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Startup on the cheap

By Chris Tachibana Startup on the cheap A faded red Volkswagen dune buggy sails into the parking lot of a forgettable brown cinderblock building in Seattle with Johnny Stine at the wheel. Stine’s transportation and vision for his biotechnology lab are straight out of the 1970s, when Genentech started in a warehouse, and Bill Gates and Paul Allen created Microsoft on a shoestring. Now, Stine is trying to do the same with North Coast Biologics. Mos

By | October 1, 2009

Startup on the cheap

A faded red Volkswagen dune buggy sails into the parking lot of a forgettable brown cinderblock building in Seattle with Johnny Stine at the wheel. Stine’s transportation and vision for his biotechnology lab are straight out of the 1970s, when Genentech started in a warehouse, and Bill Gates and Paul Allen created Microsoft on a shoestring. Now, Stine is trying to do the same with North Coast Biologics. Most companies need only a coffee pot and eager minds to get started, but Stine’s, which makes monoclonal antibodies, needs flow hoods, CO2 incubators and high-throughput robotics. To get these pricey items, he has taken a bargain-hunting, do-it-yourself approach that fits today’s new frugality.

In the cinderblock building’s aggressively unglamorous storage garage, which doubles as a cell culture room, water stains on the cement floor are paired with tidy patches in the ceiling above. The nearly 100 square-meter space is all bare-bones basics, with nothing more extravagant than a black fabric sofa that wouldn’t be out of place in a college dorm.

Stine, 45, isn’t a born penny-pincher. With what he calls a “PPhD” (partial PhD) in cancer biology, he worked as a scientist at the biotechnology firms ICOS and Abgenix in the boom days, in “palaces,” he recalls. His first start-up company had a typical structure, financed and controlled by venture capitalists. This time, Stine wants to make all the decisions himself. He used $20,000 of his own money to rent and renovate a neglected space, bargaining the owner down from $1500 to $1000 a month, in return for Stine fixing the leaky roof himself. He “Shop-Vac’ed out about a million spiders,” then he and a carpenter friend patched and painted to create the lab and office space.

For $40,000, you can launch a biotech.

Next, Stine needed furnishings. For an antibody lab, that means centrifuges, PCR machines, freezers and chemicals. Many scientists turn to giant suppliers like VWR Scientific and Sigma-Aldrich. Stine turned to eBay and Craig’s List. His biggest “score” was a used automated assay robot that retails for over $90,000 that he got for $2200 from eBay, plus an upgrade with a $500 used part (some assembly required). Using eBay, scientists can save thousands when outfitting a cell biology lab, Stine says. Buying thousand-dollar equipment from a total stranger based on online photos seems risky, but Stine checks the customer ratings carefully and says, “so far, I haven’t gotten any lemons.” He once bought a fume hood that looked right from the picture, but the venting was wrong for the building and now it’s sitting out in the parking lot. Even with the occasional mistake, Stine estimates that using the discount approach, he got his company up and running for only $40,000 and now operates at 1/30th of the usual industry cost.

Stine’s approach sounds groundbreaking, but really, he is just taking a tried-and-true model to an extreme, according to Phil Ness, president and CEO of WashingtonLifeScience.com, a local website for biotechnology news, jobs, events, and educational materials. “The companies you read about are those that have lots of money and dedicated PR, but that’s not how the bulk of companies operate,” says Ness. Small life science laboratories often “hit the university auctions for used equipment and use Craig’s List. It’s more common than not.” Still, Stine “is the only guy I’ve ever heard of who remodeled his own facility,” Ness laughs.

In turn, North Coast Biologics says it is passing on the savings, offering cheaper prices through a combination of low overhead and a technique to generate monoclonal antibodies without a hybridoma step. Stine says that for less than $10 million, he can make an antibody drug that would otherwise cost a larger company $100 million. Currently, he is making therapeutic antibodies for three clients, unnamed because of confidentiality agreements, and is in the middle of several antibody discovery projects. Business is going well enough that Stine plans to hire up to six employees and move to a larger space in the coming months. Don’t expect those new labs to be any more luxurious, however, Stine predicts. “If you use your imagination and lower your tastes, you can be down here in a garage, getting stuff done.”

