FROM THE OUTSIDE, THE SQUAT GRAY building by the railroad tracks seems ordinary enough. But inside, security pads requiring coded keys are by every door, and stairs made from a single, reinforced piece of steel lead to the explosion-proof control room. Much like the observation balcony of an operating theater, the control room overlooks an area in which stands a Rube Goldberg-like maze of green, blue, red, white and orange pipes leading to and from a 1,500-liter fermenting vat.

The air pressure in the fermenting room, which has double airlock doors, is kept below that in adjoining areas to prevent any stray emissions from escaping. All waste is purified in a self-contained filtering and disposal system below the thick concrete floor. Every part of the equipment is monitored by computers 24 hours a day.

The object of all these precautions is genetically engineered organisms, and the fermenter that produces them is the heart of a $10 million plant at the Cetus Corporation in Emeryville, Calif. Through these products, [Dr. Ronald Elliot Cape (born 1932)] - Cetus's co-founder, chairman, chief executive officer and visionary -plans to turn the nation's first company devoted to biotechnology into a major drug company within the next decade.

Cetus took a giant step toward that goal last May when it was awarded the first patent for a mutationally altered protein, called a mutein - specifically for a form of interleukin-2 (IL-2) it developed. IL-2 is a protein that activates and regulates the immune system. Produced by a specific group of white blood cells called T-lymphocytes, IL-2 ''turns on'' other T cells, transforming them into ''killers'' that attack intruders in the body - and it has recently shown great promise as a potential treatment for various cancers and other serious diseases.

Before large quantities of IL-2 could be produced, it would have been impossible for researchers - notably the team headed by [Dr. Steven Aaron Rosenberg (born 1940)] at the National Cancer Institute in Bethesda, Md. - to carry out meaningful anticancer experiments with interleukin-2 because the body makes such minute amounts of it. Dr. Rosenberg's team was the first to receive - from Cetus - an ample supply of IL-2 produced by genetically engineered bacteria, and since late 1984, the team has been treating patients with cancers so far advanced they no longer responded to chemotherapy or radiation. In this experimental therapy, the team removes a small portion of a cancer patient's white blood cells, mixes them with IL-2, and then transfers these cells as well as extra doses of IL-2 into the patient.

Early this month, [Dr. Steven Aaron Rosenberg (born 1940)] reported in the New England Journal of Medicine that this treatment reduced the size of the tumors by more than 50 percent in 11 of 25 patients, and that one patient with melanoma, a serious skin cancer, had been in complete remission for 10 months. Four types of cancer - melanoma, colorectal, kidney and lung - responded to the treatment, though not in every instance. (In a subsequent experimental group, one patient whose melanoma had spread throughout his body died three days after completion of his IL-2 therapy. Doses of drugs in an early stage of development, such as IL-2, are often more toxic than their ultimate recommended dosage because the best forms of treatment have yet to be determined.) IL-2 therapy signals not only hope against cancer, but also the coming of age of a new industry. Using biology and genetics to create and manufacture products is a field that is likely to have an effect on almost every aspect of our lives. For the last 14 years, Ron Cape has been banking on just that. Biotechnology involves such developments as gene splicing (or recombinant DNA), monoclonal antibodies, and protein and microbial engineering, all of which are ways for diagnosing and treating human diseases. These developments also have applications in chemicals, energy, agriculture, the environment - in fact, in almost every industrial sector of the economy.

Cetus products already on the market include a diagnostic test for prostate cancer and a dysentery vaccine for swine. Cetus scientists have also succeeded in creating disease-resistant plants through genetic engineering. Other companies now market human insulin and human growth hormone produced by the recombinant DNA process, and the expectation is that within the next several years genetically engineered products will range from medical treatments that can correct genetic diseases, such as sickle-cell anemia, to seeds that self-fertilize, to bacteria that are modified to break down pollutants. In the health field alone, more than 100 diagnostic and therapeutic products based on biotechnology are before the Food and Drug Administration for approval.

Industry analysts predict that by 1995 annual sales of biotech products will be in the tens of billions of dollars. In the last five years alone, $3 billion in new investments have been made in what may become this decade's version of the semiconductor boom of the 1960's that spawned Silicon Valley.

Like the computer industry, the fledgling biotech business has not been immune to growing pains. Investors who were attracted to biotechnology in the 1970's and early 80's soon realized that biotech was a poor short-term investment for big returns, because almost all major products were still several years from market.

''The buying public initially saw biotechnology as a blue-sky, conceptual business,'' says Jennifer Byrne, portfolio manager for the Medical Technology Fund of Pro Services, a mutual fund, in Blue Bell, Pa. ''Then, in the bear market of 1982-83, no one cared about cures for cancer. But the biotech businesses were coming through.''

An indication of how well the biotech industry has developed both scientifically and commercially is the recent acquisition by Bristol-Myers Company, a major pharmaceutical house, of [Genetic Systems Corporation], a biotechnology company based in Seattle. The purchase price was $294 million in Bristol-Myers stock.

The next two years ''will be the most exciting for the biotech industry,'' says Parag Saxena, portfolio manager for health-care funds at New York's Citibank. As the industry enters this new phase, the handful of leading independent companies, according to Saxena and other analysts, include [Cetus Corporation], Genentech (of South San Francisco), Biogen (of Cambridge, Mass.) and [Centocor Biotech Inc.] (of Malvern, Pa.).

How Ron Cape and Cetus have managed to survive and thrive is the story of a new breed of American entrepreneur -the biologist-businessman. 

THE CETUS LOGO IS A WHALE AND Ron Cape is wearing a company tie with whales on it. When he and his partners were thinking of a name for their new company in 1971, they wanted to avoid the generically predictable industrial names that make one company sound like another. Cape found Cetus - the whale - on a star chart. ''The whale is the largest living thing,'' he says, ''while we work on the smallest living things - cells and viruses. And besides, everyone likes whales.''

On a wall beside Cape's desk hang a half-dozen carved whales and an oar from Princeton, where he was coxswain of the rowing eight. Covering another wall is a National Geographic Society map of the world.

The view offers a sweep of the railroad tracks that run by the fermenter building and an old chemical plant, as well as of the Bay and Golden Gate Bridges spanning San Francisco Bay. Cetus headquarters - in Emeryville, between Oakland and Berkeley - is housed in former research and development buildings of the Shell Oil Company.

Occasionally, Cape stands at the window to time the sunset behind the hills of Marin County. It is one of the few things he does for no discernible reason. At 53, Cape looks the physically active man he is. He is a skiing fanatic, although there is a little more weight on his 5-foot-7 frame today than at Princeton, where he was graduated, in 1953, summa cum laude and first in his class with a degree in chemistry, and where he even talked with Einstein. In the requisite corporate garb, he fits the role of ''the statesman of the biotech industry,'' as Nobel laureate and Rockefeller University president Joshua Lederberg calls him.

These days, Cape is at company headquarters only about half the time. Since late 1982, when he hired Robert A. Fildes to be Cetus's president, responsible for the day-to-day running of the company, Cape has concerned himself with long-term planning and being a spokesman for his company and his industry.

Among other public roles, Cape is immediate past president of the Industrial Biotechnology Association and is on the boards of directors of Scientific American and the San Francisco Opera. He is an adjunct professor of business administration at the University of Pittsburgh, and he is a member of both the Rockefeller University Council and the advisory council to the department of molecular biology at Princeton University.

He travels more than 250,000 miles a year to attend meetings, testify before Congress, and speak to scientific and business groups. On his frequent trips, Cape confines himself to carry-on luggage to save time. He tends to walk slightly stooped and with a quick gait, and as he goes through an airport - his suitcase and briefcase in hand, a garment bag and portable computer slung over his shoulders, his raincoat flapping - he looks from the back rather like Groucho Marx without spats.

Whatever he speaks on these days, Cape manages to work in the subject of the Japanese challenge in yet another area of advanced technology. ''We're in a race with the Japanese for pre-eminence in biotechnology, just as we were in a race with the Russians to get into space. . . . I used to say, as a rhetorical device: 'The Japanese beat us in steel, they beat us in cars, they beat us in textiles, they beat us in electronics, and next they're going to beat us in biotechnology.' Now I think the future for this field . . . is going to be a repeat. We're going to hand over another made-in-America invention to others.'' Cape firmly believes that, as a countermeasure, the United States Government should increase, not cut, funding for basic research.

Cape's passion for biotechnology is understandable. He is, after all, one of the first biologist-businessmen.

''When we started Cetus,'' he says, ''it was two years before the recombinant DNA process was invented. But we saw all the creativity in biology and all the Nobel Prizes that were being awarded and knew there just had to be a business there.''

He came upon his vocation serendipitously, while on a business trip for his father's cosmetics company. Victor Cape, the son of Rumanian Jewish immigrants in Canada, also owned six drugstores. He built a comfortable life in Montreal for his wife and two sons, and expected his firstborn to take over from him. But Ron Cape had other plans. Going to Harvard University for his M.B.A. right after Princeton was in part an effort to postpone going into the family business. Then, when he couldn't put it off any longer, he spent more than a decade working in and running the cosmetics company.

Where Ron Cape found his future, however, was at the 1962 Seattle World's Fair. One of the exhibits was a model of the Meselson-Stahl experiment, which explained how DNA replicates. Seeing it was a momentous experience for Cape, who remembers thinking, ''This is really moving - and I'm making and selling cosmetics!''

For the next four years, Cape put in full hours at the family business while working toward a Ph.D. in biochemistry at McGill University in Montreal. He did so well in his studies that he was awarded a fellowship, in 1967, to do postdoctoral work in molecular biology at the University of California at Berkeley. When the fellowship ended in 1970, he and his wife, Libi, took stock of what he could do so that they and their two daughters, Jackie and Julie (then 11 and 9), could remain in the Bay Area. The prospects were bleak. ''I was,'' he says, ''on the streets of Berkeley with an M.B.A. from Harvard and a postdoc in molecular biology. In 1970, that was a lousy combination. I was someone who had blown it in both fields.''

Or so it seemed, until he realized that there was a way to merge his expertise. In 1971, Cape and four partners - Donald A. Glaser, the 1960 Nobel laureate in physics, who is also a molecular biologist; Peter J. Farley, a physician with an M.B.A.; Calvin Ward, a scientist, and Moshe Alafi, a venture capitalist -formed Cetus Scientific Laboratories, now Cetus Corporation. Cape became president, chairman and C.E.O.

For capital, the founders went to investors in the Bay Area. The timing was good. In the early 1970's, there were few public offerings, since the stock market was down. However, Cape and his group knew that, as he puts it, ''venture capitalists are people whose instincts are to invest and have something to dream about. By telling them that the next big revolution was going to be in biology, we were telling them what they wanted to hear.'' Cape also told them Cetus was the only game in town; for several years, it was. Cetus raised $2 million in 1972; $3 million in 1973. By 1980, Cetus had raised over $30 million from large corporate investors. CAPE FREQUENTLY TOLD early investors that Cetus ''would find answers to questions that aren't yet known.'' ''I had been living that biology for 10 years,'' he says. ''I understood the specifics of the kind of knowledge that can be harnessed - if not the specific products.'' He cites Columbus: ''He had a vision. He may not have known exactly where he was going, but he knew he was on a specific exploration and that there were terrific things to be discovered. It's the same with us. Until you find the specific things, however, it's bad to build too fast. As they say, the bigger you are, the harder you fall.''

Cetus did research in the agriculture and health fields, and supported itself by doing contract work for several large corporations. From 1973 through 1977, for instance, it worked with the Schering-Plough Corporation, a pharmaceutical company, to augment its production of antibiotics. Beginning in 1978, Cetus joined with National Distillers to find better processes for making industrial alcohol.

The early work was part of the ''old'' biology - that is, biology before the manufacture of recombinant DNA organisms - but later work used the ''new'' biology Cetus and others developed. Cetus stayed small and privately held, waiting for the right moment to come along before making a play to become a major corporate force.

There was no question that, in the fall of 1980, the right moment had arrived. On Oct. 14, Genentech - which was established in 1976, across the bay in South San Francisco -put 1.1 million shares on the over-the-counter market. In the first 20 minutes of trading, the shares went from $35 to $89 apiece, closing the first day at $71 1/4. The biotech boom was on.

Five months later, the investment bankers Lehman Brothers and L.F. Rothschild, Unterberg, Towbin took Cetus public. Five million shares were offered at $23 a share, netting the company $108 million - the most money raised in an initial offering up to that time. ''The time to take hors d'oeuvres,'' says Cape, explaining his theory of corporate financing, ''is when they're passing them around.''

Cetus's closest competitor has been Genentech, whose co-founder and chief executive officer is Robert A. Swanson. (Cape and Genentech's 37-year-old C.E.O. have known each other for 11 years; in fact, in the mid-1970's, they talked about Swanson, then a young venture capitalist, joining Cetus.) Forming his company five years after Cetus, Swanson had the advantage of watching a prototype at work.

Cetus's interest in all areas of biotechnological possibilities was attractive to investors when it was the only biotech company around. A wide product line gave better odds on the company's hitting on a hugely profitable product. But as competitors came along and started to make headway in specialties, Cetus began to look too diffuse.

Genentech, for example, aimed to be exclusively a major pharmaceutical company based on genetic technology and, to many analysts, it eclipsed Cetus in the early 1980's. ''That sharper focus,'' says an executive with another large biotech company, ''is what got them bigger faster than Cetus.''

This perception of diffuseness, coupled with the slump of all high-tech stocks that began in mid-1982 (and continued through 1984), made the Cetus stock drop to a low of $7 1/2 that summer. THERE'S A STAGE IN A COM-pany's growth where the first generation should let go and bring in someone and make it clear that he's in charge,'' Cape says. ''Early on, and through the mid-70's, Cetus was of a size where I could reasonably be the right guy in the right place and run the company and get a kick out of it. But after we went public and our staff grew to over 500, that wasn't the case anymore. The way we were running Cetus was with an emphasis on research goals, but with less thought about if the research is successful, then what?''

Of the five founders, only two -Cape and Peter Farley, who became Cetus's president in 1978 - were involved in the running of the company. Donald Glaser, a professor at the University of California at Berkeley, is chairman of the company's board of scientific advisers. Calvin Ward and Moshe Alafi sold their stock in 1977. (Cape and Glaser are Cetus's two largest individual shareholders, each with about 3 percent of the stock.) Cape and Farley wanted a manager with credentials in business, science and pharmaceuticals (Farley has since left Cetus and is involved with other venture-capital interests). After a year's search, they found Bob Fildes at Biogen, in Cambridge, Mass., where as president he was No. 2 to the company's founder and then-chairman Walter Gilbert, the 1980 Nobel laureate in chemistry. Previously, Fildes had been vice president for drug development and manufacturing at Bristol-Myers. He became president and chief operating officer of Cetus in December 1982.

A 47-year-old Briton with a doctorate in biochemical genetics, Fildes has a streetwise and no-nonsense manner (''I'll sort you out,'' is a Briticism subordinates often hear). His performance during his first three years at Cetus has impressed most observers in the financial community, and he is credited by both Cape and analysts for having put Cetus's tighter focus into effect. ''Bob deserves kudos,'' says Nelson Schneider, head of a Washington venture-capital firm. ''He has put the company on firm footing and an excellent track.''

''The addition of a professional manager is a demonstration of strength and of the forward-thinking attitude that Cetus and Cape have,'' notes Linda Miller, a health-care analyst with Paine Webber, a New York investment house. ''Once you get to the stage where you're commercial, you need someone who knows strategy, implementation and the details of getting the job done. In Cetus's case, the transition has been organic and orderly, and it has enabled them to maintain their momentum.''

Orderly transition and growth do not always come naturally to companies. Two years ago, there was a big four of biotech - Cetus, Genentech, Genex Corporation (in Gaithersburg, Md.) and Biogen. Genex and Biogen, however, then began to suffer from problems inherent to all entrepreneurial enterprises that must match growth with a switch from visionary to more professional management.

Growth can come with specialization, but the choice of a product line can make or break a company. Genex, for instance, banked its success on phenylalanine, an ingredient of the sweetener aspartame, which is manufactured by G. D. Searle (now a part of Monsanto) and sold under the brand name Nutrasweet.

Genex spent about $10 million on a manufacturing plant, believing that a contract it had with Searle would make it a major supplier. But other companies competed with Genex and the price of the ingredient dropped. Searle did not renew what it says was a yearly option it held with Genex, which has lodged a multimillion-dollar lawsuit against Searle, claiming fraud and securities-laws violations.

