Ventana Medical Systems, Inc.

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Ventana Medical Systems, Inc.

1910 East Innovation Park Drive
Tucson, Arizona 85737
Telephone: (520) 887-2155
Toll Free: (800) 227-2155
Fax: (520) 229-4207
Web site:

Public Company
Employees: 732
Sales: $166.1 million (2004)
Stock Exchanges: NASDAQ
Ticker Symbol: VMSI
NAIC: 334510 Electomedical and Electrotherapeutic Apparatus Manufacturing; 334517 Irradiation Apparatus Manufacturing; 339111 Laboratory Apparatus and Furniture Manufacturing; 339112 Surgical and Medical Instrument Manufacturing; 339113 Surgical and Supplies Manufacturing; 541710 Physical, Engineering and Biological Research

Ventana Medical Systems, Inc. is an international leader in the development and manufacture of instrument-reagent systems used to automate the process of diagnostic testing of tissue samples on glass microscope slides. The company provides healthcare professionals with superior tools that standardize and speed slide staining in clinical histology, cytology, and drug discovery laboratories across the globe. Ventana's pharmaservices and research instruments are used to accelerate the discovery of new drug target systems and evaluate the safety of cancer therapies. The company's instruments are used by most of the top 50 cancer research centers in the United States, including the Mayo Clinic, Johns Hopkins Hospital, and the Memorial Sloan-Kettering Cancer Center.

198591: Developing, Manufacturing, Marketing Automated Tissue-Testing Systems

Thomas M. Grogan, M.D., founded Immunodiagnostics Inc. in 1985. A pathologist at the University of Arizona, Dr. Grogan became interested in improving the practice of medicine by creating automated laboratory equipment to speed cancer diagnosis. Grogan first learned about immunohistochemistry (IHC) in the 1970s while doing postgraduate work at Stanford University with a professor who pioneered the field. IHC is based on the discovery that a cancer cell can be characterized by biochemical markers found within and on the cell's surface. Using special reagents and stains, the anatomic pathologist can identify these markers to determine what feeds a particular form of cancer and what types of chemotherapy can be used to treat it.

Grogan arrived at the University of Arizona in 1979. In the following years, as a practicing pathologist and professor of pathology, Grogan began to realize the necessity for automation in the anatomical pathology laboratory. Automation of the tissue preparation and staining process would allow doctors to make diagnoses and present therapy options to patients in a more timely manner than manual processing allowed. However, he lacked business savvy. In 1984, after spending two years looking for investors, he teamed up with Ross Humphreys, and the two launched Immunodiagnostics, Inc. in 1985.

From 1985 to 1995, Immunodiagnostics did not make a profit and operated solely on investments. Humphreys, who had experience heading up an investment firm, shepherded the fledgling business through its early years while Grogan developed the necessary technology. Later, Jim Danehy took over as president and CEO of Immunodiagnostics, and the company secured $20 million in venture capital from investors. By 1989, it had nine employees with plans to reach 300 in five years.

Ventana's first product was an instrument reagent system designed to automate and thereby standardize IHC staining. At the time, all IHC staining was performed manually or via rudimentary automation, with each test taking 40 to 50 manual steps and five to six hours to complete. It was hard to compare results between institutions because there was no standard industry protocol. Moreover, manual testing resulted in a five to 10 percent failure rate.

Grogan became convinced that a machine could do the testing much faster and more effectively. Looking back in a 2005 Tucson Citizen article, he explained, "I realized it needed to be done on every patient. We got obsessive. It should be done by an instrument like developing film. I looked at film developing technology." Ventana's first commercially marketed system, the Ventana 320, was launched in November 1991. The Ventana 320 could process 40 slides per run, eight runs per day, for a total of 320 slides. The instrument provided automation of a labor-intensive process thereby improving productivity and response time of the anatomical laboratory. The whole process took three steps and was complete in an hour and 20 minutes. Instead of the 10 to 15 percent repeat rate for manual tests, the 320's repeat rate was 1 to 2 percent.

19922000: Growth and Product Diversification

In 1992, Immunodiagnostics was renamed Ventana Medical Systems, Inc. Using the Spanish word for "window," the new name reflected the company's focus on developing integrated systems that provide a window on the biochemical characteristics of tumor cells. That year, Ventana began marketing its flagship device to community hospital-based anatomical pathology labs and commercial labs. Revenues for 1992 exceeded $1 million.

By the mid-1990s, Ventana had become a significant competitor in the anatomical pathology industry. From 1995 onward, the company launched at least one instrument per year and developed numerous diagnostic reagents. After Ventana went public in 1996, hospitals, clinics, and research labs quickly discovered the company and began to make use of its revolutionary and constantly improving technology. Ventana also purchased its main competitor, California-based BioTek Solutions, for almost $19 million in 1997. BioTek's more research-oriented products complemented Ventana's, which were more clinically focused.

Henry T. Pietraszek replaced Danehy as head of the company in 1997. Pietraszek had spent most of his professional career at Abbott Laboratories: first at Abbott Diagnostics; then as president of Dainbot, Abbott's diagnostics joint venture in Japan; and finally as president of its pharmaceutical joint venture, TAP Pharmaceuticals. Pietraszek left Abbott in 1994 to head Biostar, Inc., an early stage medical diagnostics company. During the first two years of Pietraszek's leadership, Ventana more than doubled in size, reaching revenues of $47.7 million in 1998 and $69 million in 1999. Under Pietraszek, Ventana signed an agreement to acquire Biotechnology Tools, Inc. of Tucson, which gave the company a second point of entry in the histology market. It also purchased several of Oncor, Inc.'s products for cancer research and treatment, including an FDA-approved test to help doctors decide how aggressively to treat patients with breast cancer.

