INCYTE PROTEGES SEEK CAPITAL
The company's former employees work for some of the startup firms.
By Virginia
Baldwin Gilbert
Of the Post-Dispatch
October 15, 2002
Dale Emge, president of Permian Plastics Inc., says he feels like "a cheerleader, but with scar tissue," as he watches startup businesses that emerged from Incyte Genomics get off the ground.
Incyte, based in Palo Alto, Calif., closed its St. Louis operations in December and laid off about 150 people. Several former employees have formed startup companies and have kept contacts with former suppliers, such as Emge's company, which makes precision molded plastics.
Permian had been in business two years in 1996 when Nigel Malterer, who designed robotics for Incyte, approached Emge about making a plastic part. That job grew, and Permian was making six products, including a line of disposable laboratory items, when Incyte cut back.
The work was about one-fifth of Permian's business, Emge said of the company that has annual sales of $3.5 million to $4 million. Permian continues to make some disposables for Incyte, but volume has been down.
Monday, Permian announced it had struck a licensing deal with Incyte to market the disposables worldwide. Terms were not disclosed.
And Permian is getting business from Malterer, who has formed a company, Scinomix LLC, with two other former Incyte employees.
"We're still around a year later," Malterer said. "The industry is not as healthy as it was a year ago, so for us to stay in business is pretty good."
Scinomix hired two more former Incyte employees last week, a programmer and a technician, bringing its total to six, including the three principals.
The company, which designs and builds robotics for research, is making two products it developed and hopes to begin marketing next year:
* A tube lifter, a programmable device that lifts selected test tubes out of racks for technicians or robots to handle.
* A "well illuminator," developed for Incyte, that lights up computer-selected wells in a tray of experiments.
Scinomix also has a contract with Pharmacia Corp. to design and build "a custom automated machine for research," said Russ Leeker, vice p resident of sales.
And most promising, Scinomix has a contract four times the size of the Pharmacia deal, to build a prototype for a "large equipment manufacturer based outside of the St. Louis region," that involves "developing some robotics that will integrate with their product, using plastics, sheet metal and machine parts," Leeker said.
The first contract is for the prototype, but Scinomix hopes to get subsequent contracts.
Leeker and Malterer speak guardedly about the nature of the products, because their field is so competitive.
Malterer said, "People are pushing decisions off. They don't have the money until next year."
David Smoller, founder of Proteoplex Inc., another Incyte startup, has had the same experience, trying to raise capital. "We tend to be high on their list of interest. We've been invited to three venture (capital) forums, and we're already at the level of partnership meetings," he said. "But they're much more cautious. They have a number of companies they're trying to support that don't have access to the (initial public offering) markets like they used to."
In its first six months, Proteoplex raised $1.5 million in angel investor money and expects to raise $2 million in venture capital by early next year, Smoller said.
"Now everyone is looking at value-oriented companies, and we fit that mold," he said. "But it's still slow."
Proteoplex is developing tools for protein research, using technology that began at Incyte, combining the electronic industry's soldering t echniques with the drug research industry's speeded-up research methods.
"I think we're in the right space. We're in health care, but a health-care tools company," Smoller said.
Amy Malterer, wife of Nigel and also a former Incyte employee, has opera ted in the black from the beginning with her company, Navigen LLC. It recently completed a genome mapping contract with a major East Coast agricultural biotech company and got a second contract to continue the research. Navigen began with an advance from the company that allowed it to purchase equipment from Incyte and get going with no debt and no need to raise capital.
Navigen has hired a contract employee to help with the start of this latest contract, adding to the firm's three full-time employees, a number that includes Amy Malterer.