Science Exchange Creates a Trading Post for Research Services
Elizabeth Iorns is the daughter of successful computer industry entrepreneurs, but as a New Zealand schoolgirl she swerved from the path taken by her mom and dad. Building on an early fascination with biology, she rocketed through her college years winning awards and scholarships, took a PhD at a prestigious cancer research center in London, and launched a traditional academic career in life sciences.
But her entrepreneurial genes soon kicked in. As a new scientist at the University of Miami, she saw an unmet need in the practice of medical research. Iorns envisioned a way to fill the need while brainstorming with her husband, a computer industry executive.
And in the swift way things sometimes happen in the tech world, Iorns became the co-founder and CEO of a Web startup that raised more than $1.6 million from early-stage investors in 2011.
Her Palo Alto company, Science Exchange, is now trying to make things happen more quickly for biomedical scientists who are toiling to reveal the mechanisms of disease and produce better treatments. The online marketplace helps those researchers outsource some of their experiments to other institutions that have the pricey equipment or expertise their own universities lack.
Investigators can shop on the Science Exchange for DNA sequencing facilities, mass spectrometry labs, electron microscopes, and about a thousand other resources at 400 academic centers and other institutions in the United States.
Iorns expects her growing startup to accelerate progress in disease discovery. “It’s going to make research much, much more efficient,’’ she says.
The idea emerged from Iorn’s culture shock when she finished her PhD in London and started her US post-doctoral studies in 2008. She was accustomed to the speed and efficiency that were built-in features at the Institute of Cancer Research in London, where scientists collaborated within a highly integrated unit that included specialists in many fields, from medicinal chemistry to human pathology. Various elements of a research project could be turned over to experts who knew the techniques best, she says.
In London, Iorns saw important lab discoveries quickly progress to late-stage clinical trials, a pace she now recognizes as unusual. Her lab mentor was Alan Ashworth, co-discoverer of two mutant genes that raise the risk of cancer, and a pioneer in the use of compounds called PARP inhibitors as cancer treatments.
In the United States, Iorns discovered roadblocks to the collaboration she had found so productive in Ashworth’s lab.
“There’s actually a real emphasis on doing it yourself,’’ Iorns says.
Scientists who do recruit outside collaborators to carry out some of their work often end up fighting over credit for their findings, Iorns says.
Leaders of US labs often maintain that it’s cheaper to perform new techniques in-house, Iorns says. But that route involves the cost of new equipment, and the time spent to master its use, she says.
Major US universities have solved some of those problems by setting up “core facilities’’ with expensive equipment and specialists whose primary role is to help their colleagues with scientific projects. Often, the specialized centers also perform experiments for scientists from other research institutions, for a fee. But Iorns says she saw no easy way for researchers to find all the services they needed.
It was the kind of marketplace problem routinely tackled by Web entrepreneurs for professionals in many different fields, Iorns learned from her husband Dan Knox, then an executive at the Miami-based company DailyMe, a personalized news website. Iorns and Knox teamed up with Web and app developer Ryan Abbott. Armed only with an idea, they applied to Y Combinator, the famed Mountain View incubator program that accelerates the development of tech startups through advice, seed funding, and introductions to other investors.
Their acceptance into the three-month program in the summer of 2011 forced a choice: Iorns, an outstanding post-doc, had become an assistant professor at the University of Miami Miller School of Medicine in 2010. She would have to interrupt a career she’d been building for years.
“It was still a little bit scary,’’ Iorns says.
Her lab mentor, Marc Lippman, arranged a sabbatical and encouraged her to pursue her vision.
“I’m an old person and endlessly impressed with how rapidly things can get taken up on the Web,’’ says Lippman, a professor of medicine.
Funding followed quickly at Y Combinator, which invested $20,000 in Science Exchange. Investors Ron Conway and Yuri Milner added $150,000 in uncapped convertible notes (an offer extended to all of the startups in Iorns’ group). In September 2011, that was augmented by $1.5 million from venture firms including Andreessen Horowitz and Crosslink Capital.