Biogen's case is an example of how, in a business, good science must go hand in hand with good management. Until his sudden and unexpected resignation last December, Walter Gilbert ran the company. But, among other problems, Biogen lost about $13 million in 1984 by spending far more on research than it could make up in revenues.

Most scientists in biotech have come from universities, where research is valuable for its own sake. But as Fildes bluntly puts it, ''You can't do business in an ivory bloody tower.''

The Biogen board apparently agrees with this assessment. Early this fall, it made James L. Vincent its new chairman and chief executive officer. (Vincent had built strong divisions at Texas Instruments; Abbott Laboratories, a pharmaceutical company, and Allied-Signal, a high-technology company.) At Cetus, the close relationship between Cape and Fildes has been critical to the orderly transition of power, which will include Fildes's becoming C.E.O. in the near future. Since the day Fildes assumed the presidency, the two men have talked at length about the company and its future. Cape is more a philosopher; Fildes, a pragmatist.

In late 1982, both knew that the company needed to sharpen its focus. Fildes went into action. In January 1983, Cetus announced that about 70 percent of its work and financial resources would go into the health-care field, with an emphasis on anticancer drugs and treatments. Six months later, the investment banking firms Lehman Brothers and Oppenheimer & Company co-managed a $75 million limited health-care partnership - with moneyed individuals - for Cetus. Other changes followed. Cape had made a point of being low-key in his dealings with the press and stock analysts. ''Genentech taught us a great deal about P.R.,'' Cape admits. ''We were overly underexposed. Our profile was so low, I remember the Wall Street Transcript having a roundtable discussion on biotechnology with analysts I had either never met or never had sustained conversations with.'' He started making himself and Cetus much more visible to the financial world.

All these innovations, along with steady product development, sound management and a general increase in value of biotech stocks, brought Cetus stock up to a recent high of $33.375. Today, Cetus has more than 600 employees; a third of the 320 staff members in research and development are Ph.D.'s.

In the fiscal year ending June 30, the company showed a profit of $1.2 million. As with all biotech firms, profits at this point are more a result of research and development than of product sales. Large profits are not expected for another two or three years.

Cetus has more than $90 million in liquid assets, and access to about $200 million for the day it takes its major products to market. That should begin in 1988 with two anticancer drugs - IL-2 and beta interferon. (New drugs must go through several years of animal and human clinical trials before the Food and Drug Administration considers them for approval.) ''The rule of thumb is that it takes $25 million and six years to develop a therapeutic,'' says Cape, ''and we're developing six.'' They are: IL-2, beta interferon, tumor necrosis factor, colony stimulating factor-1 and two immunotoxins - all potentially potent drugs against cancers and viruses.

''In hindsight,'' says Linda Miller of Paine Webber, ''if Cetus had focused two years earlier, it would have had a more dominant role. But it's petty to be negative about Cape. Not many people can put together a company worth about $500 million.'' MY MIND GOES BACK TO all those drug-company executive suites I was thrown out of in the 70's,'' Cape is saying as he watches a carton of IL-2 being packed before it is sent to one of the more than 400 researchers, worldwide, working with the mutein. (Like any company developing a new drug, Cetus provides free samples to approved researchers.) ''I can't count the number of drug-company research executives and management executives who told me that recombinant DNA was irrelevant to any of their needs,'' Cape continues. ''They're not saying that anymore.''

Today, chemical, energy, food and drug companies are among those that have realized the relevancy of biotechnology.

The SmithKline Beckman Corporation, a health-care company, and the Du Pont Company, the chemical giant, recently spent millions of dollars to build their own biotech laboratories.

Schering-Plough spent $12 million in 1979-80 for a 14 percent share of Biogen, and in 1982 spent $29 million to acquire DNAX, a Palo Alto, Calif., biotechnology firm.

In April, the Eastman Kodak Company announced a $45 million joint venture with ICN Pharmaceuticals in Costa Mesa, Calif., for research into anticancer drugs. In addition, Kodak has established its own life-sciences division, utilizing its huge resources and chemical expertise to manufacture genetically engineered products.

The stakes in the pharmaceutical market are high. One successful drug or therapeutic is worth many millions of dollars a year to its makers. Cape estimates that the American market for cancer diagnostics is $400 million a year now and probably will be $2 billion in 1995.

It was, therefore, not surprising when the pharmaceutical company Eli Lilly recently agreed to acquire Hybritech, a San Diego-based company that manufactures monoclonal antibodies, which are artificially produced proteins that identify and attack specific disease organisms in the body. The purchase agreement: at least $300 million.

Over the long haul, only a few of the hundreds of existing biotech companies are expected to become successful independent businesses. Furthermore, a company that hopes to have products in areas outside its specialty will need not only financial backing but also alliances with established leaders in the various fields. As Bob Fildes has said, ''The only way to get into a shark-infested world is to go in on a shark.'' Cetus, for example, last year formed an agricultural joint venture with [W.R. Grace and Company], called [Agracetus, Incorporated], in which Grace has pledged at least $60 million for a 51 percent interest. Joint ventures have also been negotiated with Nabisco Brands (before it became an R. J. Reynolds subsidiary) for research into food and food additives, and with Weyerhaeuser, a leading forest-products company, for possible wood by-products.

''We knew from the beginning that there would be a long time line for developments in agriculture, and that even with good products you need a strong and large marketing arm like Grace,'' says Cape.

WHEN RON CAPE first moved from Montreal to California, the only person to approve was his wife, Libi. Why seek your fortune elsewhere, the rest of his family asked, when there is one to be made at home? But he has not done badly for a biologist-businessman who 15 years ago thought he had blown it in both fields.

He has had the pleasure of seeing a new science evolve. ''We used to do genetics with our eyes closed,'' Cape says late one afternoon in his office. ''Now we do it with our eyes open. We can redesign genes, not at random but actually knowing the genetic coding material. It's unfortunate that people use the term 'designer genes' as a flip joke, because it's accurate. The genetic code is almost precisely as an engineer would have designed it. It's almost impossible to communicate the wonder and yet the simplicity of it.''

And there are, of course, the financial rewards.

His annual salary for the fiscal year ending last June was $245,000; he owns about 700,000 shares of Cetus stock, worth nearly $16 million earlier this month.

After timing the sunset from his office window, Cape turns and says, ''My father couldn't relate to my being an academic, even though he called me 'Professor' for years - until it looked like that was what I wanted to become. It wasn't until Cetus was well on its way that he understood what I was doing.''

Cape smiles broadly. ''Then he said, 'This I can relate to.' ''

"Sometimes I couldn't tell if we were the rearguard or the vanguard."  -Ron Cape, founder and president of Cetus

The first biotechnology company started with a machine. Not just any machine; it was a bioengineering machine. It could induce mutations in a massive vat of organisms. It could identify strains for potency, reproducibility, morphology. It could make clones. No one at the beginning knew what to do with the machine, or even how it might be used, but they could imagine without difficulty the heights they could achieve not only scientific distinction and not merely survival among commercial giants.

The long-term prospects were indeed fantastic, but the short term was plagued with uncertainty. As the idea began to take shape and a company began to emerge, the founders struggled between new versions of old tensions: should the company follow the more traditional route, producing and then selling the machine as an experimental tool for university research, or could the company use the machine to actually make a bioscience product, something that had practical and commercial value?

In its most familiar form, the central challenge to starting the first biotechnology company had to do with the very nature of what the biological sciences had been, versus what the biological sciences could become. But the source of the disagreement went much deeper, involving conflicting attitudes about whose insights should hold more weight: science, capital, or public good? Whether the new generation of bioscientists were quixotic, or blindly pursuing an alchemist's dream, they stood alone like Janus, both in the rearguard and the vanguard. This battle between bioscientists, capitalists, and the public-would determine the  fate of the first biotechnology company, and the shape of an industry forever.

The Bioscientist and the Machine

In 1960, Donald Glaser won the Nobel Prize for his invention of the bubble chamber. It was an experimental tool that high-energy physicists used to literally see everything: the interior of atoms, the structure of particles, the composition of matter; it was so far-reaching that it ran through the settling of modern nuclear physics for years to come. In his effort to make a scientific field more efficient, Glaser had shown himself capable of finding pragmatic solutions that could carry him and an entire scientific field into uncharted frontiers, and beyond. By all accounts, it was a remarkable performance. At only thirty-four years old, he had reached elite status within physics, and in the public's imagination.

But Glaser found the limelight uncomfortable, and worse, his scientific field no longer relevant. So he quit physics, on the grounds that pure research-conducted by swarms of students and faculty using massive and incredibly expensive machines-had little practical value to society, or worse, contributed to destructive warfare. Then he and his young wife moved to Boston, and he spent a semester sampling introductory courses in the biological sciences at MIT and then another semester as a postdoctoral fellow at the University of Copenhagen to study microbiology. By the time that Glaser returned to Berkeley a few years later he was ready to restart his scientific career, but this time, in a scientific field that gave something back to life.

Where exactly was Glaser going, many of his colleagues wondered in dismay? Debates about Glaser and his decision to leave a scientific field that he had conquered only to start over in another tore at his friends and UC administrators, and tore departments apart. But Glaser had more in mind than simply avoiding heightened professional expectations; he was determined to make a scientific field more efficient, more practical, and more relevant. (1)

While studying microbiology in Denmark, Glaser witnessed firsthand "a monotonous experimental method incapable of seeing beyond pure research." He saw rows of microbiologists sitting at their lab benches in isolation, quietly spreading cells on nutrient agar in petri dishes. He watched them wait, sometimes as much as a day or two, for individual cultures to incubate and grow into cell colonies a few millimeters in diameter. They would peer through their microscopes and search for colony "fingerprints"-a recognizable shape or size, signs of mobility on the agar surface, or sensitivity to various applied stimuli. Even more stunning, from Glaser's perspective, was that the most advanced experimentalists approached their research in the simplest manner, even if complex and ramified in detail. They would pluck a suspicious organism from a vat of colonies, re-culture it in a variety ofliquid suspensions, and then conduct detailed biochemical, serological, and microscopic staining techniques to produce an effect only partially understood at the time. Most of the experiments that Glaser saw, much to his wonder, took anywhere from two days to two weeks to complete, and in the best case, the highest trained technicians could identify just three out of four cultures with any reasonable degree of certainty. Here was an opportunity to make an entire scientific field more effective, more useful, and more practical; to introduce, in short, the principles of engineering to the biological sciences. 2

Glaser's quest to remake the biological sciences started modestly enough, when he designed, simple in outline and useful in its application, a machine that he called "the dumbwaiter," which stacked eight one-meter-square trays, each holding ten petri dishes at a time. To make the dumbwaiter operational, however, he integrated it with a much more sophisticated machine that he built called Cyclops, which illuminated the petri dishes with a light from below so that an overhanging camera could take time-lapse photographs of the growing cultures. To permit experimental manipulation, Glaser added to each tray a series of pipettes that administered to the growing cultures a range of chemicals, such as amino acids, penicillin, or vitamin B, in order to induce mutations or other external variations. Then, to allow for data collection, he attached a computer to record the behavior of each individual colony. Less dramatic, but of considerable importance for advanced microbiological research, Glaser included an intricate mechanical hand that used tiny quartz-rod fingers to pick up specific colonies and lay them down on other trays for further concentrated study.3

Without question, Glaser's "dumbwaiter" and its many variations constitute an engineering marvel, but no design better exemplified Glaser's leaping mind and artful talents than his machine that made clones: the Lazy Susan. Anticipating the technology later used in inkjet printers, Glaser built a machine that generated drops that contained, on average, a single bacterium from which an experimentalist could then grow clones. Glaser found it surprisingly easy to get his initial design to produce drops that contained bacteria; the central challenge that he faced, however, was to create a machine that produced drops that each held one and only one bacterium. To combat this problem, he rigged a laser beam to shine light on each suspended droplet as it formed, and then attached a computer scanner to analyze the light that passed through each particular droplet. If the computer recognized that the laser beam reflected only one bacterium in the suspended droplet, then the machine would literally drop the individual bacterium into petri dish, ultimately producing a sheet of colonies, each one guaranteed to produce a clone. However, if the computer recognized that the laser beam that had passed through the drop refracted, or if the computer recognized that the beam reflected two bacteria in the drop, then an automatic electrical charge would push the unwanted drop away. From there it was relatively simple to apply his other inventions, such as Cyclops, which photographed cloned colonies for advanced morphology studies.4

Glaser's machines were apparently compatible, in his mind, with his belief that he could make the biological sciences more useful to humanity. Inconsistencies notwithstanding, Glaser's technological remedies for the biological sciences reflect the unmistakable signs of a distinctive engineering genius and a mastery of design seldom duplicated. Simply put, Glaser's series of machines that he called "a screening system"the dumbwaiter, Cyclops, and Lazy Susan, as well as "baby counter," Roundabout, Candid Camera, "colony picker," and a host of other machines-embodied the principle of bioengineering that lay at the heart of the coming scientific and industrial revolution. The only method that might have been more efficient than using Glaser's bioengineering machines to find a desired organism would be to develop a bioengineering technique to make a desired organism. But in the mid- 1960s that was a theoretical way of doing bioengineering, and it would happen first in academic laboratories far off in the future, or so thought a handful of bioscientists, such as Paul Berg and Stanley Cohen at Stanford, or Herbert Boyer at UCSF.

Many more scientists knew about Glaser's bioengineering screening system than knew about developing genetic recombination methods, and they found the former inspiring. An official at the Centers for Disease Control speculated that a bioengineering screening system would use just "one-third of [a specialist's] time and cost half as much." That was not nearly ambitious enough, said another: "it will reduce a typical eight-man-hour task to about two hours and save as much as $18,000/ man/year." Casting aside all restraint, a science writer boldly declared that Glaser's bioengineering system would make advanced academic training in the biological sciences obsolete. Of those who saw the coming of the new biosciences, perhaps the most sober assessment came from Robert Angelotti of the FDA, who conceded that a "ready-made market" already existed for bioengineering. When asked to elaborate, Angelotti tried to temper his obvious enthusiasm by repeating a theme that had become popular in the late 1960s: "the need exists."5 Need perhaps, but academia approached Glaser's new bioengineer ing screening system with paralyzing indifference. Most biological scientists could not imagine an experimental approach that could render more reliable discovery. Arthur Kornberg, biochemist and Nobel laureate at Stanford, spoke for many when he warned that bioengineering would one day "lead everyone astray." It would become fashionable in later years to dismiss opinions such as Kornberg's as tragicomic evidence of academia's quaint, ideologically hidebound fear that bioengineering would spell doom for less popular bioscience subdisciplines, or taint the cherished objectivity upon which the profession rested. But such concerns should not be so summarily dismissed. Glaser's machines had passed only preliminary tests, no one had yet considered the prospects of biohazards, and most academic laboratories did not have the space for such large and expensive machines or the money to purchase them. Moreover, although it was only obscurely visible at the time, there was more than a wisp of truth in what Kornberg feared: bioengineering would one day circumscribe many academic bioscience programs and become virtually indistinguishable from bioengineering practiced in commercial industry. 6

The Venture Capitalist and a Dream

The isolation of Glaser's microbial screening system from academia still left plenty of room for a young venture capitalist named Moshe Alafi to think one step beyond: the application and consequences of applied research. Even as a child, Alafi always saw and did things a little bit differently. Born sometime in 1940, Alafi grew up in Baghdad, the son of ajewish upper-class merchant. He attended the distinguished French college-preparatory school Alliance Israeli Universelle, where he enjoyed a comfortable and privileged education that was walled off from an otherwise violent world. He was torn, unable to make sense of the conflicting circumstances that defined his community: conspicuous wealth amid religious conflict. Confused, he favored instead risk-taking decisiveness- taking a side even before all the evidence is in-as a way to move ahead of difficult issues. He made decisions, and then, just as decisively, would change his mind. His fluid manner and uncompromising approach touched everything he did, including a unique sense of bioengineering and its enormous commercial capabilities.7

After graduating in 1957, Alafi immigrated to the United States and enrolled at the University of California, Berkeley, as an undergraduate in physiology. He enjoyed the spirited freedom of Berkeley life so much that he entered graduate school, switching fields of study within the biological sciences, from physiology to biophysics and then back to physiology. Characteristically, Alafi treated his college education more as a hobby than an intellectual pursuit. Indeed, while a graduate student he started a hosiery-store chain, which most certainly stood out in Berkeley, much like the double-breasted, pinstriped blue suits that he occasionally wore to class.

