Genicon goes for gold by outfitting miners with illuminated genes

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SAN DIEGO, Dec. 16, 2002 — It’s long been said that among the great ironies of the California Gold Rush is that prospectors rarely got rich, but considerable fortunes were amassed by the enterprising merchants who sold the miners picks, shovels and Levi Strauss dungarees.

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A century and a half later, the lesson has not been lost on San Diego-based Genicon Sciences Corp. and Pat Mallon, its chief executive. “From the business side, developing drugs takes a long time and it’s a circuitous route,” Mallon said. “I wanted to get into putting something in boxes. I like the financial aspects and if you do it with some new technology in a high-tech area, so much the better.”

Genicon’s picks-and-shovels play is a nanotechnology-based signal generation and detection tool kit for microarrays or DNA chips, which play a crucial role in drug discovery. Genicon’s Resonance Light Scattering (RLS) technology uses nanosize particles treated with chemicals that cling to genetic material. When the sample is exposed to light, the genes illuminate. Scientists use the data to test how cells react to drugs or diseases. Ultimately, doctors may use microarray technology to analyze a patient’s “genetic fingerprint” in the treatment of disease.

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Mallon said Genicon’s method is far more sensitive than conventional technology, which uses fluorescent dyes to illuminate genes. “If you take a look at the Milky Way, a telescope might be able to show it to you and pick out a few of the brightest stars,” Mallon said. RLS technology, he said, can “pick out most of the stars in there.”

This summer, Genicon launched its first toolkit for microarrays, distributed by Qiagen NV. The technology has been tested at the Centers for Disease Control and Prevention, the U.S. Food and Drug Administration and the City of Hope Medical Center in Duarte, Calif.

For Mallon, it’s the end of an R&D journey, but the beginning of Genicon as a revenue generator. To date, the company has raised $36 million in venture capital from backers including San Diego-based Forward Ventures, Inglewood Ventures and Oxford Bioscience Partners.

Forward’s Joel Martin has a background in nanoscience as co-founder and chairman of Quantum Dot Corp., a pioneer in nanobiotech applications.

Mallon came to Genicon from a post as director of market development and planning at Agouron Pharmaceuticals Inc., and was an executive at Roche Laboratories, where he was responsible for the domestic marketing of HIV and oncology drugs.

Even with a better mousetrap, Mallon says Genicon must be able to deliver on its commercial potential by educating the biotech industry, and using the RLS technology to diversify into other bio tool kits expected to hit the market next year.

In the meantime, Genicon is back in the venture market for somewhere between $15 million and $25 million, but Mallon said he’s not worried about the current venture climate.

“Each time we’ve gone out to raise money has been the worst time,” he reflects, “and it keeps getting worse each time.”

Mallon said investors are looking for something more substantial than technological novelty. “This whole platform, whether you call it nano or micro doesn’t mean you’re getting better results. Just enhancing a process anybody can do, but getting a better biological result is something different. Nano is a word to us. Nano enables us to produce a better result.”

To investors at large, the jury is still out on companies in the drug discovery information business like Genicon, said John McCamant, editor of Berkeley Calif.-based Medical Technology Stock Letter. Though Genicon has key strengths such as a major distributor relationship with Qiagen and the ability to attract venture funding as it commercializes, McCamant said the allure of so-called “pick-and-shovel” companies is overrated.

The advantage of pick and shovel companies in comparison with drug discoverers is a huge “canard,” McCamant said that an irrationally exuberant market attracted millions of venture dollars to flash-in-the-pan genomics companies. “There’s only so much data people need,” McCamant said. “The information companies have got to show their technology is a real advance.”

Neil Gordon, an expert in nanomaterials at Sygertech Consulting Group and president of the Canadian NanoBusiness Alliance, said Genicon has hit on “a great idea and the approach seems very simple.

“In theory, it sounds phenomenal,” he said. “It will be one or more rounds until these guys are self-sufficient. They have good investors and good partners. They’ve had a lot of money thrown at them, but they have a high burn rate of $3.5 million to $4 million a month.”

Gordon doesn’t see any immediate winner in the competition between Genicon’s RLS, quantum dot technology and fluorescent dye methods. “The assay system market is going to fragment and different solutions will be optimal for different approaches,” Gordon said.

“It’s an exciting area, but there’s a big difference between a science project and a commercial venture. Numerous risks and obstacles have to be overcome, including time to market.”


Company file: Genicon Sciences Corp.
(last updated Dec. 16, 2002)

Genicon Sciences Corp.

11535 Sorrento Valley Road
San Diego, Calif., 92121

The company was incorporated in June 1998. At that time, CEO Pat Mallon joined the company from San Diego-based Agouron Pharmaceuticals Inc. Genicon recently launched its first commercial product, a nanotech-based signal generation and detection system for microarrays and other tests used in drug discovery.

Medical lab instruments


Small tech-related products and services
Genicon’s flagship product is its One-Color Microarray Toolkit. Its Resonance Light Scattering (RLS) technology uses metallic nanoparticles, which cling to genetic material and scatter light upon illumination, aiding analysis of microarrays or DNA chips. The customizable technology is applicable to proteomics, drug discovery and cell studies.


  • Patrick Mallon: president and chief executive officer
  • Janine Taylor: chief operating officer and chief financial officer
  • Juan Yguerabide: vice president of discovery
  • Richard Anderson: vice president of product development
  • Selected strategic partners and customers

  • BD Biosciences Clontech Inc.
  • Genomics Institute of the Novartis Research Foundation
  • Qiagen NV
  • Investment history
    According to VentureSource, Genicon picked up $4.5 million in a 1998 financing round, with a $2.5 million round following in 1999. In 2001, it garnered $33 million from nine corporate investors. Key investors include:

  • Oxford Bioscience Partners
  • Utah Venture Partners
  • Forward Ventures (largest stakeholder)
  • Competitors
    Genicon competes with firms that make microarray detection systems based on fluorescent dyes or other technologies. Selected competitors:

  • Arradial Inc.
  • Dyomics GmbH
  • Molecular Staging Inc.
  • ViaLogy Corp.
  • Zeptosens AG
  • Goals
    In the crucial 12-24 month timeframe, Mallon says, he wants to launch a variety of nucleic acid, gene expression, protein, DNA and other tool kits and hopes to get to “cash-break-even” status.

    What keeps them up at night
    “I have no problem coming to work each day, so nothing keeps me up at night,” Mallon says.

    Recent news and publications
    Genicon, German firm market DNA nanochip

    Analyte assay using particulate labels


  • URL:
  • Phone: 858-793-0276
  • Fax: 858-793-6791
  • E-mail: [email protected]
  • — Research by Gretchen McNeely


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