San Francisco Chronicle - Friday, September 27, 2002
Tom Abate, Chronicle Staff Writer

In the current issue of the journal Science, researchers in New York say they've identified several proteins that seem to protect some HIV-infected people from developing AIDS.

The technology used to ferret out this discovery was a protein chip developed by Ciphergen Biosystems, a pioneer of the biotech niche called proteomics, the large-scale study of proteins.

"This is a real validation of our technology," Ciphergen Chief Financial Officer Matt Hogan said.

Scientists have been studying proteins for decades, but the protein chips created by Ciphergen and other startups, such as Zyomyx of Hayward and Phylos of Lexington, Mass., automate the steps involved in identifying unknown proteins.

These automated systems combine two Silicon Valley technologies -- special purpose chips and sensitive instruments -- to allow scientists to make mor- precise measurements.

Ciphergen scientist Enrique Dalmasso, one of the authors of the Science paper, said in this case, protein chips allowed the New York AIDS researchers to find a group of proteins that were both small and rare -- two factors that may help explain why they have eluded researchers for 16 years.

For a small biotech firm with a new technology, a big finding in a prominent journal often provides a boost on Wall Street, and Ciphergen can certainly use the lift.

The company went public at $16 per share in September 2000 during the tail end of the biotech boom that was driven by excitement over the Human Genome Project.

Then, many investors believed biotech was a gold rush, and the first companies to profit would be tool vendors, like Ciphergen, that sold the picks and shovels of drug discovery.

When the biotech bubble began to burst in 2001, tool vendors were hit hardest. So far this year, Ciphergen's shares have lost 60 percent, while the leading biotech stock index is off 43 percent.

Publicity about Ciphergen's role in the AIDS finding helped lift the stock 19 cents to $3.24 per share Thursday -- about one-fifth of what it was worth when it went public.

Hogan said that since 1999, the company has sold about 300 of its protein chip systems, which carry price tags around $200,000.

He expects the company to gross about $38 million this year and show a loss of about $28 million.

The company had $64 million in cash last quarter, giving it a two-year cushion at its current rate of loss -- long enough, Hogan hopes, for Ciphergen to prove the worth of its protein chips and get investors excited about biotech toolmakers again.

E-mail Tom Abate at tabate@sfchronicle.com.
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