Just as suddenly, Alafi quit graduate school and started a company, Physics International, which sold nuclear medical equipment. One year later, he shifted the company's primary market to testing nuclear Minuteman missiles, for which the U.S. government paid handsomely. Those who knew him during this time, whether in business or personally, admitted that his pace and tack was a large part of his appeal. University of California Regent Ed Heller respected Alafi enough to invest a half-million dollars in his early business ventures. The bohemian poet Lawrence Ferlinghetti enjoyed Alafi socially, and often gave him keys to stay in his Big Sur cabin. And Ed Carter Hale, chairman of Neiman Marcus, always invited Alafi to his intimate cocktail parties. Alafi thoroughly enjoyed his life as a local celebrity, and more so when Physics International went public in 1964. But he had no desire to work for anyone else but himself, particularly for a publicly owned company. So Alafi sold his share of Physics International and began to drift, searching for another big venture.

For anyone other than Alafi, it would have been a poor time to change careers. The quickening of America's war against communists in Vietnam and against poverty at home had created, by the mid-1960s, a surreal and inherently unstable economy. The steady growth of the nation's financial markets-which had been going on since Kennedy's first year in office-had taken an abrupt turn: inflation and unemployment levels were rising, real wages and consumer spending was falling, the nation's GNP was stagnant, and business startups, long recognized as a powerful countercyclical tool, had slowed most dramatically.

Yet, so far as the economy was concerned, things could hardly have been better in California's Bay Area. The roots of the boom that delivered opportunity to entrepreneurs such as Alafi can actually be traced to 1955, when Shockley Semiconductor planted the seed from which grew a plethora of electronics spin-offs, including but certainly not limited to Fairchild, Intel, and Tandem Computers. Meanwhile, Varian went public in 1956, followed by Hewlett-Packard in 1957. Then, in the wake of Sputnik, a Niagara of federal funding for high-tech weaponry and gadgets flooded local firms with lucrative contracts, of which Alafi's Physics International was just one of many that profited. Before long, a fabulous amount of wealth had flowed into the hands of a relatively small number of local entrepreneurs. Meanwhile, Congress, searching for an opportunity to shift some of the burden of economic growth from the public sector to private markets, passed the Small Business Investment Act in 1958 to entice private investment in small start-up ventures with tax breaks and matching funds up to $300,000. In reality, the SBIC had very little direct impact on business development: the program's $5.2-million budget was smaller than that of the Office of Coal Research, its staff of thirty-one was less than one-tenth of the Federal Crop Insurance Program, and all tax breaks and credits passed through the hands of the investors before the capital reached a startup's ledger. For all the modesty of this enabling legislation, however, the SBIC showed its might a few years later when it brought the new class of Bay Area industrialists into a formal and professional investment activity. By the mid-1960s, the core of venture capital was born.8

In 1965, Ed Carter approached Alafi and asked if he would like to join as a general partner in his venture capital firm, Murray Hill Scientific Investment Company. Naturally, given his proclivity for risk and adventure, Alafi accepted the offer. Also quite naturally, while most venture capitalists at the time were leaping into computer technologies, Alafi deliberately looked for other business opportunities.9

Alafi came to know Donald Glaser at about the same time he became a partner at Murray Hill. They met socially first, probably at a neighborhood cocktail party, and then became friends as their two families spent time around Alafi's swimming pool. For Glaser, the introverted tinkerer, Alafi's cosmopolitan ways seemed the perfect counterpart, and a bond based on mutual respect soon formed between the two men. It was at one of these informal gatherings sometime in summer 1965 that Alafi learned about Glaser's machines.10

Alafi did not lack for evidence that Glaser's bioengineering machines had enormous potential, so he skipped the customary due diligence that marks venture capital and pressured Glaser to start a company as a partnership right away. He asked Glaser to see with his seasoned scientific eye the lives that they could save, the mouths they could feed, and the illnesses they could cure. As a further emolument, Alafi carefully pointed out that the medical-diagnostics market alone easily surpassed $50 billion. Then Alafi asked Glaser to imagine controlling even larger markets. It would take Alafi more than a year to convince Glaser to start a company, and then, said Glaser, only if Bill Wattenberg, a faculty member in Berkeley's computer science department who had designed a prototype for a personal computer, could join the partnership.11

With their consent in hand, Alafi plunged ahead with a remarkably simple business strategy: turn the academic research of his two partners into commercial products. Since Glaser and Wattenburg never swayed from their work, it seemed as if the venture would remain productive forever, and a biotechnology company might become a reality at stunning speed. They quietly used a portion of Glaser's NIH and NSF grants  as start-up capital, and then incorporated the business in August 1966 as Berkeley Scientific Laboratories (BSL), renting a small office at 2229 Fourth Street in Berkeley. Then they sat back and waited for marketable products to pour out, but none did. No one, it seemed, had any idea if a bioengineering company could earn revenues, or how.12

Haste had precluded serious thought, but just as harrowing, Alafi had woefully underestimated the hostility that many in academia still harbored toward applied research-especially research for commercial possibilities. Out of respect, none of the faculty at Berkeley openly criticized Glaser-their Nobel laureate-but they did not hesitate to turn the full force of their fury on his partner, Bill Wattenberg. His department assigned him a grueling teaching load and endless committee work, and then the administration dismissed his tenure application on the grounds that he had produced an insufficient amount of research. By summer 1968, the most committed of the two scientists running BSL had quit. That fall, a dejected Glaser went to Alafi and told him that he would give up on BSL too. He felt overextended, he explained, having lost a partner and colleague, the respect of his department, and a substantial amount of his personal savings; his grants from the NIH and NSF had run out and his request for renewal had been rejected, and to make matters worse, his wife no longer appreciated his work habits and was going to leave him. He still believed in his bioengineering system, of that Glaser assured Alafi, but he would not and could not run BSL on his own.13

Breaking Ground

It was Alafi's good fortune to have at about this time two visitors. Ronald Cape and Peter Farley were remarkably similar in background and outlook, and would become linked not only because both came to the Bay Area in search of fame and fortune, or because they incorporated as Cape/Farley only weeks after they met each other in Alafi's office. To begin, they were young-in their mid-thirties, with Cape just five years older than Farley-and enormously sociable, making friends with remarkable speed. Both spent years in graduate professional programs: Cape earned an MBA from Harvard, which he found "superficial," then took a Ph.D. in biochemistry from McGill, followed by a postdoctoral fellowship in molecular biology at Berkeley; Farley received his M.D. from St. Louis University, but realized that "he really got his kicks" studying finance in the MBA program at Stanford. Along the way, they both entered occupations they found unsatisfying: Cape wanted little to do with his family's cosmetic distributorship in Montreal and no part of his present occupation as an "irrelevant" academic; Farley left his private medical practice in Honolulu because he could no longer tolerate "the number of people going into hospitals simply because they had nobody to take care of them at home." And both had advanced knowledge of the life sciences-in particular, knowledge about medical science- that was fairly prodigious, and they had a knack for conveying it in a style that nonscientists found accessible and intellectually thrilling. There was, however, one overriding difference between them. By force of training, Cape was inclined to defer to science and the insights of its practitioners, much like Glaser; by force of habit, Farley deferred to business and deeply trusted financial results, much like Alafi.14

Cape and Farley's experiences, in graduate school and in the workplace, mirrored a generational shift. Alafi sensed this: to him, Cape and Farley seemed to have all of the right qualities to run a bioengineering company, so he urged Glaser to try again. Glaser, however, still held all the high cards. He would relent, he said, but only if he could stay as far away from the business as possible. Alafi gladly accepted his condition and then introduced Cape and Farley as the two people he thought should run the company. Glaser found them both competent, as Alafi said, and then he played his hand too strong. Glaser asked that this "leadership team [Cape and Farley] ... consider producing a product ... with a longer development time rather than rushing to the market with a compromise system." 15

"Time," Alafi shot back, "is not our friend"-an indication to his neophyte partners that they must move quickly to capitalize on their first-mover advantage in bioengineering. In reality, a surprise competitor did not exist and had little basis in fact. Richard Sweet, a professor at Stanford University, had invented a machine somewhat similar to one of Glaser's scanners, but he had no interest in business. That left Collaborative Research, in Waltham, Massachusetts, and Green Cross, a Japanese company modeled after the humanitarian organization Red Cross, as the only two companies manufacturing screening machines at the time, and nothing coming out of either of the two companies remotely suggested that they posed a competitive threat. Alafi's warning nevertheless fell on receptive ears. The businessman's acumen would trump that of the scientist's. 16

As the four partners and one employee got down to work, a sense of high excitement took over. Morale was high, the hours long, the dedication total. On October 1, 1971, Alafi scrambled together a basic partnership agreement followed by a skeletal framework for a company, one in which he, the visionary that he thought he was, would serve as chairman of the board; Glaser, naturally, would lead the scientific advisory board (SAB). Ronald Cape and Peter Farley, Chief Executive Officer and President, respectively, would thereafter "constitute the Executive Committee" in charge of "promotional responsibilities critical to the company's success." Then, in late December, Cape and Farley signed leases and began moving used office equipment into 851 Dwight Way, just off the west side of the Berkeley campus, and Glaser's bioengineering machines into a recently re-fabricated site at 600 Bancroft Way, near the Berkeley marina.17

Cape and Farley had already begun thinking about a name for the company. Since they had not yet decided on a market or a product, they wanted a name that sounded well born and well placed. They grappled with abstract combinations of syllables taken from biology and technology, until late one evening the single employee, Cal Ward, told them a fishy story about a shark attack just off the Pacific coast. It was a "whale of a tale," said one dismissively, but the comment startlingly captured their imagination. A whale indeed, but they wanted something bigger, infinite even, and universal too. Cape looked up into the sky and pointed out Cetus, the cluster of stars in the shape of a whale. Here at last, in the guise of a company name, was a symbol that conveyed grand undertones for what they hoped their venture would become.

They called the company Cetus Scientific Laboratories.18

In February 1972, just four months after forming partnership and one month before formal incorporation, Cape unveiled the Cetus business plan. He had little time to draft a carefully crafted document, or iron out all of the wrinkles, but its heart conveyed a simple message: "To introduce sophisticated systems and instruments to the practice of medical and biological research." In a masterful way, Cape capably avoided a comprehensive outline of the company by turning ambiguity into the company's strength: "the instruments and systems currently under development embody many secret and proprietary contributions. In order to maintain security, [the Plan] will not disclose in detail Cetus instruments and systems." After advancing a few ideas about their market space, which he dismissed as practically self-evident, Cape carefully noted that the principal risk for the company came from an unlikely source, something he called "old friends-the customer's inertia and existing habit patterns." Naively, however, Cape argued that the company would eventually overcome the habits of "old friends" because markets always respond to superior products like Glaser's microbial screening system. As to the finer point of how, exactly, would Cetus earn revenues, Cape took no chances and proposed two entirely different scenarios. The first he described in a straightforward manner, designated as "System A," in which Cetus would become a vertically integrated company that manufactured and sold Glaser's machines as experimental and medical devices. Tellingly, there appeared buried deep in the text a second and completely separate business strategy, referred to as the "Mutant Search Program." It came, ironically, from the partner with the least amount of experience in experimental biology-Farley-who nevertheless showed a deeper understanding of bioengineering's destiny than his more scientifically sophisticated partners: "an opportunity exists for the application of Cetus technology in conjunction with today' s understanding of molecular genetics." The revolutionary nature of the Mutant Search Program-specifically, how to bioengineer new organisms with Glaser's machines in a way that earned revenues-lent point to their reluctance to commit to this model.19

One month later, on March 27, 1972, the four founders of Cetus crowded into the majestic corner office of the law firm Heller, Ehrman, White and McAuliffe on Montgomery Street in downtown San Francisco to meet with a group of potential investors. Alafi opened with a stirring confession: the gathering had been selected for their comfort with creating a revolutionary industry. Then he introduced Donald Glaser, who quickly sketched his bioengineering system on an easel and then withdrew, but not before his presence impressed upon the gathering that Cetus had a Nobel laureate as a partner. In a coy way, they proposed the medical and biological research markets that Cetus could revolutionize: antibiotic diagnostics was a $75-million market; clinical diagnostics a $350 million market; antibiotic sales, $660 million; antibiotic contract research, $425 million; and so on. Doubtful as a matter of starting a business, any of the markets seemed eminently sensible. It had by the end of the meeting begun to dawn on the investors who had gathered that spring morning that no matter which direction they chose for bioengineering's first venture, a 5 percent share of any one of these markets might be worth millions. The Cetus founders were overwhelmed by unequivocal interest that the investors had for their amorphous business model, which fatefully made the specter of raising capital to start a bioengineering company all too easy (see Table 8.1).20

An Elusive Business Plan

No sooner had the ink of the investors' signatures on the financing deal dried-and well before the Certificate of Incorporation had been officially amended to include the sale of stock-than the founders began to "scale up operations." Cape and Farley took the first step when they opened the 1971 International Microbiology Society annual industrial report that listed companies that used microbiology by largest revenues earned: Johnson and Johnson, Squibs, Baxter, Abbott, and as far ranging as ConAgra Foods to Miller Beverages, and as notable as IBM, Johnson &Johnson, and Bayer. Not surprisingly, Cape and Farley contacted these companies in a confident and casual manner too. Farley never shied away from cold-calling a top executive, on occasion Cape and Farley road-tripped in their hippie VW van to literally knock on doors, but most often, they wrote letters of introduction, making sure their Nobel laureate Donald Glaser inked legitimacy to their proposal with his signature. With heroic assurance, urgent rhetoric, and appeals to idealism and capitalism, Cape and Farley made the choice plain: Cetus would either manufacture and sell Glaser's bioengineering system (System A), or Cetus could be hired as a service in which they would bioengineer preordered microorganisms in-house using Glaser's system (Mutant Search Program). David Taft, vice president of research at General Mills, still recalls years later his introduction to the Cetus promise: "What they were doing, what they were talking about, was really exciting. Everyone wanted to know more. I know I did."21

"Old friends" may have been attracted by the bait, as Cape and Farley hoped, but their reluctance was not truly anticipated. Eighteen different companies welcomed Cape and Farley for their presentation of Cetus. Virtually all of the executives they contacted confessed "astonishment by what Cetus had to offer." All expressed sincere interest in both System A and the Mutant Search Program. And when pressed to sign a contract, all eighteen companies said, no. From their perspective, Cetus was a new and relatively small company, front-loaded with a Nobel Prize winner and an extremely talented leadership team ofMBAs and M.D.s, boasting of a secret technology. And they feared that this new bioengineering company might put entire industries out of business, an impression the founders did not try to dispel. Contrary to the received opinion in later years, "old friends" such as the pharmaceutical industry did not necessarily move too slowly when they confronted for the first time the prospect of bioengineering; instead, they expected too much. 22

Of those companies that Cape and Farley contacted, the most interested was Schering-Plough, a mid-level pharmaceutical company. The extensive negotiations between the two companies may have been overly premature, considering Cetus had not committed to System A or the Mutant Search Program, but Schering was nevertheless paralyzed by a self-inflicted scientific wound. Virtually all of the company's revenues came from micromonospora - a rare bacterium found only in Lake Heviz, Hungary-that secreted a powerful antibiotic called gentymycin, often referred to as "the antibiotic oflast resort" in medicine. Schering scientists had dedicated virtually all of their time and resources extracting gentymycin from micromonospora that at best nibbled at the edge of its potential-a lengthy two- to three-year development process that produced an antibiotic that had, in recent years, lost much of its potency. As frustrated as the Schering scientists were the Schering accountants, who considered the $100-million gross revenues gentymycin generated each year an underperformer, or better, "the antibiotic of last choice." Even worse, the company's patent on micromonospora was running out. When Cape and Farley arrived to tout their bioengineering as a scientific solution, Schering's executives had already concluded they had a pressing scientific problem.23

It was in this foul corporate context that Schering's Director of Microbiological Research Dr. Marvin Weinstein invited Don Glaser to tour the company's experimental laboratories. As hoped, Glaser identified the company's problem, and much more besides. In a windowless, dingy laboratory in the heart of industrial Trenton, Glaser saw swarms of microbiologists engaged in an "amusing 'hunt and seek' approach" to research and development that he thought "lagged academic microbiology." He found himself face to face with "comatose technicians ... using toothpicks . . . to pick at colonies, searching for . . . something that looks like [it] might belong to the genus micromonospora." "The remarkable fact," continued Glaser, "seems to be that when one [of the technicians] finds an antibiotic produced by an organism there are actually 5 or 6 other antibiotics present, up to 15, coming from the same culture, and the highest producing strains are also the ones that are more unstable so that commercial batches often have to be restarted." In an urgent message to his colleagues back home, a normally reticent Glaser summed up his tours of Schering as "ripe with opportunity."24

Pete Farley quickly followed Glaser to New Jersey and dominated all matters great and small. "Cetus' potential gift to the world," Farley proudly declared, "will, for all practical purposes, revolutionize the antibiotic end of the drug industry." The math was simple, intoned Farley. "Schering technicians carry out 400-600 drug assays per day," while a "single tray used [in the Cetus bioengineering system] holds 100 assays each," which, according to rough calculations, would increase the total number of bugs tested each day by a factor of 105 • Farley was just getting started. Cetus would, if Schering executives so wished, use its bioengineering system to discover new antibiotics among the bugs that untrained technicians discarded. Then, relishing the power that he thought Cetus would soon possess, Farley issued a bold ultimatum: "we will choose the course that seems to us to produce the most dollars down the road for Cetus. Very simple, very easy .... We will hold up the entire drug industry, essentially put the technology up to the highest bidder."25

Privately, Schering officials did not rejoice in Farley's presentation. As the executives at Schering perceived it, neither failure nor fulfillment inspired total confidence. Conspicuous among Farley's presentation was the blatant disregard for Schering's pressing need to improve the toxicity of its gentymycin strain. But more worrisome, did Cetus really possess such a powerful bioengineering machine? If not, was this a sinister attempt to steal their patent secrets on micromonospora? On the other hand, was Cetus negotiating with Schering's competitors, as Farley implied? Even more consequentially, ifbioengineeringworked as Farley said it did, what would happen to Schering and the rest of the pharmaceutical industry? Taken aback by Farley's over-the-top performance, Schering executives stewed about their dilemma for months. Then, in spring 1972, they reopened negotiations with a direct offer: they would consider buying the bioengineering machines, or they would hire Cetus to bioengineer improved strains of gentymycin, but only if Cetus shared details about how the entire system worked.26

Schering's insistence on a precise description of bioengineering had all the appearances of a reasonable request. It also contained sinister implications for a specialty producer dependent upon intellectual property. From Cetus' perspective, to give away secrets would give away the company, but cash flow problems favored telling Schering everything. For a company less self-assured, the constant rejections and subsequent offer by Schering might have been enough reason to sacrifice the future for immediate gains, but Cetus executives did not lack self-confidence. So they took back their offer and cast about for more amenable audiences. The decision to protect company secrets was reasonable and would one day become a common practice for the industry, but it did nothing to solve their pressing cash-flow problems.

