By John Russell
October 28, 2009 | 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 capability to its portfolio of scientific data analysis software & 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 Dr. 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, aerospace. We have a wide offering.”
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)
• 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. Accelrys has assembled multidisciplinary teams with domain and computational expertise.
Subramanian cites two examples. In one instance, a Europeans 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 four million compounds, of course everything in silico, and we provided a few potential candidates,” says Subramanian. They tested these candidates and found a couple of highly active molecules which enabled them to move ahead viable compounds. It was a completely different chemical series of molecules.”
In a second project, “The client was keen on getting some insight into mutagenesis on the protein activities. We were able to give them a 3D 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.,” she says.
Accelrys owns three 32-node clusters on which it performs the work. Occasionally on-demand computational resources form the third party are used, but Subramanian says the software has been steadily optimized over time and doesn’t require exotic IT requirements.
Demand for services is up reports Subramanian: “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, she 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 $20.1 million, slightly down from $20.3 million for the same quarter of the previous year. Non-GAAP net income was $1.8 million compared to $2.2 million for the same quarter of the previous year.
CEO Max Carnecchia noted in announcing the result, "This quarter was solid from a revenue, income and cash standpoint given the challenging economic environment. Though I expect the economic climate to remain challenging in the short-term, my discussions with our customers and employees since my recent appointment as Accelrys’ CEO further my belief in our value proposition. We have 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.
* The Accelrys web site describes the company’s creation as, “Accelrys was founded in 2001, bringing together five specialist companies— Molecular Simulations Inc. (MSI), Synopsys Scientific Systems, Oxford Molecular, the Genetics Computer Group (GCG®), and Synomics Ltd. In 2004, Accelrys acquired SciTegic Inc. These companies, in turn, had combined a total of seventeen software companies over the previous decade— many of them startups from leading academic institutes. Accelrys thus encompasses a rich pedigree of scientific achievement.”