Erik Gatenholm, BICO Group co-founder and CEO

The Swedish company that commercialized the first bio-based ink in 2016 has moved far beyond bioprinting and on-demand biofabrication of human organs and tissues—especially after completing six acquisitions of companies in other life-sciences specialties this year thus far.

So a few weeks back, CELLINK Life Sciences changed its group name to the more suitable BICO Group. BICO is  short for “bioconvergence,” the combination of biology, engineering and computer science technologies for healthcare and life-sci applications that include robotics, artificial intelligence, advanced genomics and bioprinting.

The name change, BICO Group co-founder and CEO Erik Gatenholm told GEN Edge, reflects the company’s response to the changing needs of customers beyond the focus of flagship CELLINK (whose bioprinting business will retain that name) on 3D printing of human cells and tissues for drug discovery and transplant.

“Customers were asking for so many more things because their problem was not only just the printers or inks itself, it was the entire workflow around that organ printing part,” Gatenholm recalled.

For example, customers who could print cartilage tissue or liver tissue wanted to do so for testing various compounds, then analyzing the effects under the microscope, live cell imaging, in real cell culture and under varying analyses such as sequencing or genomics.

“That essentially led us to the idea that bioprinting itself is not a technology sufficient to impact the world in the sense that we wanted to do. We needed to expand this reach,” Gatenholm said. “There needed to be more. That essentially got us into a buying spree or an acquisition spree, expanding that vision to be able to combine these more holistic technologies and platforms to build workflows.”

Printed scaffold of Advanced BioMatrix, a San Diego developer of 3D research applications. Advanced is the latest in a series of companies acquired by BICO Group, which paid $15 million upfront for the company plus an additional up to $3 million tied to achieving milestones. [BICO Group]
BICO’s most recent purchase came August 27, when it acquired all outstanding shares in Advanced BioMatrix, a San Diego developer of 3D research applications, for $15 million cash plus $3 million tied to achieving milestones. BICO said the debt-free deal was designed to maintain its status as a leading developer of 3D bioinks and reagents.

Growing Family

BioMatrix joins a growing family of BICO companies that this year expanded to include:

  • Discover Echo, a San Diego maker of hybrid microscopes designed to transform between upright and inverted configurations. Since rebranded as Echo, the company was acquired for $110 million in June.
  • Nanoscribe, a developer of precision 3D printers based on Two-Photon Polymerization technology spun out of Germany’s Karlsruhe Institute of Technology. Nanoscribe was bought for €34 million ($40 million) cash and approximately €16 million ($19 million) in milestones last May.
  • Visikol, a contract research services provider focused on advanced imaging, 3D cell culture assays and digital pathology. Hampton, NJ-based Visikol was acquired May 20 for $7.5 million cash, plus up to $12 million in milestone payments.
  • MatTek, a developer of advanced in vitro, 3D-reconstructed human tissue models enabling non-animal testing for cosmetics companies while lowering testing costs. Ashland, MA-based MatTek was bought for $72 million.
  • Ginolis, a Finnish diagnostics automation company focused on advanced robotics solutions for the medical and diagnostic industries. Ginolis was acquired for €65.7 million ($77.5 million).

Earlier as CELLINK, the group expanded its life sciences portfolio through acquisitions that included Cellenion, a maker of single cell and low-volume reagent dispensing tools for single cell omics and cell line development; Cytena, a developer of automated cell line and live cell imaging technologies for manufacturing biopharmaceuticals and monoclonal antibodies; Dispendix, whose automated low-volume liquid handling technologies are used for drug development and omics sample prep; and Scienion, a developer of precision microfluid dispensing tools for miniaturized multiplex assays and diagnostics.

“We really want to offer that whole package and that’s where bioconvergence comes in, because that encompasses all of these different technologies,” Gatenholm said.

He said BICO also plans to maintain its edge in bioprinting: “We will continue to cater to the bioprinting market as strong as we possibly can, as we consider ourselves to be leaders in this industry, specifically with the benchtop laboratory or on the research side of bioprinting. For us, it’s a core market and it’s a core business. We definitely want to continue to lead that industry.”

BICO’s leading presence in bioprinting stretches back to 2015, when Gatenholm’s father Paul Gatenholm, PhD—a professor of biopolymer technology at Chalmers University of Technology in Gotenburg, Sweden—introduced his son to a nanocellulose-based material capable of culturing cartilage cells.

