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No. of Recommendations: 7
Tinker, thanks for the great report, I'll keep an eye on these companies. Now that you're in the biotech arena I was hoping you could look into a couple of companies and inform the board of your thoughts. Celera (CRA) seems somewhat similar to ABGX and MEDX in that they plan to receive the majority of revenue through licensing fees, could this become a gorilla game. There are several others the I've been following, Caliper (CALP) and Aurora Biosciences (ABSC), could you or anyone else on the board pass on their thoughts. I wrote reports a few months ago on the potential for these two companies (not GG reports):


Aurora Biosciences provides solutions to enhance the drug discovery process. The Company's core technologies include a broad portfolio of proprietary fluorescence assay technologies; its functional genomics GenomeScreen™ program; and its ultra-high throughput screening system (UHTSS™ Platform) and subsystems to miniaturize and automate assays derived from those technologies within a computer-controlled integrated system, capable of searching through expansive libraries of compounds to identify those that might lead to new medicines. These technologies allow its customers to enhance and accelerate their drug discovery process. The rapid increase in compound libraries have created many opportunities for drug companies but unfortunately, has also created bottlenecks in the drug discovery process. Due to its complexity, the screening and identification of compounds as therapeutic targets is becoming increasingly difficult. The objective of Aurora is to address these challenges and develop solutions that enhance and accelerate the customer's effectiveness in discovering novel therapeutics. Companies can either choose to outsource to Aurora or acquire Aurora technology to enhance in-house capabilities.

In late January, the company also announced that its functional genomics initiative had successfully analyzed over half a billion discrete cells derived from 20 million independent GenomeScreen™ clones in one day. This technology acts as a search engine to rapidly scan the genome of living human cells to find genes associated with specified diseases or physiological processes. This allows Aurora to rapidly identify commercially relevant genes, and to directly develop screens for drug discovery, faster and more efficiently than existing methodology.

It's Current customer list reads like a who's who of the drug industry and continues to grow. Customers include American Home Products, Becton Dickinson, Bristol-Myers Squibb Company, Clontech Laboratories, Inc., Cystic Fibrosis Foundation, Cytovia, Inc., Eli Lilly and Company, Exelixis Pharmaceuticals, F.Hoffmann-LaRoche Ltd., Genentech, Inc., Glaxo Wellcome, Merck & Co., Inc., National Cancer Institute, Pfizer, Inc., and Pharmacia & Upjohn, Inc and Warner-Lambert.

As competition in the biotech industry increases so too will Aurora's revenue growth. Also, unlike many companies in the arena, Aurora is profitable, taking in $0.35 per share in the most recent quarter versus estimates of around $0.20. Revenues are almost doubling on a year over year basis to $20 million in the last quarter.


In the world of digital information, two technology trends, miniaturization and integration, have enabled the development of huge industries. Because of cumbersome and expensive laboratory methods, chemical and biochemical information is still largely inaccessible on a routine basis. Conventional laboratory space and operations are built to accommodate human beings. Caliper Technologies' ( LabChipTM turns this paradigm on its head, automating and integrating procedures, and rescaling experimental and analysis platforms to fit on a chip. The LabChip when used in concert with experimental protocols developed in software, comprise the heart of a nanoscale laboratory. State-of-the-art fabrication processes result in highly uniform chips with superior reproducibility as compared with devices manufactured using conventional technologies. Welcome to the nascent world of microfluidics, where laboratory benches cluttered with chemistry paraphernalia are being replaced by a new breed of devices built around chips and other elements--some small as a fingernail--that are the counterpart of a PC's microprocessor. These labs-on-a-chip contain tiny mazes of channels, valves, and chambers through which minute amounts of liquid chemicals can be pumped and reactions monitored. Using no moving parts and requiring little or no assembly, labs-on-a-chip can measure and dispense volumes as small as one picoliter, an incredible fifty-millionth of a drop of water. That's a spectacular advance, because chemicals used in drug research cost as much as several hundred thousand dollars an ounce. Some DNA samples are just as precious. By handling such tiny quantities, microfluidics makes possible a proliferation of experiments that would have been unaffordable a few years ago.

The worldwide market for various analytical instruments used in chemistry and biotechnology is about $16 billion a year, and a large portion of it can be miniaturized. Agilent (former subsidiary of HP) has partnered with Caliper and is using LabChip™ inside of its Agilent-2100 Bioanalyzer. The companies say that together they will spend $100 million over the next several years to develop and commercialize lab instruments using microfluidics. About 80 companies worldwide are working in the field, and range from large established firms such as Motorola and PE Corp. to a flock of startups founded in the past few years. Caliper's technology was the first to be released and thus has first mover advantage in the industry. The Company is working in two important areas. To speed the search for new medicines through its LabChips for the high-throughput screening of drug candidates. Using a method called combinatorial synthesis, pharmaceuticals companies are now able to generate "libraries" containing hundreds of thousands of compounds that they want to test against "targets"--biological molecules inside the human body, including gene segments, that they hope to block or activate to effect cures. Before long, each leading drugmaker's library is expected to contain a million or more compounds. Caliper's other work led to its partnership with Agilent Technologies. DNA "sizing" was chosen as the first task for Agilent's HP-2100 Bioanalyzer because it is so widely performed. But the machine, which with peripherals costs $19,500, can run any experiment for which Caliper's designers have created a specialized LabChip. Like kids popping game cartridges into their Nintendo players, scientists will be able to load the appropriate square plastic modules, which encase a disposable glass chip etched with microplumbing tailored to each experiment. Yet another source of revenue for Caliper's technology is with the military. Suspecting that an enemy may be unleashing deadly anthrax, say, or plague or smallpox, a medical corpsman will be able to open a portable device no larger than a suitcase and conduct a test on material gathered by a helicopter-borne-air-sampling device. Within a half-hour the device will notify the medical officers whether an attack has taken place and what the substance was. The battery-powered instrument, which can be carried by hand, gives answers that now would require a mess of equipment cramming the back of a Humvee, as well as a trailer-mounted electric generator.
For the year ended December 31, 1999, the company reported a net loss of $14.4 million, or $0.92 per share. This compares to a net loss of $3.0 million, or $0.21 per share, during 1998. Total revenues were $12.1 million in 1999 compared to $8.2 million in 1998, an increase of 48%. Cash and investments totalled $100.2 million at December 31, 1999. This figure includes net proceeds from the company's initial public offering of $75.9 million. These financial statistics are virtually insignificant since Caliper and Agilent did not even begin shipping their product until late in the year. The true story will be seen as the current year progresses, if the company can live up to the hype it's created, there remains significant upside to the stock.

Hope to hear everybodies imput :)

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