Iorns and her team focused early on the supply side of the Science Exchange—assembling an extensive directory of research services with transparent price listings for comparison shopping. As Iorns sees it, the exchange is as much a boon to university core facilities as it is to the outside researchers who want to send them work to do.
The core facilities often run at a loss because they purchase expensive instruments that often are used only part-time, Iorns says. Contracts from outside researchers help core facilities recover the money spent on equipment that can cost hundreds of thousands of dollars. Their customers can now order the tests they want through the Science Exchange website.
Science Exchange also expedites transactions between researchers and providers by acting as a payment intermediary. It handles the bureaucratic thickets of university purchase orders, accepts institutional credit cards, and issues payment checks to providers. To help get core facilities on board, the startup gives them free management software that keeps track of their collaborators’ projects and generates reports and billings.
The Palo Alto startup charges a fee of 3 to 9 percent of the total research expenditure for each transaction. Iorns declined to disclose the revenues earned, or the number of deals completed, since the site went public in May. But the growth rate has been more than 100 percent month-to-month since then, she says.
Science Exchange’s most direct competitor is Assay Depot of San Diego, which bills itself as “the world’s largest online marketplace for pharmaceutical research services.” Assay Depot, founded in 2007, launched its marketplace in September 2008, and now counts 1,158 research service providers as members. However, the global community of contract research organizations is much larger—Assay Depot has compiled global listings that include more than 8,000 CROs, commercial testing services, university facilities, and other vendors, said CEO Kevin Lustig in an email interview. Like Science Exchange, Assay Depot provides communication channels that researchers can use to contact vendors and discuss possible transactions.
The two companies differ in their methods of earning revenues. While Science Exchange charges fees to researchers when they outsource work through the site, Assay Depot makes money from subscription fees that vendors pay for individualized listings. Subscriptions cost $720 to $5,760 a year, depending on the number of service categories listed. But providers can also join free and appear in generalized listings under each category of service they offer. They can also maintain company profiles and use the communication channels.
Lustig says his company also makes money by setting up private marketplaces for large pharmaceutical concerns that encourage their scientists to outsource work to their own in-house labs in other locations, or to their preferred service providers. Pfizer and AstraZeneca are among the drug firms that have set up these private exchanges.
“It is funding from these private marketplaces that enables Assay Depot to offer its public research marketplace at no charge to the public scientific community,” Lustig says.
On Science Exchange, all vendors can list their services for free. And the site focuses more on academic service providers than on the commercial research services widely offered on Assay Depot’s site, Iorns says. Work done at non-profit academic core facilities can be a bargain for outside researchers, because prices are set on a cost-recovery basis, she says.
Iorns says her computer industry colleagues have been surprised to hear about the income potential of the market Science Exchange has entered.
“The amount of money spent on research is pretty staggering,’’ she says. Iorns estimates that $31 billion is spent each year on outsourcing by US biomedical researchers, not including clinical trials.
Transaction fees on those outsourced experiments could generate US revenues of $2.6 billion annually for Science Exchange, Iorns says. The company could expand globally and add services not yet offered, in fields such as nanotechnology and materials science, she says.
The company’s near-term goal is $50 million in revenues by end of 2015. “We forecast exponential growth,’’ Iorns says.
In August, Iorns encouraged researchers to use Science Exchange to have their already-published work validated by independent scientific service providers that are qualified to repeat the experiments.
Outside verification bolsters the credibility of scientific studies, and makes pharmaceutical companies more confident when they base drug development programs on lab discoveries. Drugmakers have been concerned because often, scientific study results can’t be reproduced by a new team of investigators. Science Exchange launched its Reproducibility Initiative to create incentives for researchers to submit their work for validation.
After Science Exchange reaped $1.5 million from VC’s in 2011, Iorns left her academic post at the University of Miami. She says she can contribute more to medical knowledge by accelerating research through Science Exchange than she would as an individual investigator.
That said, Iorns is still collaborating with Lippman’s research group as a University of Miami adjunct professor, and is still pursuing lab discoveries. But now she’s outsourcing all the work through Science Exchange.
“I’ve published two papers so far, and one is about to be submitted,’’ Iorns says.