, and then

moved to Princess Road.

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Name Change to Praelux

As president and CEO Livingston is taking the firm in new directions

— changing the name to Praelux Incorporated, adding new income

streams, preparing for a first public round of financing, and hiring

a director of biology. In just a couple of months, says Livingston,

he has found New Jersey to be much friendlier to biotechs than he

had expected.

"I am very impressed with the favorable business climate in New

Jersey, both in terms of the network of companies, small and large,

and their proactivity and professional associations, and also, frankly,

with the state’s involvement," says Livingston. "We are in

discussions with the Economic Development Authority concerning one

of their financing programs, and they have been great to work with."

"In Massachusetts there is anywhere from apathy to antipathy on

the part of local government to emerging businesses. They don’t really

have much of an infrastructure to help such companies," says Livingston.

As programs that Massachusetts lacks, he refers to various EDA loans

and grants plus the state’s new opportunity for young firms to sell

tax credits. "While it won’t make me any friends up there, the

biotech sector grew up in spite of government rather than because

of it."

The new name for SEQ, Praelux, reflects how the company is reaching

out into new areas of its core technology. The original name was chosen

to embody the then primary technology, single molecule sequencing,

and this has been supported by sizable National Institutes of Health

and corporate grants. "The activity level on the single molecule

sequencing is higher than it was a year ago," says Livingston,

"but it was taking longer than the founders had anticipated. We

had to generate some near term income."

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Livingston’s Goals

With the new name, which comes from the Latin for "to shine a

light in front of" Livingston has these goals:

To develop and sell instruments for drug discovery companies

doing high volume testing of compounds, the so-called high throughput

market. Instrument sales and single molecule sequencing are synergistic,

says Livingston. "Both rely on in-depth knowledge of lasers, optics,

computer software, and acquisition and processing of images."

To establish an inhouse screening service by the end of

the year. "It will allow customers that can’t buy the equipment

to send samples to us for purposes of screening."

To eventually broaden drug discovery efforts, so that,

as Livingston says, "at some point we will be doing collaborations

with the Hoechsts of the world."

To do a large institutional venture capital round. "The

firm has always been privately funded," says Livingston, "partly

because it is difficult to sell a very very early technology."

The new CEO has a head count of 15 and expects to grow by the

end of the year. "I am very impressed with the technical talent

of the company," says Livingston. The two people most responsible

internally are Jay Trautman, in charge of genomics and screening technologies,

and Timothy Harris, a principal scientist concentrating on the screening

technology.

The new vice president of biology, Susan Molineux, came from Pracis

in Cambridge. A biology major at Smith, Class of ’75, she has a PhD

in genetics at Hopkins, did postdocs at NIH and Columbia, and also

worked at Merck. Former president Richard Horan, who helped hatch

SEQ when it was in Bob Johnston’s office, is now running a company

in New Hampshire.

Livingston has moved to Princeton with his wife, Cassandra, a chemistry

major at Rutgers’ Douglass College who has an MBA in finance from

Simmons’ business school.

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Livingston’s Bio

Livingston thinks he might have gotten his entrepreneurial energy

from his parents. As a youth, growing up in Rye, New York, Livingston

saw his mother eventually prosper from getting in on the ground floor

of a young biotech company that became very successful. She left a

travel agency to work for Connecticut-based U.S. Surgical, which pioneered

in dissolvable staples for sutures and disposable products for laparoscopy.

"That was part of the bug for me," says Livingston. "I

saw first hand what stock options could do for somebody." He also

watched what can happen with young firms, which are vulnerable to

getting bought out or squashed. "U.S. Surgical had the market

cornered for a number of years, but Johnson & Johnson came in and

garnered major market share by raw marketing muscle. Both my parents

had a very strong work ethic and are real self starters," says

Livingston. His father is a nutrition consultant.

An alumnus of University of Massachusetts, Class of 1977, Livingston

earned his PhD at the University of California at Davis. He did post

doctoral studies at Hopkins and at MIT and did protein engineering

research for three years at the large Boston-based firm, Genzyme,

and was a founding scientist at Vertex, where he stayed for 10 years.

During that time he earned an MBA at Northeastern University.

When he left Vertex Livingston was managing therapeutic programs with

large pharmaceutical firms. At one point he was responsible for more

than 20 scientists. He worked on a new anti-inflammatory drug in a

five-year partnership with Hoechst Marion Roussel. "Another drug

I worked with, Amprenavir, an HIV protease inhibitor, is very close

to getting FDA new drug approval and is expected to be on the market

this year."

But after attracting $100 million from pharmaceutical companies and

Wall Street, Vertex’s original technology premise fell short of its

original goal. Luckily for Vertex, its products turned out to have

other uses, ones which were never predicted, and it has turned out

extremely well. It has 300 employees and a market capitalization of

$700 million. In addition to Amprenavir it has five compounds in medical

testing and is considered to have one of the deepest new drug pipelines

of any new drug company.

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Barry Werth’s Book

But during the period covered by Werth’s book, Vertex scientists were

on a hair-raising roller coaster road that zigzagged between success

and failure. "The book gave the lay public a feel for how scientific

research is done in this era in the industry setting," says Livingston,

though he suggests some parts of the book were "exaggerated."

Still, he is happier with the book than some of his colleagues were,

perhaps because — though he is not a major character in it —

all references to him are admiring.

For instance, the author often casts Livingston as the conservative

"voice of reason" who counters the notorious arrogance of

founder Joshua Boger. Livingston is singled out among the scientists

for having business sense.

At several points Werth shows Livingston throwing cold water on business

schemes. When Vertex and mega company Glaxo are in hot negotiations,

the author writes, "Only Livingston, formerly a senior scientist

with a once-promising biotech company that had run out of money and

was sold amid layoffs and other misfortunes, debunked the good feeling.

`I think all this hype about this being Vertex’s deal to lose is a

crock,’ he snapped." On another occasion Livingston confides to

a colleague that they are really only "selling smoke."

Livingston doesn’t plan to be selling smoke at Praelux, nee Seq. He

will start out selling instruments and service, but the firm remains

enthusiastic about its original business plan, to do single molecule

gene sequencing.

And there is no "fly on the wall" reporter on Princess Road.

Livingston may be in for an adventure, but from all accounts it won’t

be a hair-raising roller coaster ride. SEQ could use a little luck,

but it holds out to Livingston the promise of an adventure that is

considerably smoother.

— Barbara Fox

Praelux Inc, 17 A Princess Road, Lawrenceville

08648. David J. Livingston, president and CEO. 609-620-0220; fax,

609-620-0222.


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