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By Malorye Branca

Sept. 9, 2002 | The 1997 creation of LION (Laboratories for the Investigation of Nucleotide Sequences) Bioscience AG in Heidelberg, Germany, came at an opportune time. Bioinformatics was widely considered to be the must-have enabling technology for genomic-based drug discovery and research. The company licensed several of its core technologies from the renowned European Bioinformatics Laboratory, and quickly became a leader in the field. In 1999, LION netted one of the top genomics deals to date — a $100-million research alliance with German drug giant Bayer AG. Even when the biotech market soured in 2000, LION still managed to pull off a notable IPO, reaping more than €200 million on the Neuer Markt and the Nasdaq in August of that year (the Euro is roughly worth a little more than a U.S. dollar).

The rest of the story is still hard to believe. First, bioinformatics took the brunt of the genomics backlash. By early September 2001, LION's stock plummeted into the low teens (down from €120 one year earlier), necessitating a change in the company's strategy to survive the market conditions.

Then tragedy struck. On the morning of Sept. 11, LION CFO Klaus Sprockamp was in the World Trade Center, meeting with investors to reassure them about the company's falling stock, only to be killed in the terrorist attacks. Married with two young sons, the 42-year-old Sprockamp was a close friend of Friedrich von Bohlen's as well as other members of the LION team, and a critical contributor to the growing company. The Wall Street Journal noted that he "helped turn LION bioscience's initial public stock offering into one of Europe's hottest biotech offerings, even as many technology stocks were imploding."

LION has not only stayed the course, but is also bucking today's trend. Rather than declaring for drug discovery, LION instead seeks to divest its drug discovery unit and concentrate on building the ultimate integration platform. It is a goal many experts consider the Holy Grail of bioinformatics, offering potentially huge rewards, but quite possibly unattainable.

On its side, LION has SRS — one of the most widely used of all commercial data integration tools, and a popular interface to some of the world's most popular commercial databases, including Incyte Genomics Inc.'s LifeSeq, the Celera Discovery System (now marketed by Applied Biosystems Group), and Derwent Information's GENSEQ. LION has also capitalized on the market downturn. Earlier this year they snagged NetGenics Inc. for $17 million. They have also picked up choice partners, including MDL Information Systems Inc. (a cheminformatics leader) and Paradigm Genetics Inc. (a metabolomics pioneer). Revenues grew by 73 percent in the last fiscal year, climbing from €23.3 million to €40.4 million.

Unveiled in early July, LION's new business plan calls for the rollout of the Discovery Center integration platform in the fourth quarter of 2002. That will be followed, over the next three years, with the module-by-module launch of analysis tool sets for biology, chemistry, and clinical trial data, as well as enhancements to the integration platform.

The market is still crowded, new entrants keep popping up, and the other market leaders are revamping their offerings as well. Investors will be watching like hawks to see if the company delivers its promises on time, while clients will be looking for the proof that the new tools can make a difference in their own troubled pipelines.

—Malorye Branca 

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