The year 2000 proved to be the springboard of a new era for Ventana with Christopher M. Gleeson taking charge of the company upon Pietraszek's departure. Gleeson came to Ventana from Bayer Diagnostics in 1999. From 1993 to 1997, he had worked at Chiron Diagnostics and prior to that, as the founder, owner, and director of Australian Diagnostics Corporation. Under Gleeson's direction, Ventana continued to expand along its traditional lines, acquiring the assets of Quantitative Diagnostics Laboratories, Inc., a specialty lab that provided quantitative IHC services to pathologists and cancer research support in 2000. The company also received FDA approval for its Pathway HER-2/neu test in 2000, which aided in identifying patients eligible to receive Herceptin for metastatic breast cancer. Herceptin is a targeted therapeutic developed by Genentech.

In 2001, the company refined its systems, culminating in the development of its "baking through staining" technology available on the BenchMark platform, which won the Medical Design Excellence award that year. Ventana also created its Molecular Discovery Systems business to expand the company's revolutionary staining technology to research and drug discovery laboratories. The MDS group provided a direct sales and marketing mechanism to place the Discovery instrument, launched in 1999, and corresponding reagents in research and drug discovery laboratories, in North America, Europe, and Japan. Also in 2001, the company moved to new headquarters in Oro Valley, Arizona.

By 2002, Ventana had successfully reached the international market it first began to seek out with proceeds from its initial public offering in 1995. At this point, it employed 540 people worldwide and its systems were in place in 55 countries. By 2003, 29 percent of its revenue came from international customers. At home, it began working with Pima Community College in Tucson to develop a degree program in histology, the microscopic study of tissue. Histotechnicians run anatomical pathology laboratories. Ventana's involvement included providing guest lecturers at the college, as well as onsite specialty classes and internships for 18 students each year.

After a court ruled that Ventana had unintentionally infringed on competitor CytoLogix's patent in late 2003, Ventana halted the sale of the extremely successful BenchMark instrument, launched in 2000, and began revamping its product line. In its place, the company unveiled the BenchMark XT instrument, a higher-capacity system. It also gained momentum on the development of the Symphony, the first fully-automated instrument to perform primary or hematoxylin and Eosin (H&E) staining and coverslipping on patient samples mounted on glass microscope slides. With the Symphony, Ventana, already a leading provider in the IHC or advanced staining market, which processes the 30 percent of patient samples that require further examination for cancer or infectious disease, entered the front-end of the diagnostic process.

Company Perspectives:

Ventana's mission is to provide Innovations in Science and Medicine that Improve the quality of Life. Our vision is to become the leading provider of solutions to the anatomical pathology laboratory so patient care can move beyond what is to what can be.

Looking ahead in 2004, Ventana angled to get in on the ground floor of a new generation of drugs targeted at people with certain genetic traits by automating the screening process for such medicines. "There's a whole host of drugs coming down the pipeline from drug companies, and the indications are that there will be a tissue-based diagnostic required to admit these patients to therapies," Gleeson announced in a 2004 Arizona Daily Star article. Moving toward this growth, the company increased its Tucson workforce by 10 percent. It also began developing an integrated information management sys-tem that would link its instrument results to hospital information systems.

By 2005, the company expected to reap revenues of just under $200 million. More than 5,000 of its devices were used for cancer diagnosis in at least 1,500 hospitals and clinics in 55 countries. It controlled a 60 percent market share in automated diagnostic and reagent systems. Promising further growth, that same year it also entered into a five-year global supply agreement with TriPath Imaging, Inc., which allowed Ventana to sell and distribute a branded version of TriPath's interactive histology imaging system worldwide. "[W]e are a fraction of what we are going to be," Gleeson announced in a 2005 Tucson Citizen article. "We want to be in every hospital in every city in every country in the world."

Principal Subsidiaries

Ventana Medical Systems GmbH; Ventana Medical Systems Japan K.K., Ventana Medical Systems, Pty. Ltd.; Ventana Medical Systems, S.A.

Principal Competitors

Apogent Technologies Inc.; Beckman Coulter, Inc.; Becton Dickinson & Company; BioGenex; DakoCutomation; Diagnostic Products Corporation; Digene; Ortho-Clinical Diagnostics.

Key Dates:

Dr. Thomas Grogan and Ross Humphreys found Immunodiagnostics Inc.
The company is renamed Ventana Medical Systems.
The company holds its initial public offering; purchases BioTek Solutions.
Henry T. Pietraszek replaces Danehy as president and CEO.
Ventana acquires Biotechnology Tools, Inc.; acquires the key assets of Oncor, Inc.
Christopher M. Gleeson replaces Pietraszek as CEO.
Ventana acquires the assets of Quantitative Diagnostics Laboratories, Inc.
Company headquarters move to Oro Valley, Arizona.

Further Reading

"Local Success Story: Ventana Leads World in Tissue Analysis Technology," Arizona Daily Star, September 15, 1996.

"Tucson Paid Off for Ventana Founder Grogan," Arizona Daily Star, October 10, 2002.

"Ventana Medical Sees Growth," Arizona Daily Star, February 21, 2004.

"Ventana Medical Systems Inc.," Investor's Business Daily, October 7, 2003.

Vitu, Teya, "Diagnosing Cancer Propels Local Firm," Tucson Citizen, May 26, 2005.

Weintraub, Arlene, "These Tests Go Way Beyond the Pap Smear," BusinessWeek, October 15, 2001, p. 68.

Wichner, David, "Tucson, Arizona-Based Medical Device Firm to Adjust Production After Patent Suit," Arizona Daily Star, January 29, 2004.