Ventana Medical Systems’ First 25 Years of Innovation
by David B. Pittman
Photo by BalfourWalker.com
A lump, a biopsy, a diagnosis.
The fight against cancer starts with a test, the critical first step in the battle against the devastating disease that – in one way or another – touches us all.
A precise diagnosis can mean the difference between life and death.
Leading the effort to improve diagnostics and patient care for people around the globe is Ventana Medical Systems, a pioneer in providing physicians with the tools to more effectively diagnose and combat cancer.
In business for 25 years, the Tucson bioscience giant has one goal – to improve the lives of all patients afflicted with cancer.
And now with the backing of Swiss pharmaceutical giant Roche, which purchased the locally-grown startup in 2008 for $3.4 billion, Ventana truly is global.
Last year, Ventana products were used in the care of as many as 8 million patients in 91 countries. Armed with state-of-the-art, tissue-based diagnostic tools, the company today is raising the standard of patient care through digital pathology and workflow automation.
The scientific team at Ventana has created more innovations and been granted more patents than any other pathology or laboratory company globally.
It all comes back to the lofty 10-word mission statement crafted when the company incorporated in 1987: “To improve the lives of all patients afflicted with cancer.”
“Our mission is so unique and powerful, I believe every one of our employees knows why we are here,” said Ventana President Mara Aspinall. “We are a business and we have a responsibility to the business – but our fundamental reason for getting up in the morning is to make a difference in the lives of the patients that depend on us.”
Ventana’s impact on personalized medicine and the growth of a biosciences cluster in Tucson cannot be overstated, said Harry George, a venture capitalist who has invested in 44 earlystage life science, information technology and clean-tech companies though his Solstice Capital.
“Ventana Medical Systems puts Tucson on the bioscience map nationally and internationally,’’ George said. “It has been nothing short of transformational for Tucson.’’
The man behind the technology is Ventana founder Dr. Thomas Grogan, a University of Arizona pathologist, researcher and world-renown expert in lymphoma. For 25 years, his vision, uncommon character and resolve have permeated this company that he started in a garage.
Grogan pioneered the automation and standardization of tissue biopsy testing – a life-saving discovery that has resulted in speedier, more accurate and greatly expanded cancer testing.
But Grogan didn’t stop there. Knowing that body tissue contains a wealth of information that is vital beyond cancer diagnosis, he expanded his objective to research the chemistry of cancer biopsies. In the process, he and Ventana have enabled physicians to personalize cancer diagnosis and treatment options for individual cancer patients.
“There’s something here that’s very special. It’s a level of engagement and passion that we are on this shared mission to improve the lives of all patients afflicted with cancer,” said Dr. Eric Walk, who succeeded Grogan as Ventana’s chief medical officer. “When you speak to people who visit us, even from other parts of Roche, they immediately recognize the energy and the buzz.
“Even though we have competitors, it’s my view that we’re unique in our industry,’’ Walk continued. “Yes, we’re a diagnostic company – but we’re the only company that really has a vested interest and is passionate about driving the future of the field of pathology through innovations in diagnostics that will lead to changes in the practice of medicine and real changes in how patients are treated.’’
That spirit of innovation is spurring growth in the biosciences industry in Tucson, said Leslie Tolbert, UA senior VP for research.
“Having Ventana here … helps to make the science environment bigger and stronger and more prominent,’’ Tolbert said. “It has created a special zing around the biosciences here.
“Ventana became a model of the kind of thing that can happen when a faculty member’s idea has been pursued and pursued and pursued with great diligence,’’ Tolbert continued. “Tom Grogan knew he wanted to change the practice of pathology to have a better impact on patient outcomes and it took a lot of hard work. It gives a human face to what can happen with perseverance.’’
What began as a small startup operating with a handful of workers has grown into a global business that has 1,500 employees, with more than 1,200 in Tucson. The company has annual sales revenues of about $600 million and boasts a 66 percent market share for automated cancer diagnostic systems in North America.
And the company continues to grow. Company officials vow to speed through the $1 billion annual revenue milestone on their way to tripling yearly profits, adding another 500 workers and expanding the company’s campus at Oro Valley’s Innovation Park.
Dr. Ray Woosley, president emeritus of the Critical Path Institute and former dean of the UA Medical School, worked with Grogan from 2001 to 2005. Woosley described Grogan as “a renaissance man who had the foresight to change the practice of medicine, and in the process save the lives of millions of people.”
Woosley said Ventana has seemingly endless potential.
“The technology and approach at Ventana is not time limited – it could go forever,” he said. “Now with the backing of Roche, I think it could be as big as Raytheon one day.”
But profitability did not come quickly or easily at Ventana. The once struggling startup experienced its embryonic beginnings in Grogan’s UA research lab and its birth in a garage near Interstate 10 and Grant Road – where Grogan and a small team of dedicated doctors, scientists and engineers pioneered the automation and standardization of tissue biopsy testing and created the company’s first products.
