The biggest decision a young scientist must make at the start of their career is which path to take: academia, the public sector, or the private sector.
In most of the world, academia and government comprise the largest employers. The size of these segments derive from the history of science.
The earliest scientists, going back for millennia, were also educators. These are our teachers and professors in the modern day.
In the last hundreds of years, prominent scientists were funded by patrons: rulers and aristocrats who also sponsored prominent artists, because great art and great science conferred competitive advantages in their economic rivalries. This has evolved to the modern day government scientist supporting a country’s resources, infrastructure, public safety, defense and so on.
Corporate science did not arise until only about 150 years ago, during the second industrial revolution. Science and technology reached a critical mass to enable a series of commercial breakthroughs, whose profits could be channeled back into more research and development, as described in this post.
Unlike governments and educational institutions, the lifetime of a corporation is much shorter. The practice of private sector science is relatively young, with few guides and sparse common knowledge on how to sustain a career as a corporate scientist.
The thinking on this started just in 1990, by professor Michael Porter, in his book, The Competitive Advantage of Nations. He introduced the concept of an industry hub, also known as a business cluster. When companies within the same industry are clustered together in a local region, it draws workers with the relevant specialized skills. There is better employment stability when they lose their job, because they are able to find work at other companies nearby, as described in this post and this post.
This is also one of the reasons this blog addresses entrepreneurship: to add to the body of knowledge, wisdom and advice about a scientific career path.
The career of a scientist working for a company is inextricably linked to the business trajectory of the company. The company can falter, or its strategic direction may eventually not prioritize a scientist’s or engineer’s research.
Let’s look at another example.
The corporate scientist with conviction
On a cold January night in 2006, I walked to the Koffler Pharmacy Management building at the University of Toronto to attend an intriguing lecture by Scott Tanner. It was interesting to me because, firstly, it was being given by a former principal scientist of a Toronto company, SCIEX, that made among the best mass spectrometers in the world.
Secondly, the lecture was about a “New Instrument for Multiplexed Bioassay with ICP-MS.”
ICP-MS is Inductively Coupled Plasma Mass Spectrometry, a highly sensitive method for analyzing trace metals and certain elements. The abstract talked about using this method to analyze stem cells.
At that time, stem cell science in Toronto was notable because some researchers had identified certain types of stem cells that may be responsible for eventual drug resistance in some leukemias. They also found other types of stem cells that may be associated with solid tumors in the colon. However, identifying these stem cells was a painstaking process.
Why was an ex-top scientist from a world class scientific instruments company, who specializes in a method that detects simple metals, attempting to work in a new field that required different and complex methods that analyzed proteins?
During his talk to the students, it became clear that he had left SCIEX to embark on this new line of research. I heard rumors that SCIEX had been facing business challenges for a few years. I wondered about the factors that led to his departure from the company.
The slides presented a conceptual system. No experimental results were presented. It was described as a venture. Being at such an early stage, I was not sure where he wanted to go with this. The students asked questions about the science and the research direction. I approached Scott after all the students finished asking their questions.
His first remark to me after I introduced myself was, “let’s go outside. I need a cigarette.” As we spoke outside the Koffler building in the freezing cold, his idea for starting a company became clear to me. His last remark was that at his age, he would forever regret it if he did not do this.
I also left with the impression that he was really stressed out. He mentioned that he was smoking again.
The life trajectory of a scientist
The pattern of dedication to a vocation often (but not always) emerges at an early age.
Scott bought his first chemistry set at the age of six. According to a newsletter from his research group, there was also a business transactional sense at that age: he bought it from his older brother for five dollars.
At the age of 12, he was able to use a lab at Brock University to conduct experiments, which had now turned towards instrumentation such as particle detectors and vacuum systems.
He graduated with a B.Sc. from York University in 1976, and then continued with a Ph.D., also at York University, in gas phase chemistry and ion chemistry. His Ph.D. dissertation was “Room temperature and in situ studies of the ion chemistry of fuel-rich flames: implications for the initiation of soot,” completed in 1980.
During those years, Scott was also a competitive gymnast and marathon runner. He contemplated training for the 1980 Olympics, but chose his Ph.D. instead.
Upon graduation, Scott had a research fellowship from a mass spectrometry company called SCIEX, where he remained for the next 24 years.
SCIEX (derived from “Scientific Export”) was founded in 1970, based on expertise developed at the University of Toronto’s Institute for Aerospace Studies to analyze atmospheric compositions.
Building and growing the business for scientific instruments is about applications development.
In his first 14 years at SCIEX, Scott developed mass spectrometric methods for detecting explosives, narcotics, environmental pollutants, and chemical agents.