At this moment, Cetus stood on the shore of a financial rubicon. One year earlier they had plunged in deeply to start the company, but now they longed for more shallow waters in which to establish a bioengineering company, or at least decide on what a bioengineering company should do or be. Throughout all of their earlier discussions, late-night brainstorming sessions, and even in their business plan and presentations to venture capitalists, they adamantly refused to choose between the two available markets. It was not a decision they wanted to make. They even made up their own business model that justified their timidity: "don't put all of Cetus' eggs in one basket, in our own heads, or in anyone else's." As Cape recalls, "everybody was looking for a model but it became quite clear that there was nothing for us to follow." Their dream of starting a company that would lead an industrial revolution, they knew, was damned if they chose a direction and damned if they didn't. (27)

Fired by desperation, Alafi returned to Schering, the company that expressed the most sincere interest, and offered a wholly new and creative proposal. If Schering truly expected bioengineering to fail, then to prove his sincerity Cetus would use their machines on micromonospora, charging a royalty according to how much gentymycin they found through bioengineering. 28

Certainly, it was unusual for a venture capitalist such as Alafi to bypass short-term revenues, but his strategy of negotiation derived not from the promise of good faith he had made, but from the arithmetic of his expectations. Needing a contract-any contract-as a starting point, he anticipated using Schering as the example that would force the hand of other pharmaceutical companies to act. He and the other founders also intended to fulfill any obligation it had to Schering, but they said nothing about how they would approach other pharmaceutical companies. Privately, Alafi knew that the present cash-flow problem was not as urgent as it seemed because Cetus had at their call a host of investors ready to participate in a second round of financing. From ScheringPlough's perspective, the company had been profitable for almost a century, so executives there knew a good deal when they saw one. They needed proof that bioengineering worked, said Schering's attorneys, but they did not wish to take on a truly complex project, or provide support for a company that might one day put them out of business. Rather, they would "accept in principle, the concept of a fee for using [Cetus as] a service." Barely masking their enthusiasm, Cetus immediately signed a contract on 9 July 1973, with only a few minor revisions.29

With that, by way of a desperate offer, Schering forced Cetus to become a bioengineering company.

In retrospect, the contract hammered out between Schering and Cetus must surely rank among the vaguest in industrial law. Its principal agreements lacked detail. For instance, it stipulated that Schering would send Cetus strains of micromonospora, but the contract did not specify the quality of the strain they sent. In absentia, the contract exempted Cetus from sending all of the mutant strains they found, only that they would send improved strains. Among other flaws, it also stated that Cetus would respect Schering's exclusive right to micromonospora, but said nothing about who owned the mutations that would naturally appear. No one noted the differing interpretations of "revenue generated"- to start, there was a world of difference between "net" and "gross" revenues that Schering would have to pay Cetus for their work. And no one thought to probe the legal definition of ownership ofbioengineered organisms. The Schering contract, in short, was an empty agreement toward the principle of collaborative research, a messy first step toward the commercialization of bioengineering. 30 For all its ambiguity, however, the Schering contract was also a watershed in business history. Instantly, it focused Cetus' energies on "strainimprovement," which made Glaser's machine a nominal piece of the company rather than a centerpiece. It also injected the company founders with much needed energy and restored the investors' confidence in them. Indeed, Cape and Alafi understood the significance of the moment when they intoned in a memo that "no commitment ever made by Cetus will be as important as that which we are presently undertaking [with] Schering," what with "the potential rewards so enormous." Finally, it defined bioengineering, at least for the moment, as a service for finding organisms rather than as a technique or technology used to make them. (31)

Building a Company and a Corporate Culture

From all sides, pressures played upon Cape and Farley to ready the company for its maiden contract by getting input from an expert in this or that bioscience subdiscipline. Not knowing whom to contact, or even which direction to turn, Cape decided to go much farther and abet the company's noble birth with the advice of as many elite scientists as possible. But the academics that Cape contacted, including Nobel laureates Arthur Kornberg and Paul Berg at Stanford and Gordon Tomkins at UCSF Medical Center, all clung to the professional maxim of separation of academia and industry, and showed no interest in helping a startup. Cape soon discovered that the mere mention of Don Glaser as a cofounder of Cetus would melt away ambivalences. Then came the decisive offer: Cetus would hire academic bioscientists as consultants and pay them generously-they would start with an offer of $2,000 in advance and $500 per day for twelve days of "work" each year, a sum that nicely subsidized typical academic salaries.32

Gradually, a few of the profession's elders signed up as consultants for the Cetus Scientific Advisory Board, and then urged the hoary canons of academic research. ]. Yule Bogue, long considered the preeminent expert in pharmaceutical fermentation processes, was a professor of physiology at the University of London and had done a bit of consulting work for Imperial Chemical Industries in England in early 1960s. His advice to Cetus was spartan in its stark simplicity: "commit to long-term research budgeting-up to ten years." Some were long-time colleagues of Glaser at Berkeley, such as Henry Rapaport, and came more as a personal favor than for professional intrigue. The most committed academics to join the Cetus Scientific Advisory Board were Arnold "Artie" Demain, an applied microbiologist at MIT who specialized in vitamin and amino acid production, and Sir David Hopwood, a molecular microbiologist who studied antibiotic morphologies at the John Innes Centre and whose knighthood Cape always made sure to flaunt.33

Conspicuous among the scientific advisers was Joshua Lederberg, the geneticist from Stanford and a Nobel Prize winner, a consummate academic scientist and the most intellectually daring of the group. His leaping mind outpaced everyone else's-he was a modern-day Da Vinci-vaulting elegantly from deep analysis to sweeping conclusions to unintelligible rambling. At any given moment, Lederberg was totally committed to research in genetics, arms control and disarmament, pediatric birth defects, exobiology (the study of extraterrestrial life), biochemistry, something he called "cognitive biology," and so on. He also submitted the first grant request to the NIH to study a technique he called "gene stitching"-something his contemporaries would later call recombinant DNA. The peculiar thing about Lederberg was that he rarely stayed with an idea through its logical outcome. But this was consistent with the general haphazardness of Cetus too. A scientist interested in everything was a scientist naturally drawn to a company such as Cetus that had difficulty making up its collective mind.34

In all, Cape together with Glaser signed up about two dozen scientific advisers. It was an unprecedented collection of scientific talent and a novelty in American industry. Academic experts had played a role in industry before, particularly in industrial chemistry, but never so conspicuously, or so many with one company, or with so many noteworthy awards. They were newcomers to industry-professors, academics, and researchers from the ivory tower, idea men. The same facts that made them objects of intrigue within industry created an advisory board high on daring scientific input. That all of the SAB members were simultaneously presenting their scientific ideas as ideal research projects was an early indication of the wide-ranging, apparently indiscriminate eclecticism that marked Cetus' approach to running a bioengineering company. (35)

The Cetus SAB played no small role in guaranteeing that scientists would have preponderant influence in the company, but the final conversion came when Cape and Farley hired staff. In compressed time, between the Schering agreement in July 1973 and the contract's start date on 1 September, the two young executives interviewed everyone they could, with a preference for anyone trained in prestigious academic programs such as molecular biology at MIT, microbiology at Princeton, or biochemistry at Stanford. Profits may remain stubbornly elusive for four years or more, they said, but Cetus would always pay a competitive salary and assign central roles within. That was enough for Steven Goulden to come on board right away, from a temporary academic post in England to vice president of research, though he also played important roles in the antibiotic programs. Roy Merrill soon followed, holding down various responsibilities as director of computer facilities. Of course they hired specialists too, such as Bob Bruner, who supervised the assays department. Then a hierarchy took shape with the hiring of generalists such as Jay Groman, trained as an environmental biologist at the University Colorado, but who served as a research technician under Bruner in assays. Some, such as Jeffery Flatgaard and Beverly Wolf, filled no particular scientific need but could "do good science" in a variety of experimental fields. David Hansen, a talented physicist from Berkeley and an old friend of Cal Ward, accepted an appointment as director of engineering. Like everyone else, Hansen believed-and kept reassuring newcomers who had their doubts-that Cetus would use Glaser's machines to introduce bioengineering to entire industries. A few had no formal training in experimental biology but simply had a familiarity with the language and a marked ability to "learn as you go." And of course, they hired staff such as Douglas Miller to recruit and develop staff. Notably among the earliest Cetus employees was Terry Mahuron, who stood almost alone in the finance department as, simultaneously, controller, accountant, bookkeeper, and intermittently CF0.36

When Cetus hired its first employees, it was not at all obvious that they would identify with each other rather than their employers, or the company itself. The kind of informal hierarchy that Cape and Farley implemented looked as if it might become a rigid kind of corporate ladder that kept everyone dependent on their superiors. Scientists in particular were assigned specific responsibilities and reported to identifiable supervisors. These were general patterns, of course, because while Cape and Farley always appreciated their elite status at the top, neither they nor their partners showed any tendency to organize the company according to traditional patterns of authority.

The staff that Cape and Farley hired shared several remarkable characteristics, in addition to advanced academic training in a bioscience discipline. They came from all over, but the worlds they inhabited as graduate students-all attended school between the extremely formative years from 1961 to 1969-exposed them continually to ideas antago nistic to industrial capitalism and to higher education. Berkeley-both the city and the university-was simply an extension of what they already knew. They had spent years training for a life in academia and then made the fateful decision to become full-time employees of Cetus. In many ways, the company's first hires were a lot like the company's pioneers; everyone had taken on frightening risk and shared a sense that they were participating in a remarkable history. But in another way the employees had taken on greater risk because academia would not, at that time, allow anyone to return after they entered a commercial endeavor.

The new hires were enthusiastic about the novelty of their company, and that enthusiasm transferred into the working environment and social relations. For instance, business virtually shut down every time a Nobel laureate from the SAB gave a lunchtime presentation. Mter work the staff took great care to celebrate the birthdays of co-workers and to play on the company softball and volleyball teams, and on weekends they organized white-water rafting trips and went to see the Oakland A's, another highly successful team of nonconformists. The company founders may have imagined Cetus to be a great white whale-kind, well-liked, impressive, and cautious-but the employees printed t-shirts and buttons with a logo that looked more like the popular movie jaw~ dangerous and proud, and more than a little forbidding. That may have been the public image they preferred, but they made sure to meet each others' needs. They praised their co-workers' achievements in front of company executives; they shared special skills or services that others found useful, such as investment advice, a notary public, or legal aid, and there was always someone with medical training who could provide inoculations and tetanus shots on site. And when Bank of America rejected the loan request of one Cetus employee, the entire staff "moved in solidarity to negotiate a better [employee banking] deal with ... Wells Fargo." (37)

To make the transition into a commercial industry more hospitable, new employees of Cetus drew extensively on the customs of the academic world they once inhabited to create, in a relatively short period of time, a unique corporate culture. Foremost, they understood that their livelihood depended upon the profitability of the company, so they took note of corporate revenues and protected intellectual property. But whether they conducted experiments, published articles in scholarly journals, or delivered papers at scientific conferences, Cetus employees continued to participate in a peer society that celebrated the most professional aspect of academic research. Bob Bruner recalls that the most challenging transition was the necessary deference to "the Bosses," because it made issues of authority and control more ambiguous than that which they experienced in academia. However, the influx of personnel put a premium on bench space and created close-knit quarters, says Jay Groman, which made it easy for peers to swap bacterial colonies, reagents, ideas, and craft lore: "everyone felt comfortable meddling in everyone else's work." This familiarity counterbalanced the authority of the company's executives, and then workers built common ground with organizing strategies designed to empower the scientific staff even further. For instance, the academic practice of organizing staff into formal working groups-a bio group, an engineering group, an assay group, a fermentation group--became a structure that supported self-management at Cetus. (38)

Scientific Promise and Company Peril

With a strong scientific base now in place, Cetus could finally sally forth on bioengineering "strain improvement" for the Schering contract. Everyone seemed to take great satisfaction in such a fruitful marriage of bioscience to industry, especially the company founders. Farley boasted that "we can carry out virtually any task or produce virtually any product. In short, anything that can be done, we can do better." Revealing a peculiar comfort with the market to defining the scope of the company, Cape intoned that "circumstances, not human will, has carried [Cetus] forward.'' 39

But there would be no progress, only an occasional success followed by more problems and then great crisis. No one-from the founders, board of directors, scientific advisers, or company employees-suspected that the very confidence that had driven them to accomplish so much and had carried them so far had given birth to such a hurried, chaotic, and ultimately compromised company. Even the best-thought businesses take strange turns.

A quiver of foreboding crept into the company's vaunted status when one of Glaser's bioengineering machines broke down during an early screening run in late September 1973. It seemed innocent enough-the table upon which rested the petri dishes and laser scanner did not sit flat on the floor, which caused the bacterial colonies to shift and grow unevenly , making all the scanning results unreliable. The engineering group responded quickly, but then an employee trying to fix the table accidentally looked into a wayward laser beam and sustained an eye injury, so they shut down the entire system for a few days to build a makeshift cover. Mter the scanner was made safe to operate, somebody came up with the novel concept of using a block of wood to prop up the uneven table, but the scanner's drive mechanism moved back and forth with such force that the wood could not prevent the entire apparatus from moving around violently, leading some to worry about the "danger of crushing the user." So they bolted the table to the floor, but that caused the scanner to have "a chain and sprocket malfunction." The winter had been a wash, someone said, but the new year would bring better tidings. 40

Instead, 1974 brought problems that swelled to horrifying proportions, well beyond what anyone could control. The first gaffe appeared suddenly, in late January, when the 100-liter sterilization tank began to leak because the engineering group had not tightened the bolts during assembly, which caused an entire batch of Schering's micromonospora to become contaminated. Sheepishly, they asked Schering for another batch and tried again. They resumed full-scale screening in early spring, but grave problems continued. No one thought to install a thermostat in the room that held the cultures, so the bioengineering group had "no way of monitoring the temperatures in the growing room," and there went another batch of micromonospora. Throughout all this, Cetus scientists somehow found a way to induce and identify improved mutation strains of gentymycin, and in the summer proudly sent a batch to Schering as proof that bioengineering could indeed work. Schering, however, claimed that Cetus abrogated the "good-faith" clause of the contract. According to Schering, Cetus should have delivered quantitative results, measured as a given number of dishes scanned in a given amount of time, a number of hours the scanning system was in continuous operation, or a number of strains improved. Schering's insistence pushed Cetus' scientists into crisis mode. They tried packing more cultures of micromonospora closer together on each individual petri dish, but that just contaminated the secreted gentymycin. Frustrated, the engineering group determined that they "needed a new system" to produce gentymycin strains faster and began the rather elaborate process of reengineering the entire lab. Mter months of trial and error, with the new production system almost three-quarters of the way complete, "all hell broke loose" when a critical member of the engineering group suffered an "untimely juxtaposition of a bicycle tire with a drainage grating, causing an impact between the rider and the roadway."41

The hell that seemed to follow Cetus throughout 1973 and early 1974 might have been dismissed as low comedy except for the uncomfortable fact that none of the company leaders could be found. Alafi had already begun exploratory work for an initial public offering, which took him far away from daily business routines. Glaser, the one individual who knew the most about the machines, continued to face down a frenzied attack by his colleagues at Berkeley, many of whom now openly criticized commercial ties in academia as "an ethical 'deep structural' poverty of scientism [sic]." Cape desperately wanted to be the boss that everyone liked, except that he enjoyed hobnobbing with the clientele even more, accepting invitations to speak about the future of bioengineering at college campuses across the country and crisscrossing the globe in search of new international divisions for the company. And Farley was so busy flitting about dinner dates, theater engagements, and Playboy Clubs that no one could get in to see him.42

Then, 7 March 1974, a fire broke out at the newest Cetus facility on Fourth Street, causing extensive damage to expensive experimental equipment and the destruction of yet another batch of Schering's micromonospora. 43

Unsure what to do or even which direction the business should go, Cape made the reflexive decision to call the company's scientific advisory board for more advice. Everyone referred him to Bill Bogue to right the company. His decades of experience with industrial fermentation and his unwavering faith in "old-school scientific methods" made him seem like the ideal scientist to identify the source of the problem and a possible solution. In him the rest of the scientific advisory board saw a uniquely perceptive observer who could be counted on to speak with candor, insight, and moxie.