Sensing a major potential for the technology and the bioprinting industry then emerging around it, the younger Gatenholm asked his father to sell him the IP for the technology. Erik then teamed up with one of his father’s students, Héctor Martinez, and a colleague from college, Gusten Danielsson, to launch the world’s first bioink company as CELLINK. Danielsson is BICO’s CFO while Martinez serves as Chief Technology Officer.

Bioprinting Opportunity

The European Union’s market ban on all animal testing for cosmetics that was enacted in 2013 presented an opportunity to apply bioprinting in research, Gatenholm told GEN in 2016. That year, CELLINK became the first company to commercialize a “universal bioink” using cellulose-based technology for which the company last year was granted U.S. Patent No. 10,675,379 (Cellulose nanofibrillar bioink for 3D bioprinting for cell culturing, tissue engineering and regenerative medicine applications). The company offers an array of bioinks customized to different cell types, including those for skin, bone, pancreas, vascular tissue, and other structures.

BICO’s continuing focus on bioprinting has included a legal wrangle with one of its rivals. In June, CELLINK filed petitions with the U.S. Patent Trial and Appeal Board for inter partes review of two patents assigned to Organovo related to bioprinter technology (Nos. 9,149,952 and 9,855,369). Also, CELLINK, MatTek, and Visikol sued Organovo in June in U.S. District Court for the District of Delaware, seeking non-infringement judgments for those two patents and three others assigned to Organovo (Nos. 8,931,880 , 9,227,339 and 9,315,043) and two assigned to licensors Clemson University and the University of Missouri (7,051,654 and 9,752,116 respectively).

Organovo countered in July in its own patent lawsuit, filed in U.S. District Court for the Western District of Texas, that CELLINK’s BIO X™ bioprinter, launched in 2017, infringed upon patents ‘952, ‘369 and ‘043, while CELLINK’s next-generation, six-printhead BIO X6™ bioprinter, launched two years later, infringed on a fourth licensed exclusively to Organovo (‘116). In August, CELLINK denied wrongdoing and called Organovo’s claims invalid.

The disputes with Organovo is not a driver of acquisition activity, Gatenholm said: “The company’s expansion is solely customer-driven. Their needs are guiding both our acquisition agenda and also our in-house development agenda.”

BICO’s products are used by more than 2,000 laboratories, including all top-20 pharmaceutical companies, in more than 65 countries, and have been cited in more than 2,950 publications.

BICO’s companies and technologies serve academic labs at Harvard and Stanford universities, as well as biopharmas small and large. One biopharma giant, AstraZeneca,  in January renewed for a third year a collaboration to use 3D bioprinting for modeling diseased and healthy tissues types such as vascularized tumors, liver tissues, and lung alveoli tissues, based at AZ’s campus in Gaithersburg, MD. This year, AstraZeneca and BICO have continued research into bioprinting applications in cell therapy and regenerative medicine for the liver and heart.

“A few years ago, I would have said 90% of our users would have been academics Innovators,” Gatenholm said. “We made a commitment 2.5 years ago that we wanted to expand our reach into pharma, because we saw that that’s where that technology can make the biggest impact today. So today, about 60–70% of our customer base is pharma and biotech and that’s mostly big ones. About 20–30% is still academic users and then about 10% are cosmetics users.”

Thinking Smaller

BICO is working to reach smaller biopharmas through Visikol, whose CRO services aim to serve smaller biotechs looking to outsource bioprinting or tissue engineering technologies at costs more affordable than in-house. “That has been a model that we haven’t been able to support in the past. Now with Visikol, we can offer CRO services to these pharma companies and really expand their reach, and I think that’s it’s a really nice addition to the product portfolio,” Gatenholm said.

He said BICO’s focus on CRO services increased during COVID-19, when many academic and commercial labs shut down operations.

“Many of these pharma companies were reaching out to us and asking, ‘We don’t have access to our laboratories. We’re all sitting at home. Is there any way that you could do this research for us, or perform these functions for us?” Gatenholm recalled.

“Visikol has transformed our ability to pitch these projects and work with pharma companies in a completely new way. I think it’s a preparation for the future. We never know where this dynamic is going to take us. It’s throwing us in different directions right now. We want to make sure that our pharma users and customer can continue to rely on us no matter if the work from home or if they get access to their laboratories.”

