Safis in the News

Cold storage's hot prospect

BioStorage Technologies expands promising tissue safekeeping-delivery business to Europe

By Ted Evanoff
The Indianapolis Star
June 10, 2007

DARMSTADT, Germany &mdsh; Four years after its Indianapolis founding, BioStorage Technologies has opened its first European office, raised $8.3 million among investors and aims to reach $30 million in annual sales by 2012.

"We've been doing pretty good for a little start-up company,'' said founder Oscar Moralez as he showed off the bare new German facility he has been busy developing this spring.

Setting up shop in Germany is a small example of a life- sciences economy taking off back home. Only BioStorage has no drug patents or medical specialty like gene splicing. It's a 25-employee, cold-storage logistics firm.

One million human blood, bone, serum and tissue samples are stored in its 350 Sanyo industrial freezers in Indianapolis on behalf of 45 clients, chiefly laboratories throughout the United States conducting clinical trials and research on potential new medicines.

Clients include AlloSource, Biogen and Covance.

Most new companies take years to develop an international presence. BioStorage's quick rise, though, points to growth from an unexpected side of the life-sciences economy: services.

Since the Indianapolis area launched its 2002 life-sciences initiative, a project to create high-paying technology jobs as factory employment wanes, the talk has been about tech start-ups, particularly shops reliant on scientists and engineers.

A few innovative tech companies have emerged amid high publicity, such as migraine researcher CoLucid Pharmaceuticals and cancer researcher CS-Keys. The expansion pace has been faster, though quieter, on the service side among companies such as DCL Medical Laboratories, Indigo BioSystems, Oxford BioSignals, Safis Solutions and Sentry Logistics.

"You will see faster growth of these service companies for a very basic reason,'' said David Johnson, the Indianapolis lawyer who heads BioCrossroads, the region's life-sciences economic initiative. "They aren't producing a drug or diagnostic device that has to be placed inside people.''

Service companies don't conduct years of expensive tests to obtain, as drug makers must, U.S. Food and Drug Administration permission to put their products up for sale. When a niche opens, service companies can move quickly into a market in life sciences and its offspring, biotechnology. Life sciences describe the health-care industry. Hospital nurses, for example, are in life sciences. Biotech includes the development of surgical devices, implants and medicines.

"In this new world of biotechnology, logistics is going to be a key,'' said Dr. John Mills, BioStorage chief executive.

Freezers and computers

BioStorage maintains FDA-level quality standards, which are essential for clinical trials, and sets itself apart with speed. Its software, designed by Information Engineering of Indianapolis, can locate any particular sample in the freezers swiftly by computer, Moralez said.

This allows medical laboratories to request a specific piece of tissue taken from a particular patient years ago and have it shipped immediately by overnight express worldwide in a dry-ice pack.

By comparing old and new samples from the same patient, a lab's scientists can measure a medicine's impact.

By storing the samples, BioStorage is trying to get biotech researchers to let go of the standard procedure of putting samples in widely different locations.

Today, when a drug maker such as Eli Lilly and Co. of Indianapolis researches a possible new medicine, it can farm out a portion of the tests to a clinical-trial company such as Covance, which in turn may outsource portions of the tests to dozens of smaller firms.

If tissue samples needed for a test are in cold storage among dozens of companies, it can take weeks for the smaller companies to get the samples to one place. BioStorage is setting itself up as a central repository.

In Indianapolis, the operation is about the size of a small supermarket, covering 22,000 square feet. Inside are banks of freezers capable of temperatures far below zero. By locating in an airport industrial park near the FedEx freight hub, BioStorage can ship thousands of samples daily.

Mills recently left Covance, where he headed operations in Indianapolis. Covance had recruited Moralez in 2002 from a Colorado lab. Both saw a niche in centralized sample storage.

In 2003, Sanyo, the Japanese freezer and appliance maker, bought a small stake in BioStorage. The company hasn't produced a profit, Mills said, but investors see potential. Radius Ventures, Spring Mill Venture Partners, Village Ventures and Twilight Venture Partners just contributed $8.3 million for expansion.

German branch

Now, Moralez is preparing to replicate a smaller version of the Indianapolis service in Darmstadt, a suburb of Frankfurt, next to one of Europe's largest airports. Today, the Darmstadt shop is an empty room and a bare office in an industrial park.

But freezers have been installed, and the computer is being hooked up. And it will become a stepping stone to securing new clients across Europe and eventually Asia.

"We're trying to position ourselves for the future,'' Moralez said. "What's really important is where clinical trials are going.''

People never exposed to a particular medicine have become more rare in the United States. So medical trials testing new drugs have expanded in Europe and eventually will take place more often in Russia, India and China.

"We have to be ahead of that trend,'' Moralez said.