In 1994, he became group ladder for ICP-MS, which is a sensitive method for performing analysis of trace levels of elements. Two scientists joined the group that would become the core team for the later venture: Vladimir Baranov in 1996 and Dmitry Bandura in 1998.
In 1997, Scott and Vladimir invented the Dynamic Reaction Cell for ICP-MS. This removes ions that would interfere with MS detection, hence greatly improving the sensitivity and selectivity of the ICP-MS technique. For this and prior work, Scott was promoted to principal scientist in 2001.
Building a new technology platform for ICP-MS in life science
When a scientist is an expert in a field, the playbook is to use that expertise to expand the field. In this case, ICP-MS is used for trace element analysis. Can it be used for other important applications?
Around 2000, Scott’s team started developing the foundational technology for using ICP-MS in biomedical applications.
By 2002, Scott had found two important stem cell research labs at a Toronto research hospital where their new conceptual ICP-MS technology could provide rapid analyses that could not be performed in any other simply way.
However, this new application had to be built with an out-sized investment in time and money, and it was not clear that the market was any larger than these two labs. As we will see, this investment would take nine years and double digit millions of dollars.
The business decision is in which competing projects to allocate R&D. Since the time Scott joined SCIEX, the field of mass spectrometry (MS) was riding successive waves of innovation, with new products and technologies expanding steadily. There were other MS product lines within SCIEX that were growing faster than the ICP-MS product line, and these required continued investment to remain relevant in the competitive MS market.
When compared to smaller investments, with projects having shorter completion times, with a market ready to buy the products, a new direction such as the one conceived by Scott’s team could not compete. In 2004, SCIEX chose not to pursue this direction.
When a company has no interest in advancing an early invention by its scientists or engineers, they are usually laid off. In other cases, they are assigned to a program aligned with the business. In rare instances, the inventors can choose to embark on a new venture, if the company was open to licensing the patents to them (which companies usually do).
In the previous case study, they chose the latter. It appears that Scott’s team also chose the latter.
Sometimes, I wonder whether SCIEX was actually starting to close down their ICP-MS line of products at the time. ICP-MS technology was reported to be fully mature since 2006. By 2010, SCIEX fully divested its ICP-MS product line by selling it to Perkin-Elmer. So perhaps Scott’s team at SCIEX knew this was coming as early as 2004. If so, this case study is like that of Martek, where the scientists were about to be laid off, so they decided to start their own company.
Hyphenated systems: an accelerating trend
To put into context this new ICP-MS technology that Scott’s team wanted to pursue, let’s take a look at an important trend sweeping across analytical tools over the last decade.
“Hyphenated methods” was first described in 1980 by Tomas Hirschfeld of the Lawrence Livermore Laboratory (Anal. Chem. 1980, 52, 2, 297A-312A): it is the marriage of two or more analytical techniques via an interface, with a computer tying everything together.
When materials are very complicated in composition, or there is a complex mixture, combining several analytical methods at the same time enables successful identification that would otherwise not be possible with a single technique.
An example is separation-identification. A separation method such as high-performance liquid chromatography (HPLC) is connected to a detector to identify when a component has come off the chromatographic column.
When I did my Ph.D. with fluorescent labeled polymers, the polymers were separated on a size exclusion chromatographic column. We had a fluorescence detector connected to the end of the column to detect the fluorescent polymers as they came out. However, not all species are fluorescent. So we also had a refractive index detector connected in series to detect components that are invisible to the fluorescence detector. That was three techniques.
In the last few years, HPLC with triple and even quadruple detectors are required to characterize very complicated mixtures.
As another example, mass spectrometry (MS) is a very powerful analytical method alone. In the 1990’s, MS was adapted to be used as a detector for liquid chromatography (LC). Since then, each generation of LC-MS system continued to get more powerful.
A few years ago, I was at a USP meeting, an organization that publishes drug standards. They were careful about setting unrealistic standards, such as requiring factory floors to have the most sophisticated instruments like LC-MS, because they are prohibitively expensive. Today, LC-MS are appearing on factory floors, because these are more affordable now.
The acceleration of this trend is due to advances across many parallel technologies. Instruments are not just getting better, they are getting smaller and, most importantly, cheaper. Also, computers are getting more powerful. This enables new methods of treating data: in visualization, in computation, in multivariate analysis.
The take home theme is that in the past decade, the tools of science at the bench level have diversified and gotten much more powerful. As technology enables combining of instruments, the hyphenation of techniques will expand new capabilities even further.
