by Paul Pyzowski, Guest Contributor
Truly transformative technologies tend to emerge from relative obscurity, where investors move quickly from manic overhype to utter despair, only to then be followed by the long and hard slog to deliver on the original promise. But ultimately the results surpass the initial hype in ways that could not have been originally imagined. Two early-2000’s vintage technology bubbles -- genomics and the Internet -- experienced such cycles, yet today genomics is genuinely transforming the practice of medicine while the Internet has transformed, well, just about everything else.
The MEMS industry’s own microfluidics technology also went through a bubble-to-bust cycle in the first half of the 2000s. Andreas Manz and his contemporaries who first developed “lab-on-a-chip” technology in the early 1990s are reputed to have dubbed their devices “bioMEMS” just to attract research financing for what at the time an obscure thrust in analytical chemistry.
But by the year 2000, microfluidics pioneer Caliper Technologies had a peak market capitalization of over US$4 billion, cross town rival Aclara Biosciences wasn’t far behind, and some lab equipment industry veterans were wondering in hushed tones whether one of these two companies would end up dominating their industry in the way Intel dominated its computer maker customers. But within a few years, Aclara was auctioning off its microfluidics lab equipment as part of an acquirer grabbing its dwindling post-IPO cash reserve. Caliper had since merged with Zymark, a lab equipment company, with the more modest but still worthy goal of transforming laboratory automation.
Paper based diagnostic devices, photo courtesy of Diagnostics for All.
By this time, raising capital, or even interest, in new microfluidics concepts was difficult at best. Many companies with innovative technology and product concepts were bootstrapping with grants and corporate money to first product shipment and paying customers; for every success (think Eksigent and HPLC) there was likely an unsuccessful counterpart (anybody remember Nanostream?)
But out of the wreckage rose a second wave of companies, many focused on specific applications instead of “microfluidics”, which crossed the chasm to sustained product revenues. Fluidigm applied its soft lithography technology to build products for protein crystallography that automated a slow, manual, and painful process essential for much of drug discovery. HandyLab, a Michigan based start-up developing a point-of-care infectious disease diagnostic system that actually delivered lab-on-a-chip, was acquired in 2009 by Becton Dickinson for a reported $275 million.
Today, a decade after its investment bubble, microfluidics technology is indeed transforming life sciences research tools, drug discovery, and diagnostics. Current “hot” areas include:
* Next-generation DNA sequencing systems manufactured by Illumina, Life Technologies (Agencourt), Roche (454) and others are using microfluidics and miniaturization to deliver price-performance breakthroughs that would make even Dr. Moore blush. Today’s cost of a full human genome sequence is less than $50,000 and falling rapidly -- a far cry from the $3 billion price tag of the Human Genome Project finished just ten years ago. Arguably this area is experiencing a mini-bubble of its own, but one based on genuine technical advances in metrics important to paying customers.
Roche delivered the first next-generation sequencing system using microfluidics technologies.
* Several companies, including DNA-sequencing veteran Jonathan Rothberg’s Raindance Technologies, are using microdroplets as reaction chambers, further miniaturizing and simplifying lab automation equipment. Although not “classic” continuous flow microfluidics, this work is in spirit a direct descendant of the pioneering work of Manz and his contemporaries.
* My own personal favorite microfluidics company is Diagnostics for All, commercializing paper-based microfluidic immunoassay tests for use in third world settings. First developed by the legendary George Whitesides, these tests can be manufactured and sold for literally pennies a piece.
So where are we with microfluidics innovation and investment? First, microfluidics is a respected and proven technology. The past ten years have left a strong network of fabrication capacity (e.g. Micralyne, Micronit, ThinXXS) so that new entrants don’t need to start from scratch. Second, there is so much variety in different applications that one size does not fit all -- the “Intel inside” model doesn’t work here -- which means that new entrants have a chance. Third, going forward the real value creation for investors, entrepreneurs, corporates, and customers will come through combining microfluidics with other advances in technology and/or biology to either leapfrog current products or open up entirely new application areas.
Bottom line: microfluidics, like other transformative technologies, will continue to change our markets and our world in ways we can’t yet imagine. And I can’t help but think that there are still some as-of-yet unrealized opportunities for investors and entrepreneurs out there.
*********************************************Copyright 2010 MEMS Investor Journal