Bogue did not merely report about Cetus. His "unfavourable" rebuke broke the company's prevailing optimism. Said Bogue, cogently:44 The operation as at present constituted is, in effect, an enlarged academic facility rather than an adapted one. Adaptation to industrial requirements demands a different attitude towards housekeeping, stricter discipline, stricter routine monitoring, improved barriers to cross contamination and to stray contaminants and a foolproof flow pattern .... I do not recollect seeing any room or work area with really good housekeeping. In those areas in which several people were working, I had the impression of ... chaos.

Bogue lambasted the lack of cleanliness and listed the gross negligence that he had seen:

• Experiments [were] conducted on bare wood strips and [near] tile joints in sterile areas that were rough and probably absorbent

• It is not very impressive to observe an individual ... wearing protective gloves to ... handle the telephone, clipboards, etc.

• Laboratory footware is really essential

• The flow pattern of materials to and from wash areas allowed clean and dirty materials to cross-not a good idea

• Clothing: I was worried by seeing personnel moving around in their street clothes and outdoor shoes

• In the "clean" corridor I noted two pairs of used disposable protective pants thrown over a carton containing a new supply of them.

Inexplicably, on a return visit Bogue saw more of the same: (45)

• Attitudes toward mutagens should be similar to that toward most other dangerous chemicals, such as ether or cyanide.

• There are general precautionary procedures which one always follows when using dangerous chemicals, such as not pipetting them by mouth.

On the whole, it was a bad report for the scientists at Cetus, which was ironic. Nothing meant more to the company, no one had done more work, and in terms of sheer numbers, there were simply too many of them to dismiss their contributions so heedlessly. Furthermore, conspicuously absent among Bogue's reports was any reference to the company's leadership. A relieved Farley reported back to Bogue that his report had compelled Cetus to implement a series of new policies: "Thursdays and Fridays are the days requiring the highest level of sterility." He said nothing about Cetus' sterilization policies on Mondays, Tuesdays, or Wednesdays.46

In the months following Bogue's report, the mood at Cetus turned gloomy. Then matters came to a head when Alafi decided at last to resurface. True to his instincts and consistent with Bogue's overall assessment, Alafi lambasted the scientists for their total disregard for the financial health of the company. To Alafi, it was not merely that the machines kept breaking, or that Schering kept reneging on the contract, but that no one seemed to care about the company's prosperity, or the concerns of the investors behind the scenes. This was only halftrue. The company had indeed burned an extraordinary amount of cash in a relatively short period of time, but the scientists could hardly be held accountable for their own swelling ranks. Most of all, however, on the issue of cash flow, the different perspective of the venture capitalist became a genuine antagonism.

"We need 8 scientists ... for a 7 million/lab/year?" wrote Alafi in a barrage of sarcastic memos. Feeling betrayed, the scientists united and formed a "Safety Committee," and firing off a general memo that stated in no uncertain terms that all of the company's failures "can easily be propagated to upper management." Never one to back down, Alafi volleyed back, "the Safety Committee costs $75/hour, or about $100 each meeting," and ordered Cape to break it up, which he did to great discomfort. Alafi's criticism of the scientists inspired Terry Mahuron, the lone financial adviser at Cetus, who raged against the scientists for their "total disregard" for money and resources. The charges turned out to be baseless, but Alafi thought he smelled a scandal anyway. He invited a statistician from Berkeley to come behind closed doors and study the accuracy rate of the bioengineering system implemented by Cetus. In terms of pure probability, said Alafi's mole, "you could flip a coin and you would do better." Wasting no time Alafi angrily confronted Glaser and accused him of overstating the capability of bioengineering and misleading him into a reckless business venture. For the first time that anyone at Cetus could recall, Glaser spoke with forceful reassurance to Alafi: "first you walk, then you stumble, then you run. Science proceeds just like this, and so will our science and machine. But it will work." It also happened to be the first time that anyone at Cetus had counseled patience. (47)

One person was not displeased with the turn of events at Cetus. That was Pete Farley, the wild card in the deck of company leaders, determined to play the salesman's hand that would save the company from certain financial ruin. Never mind that the scientists could not fulfill just one contract when Farley knew that Cetus had the opportunity to take bioengineering everywhere. He tried the improbable task of convincing Stanford University to enter into a commercial relationship "wherein Cetus had the licensing rights to any commercial application of their projects." On the grounds that Stanford was not a private company and would not consider giving away its intellectual property anyway, university administration decided to pass on Farley's proposals. He approached nationalized pharmaceutical manufacturers in India and the Philippines and offered bids to "screen huge quantities of antibiotics," but they said no too. Undaunted, he resurrected the first market that Cetus considered-System A, or the manufacturing and sale of the microbial screeners. He could almost see a cheaper version of Glaser's bioengineering machines selling for "$600-$1,000 each, depending upon the number of knobs and whistles and sex appeal ... and the overall parameters of the market." Manufacturing offered additional benefits, added Farley, because it created new markets for products compatible only to the Cetus system. "Square petri dishes" was just one of many possibilities, and he hastened to assure that the market was enormous too: "square petri dishes w/agar at $50,000,000.00/yr, and w/o agar at $20,000,000.00, along with an assortment of filter paper $25,000,000.00 and report forms $5,000,000.00." Farley could not believe that "the financial community and all the other idiots in the world who get very riled up about large recurring markets have missed this opportunity. I can't, off the top of my head, think of a good reason why everybody in the world wouldn't want one." In Farley,just as it had with other executives at Cetus, business trumped science again-the size of the petri-dish market was, and remains, roughly the same size as the market for square wheels.48

Nevertheless, rejection merely galvanized Farley. Sure enough, in winter 1974, Farley closed deals with Upjohn to screen for Erythromycin strains and a general research contract with Bayer, with the upside that both companies would pay some of their fees up front. The scientists were beside themselves, but Alafi defended both contracts and even encouraged Farley to negotiate with industrial giants such as Glaxo, Delft, Ciba-Geigy, Stauffer, and others because he wanted accountable evidence of "earned income" to prop up his $5-million financing deal already underway. 49

Having been pushed into precisely the kind of situation they most wanted to avoid, the scientists now found themselves trying to cram three bioengineering projects into one. Theoretically, Cetus needed to examine 250,000 sets of organisms each quarter just to meet Schering's minimum expectation, to say nothing about the new quotas for Upjohn and Bayer. Unfortunately, after one full quarter under pressed conditions, they completed 80,000 screenings, which meant they needed to do about 420,000 in the next quarter, or about 192,000 each month, just to fulfill their contractual obligation to Schering. To catch up, they hired six new scientists and ten technicians, and they still needed more, so they added an additional six scientists and dozens of technicians. Saddled with unending maintenance problems and impossible production schedules that they could not possibly expect to meet, a few employees simply walked away. Cetus had little choice but to halt the Upjohn and Bayer projects, which created more legal problems, and forced them to concentrate entirely on their original contract with Schering.50

Someone had to take control of the company. The pivotal figure in this group was no longer Glaser or Alafi, and it certainly was not Farley. The bioengineering group was back on their heels and hesitated to take charge too. So, by default, the moment belonged to Ron Cape, the man who, almost literally, lived for conversation and notoriety. He had a delicate command of the science, but a deep respect for those who did, and so was more comfortable following the advice of the SAB than guiding them. However, he had an attractive personality and always a story or a quip that could disarm conflict. He may not have been the ideal person to save the company, but at the very least he could always calm jittery nerves. If nothing else, Cetus sorely needed this.

Throughout spring and summer 1974, Cape contacted virtually every consultant from the company's SAB and confessed that Cetus had trouble hitting Schering's moving target, contractual and otherwise. Many of those contacted scoffed when they heard that the company had focused its fundamental efforts so narrowly on bioengineering and called for "immediate and maximum diversification" of scientific research into as many commercial fields as possible: "a. stick to [original] antibiotic projects, b. respond to random stimuli like the Israeli oilspill, c. aggressively . . . go after large-scale opportunities: chemical/ fermentation plant design, waste water engineering, mining and oil extraction, etc. " 51

Cape embraced the SAB's entire package of proposals with characteristic enthusiasm, which set off a wild "market-driven" approach to research that spread resources and personnel across a wide spectrum of projects. With an eye toward solving the energy crisis, Cetus recruited scientific advisers skilled in "continuous cellulase production," such as the chemical engineer Dr. Charles Wilke, and shifted jon Raymond and his screening research team out of the Schering project and into development work on "cellulose ... to harness the solar energy stored in plants." They took suggestions for treating chitin (crab shells) to make thin transparent film used in food packaging, then expected heroic returns: "everyone wins-seafood processors, environmentalists, government, scientists, industry, consumers, and the ocean." Almost casually, Cetus tacked on to the gentymycin project an identical strain improvement program for cephalosporin antibiotics. Here again, Cetus attempted to capitalize on a unique market opportunity: Eli Lilly had earned about $325 million in annual revenues in that market alone, but stood to lose its patent protection at the close of the decade. Some of the new projects seemed impulsive, such as the experiments with chenodesoxycholic, an acid used by physicians to dissolve gallstones. However, the decision to collaborate with Schering Agriculture on a "steroid conversion" project, despite on-going problems with the parent company and the technical limits of the screening system to accurately identify anything but bacterial colonies, simply defies any rational explanation. These, to say nothing of the requisite projects on citric acids, ethanol, sisomicin, vitamin B-12, and so on, pushed bioengineering aside. Such diversity strained the financial resources and the staff, which was neither stable enough nor large enough to perform this array of tasks. Yet, rather than oppose such a shift in strategy, the executive board likened the move to "financial diversification" and approved it, while the scientific staff seemed genuinely appreciative of the professional autonomy that went hand-in-hand with open-ended research. 52

The scientific advisory board at Cetus was not the only observer searching for commercial opportunities in the biological sciences. A young upstart venture capitalist who had come from the Kleiner-Perkins firm, a second-round investor in Cetus, twenty-seven-year-old Robert Swanson, also saw reason to explore bioengineering. At some time in early summer 1974, Swanson told the two partners in his firm about a celebrated article in the New York Times, "Animal Gene Shifted to Bacteria; Aid Seen to Medicine and Farm." As far as Swanson could tell, new recombinant DNA techniques developed by Paul Berg and Stanley Cohen of Stanford University and Herbert Boyer at UCSF could be used to bioengineer-or, literally make-proteins that met "some of the most fundamental needs of both medicine and agriculture." On behalf of Swanson, the firm's partner Tom Perkins placed a call to Alafi and asked if he and his upstart associate could reconnoiter the world's most promising bioengineering company. Alafi proudly led them on a tour of Cetus, showing off the many different projects, their market projections, the talents of the staff, the different facilities, and eventually Glaser's bioengineering system. Sufficiently impressed, Swanson issued a bold proposal: he would manage a second bioengineering division for Cetus, a recombinant DNA program, which would sit alongside the bioengineering system already in progress. 53

Cetus could hardly ignore Swanson's offer. One year earlier, HoffmannLaRoche had approached Cetus with a request to explore the "possibility of using recombination," but at the time, Cetus was wholly committed to using Glaser's machines as a bioengineering system and turned them down. At about the same time, executives from GE mentioned they had a "modest but effective [genetic engineering] procedure used by AI Chakrabarty and Steve Rosenburg," but again Cetus did not pursue this offer. Cetus could credibly believe that their own bioengineering program, radical enough by any objective standard, was prudent and attainable when compared against the embryonic techniques of recombinant DNA. But Swanson's offer was different. It was direct, it would occur within the walls of their own company, and it had the backing ofwilling and familiar investors. 54

Ignorance had enshrouded Cetus leadership. No one at Cetus, including Glaser, whose scientific insights were keener than most anticipated the scientific or commercial merits of recombinant DNA. Moreover, the founders were not only unable to remain focused on the industry they longed to create; they were almost equally unable to see how a company could use recombinant DNA as a commercial venture. Under these circumstances, it was not simply the weakened state of the company but reasonable skepticism that led Cape to their mercurial scientific adviser, Joshua Lederberg.

Fatefully, Lederberg expected there were "other ways to make more valuable products" than just recombinant DNA-a veritable "no" considering there never was another scientific project that he did not like. 55

History will not look kindly upon Lederberg's advice, or Cape's decision to approach him, but at the time there was no one better to ask. Lederberg was the first to propose gene-stitching to the NIH in 1967. In 1971, he served as the faculty adviser on two different recombinant DNA projects when few, if any, had students practicing in the field. His office and laboratory neighbored Stanley Cohen and Paul Berg's in the Stanford University Medical Center, arguably the point of origin for the first successful recombinant DNA experiments. Further, given his academic position and his experiences with private companies such as Cetus, he understood as well as anyone the slow pace of research and development in academia and in industry. In short, Lederberg's opinions represented the purest, most informed scientific orthodoxy available.

This much is also clear: the consequences of Lederberg's lukewarm endorsement were immense. Cetus would follow his advice and stay its current course, using Glaser's bioengineering machines to pursue a wild plurality of commercial opportunities with a sometimes desperate fervor. Most would fade from view as unfulfilled alchemic promises, while recombinant DNA would challenge Glaser's microbial screening system as the scientific platform for bioengineering. And, from what was still in 1974 a single biotechnology company would spin an unprecedented industry-unrestrained.

Down through Swanson's offer to run a recombinant DNA division, Cetus seemed by all appearances poised and ready to become a wildly successful company. The press lauded Cetus as a "progressive" company with an abundance of scientific answers to society's most pressing needs, and compared it on equal footing with such powerhouses as IBM, Intel, Hewlett Packard, and Microsoft. Investors widely believed that Cetus would deliver on its promise and clamored for an opportunity to invest. The sheer scale of the scientific activity of this new company no doubt helped to shore up its public image, as did Cape and Farley's own private proclamations, "we will essentially ransom the world!" Despite the exhilaration of the public, despite the assertions of its founders, despite the exertions of its scientists, despite all the ingenuity and exuberance, one key truth stands out: something had gone terribly wrong at Cetus. 56

Why did Cetus struggle when it had so many advantages? Answers converge from a number of directions. First, in terms of development, Glaser's bioengineering machines clearly failed as an operable tool at industrial production levels. From this perspective, Glaser's system sounds like a straightforward mechanical failure and should never have been attempted. Simply put, was it a mistake for the founders to use Glaser's screening system as the technology in which to launch a commercial biotechnology company?

Certainly not, at least from the perspective of the participants. The social, scientific, and financial rewards for successfully developing a continuous process for bioengineering are undeniably enormous, then or now. Even if the project took many years and much money, everyone believed it should be pursued until the system was proven successful or impossible.

