By Virginia Baldwin Gilbert
Of the Post-Dispatch

April 9, 2002

Scinomix LLC is a startup with more ideas than cash. But it's building intellectual property quickly.

The three principals, Nigel Malterer, Russ Leeker and Mark Mertz, have taken no salaries since forming the company three months ago. Recently, they drove together to a trade show in Chicago to save airfare.

The company makes custom robotics for the biotech industry, but the founders' dream of creating a new robotic process that could automate some research operations common to many labs, one they could sell more or less off the shelf. They'd been brainstorming for weeks after moving into their new office/lab space in Earth City.

During the six-hour drive to Chicago, "all of a sudden, the light went on -- this is the product," said Leeker, who declined to give details. On the way back, they started making sketches and dating them, something their patent attorneys had recommended.

Scinomix sent its first patent application last week, and is nearing completion on a second.

Scinomix is one of three local startups spawned when Incyte Genomics Inc. closed its DNA cloning facility in December. All three have begun moving quickly to solid ground, helped by Incyte and by local economic development organizations.

The other two companies:

* Navigen LLC has its first contract -- providing genomic mapping services to an East Coast agricultural products company -- and is negotiating two others.

* Proteoplex Inc. is completing a round of angel financing for more than $1 million and is negotiating a lease for 11,000 square feet of lab/office space.

It has begun working on consulting contracts in one of the latest new fields, mapping proteins.

All three startups have benefited from their relationship with Incyte. The biotech company, based in Palo Alto, Calif., decided to concentrate on drug discovery. It got out of the DNA reproduction business, which involved cloning bacteria with specific segments of DNA. It laid off 400 workers, including more than 100 here.

Incyte plans to contract with the startup companies to do some of the same work the founders did as employees. And it has included the companies on a list, given to former customers, of vendors that provide services Incyte no longer offers.

Although they were born at the same time from the same parent, the three companies have different needs and aspirations.

David Smoller, Proteoplex founder, formed his first company, Genome Systems Inc., in 1992 and sold it to Incyte four years later.

"My first startup was a bootstrap operation; we did it all on our own, " Smoller said. "A lot more resources are available now."

Smoller is using space and assistance from the Nidus Center for Scientific Enterprise, a business incubator in Creve Coeur. Smoller is moving some of his equipment into Scinomix's lab, so the people there can get it up and running while Smoller gets his leased space ready.

"We're a mature seed," Smoller said. "We're not spending near as much time getting started. We have a product that was near-term to launch."

Incyte sold equipment to Proteoplex and has struck licensing agreements for patents, some issued and others pending.

"They've been very accommodating," Smoller said. The deal has "an equity component" that he declined to disclose.

Smoller said he and his crew spent "three years and millions of dollars" at Incyte to develop the product, which would combine micro-circuitry soldering technology from the electronics industry with biotechnology's methods of putting experiments in trays of tiny wells, called microarrays.

Much protein research is still done one test tube at a time, Smoller said. The new technology would use the soldering techniques to deposit a tiny bit of protein into the wells of a microarray, multiplying the number of simultaneous reactions by hundreds of times.

When Proteoplex moves out on its own, it will have more employees - 14 by year's end, 24 by next year - and more debt than the other two startups.

Scinomix and Navigen are pay-as-you-go operations, seeking no outside financing. They share lab and office space in Earth City, and serve complementary niches. The chief executives - Nigel Malterer of Scinomix and Amy Malterer of Navigen - are married. And they've just had their second child, so she works from home.

Navigen offers a service with a ready-made customer list. In fact, it had its first contract almost before the Incyte facility closed, said Todd Goldstein, vice president. He declined to identify the customer.

Now that the human genome project is mostly completed, gene mapping is concentrating on plants and on comparative mapping of other animals, Goldstein said. For instance, a drug company might want to see how much humans have in common with a distant mammalian relative, such as the platypus, versus a close relative, such as a chimpanzee.

Navigen takes a customer's sample of small snippets of DNA and creates larger pieces, which it inserts into bacteria for cloning.

"We can say, 'These are the clones you want to take a look at,' and the customer will further their research," Goldstein said.

Navigen bought equipment costing hundreds of thousands of dollars from Incyte. The technology and methods are not patented, Goldstein said. "It's more of a service we're providing." Customers "outsource the mapping to us, instead of buying the equipment and trying to get the technology running as smoothly as we have."