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Comments

Avatar of: anonymous poster

anonymous poster

Posts: 2

October 1, 2009

It's true that many companies in their early days are frugal and use various similar means to slow their burn. But what is groundbreaking here is that by signing a couple of partners, he is already profitable and the company he has is entirely his. There aren't many biotechs here in Seattle, much less the country that can say that. \n\nBiotech companies usually raise money, then acquire expensive space, buy expensive equipment, and hire an army of people. They have to raise venture money to do this and thus give away a vast majority of the company. Then they go out and try to partner their technology to create non-dilutive revenue to slow down their burn....... Well what if you could make the partnering deals BE your burn. In other words - can you lower the cost dramatically enough such that the partner deals create cash flow and then some. This is what Stine has done - he's eliminated the massive over head by being insanely frugal, adapted creative automation, and outsourcing, and as a result of two partners signing on - he's profitable and he owns his entire company himself. And he has enough revenue that he can fund his own internal programs to create even more value.\n\nThis is the part that is extremely groundbreaking and something that we've ALL wanted to do - but just never knew it was possible.......until now.\n\nGrow organically - and just do the work. What a concept.....
Avatar of: anonymous poster

anonymous poster

Posts: 4

October 16, 2009

I groaned with envy. My university's purchase rules (dictated by the state) make it almost impossible to buy anything on eBay or Craig's List or online auctions. So while the university says it has no money, it requires me to pay full retail for brand new equipment from my grant, when all I really need was a used piece at a 1/6 the price that would last the year or so we are doing the experiment! Perhaps if granting agencies rewarded "on the cheap" efforts, the universities would catch on and there would be more grant money to go around.
Avatar of: anonymous poster

anonymous poster

Posts: 26

October 16, 2009

Creatively keeping overhead low is rare, but not new. Tritech Research (http://www.tritechresearch.com), a major biotech equipment and supply company, was started by its founder in an apartment shared with room mates in 1991 with just a few thousand dollars. By allowing each of its products to bootstrap its own production and refinement, Tritech is now a leader in microinjection, electroporation, and temperature control technologies that it manufactures in-house and one of the lowest-priced providers of disposables like Petri dishes worldwide. It has been around for 18 years, and turned a profit every year.\n\nThe key to success stories such as these is hard work and keeping overhead low over the long term. This allows lean companies to offer lower prices to their customers, and, in turn, save on advertising and marketing, benefitting from word-of-mouth advertising. Funds that could be spent on elaborate facilities are plowed into new product development instead. For example, Tritech Research now has over 500 products and has become a well known supplier for molecular genetics labs worldwide.\n\nBaxter Zappa
Avatar of: anonymous poster

anonymous poster

Posts: 17

October 20, 2009

Presumably, he's not offering GLP or GMP products!
Avatar of: Johnny Stine

Johnny Stine

Posts: 2

October 21, 2009

Awesome story of Tritech. You are correct that this is not new - it's just very atypical and deemed impossible by some to create a company that can create therapeutic antibodies without going to the venture markets. The only difference from Tritech is the size of the markets. Imagine generating a therapeutic mab and selling it for $1-$10M dollars or more ....and actually owning the whole company outright. And because of that - you're able to practically give away these antibodies by comparison to the usual way. If people feel they need to continue to make $100M purchases loaded with milestones and royalties in order to have a good drug, then so be it. But for the rest who recognize that I can bring value to their company rapidly and at about 1/20th the cost - then step right up. There's more than 500 validated targets for antibodies in human disease. \n\nAs far as production - I make product - but it's up to the partner or the buyer to scale up in GLP/GMP for clinical trials. I can produce enough to do preclinical models - but that's where I draw the line. North Coast is the manifestation of the industry-forced belief that antibody discovery and product development cannot be under the same roof. So be it. Since most of you have chosen to reduce or abolish your discovery groups- and since most of you investors have decided that you can't invest in early stage discovery - and since the market is dictating such limited use of prolific discovery antibody technology - then I'm filling the void with rapid, inexpensive alternatives. \n\nSurf's Up at North Coast.....
Avatar of: Ken Piech

Ken Piech

Posts: 2

November 27, 2009

You may find even better used laboratory equipment deals at www.labx.com which is an auction and classified website designed specifically for scientists and researchers. Online since 1995, there are some great deals and many scientific manufacturers use LabX to sell their demo instruments exclusively, which might address some grant money issues on buying used from a dealer.
Avatar of: Victoria Jackson

Victoria Jackson

Posts: 1

November 27, 2009

Atlantic Lab Equipment's mission is to remove the risk from buying used lab equipment. Our discounted prices are not dirt-cheap, but we service and warranty all our products. We also have aleoutlet.com--which has an ebay store--for benchtop bargains with a 30-day right of return.\n\nKeep up the good work, Johnny! All the best to you.

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