Science & Business | How Caliper Life Sciences has exploited industry trends on its quest for profitability
Photo/Ron Bouley
Seth P. Cohen, senior director of microfluidic applications and support at Caliper Life Sciences in Hopkinton, was previously a top scientist at Cambridge-based Millenium Pharmaceuticals.
The life sciences industry still faces big hurdles, from hard-to-come-by financing to the ever rising cost of developing new drugs.
But Hopkinton-based Caliper Life Sciences has been able to turn those industry challenges into revenue. The company recorded its first quarterly profit late last year and is now laying plans for a significant expansion to its payroll.
But getting there has not been easy or simple, with Caliper routinely acquiring and then shedding smaller firms as it steadily adds and refines its portfolio of drug discovery platforms and technologies.
With its balance sheet growing ever more solid, Caliper is now looking ahead to steady expansion and hiring over the next few years.
And in a boon to the Bay State's fast growing life sciences sector, despite early roots in California, Caliper has opted to grow its operations along the Interstate 495 beltway, not out west.
Executive Pay
"When you are a company like Caliper, it's all about inventing the next generation of technology,'' said Robert Coughlin, president of the Massachusetts Biotechnology Council. "They want to be closer to the people who are best at innovation and that's here in Massachusetts.''
Kevin Hrusovsky, Caliper's president and CEO, estimates the company, headquartered in a 140,000-square-foot lab and office complex in Hopkinton, will hire another 100 employees over next five years. That represents a 25 percent increase from its current payroll, now at 425.
The company is also hiring at a higher pay level as well now, from $80,000 to $150,000, with many of its new employees having earned Ph.Ds, he noted.
It's a dramatic turnaround for a company which once boasted cutting-edge science and meager business prospects, with 200 employees but just $30 million in annual revenue. In 2009, the company brought in revenue of more than $130 million.
But Hrusovsky, who comes from a high-tech background, is also particularly proud of the top scientific talent Caliper is starting to draw.
While his background is in robotics, Hrusovsky has managed to bring together top life sciences talent, including a top executive from Millennium Pharmaceuticals, Seth Cohen. Cohen is senior director for microfluidic application at Caliper and was involved with cancer research at his old firm.
Cohen and other members of Caliper's team are drawn to the idea of streamlining the cumbersome and expensive drug development process and getting life-saving treatments for cancer and other diseases on the street. The applications also improve the accuracy of testing, crucial in a field where misfires can be costly, Hrusovsky said.
"A lot of people who work here have personal stories,'' Hrusovsky said. "They have lost influential people at young ages and they are compelled to bring goodness to the world through these technologies.''
"It really fires us up for a greater purpose than just making a lot of profits,'' Hrusovsky said. "We are really growing this thing because we know it will bring a greater quality of life for people.''
The company itself is a hybrid, marrying high-technology with biotechnology, creating what has become a rising power in a specialty niche as a provider of "tools'' for the life sciences industry.
Teamwork
A watershed moment in the company's history came in 2003, when Caliper, then based in Palo Alto, Calif., acquired Hopkinton-based Zymark, an industry rival that specialized in laboratory robotics, through a reverse merger. The combined company took the Caliper name and kept Hrusovsky, then Zymark's chief executive, in the top office.
The company's top management team, in turn, reflects this fusion of high-tech and general business with biotech.
Hrusovsky brought along with him Bruce Bal, senior vice president of operations, who worked with Hrusovsky for years at Dupont and who has a degree in chemical engineering and an MBA.
Stephen Creager, senior vice president and general counsel, previously headed business development for Tyco Electronics, while Paula Cassidy, the firm's human resources chief, spent years at IT and software firms.
Mixed in with executives from more traditional management backgrounds are others with Ph.Ds instead of MBAs, and with long careers pushing forward the frontiers of innovation.
Enrique Bernal, senior vice president for in vitro business development, came from Galileo Corp., where he oversaw engineering and product development. He is the co-holder of eight U.S. patents and has published dozens of technical papers.