If errors of judgment were committed, they occurred in the tone of the venture and the pace in which it was executed. The tone of the company's operations was set by the scientists. No one at the time thought of this as a disadvantage. In a sense, the founders considered scientific excellence a necessary advantage and the basis for their existence as a company. Metaphorically, Glaser was used as the symbol to represent the scientific merit that defined the company: they had him sign virtually every piece of correspondence that went out, they inserted his name into as many conversations as possible, and despite his overwhelming reluctance, they included him whenever they went before the board or the company's investors. In turn, whenever the founders thought they saw the company unravel, they turned decision-making authority over to the SAB. Moreover, three of the founding partners, the first and then almost all of the company's staff, and key members of the board of directors all had advanced training in a life-science discipline. With such a strong scientific base, the venture capitalists who knew little about the biological sciences uncritically deferred to its practitioners and almost always accepted the data presented by the scientists over their own best judgment. "Investors like Ed Carter Hale always seemed in awe of a Ph.D.," said Cape, who had one. Undeniably, everyone approached Glaser with the same reverence and awe; intoxicated by their proximity to Glaser, they all wanted to believe that the laureate could accomplish anything. This respect for science manifests itself, at various times, as adversarial, respectful, and independent. Indeed, there were occasions when Cetus needed help from the Berkeley faculty, or when its own failing projects were being duplicated in Donald Glaser's academic laboratory on the Berkeley campus. Yet, Cetus leadership decided to keep all of the company's research and development at great intellectual and physical distance from research and development at the university. Their stubborn insistence on doing everything internally would be one of the defining traits that separated Cetus from all other biotech companies to follow. 57

While scientists set the tone, the pace of the company was set by the venture capitalists. The ease with which venture capital was willing to overlook business details attests to their hope and their willingness to give money to scientific experts, especially a company led by a Nobel laureate. Their ambitions overshadowed the discipline necessary to perform due diligence on their investment, further fueling the hysteria. Everyone was champing at the bit to get started. They felt the pull of potential profits and were pushed by the fear that competition loomed on the horizon. Leading the charge was Moshe Alafi, whose drive for the fastest route to the biggest returns easily captivated the younger nonventure capitalists such as Cape, Farley, and Ward to get caught up. Furthermore, the influence of venture capitalists as investors and board members-of interest, money, and influence-contained serious deficiencies as well. They were revolutionaries, they imagined, on a mission to build a new industry with Glaser's machine. What's more, they believed, they were fated to succeed. It seemed never to have occurred to any of them that the machine might not be ready, or that another system might replace it.

In the end, power within the company vacillated between the scientists, who understood bioengineering the best, and the venture capitalists, whose reign over commerce the scientists could not contest. Together, they ran at a youthful and impatient pace. Internecine warfare cancelled out the individual talents of the two sides, a happy by-product for managers like Cape and Farley, who found tremendous concentrated authority. Nevertheless, despite blatant mismanagement, Cetus accomplished one major feat-they had vanquished the stubborn habits of" old friends." With that, there was just one last obstacle to overcome before a bioengineering industry could proceed unrestrained: the magnitude of popular concern that previous generations of bioscientists had provoked.

Chapter 1 - Cetus Beginning

The genesis for Cetus,[1] the first biotechnology company, began with Pete Farley[2] who after mustering out of the Navy where he was the ship’s medical and diving doctor aboard a nuclear submarine, enrolled in the Stanford MBA program. Following graduation, he took a job with a venture capital company for an annual salary of $1. His sole intent was to learn that business first hand while making as many contacts among the successful Silicon Valley entrepreneurs and venture capitalists as possible.

Pete’s first attempt at building a company was based on developing a simple thermometer using the behavior of supersaturated liquid under small temperature changes. As a part time practicing emergency clinic doctor while in graduate school, he understood the marketing potential of such a device. To implement this idea, he sought out the top expert on the behavior of supersaturated liquids; Dr. Donald Glaser, chief of the Virus Laboratory and graduate professor at UC Berkeley. He had been awarded the Physics Nobel Prize for inventing the bubble chamber, a device used as a high energy atomic particle diagnostic tool based on the behavior of a supersaturated fluid when subjected to small changes in partial pressure. Specifically, under the right conditions, a stream of bubbles will form along the path of a high energy particle passing through the solution.

After studying the thermometer application, Dr. Glaser concluded it was not practical, and recommended it be dropped. Instead he, suggested an idea that originated with Calvin Ward, one of his brighter post-graduate students. Cal identified a microbiology analog to a well known electrical property: the electrical field strength measured from the edge of a straight charged wire varies linearly with perpendicular distance where as the field propagating from a point source charge varies exponentially with distance. A similar characteristic exists in microbiology petri dish assays where the distance to the edge of an inhibitor zone on the petri agar indicator lawn measured from a 6 mm pad strip saturated with antibiotic, varies linearly with drug concentration while on the other hand this distance measured from a 6 mm round pad varies exponentially with drug concentration. Because of this biological phenomena, a technician could indirectly measure drug concentration using a linear strip pad with an accuracy of at least one order of magnitude greater than that possible using a round pad. Cetus was formed and the first round of outside financing obtained in 1971 based on this new approach to implementing biomedical assays.

Drawing from Cal’s observations, they developed a simple device, called the “Cetus Fetus,” to measure indicator lawn inhibitory zone size, and organized a marketing business plan. Pete’s first task was to canvas a representative sampling of the hospital and clinical pathology laboratories in the SF Bay Area. To his astonishment, he discovered that the medical equipment & supplies manufactures were selling their round pad diagnostic supplies and measuring instruments at a loss (i.e., as a “lost leader”) as a marketing ploy to gain access to hospital and clinic staff where other more lucrative products might be marketed.

Despite this discouraging development, his backers urged Pete to go ahead with a third attempt at building a company. It was based on a modified version of Dr. Glaser’s ideas on a NASA Lunar project microbe screening system. To do so, Pete joined with four others to form a partnership and start up a biotechnology enterprise. The partners were Ron Cape with a doctorate in biology and substantial business experience in his family’s Canadian pharmaceutical company; Mosche Alafi, a venture capitalist with strong finance credentials who shared in starting up the North Face outdoor equipment business; Dr, Donald Glaser, the UC Berkeley graduate department professor in Viral Biology that had been awarded the 1960 Physics Nobel Prize for inventing the bubble chamber; and one of Don’s brighter post-graduate students, Calvin Ward with a doctorate in physics.

Pete, Ron, Moshe, and Don each were given a full partnership share and Cal was given one half a partnership share in the company formed in 1971. Ron Cape was appointed president and Pete Farley vice president of the enterprise. Later in 1977, Ron moved up to board chairman, and Pete took over company presidency.

Early in the company’s history, Pete with his partners help, staffed the company’s Scientific Advisory Board with some of the brightest people around at the time: Dr. Joshua Lederbeg, President of Rockefeller University with the 1958 Biology Nobel Prize for discovering that bacteria could have sex and exchange genes, thereby establishing the foundation of modern genetics and biotechnology; Dr. Stanley Cohen who in 1973 was immortalized along with Dr. Herbert Boyer as the inventors of the DNA cloning technique, which allowed genes to be transplanted between different biological species; their discovery signaled the birth of genetic engineering; and Dr. Carl Djerassi, Professor of Chemistry at Stanford University, and later, President of Zoecon Corporation, who was inducted into the Hall of Fame in 1978 for his invention of the modern oral contraceptive commonly referred to as the “birth control pill”.

Shortly after they formed the partnership, Calvin Ward, while scuba diving off Sea Ranch with his Oakland sanitary worker buddies, was bitten by what he thought at the time to be a killer whale. Noting that Cal survived the ordeal, the partners took it as a good omen, and named their company Cetus, latin for toothed whale. As an aside, later Cal on a hunch, checked his wet suit for any evidence of his assailant and found a small shark’s tooth. Upon examining it, a marine biologist identified his predator as a great white shark, and not a killer whale after all. By that time however, the partners agreed to keep the Cetus name.

Chapter 2 - The Cetus Mass Screening System (CMSS) Development

With the original investor’s consent, and after the thermometer and assay device ideas proved impractical, the partners redirected there effort from instrumentation to implementing a pharmaceutical system based on a logical extension of a project Dr. Glaser and his Cal Berkeley university graduate students worked on regarding mass screening of microbes that possibly had returned from a NASA lunar probe. That effort was directed at developing automated methods of doing ordinary bench top microbiology on a massive scale. Several applications came to mind immediately, the most promising of which was pharmaceutical drug producing strain improvement. Don’s NASA system had been conceived to quickly determine whether any toxic microbes had been carried back to earth on returning lunar mission astronaut’s space suits; and to do so before releasing the astronauts from their quarantine trailer.

Instead of using large 12 x 15 inch agar plates to grow-up isolates into colonies for morphological studies as was done in the NASA system, Cetus microbiologists decided to use 12 x 15 arrays of small test tube-like wells in a plastic tray each to be inoculated with a single isolate; i.e., a viable mutant of the parent strain under investigation. Then after allowing the isolates to grow up in a nutrient solution, add an assay reagent to check for promising drug production properties. As part of this NASA system adaptation, the Cetus microbiologists used intense UV and/or chemical mutation agents to scramble the parent strain DNA gene’s with the objective of producing a few viable protege, from among the approximately 10 thousand viable isolates screened each week.

The mass screening process used a hundred or so of these trays molded into 12 x 15 arrays with ~5 milliliter wells; a parallel pipetting machine comprised of a 12 x 15 array of pipettes connected to a large manifold for inoculating isolates, transferring nutrients and loading ph-sensitive reagents into the wells; dozens of large New Brunswick shakers that stirred large assemblages of these trays to oxygenate the isolate microbes while they were growing up in the wells; and several large warm rooms operating at high temperature and humidity, for housing these shakers during the microbe incubation period.

A staff of microbiologists and technicians performed the parent strain mutation; colonized the results on petri dish agar; streaked-out the viable isolates; transferred them into a nutrient bath; loaded the result into the pipetting manifold; and injected measured quantities into each of the tray wells as needed to on-average inoculate each well with just one mutant; load/unload the shakers; incubate the trays of isolates; transfer an assaying reagent into the wells; search for any ph change with unusual color changes; and transfer these potentially high producers from their tray wells into shake flasks. These potentially high producers then were scaled up first in shake flasks, then into bench-top fermentors, and finally, large pilot plant fermentation vats.

After solving varies problems with contamination, and equipment glitches, the Cetus Mass Screening System did result in significant production improvements ranging from 25 to 30%, for the parent strains of Gentamicin, Erythromycin, and Penicillin.

The Author’s Experience during the Cetus Mass Screening System Period

Introduction: Pete Farley and his wife, Loretta, lived next door to my family in Los Altos-Mt. View. After learning about my computer science and control theory graduate training at Stanford U. and work experience in electronics engineering and computer science at the Lockheed Palo Alto Research Laboratory, Pete offered me a job with a generous stock-option package. I joined some 20 other employees in starting up Cetus in 1973 as a microbiology strain improvement (pharmaceutical) biotechnology company. My first job was managing the computing facility supporting the Cetus Mass Screening System (CMSS).

Initially, my assignment was managing a computer center and developing software support for CMSS that included developing an isolate assay analysis program; an isolate production vs time database storage and retrieval system ; and an isolate production analysis program. I also assisted Engineering in interfacing a large agar plate laser scanner to the center's PDP-11 digital computer; and developing the scanned data preprocessing and analysis program to discern the inhibitor zone sizes of large arrays of assay tests on each plate. With that job nearing completion in 1975, I was asked to consider some of the instrumentation and control activities supporting CMSS.

Microprocessor-based Shaker Monitor Development Effort

At that time, a serious engineering problem developed that was costing the company considerable effort, time and resources; specifically, during typical CMSS runs, a dozen or so New Brunswick shakers were loaded with system trays and shake flasks to sustain the newly identified high production mutants among the some 10 thousand isolates handled weekly. Unfortunately, the shakers were not very reliable and often failed, sometimes at night, with the result that the microbes growing up in these tray wells and shake flasks died for lack of oxygen. The cost of each failure was estimated at $10,000.

To combat this problem, the Engineering Department, managed by Dave Hansen, an instrumentation physicist, developed a shaker speed monitor. It consisted of a flywheel rotation optical sensor connected to electronic detection circuitry and power supply that was packaged together and mounted on each shaker frame. It was designed to sound audible and electronic alarms whenever a shaker’s speed dropped below a set level. Initially, these speed monitors performed satisfactorily.

Unfortunately, after several months operating in the 100 deg. F temperature, 95% relative humidity warm room environment, the monitors started failing. Their failure rate soon exceeded that of the shakers. The engineering electronics staff, lead by the principle electronic technician worked frantically to find a satisfactory solution. As this drama played out, Al Nies, an old friend and senior electronic technician in Engineering, dropped by my office one day to describe this shaker predicament. He had studied the problem, and came up with a solution to their problem. He discussed his ideas with the engineering staff, but they continuously postponed considering his suggestions.

Al and I had become good friends as we shared a love for scuba and abalone diving. I knew Al to be level-headed, extremely bright, and a very good electronic technologist. Consequently, after studying the problem, I didn’t hesitate in joining Al to convince upper management that we could solve this shaker speed monitoring problem ourselves. Management was receptive to the plan for two reasons: I had a proven track record managing the Computer Facility and developing the CMSS data management software applications; and second, the Engineering Department had been unsuccessful for several months in correcting the monitor’s high failure rate.

Al’s idea was to leave the shaker rotating speed pickup on the flywheel frame, but move the electronic detection circuitry and associated power supply outside the warm room. My contribution was to propose using a brand new technology, embedded microprocessors, to facilitate Al’s design implementation.

Before leaving Lockheed Palo Alto Research Laboratory for the Cetus job, I had studied the microprocessor technology, and knew about its first practical application, the hand-held HP pocket calculator. I had learned that Pro Log, a Monterey-based business, had started marketing a family of printed circuit boards built-up around the Intel 4040 microprocessor. Their product line included a family of matching elements: a card rack with integrated power supply; digital input and output cards; random access read and write memory (RAM) cards, and programmable read only memory (PROM) cards. Their product line also included a PROM Burner; specifically, a device that loaded (burned) the PROM chip with microprocessor instruction code the operator entered via a hexadecimal keyboard with matching laser diode (LED) display; and a System Analyzer by which the operator could stop the processor clock at a specific address in a program code sequence execution, and observe the processor state via a hexadecimal LED display.

Cetus upper management liked our ideas and gave the go-ahead to develop a demonstration prototype. The Engineering manager was surprised and upset that they would not let him continue their search for a solution. Countering manager’s prediction that Al and my design would not work any better, Upper Management pointed out that the Engineering group had been trying to correct this problem for several months without success. Clearly to them, it was time to try another approach.

Within five weeks, we had developed a design, ordered the necessary electronic and microcomputer parts, and taken the Pro Log training classes on using the microprocessor in engineering applications. Five weeks after that, we had the prototype built, and the software control program coded & debugged. We scaled it to handle a dozen shakers, and interfaced it with Cetus’ Security Company. With that link-up, detected shaker speed failures were quickly passed to the on-call technician.

Cetus management, and the Engineering and microbiology staff watched our progress very closely for several weeks. During that time, two shakers did fail, but the microcomputer based monitor signaled the Security Co. which quickly alerted the maintenance technician. He in turn, had time to move the trays and flasks to another shaker before any of the affected microbes were asphyxiated. This new monitor had performed as promised. Upper management was satisfied; and gave the go-ahead to expand the capacity of the monitoring system to the shakers in the remaining warm rooms. The monitor implementation, pictured below, was replicated for each shaker warm room; all of these operated for over seven years after that without failure!

Not too long after Al and I had successfully completed the microprocessor-based shaker monitor implementation, we were asked to solve other problems the Engineering Department had failed to implement properly.

With these added responsibilities, Doug asked me to consider relinquishing the Computer Facility assignment and taking over the Instrumentation and Control Group including the associated development and I&C maintenance responsibilities. I agreed since by that time I had hired and trained a computer software programmer to support the Computer Facility and the associated Microbiological Data Management Software. Further, the manager of the Cetus accountants, had been harassing me during the final phase of developing the isolate production sorting and analysis software. Why he did this I never fully understood.

Parallel Pipetting Filling Machine Embedded Microprocessor Controller Development Effort

A few weeks after the shaker monitor success became generally known among the Cetus microbiology staff, one of them, Bob Bruener, ask for help. It seems that over the course of the past year, the CMSS crew had been suffering a malfunctioning parallel pipette transfer machine. The main complaint was that sometimes when the operator signaled it to lift or lower the pipette array, it would dump the full contents of its manifold of inoculate or nutrient or ph indicator liquid. It appeared to be due to vibration induced into the manifold-parallel pipette assembly as the lifting mechanism began movement. This disturbance in turn caused a loss of surface tension within one or more of the pipettes which caused air bubbles to stream from the pipette tip into the manifold. This chain of events in turn caused the vacuum pressure to drop precipitously and dump the entire contents of the manifold basin out through the pipettes. After studying how and when these dumping failures occurred, it became apparent that the abrupt starting and stopping of the lifting mechanism was the primary cause.

