ChromaVision Medical Systems Inc. has fresh strategy to go with a new boss.
The San Juan Capistrano-based company has opened a laboratory to run diagnostic tests for doctors screening patients for cancer. The lab is in Irvine’s University Research Park near the University of California, Irvine.
Historically, ChromaVision made and delivered laboratory instruments to doctors to help them manage cases of breast cancer.
That was a “worthy goal,” said Ronald Andrews Jr., who became ChromaVision’s chief executive in August.
But that only is a small part,about $100 million,of a broader cancer diagnostic market that could reach $2.5 billion yearly by 2010, he said.
The move into cancer diagnostics puts ChromaVision in competition with US Labs Inc., a venture-backed company based in Irvine.
Other rivals include Genzyme Corp. of Cambridge, Mass., which boosted its cancer testing business by buying New York-based Impath Inc. earlier this year.
ChromaVision’s shift comes after a period of tough times, according to Andrews.
“About a year ago, ChromaVision went through some drastic changes,they basically reached a point where they had run out of money,” he said.
As a result, majority shareholder Safeguard Scientifics Inc., a Wayne, Pa.-based venture capital firm that owns some 60% of ChromaVision, brought in a new management team, including Andrews, and led a $21 million stock sale to fund a strategy shift.
“We’ve been an investor for a number of years and have an active role in helping them developing and growing their business,” said Janine Dussosoit, a spokeswoman for the fund.
ChromaVision still faces challenges, including boosting its value, according to Andrews. As of last week, ChromaVision counted a market value of about $45 million. The company’s shares surged in January but are off about 75% for the year.
The company’s stock now trades for less than a buck, putting it at risk of being kicked off Nasdaq.
“We have to improve the value of the company very quickly in order to keep that status” on the exchange, Andrews said. “We have assertive plans to make the company profitable by this time next year.”
ChromaVision lost $5.4 million in the third quarter, versus a $2.2 million loss a year earlier. The company had sales of $2.6 million for the quarter, which were off 16% from a year earlier.
The larger loss came about because of “accelerating investments in facilities and personnel associated with the launch of new laboratory services,” ChromaVision said.
No analysts follow ChromaVision. Andrews said he has been doing road shows and is seeking research coverage of the company.
ChromaVision is creating what it calls an academic consulting unit that would allow cancer doctors in rural areas to use the Internet to get advice and coaching on how to treat specific types of ailments from cancer specialists.
Another goal, Andrews said, is to create a business unit that would work with drug companies and ChromaVision’s technology to get products through clinical trials faster.
ChromaVision has about 125 workers at its two offices in Orange County and a small European operation.
The company eventually plans to consolidate its operations at a larger facility in the county, Andrews said. Andrews was senior vice president, global marketing and commercial business development at Hoffmann-La Roche Ltd.’s Roche Molecular Diagnostics in Pleasanton, before coming to ChromaVision. He replaced ChromaVision Chairman Michael Cola, who had been the company’s interim chief executive since February.
“I was very interested in doing something more entrepreneurial,” said Andrews, whose resume also includes jobs at Abbott Laborator-ies Inc. of suburban Chicago and Immucor Inc., an Atlanta instrument systems company.
Additionally, Andrews said he had a passion for trying to fight cancer on a personal level.
“My life has been extremely touched by cancer. My grandmother, who raised me, died of breast cancer. I’m the oldest of 17 grandkids and as you can tell from my accent, I’m from the South,” said Andrews, a Georgia native.
“She looked at me on her death bed and said, ‘Hey, you’re smart enough to do something about this.’ And so my whole career, I’ve been trying to work toward having some impact on the disease of cancer.”