The above examples are of hyphenating separation and identification techniques. Hyphenating Identification and identification techniques are also growing, and this was the type devised by Scott’s team.
The innovation of flow cytometry with ICP-MS
In the biological sciences, a mixture of cells are analyzed using a flow cytometer. Cells flow through a narrow tube, one cell at a time, and pass across a laser beam. Different types of cells scatter the laser light in different ways. This allows the detector to count each type of different cell as it passes the beam. This method is fast. Tens of thousands of cells can be counted per second.
If different reagent markers were added to the cells, even more cell types can be differentiated. The limitation of the flow cytometer technology is that in any mixture of cells, there are hundreds and perhaps thousands of different types of cells. The flow cytometer cannot distinguish any more than a few cell types at a time.
Scott and their team were proposing to use ICP-MS to detect a much larger number of cell types than was possible by flow cytometry. This would allow experiments to be performed much faster, with less sample sizes. Furthermore, the larger amount of information captured would allow experiments that are not possible with flow cytometry.
Stem cell research was one of the fields that had this technical demand of identifying many different proteins on the surface of a stem cell.
To do this, the mass spectrometer can be configured to analyze one cell at a time very quickly, even faster than a flow cytometer.
For the detection, they would need reagent kits comprised of an antibody that will bind to a target protein on the cell. When the cell enters the ICP-MS, it will be vaporized and only metal atoms will be detected by the ICP-MS. So they will need to link the antibody to an isotopic metal atom.
They want to identify many different proteins at the same time. This will require a diverse set of kits of different antibodies linked to different isotopic metal atoms.
Combining these multiple technologies was a paradigm shift in the use of mass spectrometry. The power of MS to identify many distinct atomic species at once provided a different type of hyphenation analysis, namely multiple identification, or multivariate analysis.
The long road to financings and the eventual exit
To get funding, it helped to have supporters in the academic community. Scott has a personality that was conducive to this. His project collaborators as well as professors at the University of Toronto secured an adjunct professor position for him. This allowed him access to research grants. He was also given a lab in the department of chemistry at the University of Toronto.
Eventually, the work would move beyond the university. The company was called DVS Sciences, after first initials of Dmitry Bandura, Vladimir Baranov, and Scott Tanner. There was a fourth member in the team, Olga Ornatsky.
By 2009, as Scott described in the presentation below, they had secured over C$13 million cumulatively in non-dilutive funds (which reached C$16.8 million by 2010).
Around that time, I ran into someone who was working for DVS Sciences. This person was really stressed out working at DVS. It was a consequence of the founders who were also really stressed out, as they had taken out mortgages on their homes to keep the company going.
Why hadn’t they secured any venture capital investment by then? I presume it concerned questions about the market potential. There is also the overhanging question of why didn’t SCIEX invest.
Investors would want to see sales to validate the market.
The machine was called the CyTOF and their reagent kits were branded Maxpar.
According to a DVS marketing flyer from November 2010, they sold 4 CyTOF machines from their founding to that date: 2 to Stanford University, 1 to National Institutes of Health, and 1 to Ontario Institute for Cancer Research, at a price of US$600,000 each. The sales projection for 2011 would be 11 CyTOF machines.
When I last spoke with Scott three years ago, he said that he spent C$40,000 on an independent market research study. The report validated the need in the market for such an instrument and provided market projections that helped answer critical questions from investors. He said it was the best C$40,000 he ever spent.
I know this sentiment, because I have experienced it twice myself. Investors are always looking for an independent market research report, but these never exist for completely new products. Multiple reports exist for just about any existing mass market, and they always cost about US$5000, easily purchasable online. However, for novel products, one has to commission a custom research report, or build a detailed model using credible and verifiable sources of starting data.
In July 2011, DVS Sciences closed a US$14.6 million Series A financing, from 5AM Ventures, Pfizer Venture Investments, Mohr Davidow, Roche Venture Fund and the Ontario Institute for Cancer Research.
Andrew Schwab, managing partner of 5AM Ventures, led that round. I met Andrew in 2006. He built 5AM Ventures from its founding in 2002 in San Francisco to be a top tier early stage venture firm that has raised US$1 billion in total investment financing to date, and a staff of 39 split between San Francisco and Boston.
He has been scouting the Canadian space since the very beginning, investing in Miikana Therapeutics from the Tak Mak lab at Princess Margaret Hospital and in Variation Biotechnologies from the University of Ottawa.
As others have described him, he’s not someone you have a beer with. He is a hard core investor that is there to get the deal done and to propel it to an exit. It’s not adversarial, but it’s all serious.
Indeed, by December 2011, a new CEO was installed, Joseph Victor, to be based in a new office in Sunnyvale California.
