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SMALL BUSINESS: Testing the Waters

SMALL BUSINESS: Testing the Waters

Biotech firm helps fund research efforts through creation of a marketing division selling consumer products that detect common contaminants.





By LAURENCE DARMIENTO

Staff Reporter

In some ways, Silver Lake Research Corp. is like other small biotech firms doing esoteric and advanced science in this case a new method for generating antibodies, a key component of the body’s immune system.

Scientists work in the rear offices of the 15-person Monrovia firm amid an array of lab apparatus in search of developing the next big drug.

But in the front office there’s also a three-person sales team marketing several of the company’s products to slaughterhouses, farmers, water agencies and retail stores.

Silver Lake is one of the few biotech companies with a consumer product arm.

“Biotech companies don’t have consumer products, and consumer-product companies don’t have technological platforms for pharmaceutical companies,” said company founder and chief executive Mark Geisberg. “It is a unique mix.”

Hybrid company

The 10-year-old company’s core antibody technology has applications not only for the doctor’s office, but the farm and the kitchen as well.

Silver Lake has used the technology to develop test kits, similar to home pregnancy tests, that detect antibiotic traces in milk and beef, as well as eight contaminants in drinking water.

If done in labs, these tests can run several hundred dollars. But the test kits range from a few bucks for the meat test to $16.99, at full retail, for the home water test. “What the antibody research has enabled us to do is put that whole lab process in a little test strip,” Geisberg said.

The idea is to generate a revenue stream so that Silver Lake won’t have to rely as much on venture capital. The company says it received $200,000 in revenues last year from its consumer products arm.

In early 1998, Silver Lake brought out its first commercial product, the cattle test called Meatsafe. A year later came a test that allows water agencies to detect common crop herbicides that can contaminate drinking water in rural areas. A retail version of that water test, which can detect eight contaminants, from lead to bacteria to nitrates, was released in 2000.

Originally on sale in a few hundred stores, the product is now available in 2,500 stores nationwide, including Whole Foods, Wal-Mart and Walgreens, prompting Silver Lake to boost projected revenues this year to $750,000. “I think the growth will be huge in the next couple of years,” said Tom Round, Silver Lake’s vice president of sales.

Academic roots

Tests were chosen that measure contaminants already regulated by the government, so that the company would have an established standard to work with.

Its first product was a test for the residue of penicillin and four other antibiotics used on cows. The antibiotics are sometimes found in dairy cows that are shipped to slaughter when their milk production falls. If there is antibiotic residue in the system, the whole carcass can get thrown out. Farmers or the slaughterhouse administers Silver Lake’s test; if the animal tests positive, it is penned until the residue is gone.

“It used to be guesswork,” said Bert Buithenhuis, owner of the Calmeco slaughterhouse in Pomona, which processes dairy cows from the Chino area and uses the test on cows that have been recently treated with antibiotics. “Now, we can save the animals. We get very good results with it.”

Silver Lake wants to piggyback sales of its Milksafe test that detects antibiotics in milk to the same dairy farmers who use it on aging cows. But to really fuel commercial sales, it is counting on consumers’ heightened awareness over water safety.

“It’s gotten some awareness from our customers who truly want to know if their water is safe,” said Kristin Lares, a buyer for Whole Foods Southern Pacific region, which began selling the kits two years ago. “People want to know if there is lead coming out of their faucets at home.”

Geisberg has impressive academic credentials an undergraduate degree at Yale and a doctorate in immunology from Cornell but while completing his doctorate, he realized the best way to develop his new antibody technology was by starting his own company that could generate commercially viable products. He moved to Los Angeles from the East Coast in the early 1990s, starting the company in his Silver Lake apartment in 1992, hence the name.

The first two years were spent beating the bushes for capital. Three years ago, the company moved from Arcadia to its current space in a Monrovia office/light industrial park.

Despite the company’s work in developing commercial products, its scientists are also identifying and developing antibodies that can be used in creating new medical diagnostic tests and therapies for human diseases.

Among the focus areas are cancer drugs and diagnostic tests for fertility and heart disease.

The company won’t disclose additional details, but Geisberg said Silver Lake does have partnerships with five companies, including pharmaceutical giants, in pursuing the research. Such lack of disclosure is common in the industry, where companies fiercely guard their research.

PROFILE: Silver Lake Research Corp.

Year Founded: 1992

Core Business: The development of new antibodies for consumer products, clinical diagnostics and therapeutic drugs.

Revenues in 2001: $200,000

Revenues in 2002: $750,000 (projected)

Employees in 2001: 11

Employees in 2002: 15

Goal: To enter into more partnerships with pharmaceutical, biotech and diagnostic companies while increasing the number of retail sales outlets for consumer products.

Driving force: Fulfilling the need for new pharmaceutical and diagnostic products.

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