Founders of startups negotiate for equipment and intellectual property

By Virginia Baldwin Gilbert
Of the Post-Dispatch

December 13, 2001

Several scientists and engineers being laid off at the Incyte Genomics Inc. facility in Berkeley plan to build new businesses from its remains.

At its busiest, the facility employed 250 people, who shipped segments of DNA that had been cloned in bacteria to research labs around the world.

Last month Incyte said it was refocusing its business and would close the cloning facility, at 4633 World Parkway Circle, by Dec. 21. It also sold a small animal lab in Maryland Heights. Incyte laid off 400 workers, including 150 people in the St. Louis area.

Founders of three local startups are negotiating with their former employer for equipment and intellectual property. Combined, they initially plan to employ about a dozen people.

The largest, Proteoplex LLC, is headed by David Smoller, 38, who co-founded Genome Systems Inc. nine years ago. Incyte bought Genome Systems in 1996, and Smoller stayed as an executive.

Nigel Malterer, 41, who headed Incyte's automation department, is starting Scinomix LLC, which will develop robotics for companies and universities engaged in biotechnology research.

His wife Amy Malterer, 30, is heading a startup that will do contract genomic research similar to the work she supervised at Incyte. She declined to discuss specifics.

Meanwhile, the clones have been destroyed or shipped to Incyte's home office in Palo Alto, Calif. The freezers that stored them sit open, awaiting sale or shipment. Boxes and packing crates are stacked everywhere in the 56,000-square-foot building.

But the mood is upbeat among the entrepreneurial phoenixes rising from the ashes.

"Things are going well," Smoller said. He said he is in serious discussions with one investor.

Smoller has found a couple of locations offering 10,000 to 12,000 square feet of "wet lab" space with the sinks, hoods and heavy-duty plumbing, electrical and ventilation systems needed for biotech research.

"We're really a mature-stage spinout," Smoller said. "We're not two people in a garage."

Proteoplex has about five employees now and expects to grow to about a dozen as soon as it has funding, he said. It will develop tools and services that allow researchers to understand the functions of genes. "We hope to have a product that will meet an unmet need," Smoller said, much as he did with his first company. Then, the need was a quick, easy way to make and share copies of segments of DNA as researchers isolated and identified them.

The focus is shifting to discovering gene behavior, and proteins are the next frontier to be mapped, he said.

The two Malterer-led startups are self-financed and focused on a "pay-as-you-go" model.

Nigel Malterer has an engineering background and started two small businesses in his native England -- installing car stereos and mobile phones and repairing computers.

He was the fourth employee hired by Genetix LTD, an equipment maker for the biotech industry that now has 120 employees and raised more than $160 million in its initial public offering last year.

Genetix made Incyte's first robotic equipment and sent Malterer to the United States to install and service it. He met his wife-to-be, who began at Incyte as a lab technician and rose to project manager. Her department used some of the machines his company -- and later his department at Incyte -- developed.

"We don't want to copy" the products that Genetix makes, Malterer said. "We are looking for equipment that is unique." His group has begun talking to industry and university researchers about processes they do by hand that could be automated.

Malterer estimates his department saved Incyte several hundred thousand dollars a year by developing locally made products to replace disposable plastic petri dishes and well plates that the company had been ordering from England. He also plans to market similar products to other companies.

Scinomix has signed a lease for 5,000 square feet of office/warehouse space at 4069 Wedgeway Court in Earth City. The company plans to open in January.