“Mr. Victor was President and CEO of Applied Precision Inc. which was recently acquired by GE Healthcare. Before that he drove significant sales growth, new product development and overall profitability of the Applied Precision business in the roles of President, Sr. VP Life Sciences, VP R&D and Operations, and VP R&D. Prior to Applied Precision, Mr. Victor held various executive management and technical positions in the aviation, high technology, and energy markets. Mr. Victor will assume the role of President and CEO from Dr. Scott Tanner, co-founder of DVS Sciences. Dr. Tanner has transitioned to the role of Chief Technology Officer and General Manager of the company’s Canadian operations providing additional focus on the research and development of the mass cytometry technology platform at DVS Sciences. Mr. Victor will be located in the DVS Sciences global headquarters in Sunnyvale, California.”
With a profile like that, it is all about accelerating commercial sales and, more importantly, finding an acquirer.
This was achieved in January 2014, when DVS Sciences was acquired by Fluidigm for US$207.5 million (eventually closing at US$199.9 million due to stock price fluctuations in the stock portion of the deal).
Fluidigm sells cytometry tools, which presumably aligns with the CyTOF platform for sales.
Let’s take a look at a back-of-the-envelope calculation. Sales reported in Fluidigm’s annual filings in 2013, before the DVS acquisition, and 2014 after the DVS acquisition, increased by US$42 million dollars. It is not possible to determine how this breaks down between Fluidgm’s own products and DVS’ products. Assuming that DVS alone contributed to this increase, the acquisition price was about 5 times top line revenue.
A public document from 2019 states that 250 CyTOF systems are in use around the world today. This would represent about US$150 million in lifetime revenues from the CyTOF, excluding revenues from the Maxpar line of reagents.
The global business of scientific instruments
The eventual business of scientific instruments is about commercial efficiencies in production, marketing, sales, and support services.
SCIEX never reached this capability on its own. It was founded in 1970. It was then acquired by MDS Inc in 1981, the same MDS that acquired Molecular Devices in the previous case study. MDS did not focus on the important business strategy in this industry, which is to achieve efficiencies of scale. Instead, MDS spread itself thin across multiple businesses, starving needed investment on the commercial growth of SCIEX (and Molecular Devices).
To fund the business growth of SCIEX, MDS created a 50:50 joint venture with US-based Applied Biosystems in 1986, wherein SCIEX performed R&D and manufacturing, and Applied Biosystems managed commercial operations. This approach is unsustainable. In 2009, the SCIEX-Applied Biosystems joint venture was acquired by U.S.-based Danaher Corporation.
It is ironic that today, Danaher Corporation owns both SCIEX and Molecular Devices. Danaher was founded in Massachusetts in 1969 on the business idea of creating a new kind of manufacturing company dedicated to continuous improvement using Kaizen continuous improvement philosophies and lean manufacturing principles. This is the culture of Danaher today. This is the business strategy it is using to compete in these businesses, which seems to be working so far.
As for Fluidigm, it is running the CyTOF business much like how SCIEX is run. The Canadian facility serves for R&D and manufacturing while the commercial and business operations are performed in the U.S.
Scott Tanner has since retired and is acting as an investor and advisor to other startup companies while his partners have continued working at Fluidigm.
A professor that worked with Scott expressed concern for the future of the remaining staff, because the market capitalization of Fluidigm dropped significantly in late 2015 to less than the price they paid for DVS Sciences. Today, its market cap is US$172 million. Actually, one needs to look at enterprise value, which is about US$250 million today, more than what they paid for DVS. Fluidigm performed this acquisition because it had to engage in its own long term pivot in its scientific tools business, a process which is still in play today.
Closing with the final lesson from this case study, the career trajectory for a corporate scientist can present more uncertainties along the way, unless one works in a business cluster. A business cluster for this industry does not exist in Canada, despite the investments made by various economic development incentives, though we are seeing one emerge in Montreal.
However, there are always choices that may not be apparent originally.
Scott Tannner said that he would forever regret it if he did not do this, and his team of Vladimir, Dmitry and Olga were similary inspired with the same conviction. There is something intangible here that changes outcomes.
The previous post talked about the privilege of the scientist to remind us of courage in creating the pillars that will help us and our world to endure and prevail.
Some day, some key discoveries enabled by the CyTOF may be a key step in providing for medicines to treat someone with a deadly condition, or maybe enable life science discoveries in a direction of sustainability, and it will have happened because Scott and Vladimir and Dmitry and Olga felt it was worth the agony and the sweat of their venture, and they endured that stress and uncertainty with courage and conviction.