The venture capital funding environment for genomics tools companies may seem dire, but as the year begins, one microarray startup can celebrate.
GenoSpectra of Freemont, Calif., has raised an additional $8 million in venture capital financing.
“We have a strong syndicate of investors who have long-term confidence in the company,” Frank Witney, GenoSpectra’s CEO said. Company workers did not greet the funding with a party, however: “We went home feeling we can live to fight another day,” Witney said.
Founded in April 2000, GenoSpectra is developing an open-platform microarray technology that uses fiber-optic strands to deposit an entire microarray’s worth of oligonucleotides onto the chip at once — an efficient approach, according to the company, that also allows the user to quality-control the oligos while they are being spotted.
The microarray technology is expected to enter the beta-testing stage in the second quarter with commercialization expected at the end of the year.
With the new financing, the company will also launch developmental efforts in systems biology that it will market as Parallel Quantitative Biology. Witney said the business plan, including commercialization strategy, partnerships, and service offerings, is under review.
Investors in this tranche of investment include: Frazier Healthcare of Seattle, which has also invested in Quantum Dot and GeneMachines; HBM BioVentures of Baar, Switzerland, which has investments in proteomics, therapeutics and pharmaceuticals; Novartis BioVenture Fund of Basel, Switzerland, which invests in pharmaceuticals; and Bay City Capital of San Francisco, which invests in pharmaceuticals and biotechs; joining new investor SC Biosciences, a venture investment group of Sumitomo Corp. Previous investors in the round include the BioMedical Sciences Investment Fund of the Singapore Economic Development Board, and Affymetrix co-founder Alejandro Zaffaroni. Affymetrix, which earlier invested $200,000 in the company, did not participate. The Santa Clara microarray giant retains a 5 percent equity stake in GenoSpectra, Witney said.
GenoSpectra took in $20 million at a valuation of $35 million in its last capital infusion in December 2001. The company said that this round of funding is an extension of the 2001 funding. The negotiations took about six months and the valuation was not lowered, said Witney.
The company has been through a transition period since hiring Witney, formerly president of drug discovery tools at PerkinElmer Life Sciences, as chief executive officer in July. Shortly after he arrived, the company trimmed its staff, firing five workers, according to a report in BioArray’s sister publication, GenomeWeb.com.
This latest funding also brings with it a restructuring of the com-pany, Witney said. GenoSpectra will wind down its XHTS nanovolume high-throughput screening system, laying off engineering staff assoc-iated with the project. Witney said the 30-employee company is not disclosing layoff numbers.
The company has ties to Affymetrix, with its board members including Affy vice chairman John Diekman, managing director of Bay City Capital, and former Affy chief technology officer Richard Rava. Additionally, the company has assembled an executive team (see page 2) that includes Gary McMaster, chief science officer, formerly head of systems biology at Eli Lilly.
The new funding should carry the company “a couple of years,” said Witney, adding that there are no plans to begin a new financing effort.