The solution was to find a way to slowly start and stop the lifting mechanism. To do this, I proposed replacing the big awkward on-off relay controlled stepper motor power drivers with compact stepper motor power drivers whose stepping rate could be controlled directly by a microprocessor digital output stream of electronic pulses. Dave Hansen, the engineering manager, stated flatly that microprocessor wouldn’t be able to accomplish the necessary smooth movement transitions with our design. We proceeded without his blessing.

Al connected one of the microprocessor digital output channels to supply this electronic pulse stream to the stepper power driver. I wrote the embedded microprocessor control code so that it generated an output pulse stream beginning from a stop condition and smoothly ramping up the pulse rate to cruise stepping rate, then as the lift mechanism approached the desired stopping point, smoothly ramping down the stepper rate to a stop. On repeated tests of this new implementation, and subsequent extensive field operations, the filler machine never dumped its loaded manifold again. The Engineering Group Manager's judgement had been proven wrong again.

Because the microprocessor logic instructions were executed with the precise timing of its crystal controlled oscillator, I was able to calculate exactly how many microseconds it took to execute each of the instructions in the control program. Hence the time interval between consecutive output pulses could be easily altered by varying the number of “no op” “do loop” instructions between pulses. Moreover, there was enough time between even the shortest interval between consecutive output pulses to intersperse a read input signal branch-on-compare code string without altering the necessary ramp-up, cruise, or ramp-down output pulse rates. Using this coding method, the limit-switch, emergency stop-switch, and bench mark position flag-switch states were routinely checked as the lift mechanism stepper motor pulse generating commands were being executed. If either the limit switch or emergency stop switch state were asserted, the control code was programmed to bring the lift mechanism movement smoothly to a stop, and output an appropriate alarm signal. When the bench mark position flag was encountered by the optical pickup on the lift, the internal distance measuring counter was updated with the known step count for the associated bench mark position. It was possible, if the current count was different than the position flag count, an alarm code was displayed on the control console.

Also at about that time, the manager of Engineering and the other two fellow instrumentation physicists were in the process of leaving Cetus. Sometime later, the Accountant manager also left Cetus and went to work for a sheet metal fabrication business in San Leandro.

While developing the filling machine embedded microprocessor controller, I began experiencing criticism from the Cetus’ chief of microbiological R&D. He demanded that I stop this development, and redirect the effort to his design, a general purpose microcomputer machine that he thought could be easily adapted to handle the tray filling task as well as several other outstanding instrumentation and control problems. I resisted his badgering, and asked Doug Miller, Cetus’ Operations Manager, whether to follow the R&D chief or continue on my own course. Doug was adamant, do not listen to the Microbiological R&D Chief, and sit tight as there were plans afoot to handle this situation. Sometime later we learn that the Microbiology R&D Chief had left and enrolled in studies to become a patent lawyer.

Bob Bruner, and his associate microbiologists, Jeff Flatguard and Jon Raymond, routinely checked our filler machine development progress. As they learned more about the capabilities of the embedded microprocessor control code, they suggested improvements to the operator interface and added functionality in the control modes. With their help, I designed the implementation so the operator, using a control console with a numeric keypad, two push-buttons, and an alphanumeric display, could set the volume of liquid to be sucked into the manifold; and the incremental volumes that were to be injected into the tray wells. The operator was provided with a set of control buttons with which he could initiate the pipet liquid injection pump, manifold-fill pump and pipette array lift mechanism moves. After this new filling machine & controller system shown below was completed and checked out; the pipette manifolds never dumped again!

Filler Machine with Controller

New Applications for our Embedded Microprocessor Controls

As the parallel pipette filling machine effort was nearing completion, Our Instrumentation & Control (I&C) group was asked to develop microprocessor-based temperature and relative humidity controllers for four large warm rooms, one incubator room, and a large water bath system under construction.

This required that I&C interface analog-to-digital, and digital to analog converters with the microprocessor controller configuration where the ADC input channels were conditioned to interface with resistive temperature device (RTD) inputs; and the DAC outputs were conditioned to drive strip chart recorder channels. We used a “dual-slope” ADC on RTD and relative humidity sensor inputs to achieve the necessary high signal-to-noise conversions needed to obtain +/_0.1 degree F temperature control, and +/_ 5 percent relative humidity control, respectively.} In order to control room and water bath ambient conditions with this accuracy, it was necessary to design the controller to supply heater input for cold load conditions and refrigerant cooling for hot load conditions, respectively.

Chapter 3 - Cetus Retooled for the Genetic Engineering Revolution

In 1973, Stan Cohen & Herbert Boyer[3] created the first transgenic organism, a technique of DNA cloning, which allowed genes to be transplanted between different biological species; their discovery signaled the birth of genetic engineering. In Cetus’ case for example, the drug producing gene in the parent strain once identified could easily be replicated on the same DNA using this genetic engineering method to achieve higher drug production.

Sometime later, Cetus management reluctantly abandoned the CMSS, and redirected the personnel and infrastructure to capitalize on this new method of replicating the drug producing genes in the parent DNA using genetic engineering processes. This method showed astonishing promise over the mass screening method. Developing processes for producing Beta Interferon and Interlukin-2 were two significant results of this work.

It was soon clear to the planners that the full I&C crew would not be needed until Cetus had retooled for this new technology. Doug Miller, Operations Manager, ask that I lay off a number of I&C technicians; and gave Al, my senior electronic technologist, and myself the option of staying on with a skeleton crew, biding our time for 6 months or so until the role of I&C could be re-established. Coincidently, AL and I had been considering forming a consulting business of our own outside of Cetus. This situation was made to order for us, so we accepted immediately.

Chapter 4 - Our Consulting Business outside of Cetus

M&N Store & Forward Computer: Operating from a laboratory in Warren Cook’s victorian business office house basement on Bancroft St. in Berkeley, M&N Associates developed, over a period of 4 months, two Store-&-Forward Computer prototypes; one of which is shown above: left to right, a LSI (Lear Seigler Inst.) Dumb Terminal with numeric keyboard; the computer control box containing a Shugart Floppy disk drive, an Intel 8080 microprocessor mother board with digital I/O ports, RAM memory, PROM (Programmable Read Only Memory), & UART(Unidirectional automatic receiver/transmitter); +5 & -/+12 dc volt power supply; and the Synchronous (telephone data) Modem.

Hardly had Al Nies & I enrolled in an IEEE correspondence course on managing a consulting business, when a scuba diving friend of ours, Dave Atkins, asked if we might consider a problem that had just developed with his employer, a mail order electronic data processing company, Accounting Automated (AA) in Portland, Oregon.

Just a little earlier, the U.S. Postal Department had been spun off as a separate government entity. A serious consequence of this action was their postal delivery time doubled. Instead of AA’s CPA customers in Texas, Arizona, California, Oregon and Washington being able to have their budgetary data delivered via the mail to AA in Portland within 3 days, it was taking 5, sometimes, 6 days. Moreover, the same delays were being experience with the delivery of the EDP reports back to these customers.

Dave asked Al & I to consider developing a method of transmitting this data between AA and their customers over telephone lines. After studying the problem throughly, we assured Dave it could be done with a microprocessor-based store-and-forward terminal at the customer’s end linked via telephone data modems with the Honeywell computer at the AA Portland office.

Al &I formed our own company entitled M&N Associates. We were awarded a development contract by AA, and within four months, using this new microprocessor-based technology we had completed two prototypes. Al had decided to resign from Cetus so was able to put in full time on our contract. I, on the other hand, continued at Cetus putting in my 8-hr. days as usual, but spending a couple of hours before Cetus work every day, all holidays, and Saturday and half of Sunday each week on M&N’s business.

This effort took place in almost the same time frame as Jobs and Wozniak were developing the first Apple personal computer (PC) and a similar group at IBM together with Bill Gate’s at Microsoft were developing the IBM-compatible PC platform, but we didn’t realize it until almost a year later. The M&N machine had nearly all the same functional subsystems contained in Apple and IBM-compatible PCs including terminal and keyboard operator interface with spreadsheet application including audit and edit features, message editor, report generator, floppy disk software driver, telephone modem software driver, printer software driver, etc.

After we demonstrated this prototype, AA extended the M&N contract to build 10 engineering units. We accomplished that contract over the next 6 months. Field tests on these units by selected AA customers established the user community acceptance. From those results, AA was ready to contract for 200 units within that next 6 months. Unfortunately, because M&N did not have the necessary operating capital nor manufacturing infrastructure, we were not able to compete successfully for the production contract that followed. Al & I were obviously very unfamiliar with the fact that Silicon Valley was just teeming with venture capitalists, nor had we developed a business plan nor found an MBA willing to ferret out these potential sources. We just missed a golden opportunity; it was not in the cards for us to obtain the capital necessary to satisfy AA’s contract requirements.

Chapter 5 - Rebuilding the Cetus Instrumentation & Control (I&C) Group

I&C Group began in 1977 to work on several machines for the new Cetus genetic engineering enterprise. In rebuilding I&C, I first hired Al Johnson, as the I&C electronic technician Lead; next, Jim Zeitlin, an electronic circuit designer and software engineer; and finally, Joseph Widunas, an electronics draftsman. Each of these employees turned out to be exceptional in their respective fields. Jim, for example, had worked on the Altair 8800 S100 microcomputer operating system software, until Altair went under. I immediately gave Jim the assignment to develop a real-time operating system for the Prolog Intel 8080 microprocessor. The result was a very simple system that had just the right functionality! Even though Jim hadn’t finished his BS(EE), he turned out to be an accomplished digital circuit designer, and software engineer as well.

Al Johnson came directly from a bio-instrumentation firm with the skills and knowledge to setup the necessary equipment, and hire the electronic technicians to accomplish our up coming biomedical device assignments.

Joseph Widunas, was a skilled draftsman and mechanical designer; just the capabilities we needed for this work. It was not surprising that Joe’s capabilities came naturally as his uncle was a very famous west coast artist and sculptor.

Initially, my I&C Gr. consisted of two R&D electronic technicians and three maintenance techs; all skilled competent workers. Later it was to grow to 15 personnel as shown.

Developing the Serial Dilution Machine

I learned somewhat by chance that Kari Salomaa, one of Cetus’ mechanical engineers, had been charged with developing a machine that could perform serial dilutions over 12 rows in an 8 x 12 well micro-titer tray. He worked on the problem for several months without successfully perfecting the machine. His design used many cams, eccentrics, relays, detents, ratchets, and microswitches. These mechanisms were difficult to adjust, and regularly lost alignment and positional accuracy.

I discussed these design problems with Kari, but he resisted help. In frustration, I talked with Doug Miller, Cetus’ Operations Manager; Steve Golden, Cetus’ Microbiology Production Manager; and Pete Peterson, Engineering Manager. With my successful embedded microprocessor implementation of the shaker table monitor and filler machine systems, both Doug & Steve trusted my engineering methodology and design judgement. Doug talked with Kari about his slow progress, and asked him to consider working with me. He reluctantly agreed.

I immediately laid out a design incorporating stepping motors, optical sensors, solenoid actuators, and microprocessor controls integrated with Kari’s mechanical design. Pete Peterson, the Engineering Manager, stated emphatically that my design would be impractical. He envisioned my implementation as one with an unwieldy array of displays and control switches.

Within 2 month, the I&C group had, with Kari and his mech-tech. completed an operational prototype that had only one 5-digit LED display, and two buttons for incrementing and decrementing the nominal pipette volumes, and numbers of mixing cycles. Peterson, failed to acknowledge our success! Ron Cape, the Cetus CEO, did acknowledge Engineering’s effort with a backhanded compliment: “it appears to be doing an excellent job, but what do I know!” Ron had illustrated once again that he was a ‘prince‘ of a fellow.

The microbiologists, Bob Bruener, Jeff Flatguard, Jon Raymond, and Saul Neidleman, were so impressed with the resulting prototype that they recommended it be upgraded, and four operational versions built. The resulting machines proved reliable and easily controlled, so much so in fact that management decided to have it patented. Later they hired an outside product design specialist to upgrade its appearance, while retaining all its functionality. Cetus marketed the result as the Pro/Pette, and sold over 2 thousand units; one to nearly every blood bank in the country.

Kari, an MIT graduate, is a talented designer. He is the off spring of Finnish parents who immigrated to the US after WWII; Kari closely identified with the Finnish culture, and told many stories of his mother’s heroic exploits as a member of the Finnish underground resistance movement against the Russians.

The serial dilution machine shown above has a horizontal movable table with an 8x12 well microtiter tray in the foreground, and an 8 micro-syringe array mounted on a vertically movable yoke having just ejected the contaminated pipette tips, and picked up a row of sterile tips from the 8x12 sterile tip array on the back of the table.

The serial dilution machine was patented under the title, “Liquid Sample Handling System.” The patent abstract follows: An automatic liquid transfer system includes a horizontally translatable table and a vertically translatable set of pipettes. The table accommodates a titer tray having a multiplicity of receptacles to be filled or holding liquid samples to be diluted, and a rack housing eight rows of disposable tips. During each cycle of a serial dilution process a fresh sterile set of tips are picked up by moving the bare pipettes over the sterile tip array and pressing the pipettes firmly down on the next row of sterile tips in the array, then the pipettes transfer liquid in a sterile manner from a sample or diluent source to a row of wells in the micro-titer tray, or from a row to a successive row of wells where it is mixed with diluent. Thereafter, the tips are discharged back into a rack for used tips thus maintaining sterile conditions during the process. A sensor is provided on the machine to detect whether all used tips in each set are discharged and another set successfully picked up.”

Development of a Fully Automated Bench-top Fermentation Control System

Sixteen operational versions of the system shown above were developed and produced by my I&C Group for Dr. Bez Koshrovi, the Cetus Biological Production Process Manager. A seventeenth copy was produced with my machine language control code converted to C-language code by Jim Zietlan. This machine was interfaced with a 300 liter vat and used to grow-up seed inoculant for pilot plant fermentation runs.

The hardware and software of this system were patented in mine and Kari’s name as principle inventors, and later described in an international peer reviewed journal article which I co-authored with Keith Bauer, a Cetus microbiologist. Specifically, Roy D. Merrill & Keith Bauer, “An Integrated Microprocessor-based Fermenter Control System,” Biotechnology and Bioengineering, Vol. XXVIII, Pp. 494-503 (1986) In searching the literature for relevant fermenter control related publications, it became clear that this machine was the first to use one imbedded microprocessor to control all variables, the operator interface, the output displays, and 6-channel strip-chart recorder as a completely automated stand-alone fermentation system.

The Fermentation Control System patent abstract follows: “A unitary control system controls a plurality of individual digital control systems for fermenter units operating independently of each other in response to a multiplicity of measured variables representing the reaction rates and end products of each fermenter unit. The energy input quantities, both chemical and physical, to each unit are controlled independently either locally or from a master control unit to achieve optimum fermentation conditions. Each of the plurality of fermentation systems, running under widely varying reaction conditions, is operated to produce any selected micro-organism under substantially differing, or substantially identical process reaction conditions. The individual fermenter control system includes an executive program using a high speed microprocessor bus for operating without system upset is provided to both the local, microprocessor computer and the central, minicomputer controller. The fermentation control system was particularly useful for research and development, for example, research involving recombinant micro-organisms to improve and optimize commercial production of such micro-organic species on a batch basis.”

Chapter 6 - Cetus Could Have Been Great

What if in the early 1980’s, Cetus had decided to keep the Engineering Instrumentation & Control Group, and later in the 80’s, the management staff had recognized much earlier the importance of Kary Mullis’ PCR discovery, and at the same time stepped down to let professionals run the company? (I believe there was a desperate need for better biological R&D management; and as so often occurs in new companies, the original entrepreneurs, particularly Ron Cape and Pete Farley, stayed too long! Had they relinquished company management to professional biotechnology administrators much earlier, it seems highly likely Cetus would have survived for longer than 20 years. As it turned out, Cetus was acquired by Chiron in the 1992; and Chiron, in turn, was acquired by Novartis International AG in 2006. The original Cetus R&D facility contained in the renovated old Shell Research buildings on Norton & 54 St. in Emeryville remains the Novartis complex in California.)

Prior to Cetus management deciding to reduce the size and scope of Engineering I&C activities in the early ’80’s, I had already contacted two companies about commercializing the serial dilution machine. If that course of action had been taken, the Pro/Pette could have been brought to market faster and at considerably lower cost.

