Stayin' Alive

Stayin' Alive

By Mark Gordon

Managing Editor

From his office on the outskirts of downtown Sarasota, Tony Frudakis, head science man for DNA Print Genomics, leans back in his chair and points toward the bay, at the bustling pockets of condo construction.

"You can get more for one of those condos," he says, "than you can for this company."

Frudakis is blunt about his company's financial portfolio: The numbers are bleak. His personal stock in the biotechnology company is worth about $25,000 - a dramatic plunge from the $30 million or so those shares were worth at the peak of the dot-com craze, he says. The stock, traded over-the-counter under the symbol DNAG, has been trading at less then a penny a share.

"We are talking complete devaluation," Frudakis says about the company he started in 1999 as a makeshift laboratory in a garage at his dad's Sarasota home.

Today, DNA Print, a 2003 Gulf Coast Business Review Innovation in Technology Awards finalist, is undertaking a buy-to-survive strategy. The company, which sells a variety of DNA research products for both average consumers and police investigators, is targeting private companies in similar fields.

"Staying small does not work in this market, so let's go big," Frudakis says. "If we were a private company, we would have been dead a long time ago."

The plan: Buy companies at a cheap price and use the new company's staff, revenue streams and equipment to boost DNA Print, he says. Over the last five months it has bought two firms in all-stock deals; Frudakis says a third deal is in the works, but he declined to elaborate.

In June, DNA Print bought Trace Genetics, based near San Francisco. DNA Print Chief Executive Officer Richard Gabriel says the goal with buying Trace is to build a marketing presence in Silicon Valley and to utilize the company's high-tech genetic testing equipment. In late October, DNA Print bought Kenna Technologies, a suburban Philadelphia company that specializes in building computer models to assist scientists with drug testing and manufacturing. DNA Print plans to use Kenna in its ongoing effort to expand the drug research side of the business.

The new companies bring DNA Print's total number of employees to about 20, with 12 of those working in the company's Rosemary District headquarters.

Irrational exuberance

DNA Print executives say the company, a pioneer in the advancement of forensic technology, has the science part of its business down. The company's lab helps police catch criminals, including killers and rapists. Its tests can predict common hereditary traits such as skin pigmentation and hair and eye color, and in the process become a science-witness to a crime.

The company also sells a consumer-oriented product called recreational genetic testing. It allows a person to buy a DNA test that traces genealogy and ancestral origin back hundreds of years.

DNA Print scientists also are attempting to use DNA to determine whether someone has a genetic predisposition that will cause an adverse reaction to certain prescription medication.

But while DNA Print is set on the science part, the money side of the business has been a failed experiment. The company has reported multimillion-dollar losses almost since its inception, partially due to its high research and development costs. Frudakis says over the past four years, the company has been on the wrong end of what he calls the cyclical "irrational pessimism" in the biotechnology industry.

Catch a killer

In 2003, the company's analysis of DNA played a key role in helping the Louisiana State Police arrest Derrick Todd Lee, who was later convicted of murder. Prior to DNA Print's help on the case, police had been searching for a white man; when DNA Print analyzed the evidence, including human tissue from a crime scene, it determined the suspect, ultimately found to be Lee, was black.

DNA Print received national attention for its role in that case. The company was profiled in national newspapers, including USA Today and the New York Times, and on TV shows such as ABC's Prime Time and Court TV's Forensic Files.

Frudakis says the work on the Lee case was gratifying. And he says the other work the company has been doing, too, has been satisfying. He points to drug research, called pharmcogenomics. That is the work of figuring out if someone will have a poor reaction to a medication before they take it. One test, for instance, would be used as a diagnostic tool to match ovarian cancer patients with the best chemotherapy, all from DNA.

Gabriel says this new aspect of drug research is one of the most forward-thinking moves to be approved by the FDA in the last 20 years. And DNA Print wants to be at the forefront of the technology.

Frudakis, a molecular and cell biologist with a Ph.D. from the University of California at Berkley, says he is still hopeful DNA Print will become profitable, maybe even in the next five years. He says that he still believes the business route he has taken - as opposed to working in academia or government, both with their restrictive policies - is the best way to foster technological achievement.

"The key to biotechnology is to preserve through the bad times," he says, "so you can be there in the good times."