Retaining Management

Unlike some buyers, Gatenholm added, BICO plans to retain existing management of the companies it acquires. “We’ll always try to motivate the founders and management to stay on, and then we want them to align with our bioconvergence agenda and essentially expand their reach,” Gatenholm said.

“My job as CEO of BICO is going to be essentially to find solutions, products and technologies that fit our customers’ needs. Ideally, I’ll find that within the group and combination of technologies that we have in the companies that we have. But sometimes, we’ll have to look elsewhere, outside, and that’s when acquisition opportunities open up.”

Gatenholm said the acquisition opportunities that BICO will consider “definitely has to fit the bioconvergence agenda, so really in the areas of bioprinting, bioprocessing, multi-omics or diagnostics.”

The company’s bioconvergence focus is also open to potentially include emerging areas of life-sci.

“We’re definitely looking into supporting and catering to the synthetic biology industry. We’re looking to cater into food tech,” Gatenholm said. “We see that our bioconvergence technologies can be used to help these companies with bioprocessing needs to culture different cells if it’s to culture meat or if it’s to print different meat or meat substitutes.”

Acquisition Criteria

Gatenholm laid out criteria through which BICO will assess future acquisition opportunities. Future purchases, he said, will be companies that have:

  • Already generated revenue: “It can’t be a complete renovation project, or a complete working from scratch.”
  • Established a proven track record in the market by applying a proven business model, such as razor/razor blade or equipment/consumables.
  • Attracted some paying customers: “It could be $1 million dollars. It could be $40 million, could be $50 million. We’re looking at significant sizes.”
  • Developed a plan or path for breaking even.

BICO’s acquisition wave has more than tripled its headcount so far this year, to about 1,000 people from 300 at the start of 2021. About 35% of BICO’s workforce is based in Germany, 25% in the U.S., and about another 25% in Sweden, with the rest scattered worldwide, Gatenholm said.

The buying spree has also accounted for a near-tripling of BICO’s net loss during the first half of this year, to SEK 98.3 million ($11.4 million) from SEK 38.3 million ($4.4 million) in January–June 2020, on net sales that zoomed 440% year-over-year, to SEK 422.6 million (about $49.1 million) from SEK 78.2 million (about $9.1 million).

However, earnings before interest, taxes, depreciation, and amortization (EBITDA) rose 12% year over year, to SEK—24.3 million ($2.8 million) from SEK—21.7 million ($2.5 million). BICO blamed SEK 29.6 million ($3.4 million) in acquisition costs and approximately SEK 5 million (about $580,000) in renaming and re-branding expenses.

During BICO’s first conference call with analysts under its new name on August 18, Viktor Lindeberg, Head of Small Cap Research with Sweden’s Carnegie Bank, identified several challenges for the rebranded bioconvergence company:

  • Maintaining sales growth organically following the wave of company acquisitions
  • COVID-19-related challenges, including rebuilding business at academic and commercial labs that have shut down during the pandemic, and making up for any business that may ebb if nations cut down on pandemic preparedness or prevention efforts.
  • Growing European sales after evolving beyond reliance on distributors.

Danielsson said three of BICO’s companies enjoyed fully organic growth during Qs: CELLINK, Cytena, and Dispendix. While BICO’s organic growth rose 95% worldwide year-over-year during Q2, geographically organic growth rose the highest in North America (164%) as U.S. labs reopened due to the suspension of shutdowns before the Delta variant triggered a new surge of COVID-19 cases. North America accounted for 46% of BICO’s total Q2 sales of SEK 293.1 million (about $34 million).

By contrast, year-over-year organic growth during Q2 was 73% in Asia (13% of sales), just 16% in Europe (38% of sales), but 561% in Australia and the rest of the world (3% of sales).

In the U.S., “You have seen laboratories have started back up, you have seen customers return, we have seen research ongoing, and that’s very positive and that’s been driving the majority of our growth, I think. That will, of course, return to Europe,” Gatenholm said, according to a conference call recording.

European organic growth should pick up later this year, in part due to BICO establishing a direct sales force for the continent, which has begun to show results. “We did make the right decision by establishing our own sales force in Europe. And for that reason, we have been able to actually show growth during this very, very difficult time period.”

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