David Manyak, executive vice president of drug discovery services, was one of the first biotech analysts on Wall Street and was a co-founder of GeneMedicine, while William Kruka, senior vice president for corporate development, spent years at Applied Biosystems.
And in Hrusovsky's view, the management team is part of what Caliper needs for success in the future.
"I am a mechanical engineer with a business degree,'' Hrusovsky said. "I really am one of these people who brings them all together.''
And the wide-ranging management and technical background of Caliper's top execs is a plus given the wide range of technologies it specializes in.
With drug and life science companies like Pfizer and Novartis hungry to boost the efficiency of drug discovery, Caliper offers microfluidics, lab automation and liquid handling as well as optical imaging technologies.
The company also provides some drug discovery development and outsourcing solutions as well.
The Hopkinton firm over the past year shed three different businesses with older, lower-margin technologies.
It's part of a long-standing pattern of buying and selling that has seen Hrusovsky and Caliper seek out companies with great technology but arguably poor business management skills.
This maneuvering has helped Caliper focus on a series of relatively new, patented technologies that are now driving most of the firm's bottom line growth.
More than 70 percent of Caliper's first quarter revenue, $28.7 million, came from the company's LabChip and IVIS product lines. Both lines saw year-over-year revenue growth of 31 percent and 26 percent respectively.
Minimizing Burn
Caliper's chips feature miniscule networks that pump chemicals and fluids through channels no wider than one micrometer to perform experiments.
The chips have helped expand the capabilities of researchers, allowing both for many more tests to be done than would otherwise be possible, and for greater accuracy.
A key example of a product Caliper is relying on to drive growth is the Quantum FX, which it unveiled in April at the annual meeting of the American Association for Cancer Research.
The Quantum FX "provides researchers with a three-dimensional anatomical view of disease activity, tumor development and therapeutic response over multiple time points during the course of a study.''
Caliper is now looking ahead to the next revolution in drug development, increased accuracy.
Automation, robotics and other technologies have sped up the pace of research, allowing scientists to sort through ever more massive quantities of data in ever more compressed time frames.
But speed has not necessarily led to accuracy. In fact, there has been a rise in failures later in the testing process, according to the company.
However, with its latest round of products, Caliper is hoping to play a leading role in creating the next generation of laboratory technologies.
Caliper's drive to both speed up and improve the accuracy of new drug development comes at just the right time, with the life sciences industry under pressure to improve on both scores, said Scott Sarazen, global biotechnology markets leader at Ernst & Young.
The average cost to develop a new drug has now crossed the $1 billion mark and is rising. Meanwhile, a still struggling economy has meant that new capital is still relatively hard to come by, Sarazen said.
"An investor today wants any company getting created to outsource any service they can instead of building their own infrastructure,'' Sarazen said. "Companies that are able to provide targeted, niche services to improve the efficiency of drug development, there is going to be a market for those companies.''
"The name of the game is to minimize burn,'' he said.
Talent Cluster
While it has become a global player in facilitating drug development, Caliper has opted to stay and expand in Massachusetts, though not for lack of potentially alluring rival locales.
Given the company's roots in California, a major center for biotechnology, one option might have been consolidating operations on the West Coast, Hrusovsky said.
But he contends that Hopkinton and its location out on the I-495 beltway offers the best of both worlds.
Caliper is still close to the universities and research talent clustered in and around Boston and Cambridge, while it is far enough out to avoid having to pay big city rents, Hrusovsky said.
California, by contrast, would have proven to be a very expensive option.
"It's a great place to form a business,'' Hrusovsky said. "You have so many schools and universities that pump out a lot of talent in all the different disciplines. We have Ph.D. scientists, software and hardware engineers, we all have different disciplines. Many of the customers are right here in Boston."
Scott Van Voorhis is a freelance writer. He can be reached at sbvanvoorhis@hotmail.com
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