Sensor startup has a sense for business

Ursula Spichiger is a co-founder. Sensorix

Sensorix, a Swiss Federal Institute of Technology spinoff, has developed a promising sensor product in record time.

This content was published on August 23, 2002 - 11:07

The firm was helped by substantial venture capital investment and some savvy management decisions.

Sensorix makes analytical instruments based on biosensor and chemical sensor technology.

The startup has a high potential business model that sees the company commercializing not just the sensor technology, but a complete, flexible, automated sampling and analysis unit or platform that can be targeted at the biotechnology sector, as well as the food processing and chemical sectors.

The decision to manufacture a platform that automates the sampling and analysis steps in a number of production processes, rather than just manufacture sensor parts, is just one way that this young company is exhibiting innovation.

Sensorix is also pioneering in its choice of market, targeting for itself an unoccupied niche.

Typically these kind of sensors are used in the diagnostic area of the life sciences market, a market dominated by Abbott, Boehringer Mannheim and Bayer, according to Glenn Cudiamat, a consultant at Strategic Directions Intl, Inc, a market intelligence firm specialized in the analytical and life science instrumentation industry.

A horizontal niche

Within life science Sensorix has a niche, Cudiamat confirmed to Swiss Venture by email. But the two year-old firm believes there is more opportunity than meets the eye. It also has its eye on other so-called process industries, such as food production and water treatment facilities.

That is why it decided to sell a platform with sensors that are interchangeable and disposable. The sensors can be optical, chemical, or biologically based, according to CEO, Fritz Tschopp.

"The cell culture market, which deals with mammalian cells, is only part of our market. The fermentation market which deals with yeasts and bacteria is about equal in size," says Markus Rothmaier, Sensorix's chief technology officer.

Having said that, Rothmaier says the only market demanding the equipment today is the biotechnology market. Some of the sensors are being used in by Cytos Biotechnology in Schlieren, for example, a company that has taken a radically different approach to cancer therapy and is in the process of developing a whole new category of drugs, according to public information.

How sensors are used in bioreactors

When laboratory scientists fabricating new cell cultures or substance move from the research to the analytic stage, they require samples of the cultures in larger volumes. Moving from the pilot through to process-scale can be very problematic. "The quality [of the broth] typically diminishes, which can alter the efficacy of the drugs, " says Cudiamat.

To prevent diminished quality, researchers must constantly monitor glucose levels, for example. If they are too low they will need to feed the cells more. If glucose levels are too high, then they will cut back on the nourishment.

Cudiamat says that the Sensorix products could be very important to the market because pharmaceutical companies can better understand the processes and, essentially, make the proper adjustment to the system to achieve optimum results.

And that is where Sensorix sees its opportunity. Its equipment automates or removes the need for a lab technician to intervene in the monitoring and production of analytical data, such as the monitoring of glucose levels in a batch of cell cultures. Instead of taking two or three hours and the intervention of a human, the Sensorix system provides the data in real time and does it automatically.

Once the unit extracts a sample, the machine pumps it into the flow-through sensor unit via tiny tubes and tests it. The sample's signal data is then fed into a standard computer running specialized software. The software is also a product of Sensorix researchers.

The fact that Sensorix works in real time is a real competitive advantage for it in the market, according to the experts. "It is not the only firm to use sensors for this type of application, but it is the only one that I know that can do it online," says Elizabeth Bühler in sales at Bioengineering AG, a Zurich-based firm that manufactures ands sells biotechnology plants and equipment.

Bühler, whose firm has no financial or personal relationship to Sensorix, adds that the sensors are sterilizable and durable, which also makes them distinct from competing products.

From prototype to production

Making the transition from prototype to production is sometimes a fatal step for startup companies. A common criticism of university spinoffs is the notion among some academic types that the job is done when the first units roll off the production line, but it looks likely to avoid that pitfall.

The firm's CEO, Fritz Tschopp worked for 15 years at Tecan in various roles, from project management to running the applications group. He told Swiss Venture that technical and customer support are already being built in to the operations of the firm.

One of the reasons that Sensorix, which employs 17 people today, has moved so quickly to market is that it sub-contracted the design and manufacturing of its equipment. To develop the products in this manner in order to get them market ready more rapidly requires a great deal of capital.

Eventually logistics will also be outsourced, leaving Sensorix to focus on sales, support, and development of sensor technology.

Money talks

Such a strategy requires capital and lots of it. The team started seeking venture money at the beginning of 2000, just as the flow of money to the high tech sector started to dry up. (The market for technology shares, whether public or privately owned, crashed at that time and has not recovered.)

Sensorix managed to raise the money but it was not easy, according to the founders, and it took them a good year. The company does not disclose exactly how much it raised but does say that the figure was closer to SFr10 million than it was to SFr5 million.

The Board of Directors is lead by co-founder Prof Ursula Spichiger-Keller, who is a Zurich-born, ETH professor, and the founder of the Centre for Chemical Sensors. It is her research on which the sensors are based. Tschopp says the other board members, Mahmaud Malhas, Samir Tawil, and Leander Tenud, formerly of Lonza and now a consultant, and Marc Fuhrer, a lawyer.

The board represents the legal side of the business, the investors and the voice of industry, according to Tschopp.

By Valerie Thompson

sensor in brief

An ETH spinoff company has launched a flexible sensor platform.

Innovative aspects include the market targeted by the firm, which is able to handle chemical or biological monitoring and analysis applications.

The fact that it sells an automation platform, rather than just parts and its decision to use subcontractors also point to a good growth potential.

Such decisions lower risk but keeps core competencies in-house, along with higher margin business units, such as sales.

Business angel investors have put up an estimated SFr10 million venture capital.

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