and hard to come by. They don’t have to do massive amounts of PCR amplification of DNA, which can introduce bias into their results, he says. And it ultimately allows them to move quickly to publish groundbreaking research that gets published in the top journals like Nature and Science, which is the coin of the realm in academia.
The business is essentially built on a razor/razor blade model, where Fluidigm makes the money on the blades. The blade in this case is a disposable microfluidic chip that is “a very highly integrated bit of plumbing,” Worthington says. The chip has an intricate network of valves, pipes, and reaction chamber and costs between $200 and $800 per use, he says. (This year, Fluidigm has come up with its first re-usable chip, which I can imagine ought to appeal to scientists who have to cringe when they toss an $800 piece of equipment into the garbage after a single use.)
The strategy is to go after three main markets—genomic research on cells, agricultural biotech applications, and prenatal diagnostics, Worthington says. The third area is still in development, and has historically been technically challenging, as researchers strive to find trace cells in a mother’s blood sample that can say important things about the health of a developing fetus. Lots of companies are pursuing this same concept of non-invasive prenatal diagnostics. Fluidigm, for its part, has signed up a partnership with Novartis Vaccines and Diagnostics to see how far it can take this.
But before such deals that deal was inked, partnership talks often yielded humiliation. It happened time and time again, long before the ill-fated IPO road show of September 2008. “Basically everybody thought we were stupid. We didn’t even get the backhanded compliment of being crazy,” Worthington says. The company’s chips use rubber in them, which many from the semiconductor industry didn’t think would ever work.
Yet, the company is still around, and has stayed in the game long enough to be in the rare position of a second IPO attempt. It has a machine that is in position to compete in the markets for gene expression analysis (projected to be worth $2.4 billion in 2012 by Kalorama Information); genotyping ($1.3 billion in 2014, according to Kalorama); and single-cell analysis ($576 million in 2015, according to Select Biosciences). Non-invasive prenatal diagnostics could be worth more than $1 billion a year in the U.S. alone, and a lot more when factoring in other countries, Fluidigm says in its investor prospectus.
Getting into this kind of position took what seems like an impossible amount of time, money, and risk. This wasn’t one of those classic business school stories in which an entrepreneur listens to customers, spots a void in the market, and fills it. It was more like one of those stories VCs like to disparage—a solution in search of a problem. Worthington didn’t use that language when we met, but he essentially said that’s the way great instrument companies get built.
“Very large businesses in this industry get created in conjunction with a biological need and a tool. It certainly isn’t a matter of the researchers saying, ‘we need you to build X, and then we go out and build X,” Worthington says. “We build a tool oftentimes when people say we shouldn’t. It turns out there is a fundamental need that only a fraction of biologists out there understand. But when the need and the tool come together, there is an explosion of work. It has happened in waves over 25 years in our industry. We believe, and we aren’t the only one who believe this, that this time it will be single-cell genomics.”