Moreover, I&C would have been primed to address a second challenge of that time: an automated means of sequencing DNA. A new laboratory sequencing protocol method had just been published in the Biotechnology literature that would have made this implementation feasible.

More importantly, I&C would have been primed to commercialize the PCR (polymerase chain reaction) method[4] discovered in 1983 by Dr. Kary Mullis, a Cetus employee. Later, in the 1980’s, Dr. David H. Gelfand, a senior Cetus microbiologist, led a team that discovered the Yellowstone boiling mud pot bacterium, Thermus aquaticus, that thrived at 100C and produced the key enzyme,Taq Polymerase, needed to denature DNA at 90C in repeated cycles of the PCR process.[5] I&C would have been ready to tackle the reagent pipetting and 30C-90C-30C temperature cycling implementation necessary to commercialize viable PCR machines. Cetus received a PCR patent in 1991.

Rather than exploiting the PCR capabilities, Cetus sold their PCR process, arguably the most important discovery in biotechnology of the 20th century, to Hoffman-La Roche for $200 million in the early 1990’s.(Later, it was rumored, Dr. Peter J. Farley stated the sale amount was really closer to $1 billion.) Hoffman-La Roche has made 10’s of billions of dollars exploiting the PCR method. Shortly after Cetus sold the PCR process in 1991, the company was acquired by Chiron. Ironically, only 15 years early, Cetus had rented laboratory space in the newly acquired Old Shell Research Building in Emeryville, CA to a new startup, Chiron. Later in 2006, Novartis International AG acquired Chiron.

Probably, the saddest irony of it all was that at Cetus inception, Pete Farley stated his goal was to develop a biotechnology instrumentation company that would rival the commercial success of IBM. Had Cetus commercialized the PCR process, this dream undoubtedly would have been realized.

Chapter 7 - The Whimsical Side of Cetus

The Case of the Great Garbage Dumpster Fright: John, the early lead electronic technician, was the champion practical joker at Cetus. The first antic I had heard about involved John and a couple of his friends who after work, clearly had far to much time on their hands. While routinely consuming a 6-pack of Bud, they conceived many pranks. The most notorious of those was the great dumpster escapade!

It seems that in their spare time after work, they had been experimenting with coupling surgical tubing to an acetylene tank gas outlet valve and directing the other end of the tubing beneath an overturned 1 lb. coffee can, or 2 gal. bucket. This led to many escapades that produced almost uncontrollable mirth. On disconnecting the tube from the acetylene tank valve, and touching a lit match to the tube’s open end, flame would race down its length to the gas collected under the can or bucket, where it sparked an explosion that would propel the container to the ceiling of the Engineering High Bay with a great bang! This always caused peels of uproar-us laughter from John and his buddies.

With that success, John’s fertile mind next struck on the idea of filling a garbage bag with the gas. Then he had to decide where and in what container to place the bag before torching its’ contents? Well! the Cetus parking lot off Fourth street between Engineering and the Steam Works (a gay bath house) contained a large dumpster bin with dual lids. This seemed like just the perfect location for their next prank. The dumpster was located behind the parking lot lath woven cyclone fence almost completely hidden from the street. They ran the surgical tubing from the acetylene tank in the High Bay up the stairs, through an office window facing the parking lot, then down to the dumpster. The end of the tube was then tied off inside the garbage bag. The bag was filled with gas, the dumpster lids closed over the bag, and as before, John and company disconnected the tubing from the acetylene valve, and lit the gas in its open end. There was a momentary period of complete silence; the perpetrators held their breath looking at one another thinking their experiment wasn’t going to work, before a tremendous explosion rocked the dumpster and reverberated between the buildings and out into the street. The dumpster was deformed outward like a gigantic ball, and both dumpster lids were propelled up above the buildings, then down, one into the parking lot with a loud clang, and the other onto the roof of the Steam Works with a resounding thud. Witnesses standing outside the Engineering building saw the front door of the Steam Works fly open and more than a dozen men in various stage of undress came bursting out into the street thinking that someone had just bombed the place. Within 10 minutes the Berkeley police were alerted. Thinking the reported explosion could well be the result of a bomb set off by the Underground Weatherman Terrorist, they sent a patrol car cruising back and forth along 4th St. in the vicinity of Engineering looking for the cause of the explosion.

Fortunately, by that time the smoke had cleared, the nude steam room customers had returned to their activities inside, and the damaged dumpster and debris in the parking lot remained safely hidden behind the lathed cyclone fence and on the Steam Work building roof. John and his conspirators were lucky also in working for Doug Miller, a very tolerant Operations Manager.

It was not until 6 years later during the going-away party for John, that a gift was presented to him by his co-workers. At the urging of Pete Farley along with others there, John unwrapped the gift revealing a miniature replica of the infamous dumpster with bloated sides and bent lids. To those of us who knew of the dumpster escapade, it clearly represented the result of that fateful episode many years before. Pete was the first to ask John the significance of this replica. John then had to come clean and sheepishly confessed the incident to the speechless consternation of both Pete and other of the management staff.

The Case of the Japanese Sake Plant Advertising Fizzle: This prank came a little after the Carnation Milk Company sold their building across from Engineering on 4th street to a Japanese Sake Brewery. Upon completing several successful sake brewing cycles, the Japanese management opened a tasting room. To commemorate the occasion, they tethered a great helium filled dirigible-like ballon atop the brewery. With spot lights trained on the scene, their advertisements on the ballon sides could be seen for miles along the East shore freeway. Looking out the second floor windows of the Engineering build, one could see across the street, over the roof of the Sake Factory, and into the waters of the Berkeley marina channel just on the other side. One could also clearly view the ballon.

Well, as one might imagine, it was only a few days and just as many Bud 6-packs before John & his buddies came up with the perfect prank. They quickly cobbled together a large crossbow which with bicycle inner-tubes providing the resilience, could propel a 3-foot long arrow with sharpened point some 150 feet across the street to the vicinity of the sake advertising ballon. When the opportunity presented itself an evening or so later, they tested the device on a local high school ball field. With a few minor adjustments, the crossbow was declared operational.

They waited then for a busy Saturday evening with a large sake tasting crowd present. Large flood lights were again trained on the ballon advertisement flying brilliantly over the Brewer. John and crew quickly moved the cross bow into an engineering office with a window facing the Brewery. After posting sentries to make sure the coast was clear both on 4th St. and the marina channel behind the Brewery, they strung the bow, stretched the bicycle inner tube string tout and let the arrow go.

The arrow disappeared into the night in the direction of the ballon, but no one could be certain it had struck the ballon. They waited and waited for any sign that their dirty deed had been successful.

Thinking finally that the arrow had not accomplished its intended purpose, the perpetrators began disassembling the crossbow and moving away from the window, then looking back one last time, a member of the group thought for a moment he perceived that the ballon had sagged just a little. They waited a few minutes more and sure enough within a short time it was clear the large ballon had been punctured. Its drooping appearance grew worse and finally caught the eye of one in the crowd below. With this taster’s loud out cry, the sake tasting queue beneath the ballon began screaming and wildly running away. It took some time before finally the ballon, with a funny blubbering sound, sank to the brewery roof, draping itself over the eve then sliding down almost to the sidewalk. Again, the Berkeley Police were called upon to investigate this incident. They soon arrived and proceeded to patrol up and down 4th street looking without success for any clue as to the cause of this outrages event. To this day, no one either on the Berkeley Police Force nor in the Sake Brewery management staff have been able to prove from where the 3 foot long arrow had been launched, nor how it could have successfully pierced the thick inflatable ballon skin and deflated it so completely.

The Case of Another Character at Cetus, the Construction Manager, and Perpetrator of the Roof Garden Mystery: Memories of Joe Proctor (an alias since his actual name has long been forgotten), the Cetus Construction Manager, I had worked with in the mid-70’s, prompted this story. In conversations over a beer one evening after work, I learned that Joe was a WWII veteran, moreover, he had been a P40 & Corsair pilot in Maj. Greg. Boynton's Black Sheep Squadron. He related many harrowing experiences flying with Boynton and his pilots in their Corsairs against the Japanese air force over the Solomon Islands.

Joe owned a twin engine beach craft he flew between his ranch in Northern California and the Alameda Airport. He had a construction job in progress there, as he also had with his Urban Renewal crew in the East Bay. Doug Miller, our Operations Manager, knew of his contractors businesses outside Cetus, but was so impressed with Joe’s effectiveness in remodeling old ware houses into biological warm room facilities, he chose to overlook this and some other of his questionable activities. One of these was the considerable savings he realized in the wholesale discounts of large bulk orders obtained by combining his with those for the Cetus remodeling jobs. Another, and one that Doug never knew about, has been entitled “the Roof Garden Mystery/”

Joe was a blustery man and demanded a lot from his employees, but on the other hand, he took care of them. Especially, the down-and-out fellows that he had hired off the streets of Berkeley’s Telegraph Avenue. For example, he always had a big pot of stew brewing when his crew arrived on the job in the morning, and he often took them to Brennon’s Club for a beer in the evenings after work. Once these entry level fellows had a taste of Joe’s hospitality, he was their friend for life, and most often became steady hard working employees.

Which brings to mind the following incident. I was in the midst of coding real-time application software for the bench-top fermenter controller. Jim Zietlan, our software engineer and system programmer, had just completed the operational version of a real-time operating system for the Intel 8080 microprocessor (possibly the very first) we were using at the time, and I was developing the application software to run in this operating system environment to control the fermenter temperature, ph level, agitation speed, dissolved oxygen concentration, and foam level variables using second-order negative feedback algorithms as well as service routines to handle the numeric and function key pad entry of variable operating set-points and alarm limits; the variables plotting scale and offset for driving the 6 channel strip-chart recorder; and driving the alphanumeric LED display.

I was having the time of my life doing something that had never been done before. For example, to achieve comparable functionality prior to this implementation, the microbiology process engineers had routinely used a separate analog controller for each of the operating variables, as well as a separate off-set and gain amplifier for each variable displayed and recorded; and on top of that, it was necessary for a biotech to be in attendance all through each often multi-day experiment. My implementation was capable of being linked to a central laboratory computer and alarm system, and could operate unattended. It controlled all of these variables using just one microprocessor (linked to two 4-bit discrete input/output registers, a 6-channel 12-bit analog-to-digital converter, a 2-channel 8-bit digital-to-analog converter, a 10-numeric and 6-function keyboard, and a 12-character LED display) which was a significant achievement. A process lab. microbiologist co-authored a paper describing this development in a peer reviewed international journal: Roy D. Merrill & Keith Bauer, “An Integrated Microprocessor-based Fermenter Control System,” Biotechnology and Bioengineering, Vol. XXVIII, Pp. 494-503,1986

At the time of this incident, I had finished and tested about half of what had to be done for a complete implementation. All tests assured me that the microprocessor could easily handle the complete application.

My work routine was to arrive in the office about 2 hours ahead of the engineering and technician staff, tune in Dr. Don Rose, a very funny disc jockey on KFRC-AM at the time, and listen to his rock & roll music and comedy while coding the control software. The music put me in a relaxed mood, so that I could concentrate exclusively on the task at hand. It was a euphoric experience, and one I looked forward to every morning. My office was on the second floor with a door opening into the hall with another door opposite my office that opened out onto the high bay roof. There one could view the building roof top stretching out about 20 feet to a short 3 foot high separating wall, and then on another 20 feet over the roof housing the engineering drafting room and technician lab space. Normally, in the summer time I left my door open for the fresh air. However, I noticed that regularly one of Joe Proctor’s go-fers would trudge up the stairs every morning carrying large heavy buckets.

He would proceed out the roof access door carefully closing it behind him, then move on to accomplish some mysterious task there before returning and shuffling back down stairs. This morning ritual continued for two weeks, or so until one day I could no longer contain my curiosity. After the young chap completed his daily task, and disappeared down stairs, I quietly opened the outside door and searched the roof for some sign of what the young lad had been up to. It only took a few seconds to spot a row of spindly green stems just peeking over the 3-foot high separating wall. On closer inspection, I discovered three dozen potted plants flourishing there in their solitary place. Obviously, the young man had been watering and feeding those plants during his daily visits.

Not recognizing their species, but thinking something strange was going on, I clipped a leafy branch off one plant, and pressed it between the pages of a reference book. The next weekend, with book in hand and during one of our many trips to the local nursery, while Ina, my wife, was shopping, I asked one of their horticulturist to help me identify the clipping. The nursery man studied the leaves briefly, then lead me into his potting shed for a closer inspection of similar plants displayed in his reference book. He then turned to me and said, “Well, it is just as I suspected. You have in your possession a marijuana plant. I’m not going to ask you where this clipping came from, as even possession at that time was probably an illegal act.”

In the course of the next week, the young water boy continued on his appointed rounds. On about the third day, and after noting the plants had grown another 3 or 4 inches above the separating wall, I asked Joe if we might have a word.

After a brief silence, Joe turned, as if he fully expected me to accuse him of one of his nefarious acts. Instead I simply said, “you know Joe, one of your helpers is tending a crop of marijuana on the roof, and my main concern is that the Operations Manager might accidentally happen upon the crop and most certainly go ballistic!” With a shocked look on his face, he nervously assured me that he would look into the matter right away.

I noticed on the next morning when normally the go-fer would have carried out his bucket delivery task, there was complete silence. Well, of course you guessed it, my next action was to check the space behind the separating wall. It was completely bare as if nothing had been there. The incident was never spoken of again.

Notes

1. After reading Eric Vettel’s Book entitled: “Bio Tech: Counter Culture Origins of an Industry,” I was compelled to tell my own Cetus Story.
2. Dr. Peter J. Farley, a pioneer in the field of biotechnology and a lifelong entrepreneur, passed away at his home in Redwood City, Ca., on Monday, June 7, 2010, at the age of 70. Dr. Farley spent 30 years as an innovator in the biotechnology industry, having co-founded Cetus Corporation, one of the first biotechnology ventures, in 1971. During the 15 years that he led the company, he directed the work of over 200 Ph.D.s in the disciplines of molecular biology, computer science, and drug development. One of these scientists, Dr. Kary Mullis, discovered the process of Polymerase Chain Reaction (PCR) for which he was awarded the Nobel Prize in Chemistry in 1993. Under Dr. Farley’s direction, Cetus completed the largest IPO at the time and discovered and developed several major drugs, including the MS treatment Betaseron and the renal cancer drug Proleukin.
   Following his retirement from Cetus, Dr. Farley pursued an entrepreneurial career personally founding and funding start-ups spanning the fields of healthcare, E-commerce, electronics, and even a custom boat company. Throughout all of his endeavors, he remained passionate about curing world diseases and supporting cutting-edge research.
   He received his M.D. degree in 1965 from St. Louis University. Following a period of surgical training, he served in the U.S. Navy during the Vietnam era as the medical and diving officer aboard a nuclear submarine. Following his discharge from the Navy, Dr. Farley graduated from the Stanford University Graduate School of Business in 1971, becoming the first physician in Stanford history to obtain an M.B.A. He later served as a biotechnology/pharmaceutical industry advisor to the Reagan Administration and testified before Congress regarding health care cost containment.
   Dr. Farley was an avid fisherman, sports car enthusiast, gregarious storyteller and lifelong philanthropist. He was beloved for his bold intellect and generous spirit. He is survived by his mother Mary, sister Susan, former wife Loretto, four children (Kathleen, Brian, Shannon, Maureen), and his three grandchildren (Finn, Kai, Teagan), as well as by countless adoring friends, family members and colleagues.
3. Shorty after the genetic engineering discovery, Dr. Boyer joined with Dr. Robert Swanson to form Genentech Corp. in 1976
4. The PCR process is extremely powerful, for example, with just a snippet of DNA, say that removed from under a finger nail, a hair strand, or blood smear in a violent murder scene, can be multiplied exponentially over a billion times in just 30 PCR replication cycles in less than 2 hours. With this process, for example, CSI units routinely use this process to determine the identity of individuals who produced the snippets.
5. Journal of Biomedical Discovery and Collaboration, 2006, 1:7doi 10.1186/1747-5333-1-7 “The effects of business practices, licensing, and intellectual property on development and dissemination of the polymerase chain reaction: case study,” by Joe Fore Jr, Ilse R Wiechers and Robert Cook-Deegan Center for Genome Ethics, Law & Policy, Institute for Genome Sciences & Policy, Duke University, Box 90141, Durham, NC 27708, USA. Massachusetts General/McLean Hospital Adult Psychiatry Residency Program, 55 Fruit Street Wang 812, Boston, MA 02114, USA.