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Accelrys Finds Ways to Engage

By John Russell

January 20, 2010 | Founded in 2001 as the amalgam of five companies*, Accelrys leveraged its early strength in cheminformatics to build an expanding footprint across many industries. No doubt the horizontal reach helped it survive while others foundered in the choppy water of bioinformatics. Today, Accelrys is NASDAQ-listed (ACCL) and profitable. Over time the company added various ‘omics analytics and workflow capabilities to its portfolio of scientific data analysis software and services.

While software licensing produces the bulk of Accelrys’ revenue, services provide an important and growing piece of the business. Like many, Accelrys expects growing demand for services from the biopharmaceutical industry shaken by layoffs, reorganizations, renewed focus on core strengths.

“Our services portfolio, which is completely based on our software, covers deep science as well as software customization and implementation across the enterprise,” says Lalitha Subramanian, senior director of worldwide contract research services. “The kind of markets we serve include the life sciences, pharma, and biotech as well as chemical, fine chemical, oil and gas, consumer packaged goods, automotive, and aerospace.”

Accelrys’ core software offering includes Discovery Studio (modeling & simulation for drug discovery); Materials Studio (modeling & simulation for chemicals and material R&D); Accord (desktop & enterprise cheminformatics); and Pipeline Pilot (workflow, data integration, and reporting). Within life sciences, client projects might include chemical library diversity/similarity analysis, ADME-tox assessments, lead identification and optimization, drug delivery and drug formulation.

Subramanian cites two good examples. In one instance, a European biopharmaceutical company had a very interesting target, but a small set of molecules able to interact with it. The client sought a new chemical series with activity to the target. “They said it should be a completely different chemical series. We screened about 4 million compounds, of course everything in silico, and we provided a few potential candidates,” says Subramanian. These included a couple of highly active molecules which enabled them to progress viable compounds from a completely different chemical series.

A second client needed help in mutagenesis of protein activities.  “We were able to give them a 3-D visualization which helped them understand what is happening with changes to the proteins and how that is impacting the binding site and interactions with another protein, etc.,” Subramanian says.

Accelrys owns three 32-node clusters on which it performs the work. Occasionally on-demand computational resources from the third party are used, but Subramanian says the software has been steadily optimized over time and doesn’t require exotic IT requirements.

Hot Areas

Demand for services is up, she reports: “I was expecting to see more and more of the development problems arising and they do, but drug discovery is not going down in any way. Biologics is big. A lot of our customers come to us with problems related to antibodies, protein-protein interaction studies.”

Drug stability, controlled drug release, and formulations in general are also hot areas, Subramanian says. “For one CRO, we provided in silico design of new polymers that can be used as excipients for API formulation. There has been work of co-polymer drug interaction in the realm of controlled drug release. While big pharma may be moving away from discovery because they’re getting a lot of in-licensing from biotechs, the biotechs are doing a lot of discovery.”

In building the services team, Accelrys prefers personnel with experience in biopharma, and recent downsizing has enlarged the talent pool. Subramanian says, “We’ve been able to soak some of them up, but there are also people coming out of those companies who are also independent contractors and they do prove to be a little bit of competition.”

Accelrys hasn’t escaped the downturn entirely. In August, the company reported revenue of $20 million, slightly down from the same quarter in 2008. Non-GAAP net income was $1.8 million compared to $2.2 million for the same quarter of the previous year.

CEO Max Carnecchia expects the economic climate to remain challenging in the short-term, but insists Accelrys has “the unique ability to enable the world’s science-based organizations to better utilize their vast reservoirs of scientific data in order to solve their scientific business problems. I am therefore enthusiastic about our long-term prospects.”

Unlike many bioinformatics companies which have veered into becoming “drug companies”, Accelrys “plans to remain a software company as far as I know,” says Subramanian. There are few direct competitors, she says, although several niche players which compete in select market segments. Accelrys’ near-term goals for its services organization mirror those of others. It would like to achieve deeper penetration of existing, grow the number of master agreements, and beat its financial projection.

*Molecular Simulations, Synopsys Scientific Systems, Oxford Molecular, the Genetics Computer Group, and Synomics, together with SciTegic in 2004.

This article also appeared in the January-February 2010 issue of Bio-IT World Magazine.
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