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At A Glance:
CEO/Founder, Genome Explorations, Memphis, Tenn. 1986 - BSc, applied
biochemistry, Liverpool Polytechnic, UK. 1992 - PhD, biochemistry,
University of Leeds, UK. Thesis: "Characterization of Non-Specific
Esterase Isoenzyme Forms in Normal and Leukemic Myeloid Cells."
Postdoc - University of Tennessee, Investigation of mechanisms involved
in signal transduction resulting from the activation of ANF-C and
TGF-beta1 receptors in human and rat models. 1994-2001 - Section
leader, St. Jude Children's Research Hospital, Memphis, Tenn.
If there is a Horatio Alger story in microarrays - other than that
of Steve Fodor, the founder of Affymetrix - it could possibly be
brewing in Memphis, Tenn., where startup Genome Explorations is
four years ahead of its business plan, and co-founder Divyen Patel
happily functions on four hours of sleep a night.
Patel created the Affymetrix core lab at St. Jude Children's Hospital
three years ago and then thought that the kind of research that
microarrays empower could extend past the narrow focus of diseases
studied at St. Jude's.
After finding a partner in former naval aviator Arno Justman, he
got a GeneChip brand system, some lab space, and transformed from
a research scientist into a bootstrapping, gene-chip packing research
services entrepreneur.
A year later, Patel and his team of three have mostly paid off the
equipment, brought in $1 million in revenues, and have assembled
a list of global clients for microarray analysis. Now, they are
preparing to create an umbrella holding company to manage the initial
firm and at least one spinoff, while looking to create similar labs
overseas.
BioArray News recently spoke by phone with Patel from his Memphis
office, which is five blocks from blues music mecca Beale Street,
but perhaps more importantly, just three blocks from one of his
first customers, the University of Tennessee hospital.
Why Memphis?
I did my training at St. Jude's Research Hospital, so I was already
here. And, the other thing that has been very helpful is that FedEx
has its headquarters here. So, samples from Singapore can be here
the next morning. It's fortuitous. And, the cost of living is extremely
good in Memphis. Talent can be a little difficult to get, but we
are blessed with having St. Jude here as well as the University
of Tennessee Medical Center. We have university clients on both
the East Coast and the West Coast, just about everywhere. What you
have done, establishing a commercial entity, seems like a great
idea.
What was the eureka moment?
The motivation was based around the data that we generated while
I was at St. Jude. We were looking at leukemic samples at that time
and the data was so fascinating that I felt this would be very useful
for other disease states as well. As a pediatric oncology hospital,
St. Jude was really only interested in looking at children's diseases.
The data was compelling enough for me to try and branch out to apply
the technology to other diseases, especially adult tumors.
So, how did you get it going?
My partner, Arno Justman, and I financed it out of pocket. In setting
up the lab, we asked most of the vendors for 90-day terms for repayment.
Affymetrix was fantastic. They gave us very favorable terms and
gave me the go-ahead to set up the service provider thing. I think
we were the first to get a contract from Affymetrix to do this.
We were profitable in our first quarter of operation. At the end
of the first fiscal year of operations, we had revenues in excess
of $1 million.
We have 62 different universities, representing probably in excess
of maybe 200 investigators [as customers]. We first acquired databases
of scientists, and then marketed to them with our own fliers. Since
then it has been word of mouth. People talk about our services at
various conferences; and our data has been amongst the best that
the Affymetrix platform will allow.
We are at year four of our business plan: We anticipated we would
provide services for maybe the University of Tennessee for the first
year, then go into the North America market slowly in the second
year, Europe in the third year, and Asia in the fourth. We did all
that in the first four months.
That speaks to your business acumen, or the state of the market
for this type of analysis.
Certainly, it's a little bit of both. If the data coming out of
the lab had not been of any value, we wouldn't get the word of mouth.
What do you think has made this possible?
We are touching people that don't have access to this technology,
and would desperately like to have access. Secondly, a lot of people
get baffled with the data that comes out. With our complete service,
we tend to do a lot of handholding with clients so they don't feel
like they have been thrown into the deep end. At the front end,
we help them design experiments so they get the best quality data.
At the back end, we will help them analyze and plan additional studies
if they are interested. I can't overemphasize this: I never came
out here to make a million dollars. This wasn't meant to be a money
making thing. I saw the power of the technology. At the time I set
up the core facility at St. Jude, there was only one system in Tennessee
and only 100 globally. I think everyone should have access to it.
I first heard about microarrays when I went to AACR in San Diego,
where Affymetrix basically launched their product, back in 1995
or 1996. I've always been interested in looking at differential
gene expression but the technology we had at that time was so archaic
and irreproducible. At that time, I was doing differential display,
using sequencing gels. When they came out and said here is a chip
with 2,000 genes on it, we were amazed. It was cost prohibitive
at that time, but later on it became more affordable.
Why
did you decide on Affymetrix technology, and how do you handle data?
We have looked at the other platforms, and I had done so when we
were at St. Jude. We got funding at St. Jude to bring in the system,
starting the core there in 1998. Affymetrix was chosen because of
the huge lead that they have in the numbers of sequences that go
on their array. We rely on the Affymetrix MAS 5.0 software, and
have an agreement with a company in Belgium, Applied Maths, to do
most of our clustering. We also have an alliance with Data Description
for their product Datadesk. We usestandard Affymetrix reagents but
have modified the protocol somewhat to get more reproducible data.
For normalization, we use a global scaling methodology.
You are going to spin out new business lines. Where did that
idea come from?
Diagnostics is the place we want to head first. The spinouts are
based around the pilot studies we have conducted as a service provider.
Through pilot studies, we have been able to identify several different
diseases that lend themselves quite well to generating gene expression
signatures. When we generate these profiles, the intent is to get
to the stage where we have signatures for specific diseases that
would ultimately serve as diagnostic chips. That's where the spinoff
companies are. Genome Exploration is for services, and the spin-offs
are R&D arms that we will generate and fund for each disease
we follow. The diagnostic chips that come out of that will be the
revenue generators for those companies.
This will be funded partly through Gene Explorations, and private
investors - angels and the medical community in the Memphis area.
We are trying to raise $400,000, which is enough to pay for the
samples. Our staff will process the chips at cost. The money will
go towards buying chips, and also, lawyers' fees. There're always
lawyers.
What are the diseases you have studied?
We started off with brain tumors and we are also interested in sepsis,
Alzheimer's, and diabetes.
What has been the biggest
cost your first year?
It's been the equipment, maybe there is $20,000 left to pay and
the whole lab is paid off. We don't have any other debt. It's actually
fun. You think about a scientist coming out of the field, I have
16 years in research, and doing something like this, it's been exciting.
I'm still in the lab. I do everything: I answer the phone; I run
the samples when needed; and go to the international meetings when
needed. I sleep four hours or less.
What's in the future
for you?
We are going to try to get the second part of the company going,
providing validation for investigators, using real-time PCR. We
want to take NA from clients and give them data back that they can
go directly to publishers with. I'm going to Dublin soon, to look
at potential sites to see if we can branch out there. We have looked
at Wales and London. In Dublin, there are tax incentives and a science
community - lower Ireland has five universities - and we would instantly
have access to those people.
It has been a fun ride so far and I don't see it slowing down any
time in the future. We will start off with just one disease - I
think we are focusing on brain tumors - and based on how that does,
the revenues fund the next disease, so we never, at any stage, need
substantial dilutions. The main reason is that once you bring the
VC people in, the buck becomes more important. Bootstrap is the
method for us.
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