Ventana was still losing money in 1991, when it had 35 employees and sold its first six medical devices. Investors remained committed to Ventana and by 1993 – despite the fact the company had yet to have a profitable year – it swelled to 100 employees and outgrew the garage.
“We moved over to Prince Road, just east of the sewer treatment plant,” said Grogan. “It smelled nasty.”
In 1995, after eight years of growth, development and the substantial hemorrhaging of venture capital investment, Ventana had its first profitable year. The company went public the following year and has been riding a growth arrow pointing upward ever since.
“We went public the old-fashioned way,” said Grogan. “After we made money and showed we could operate profitably, we were allowed to go public. In those days, that was the way it was done.”
Ventana stock was initially offered in June 1996 at $10 per share, which was the start of an amazing run in which Ventana never fell below market expectations in any quarter over the next dozen years.
Grogan never regretted that Ventana went public.
“If you are going to change hospital practice and the practice of medicine, the denominator of capital that you need is in the hundreds of millions of dollars,’’ he said. “How could you start in a garage off of Grant Road and become a global company without raising capital? And where else are you going to get $100 or $200 million? I happen to be very positive about Wall Street because of its old-fashioned mode of supplying capital for ideas like this. That’s when Wall Street is brilliant.”
In 1997, Ventana sold 500 systems. In 1999, the company, which long ago had established locations in Europe, opened offices in Japan and the Asian Pacific. Virtually every year, Ventana improved its medical devices, introduced new models or came up with new products.
In 2000, the rapidly growing company purchased land in Oro Valley where it began construction of its modern campus. In 2001, Ventana moved into its new home at Innovation Park, which originally included 182,000 square feet in four buildings.
Ventana experienced huge change in 2008. Three more buildings were constructed at the Oro Valley campus, bringing it to its current size of 360,000 square feet in seven buildings. Next, Ventana was purchased by Roche for $3.4 billion.
Grogan was among the majority of Ventana board members who favored the Roche buyout offer because Roche gives the company a significantly greater global footprint and the capital required to speed growth.
In late 2010, Ventana announced it would add 500 workers and embark on a $184 million capital investment plan for new buildings and equipment at its headquarters at Innovation Park.
The planned expansion translates into an economic impact of $640 million over 10 years for the region, reflecting a ripple effect of jobs, capital investment and increased productivity.
Tucson Regional Economic Opportunities, the Town of Oro Valley, Pima County and the State of Arizona provided a $12.2 million economic development incentive package to ensure the Ventana/Roche expansion occurred in Oro Valley.
The deal includes $8.2 million in property tax reduction from Pima County, $3 million from the state that came from federal stimulus funds and a rebate of up to $1 million in infrastructure impact fees from Oro Valley.
George, of Solstice Capital, said Roche could have chosen to pull Ventana from Tucson.
“When a company gets started in Tucson, as the company grows and goes public and often gets acquired, there is always a risk that when it gets acquired we will lose it, as we did with Burr-Brown,’’ he said. “It is a great success that it has grown, it has gotten to this scale and that it is planning to continue to grow in Tucson.
“You really couldn’t overstate the impact that Ventana has and will have on Tucson’s knowledge-based economy, and especially the biotech sector,’’ George added. “It’s the single most important influence.’’
After the flurry of planned expansion is complete, Grogan said more will come. He said Ventana “is only 1/20th” of what it will eventually be.
“In 2011, our products were used to run 32 million assays, or tests, in more than 90 countries,” said Grogan. “It usually takes four tests per patient, that’s the norm. So that means we were involved in the care of 8 million patients. But that’s a drop in the bucket. We want to be in every country in the world, and our big brother Roche is going to help get us there.’’
Aspinall, who became Ventana president in 2011, believes the next decade will bring tremendous change.
“In 10 years, I believe every patient’s tissue sample will be digitized so it can be viewed and shared across one health system or across the world by experts in a specific cancer,’’ Aspinall said. “It will also reduce health care costs and provide more specific and faster diagnosis – which will save lives.’’
Aspinall does not believe a single miraculous cure for cancer is coming. Instead, she believes improved diagnostics and therapies may transform cancer from a potential death sentence to a chronic disease.
“Given the diversity of the cancer challenge, I don’t believe there will be a one-size-fits-all solution. I believe it is all about diagnostics on day one, and day 30, and day 60, and day 90, and throughout the patient’s treatment and fight against cancer.’’
Ventana is poised to develop the technology to conquer some forms of cancer, and make others manageable.
“We think big and out of the box,’’ Aspinall said. “We have earned the right, through our large size, to create new opportunities and push the edge of the envelope.’’
Reporter Eric Swedlund contributed to this report.