PALO ALTO, Calif.--A round of equity funding completed in late April gained Molecular Applications Group here $9.5 million dollars in new funding. The bioinformatics software company announced it will use the money to enhance current projects, hire additional expertise, and build up its marketing efforts.
Investors were Bay City Capital, Coral Ventures, Delphi Ventures, Medicus Venture Partners, Morgenthaler Ventures, and Dr. Timothy Springer. BioInform asked investors what they looked for when investing in bioinformatics companies and what factors contributed to their decision to support Molecular Applications. The company claimed its scientific expertise and strong customer base were deciding factors in most cases.
Debra Yu, a general partner at Delphi Ventures, a healthcare-focused venture fund, told BioInform she investigated bioinformatics companies for two years before choosing Molecular Applications. She and Karen Boezi, general partner at Coral Ventures, which invests about 50 percent in healthcare services and products and 50 percent in high-tech companies, said they considered starting their own bioinformatics company to fill a gap they saw in the market.
But after meeting with Molecular Applications board members they decided to invest instead. "They had the infrastructure for a lot of the kinds of ideas we had," Yu said.
Molecular Applications also filled a void in the bioinformatics field. She and Boezi felt that other bioinformatics companies were focusing on just one aspect of bioinformatics. "One company is building the road, and another is painting the stripes," said Yu.
Boezi said that Molecular Applications' scientific base was also important. She liked the large number of biologists and chemists on the staff. Boezi said she believes the winners in bioinformatics will be those who understand the drug discovery approach. "We felt Molecular Applications had the most technical depth, " she said.
She said this scientific expertise will pay off in better software. "The people within Molecular Applications really understand what these data mean," she said. "Molecular Applications is trying to develop products to be on the desktop of all biologists and chemists."
Molecular Applications' software helps speed the drug discovery process by improving how researchers search genomic databases to identify novel drug targets. The software also helps model target proteins in the absence of x-ray crystallography data. The company's Look software, which is an integrated protein modeling, bioinformatics, and research communications software system, is used by over 100 sites worldwide. GeneMine, released in 1997, provides data mining and visualization capabilities to help predict a protein's structure and function. GeneMine is used by 10 major pharmaceutical companies and academic sites, including Stanford, Yale, Harvard Medical School, and the National Institutes of Health. The company's recently released DiscoveryBase is a web-based product that provides organizations with an integrated resource of bioinformatics databases and analysis tools.
Myra Williams, president and CEO of Molecular Applications, said the company's biggest strength is in the number of scientists on staff. Williams said the molecular biologists, chemists, and structural biologists all bring broad knowledge to software design. "The thing that distinguishes us is the strong science base to our products," she said.
For instance, DiscoveryBase also includes a built-in help system so a novice scientist can learn which search tools to use or how to fine-tune a specific search. "Our products are truly user-enabling with strong science behind them," said Williams.
Williams joined Molecular Applications one year ago. She previously worked at Glaxo Wellcome, where she was vice-president of research and development information resources (see BioInform, June 23, 1997). Before that, she served as executive director of information resources and strategic planning at Merck, where she had worked for 24 years. Williams said that after turning down several offers she realized that she wanted to manage her own company. "I looked for a company I could passionately believe in."
In Molecular Applications, she found a good match for her genomics and drug discovery background, as well as scientists she respected. "It seemed that Molecular Applications had all the critical ingredients."
Williams said she was also impressed by the company's founders, Michael Levitt and Christopher Lee. "Both are active and continue to do innovative research," she said. "There is also a very strong board of directors."
The same day she interviewed for that job, Williams had dinner with Boezi and Yu. "The timing was perfect," she said. "They wanted to make an investment and we needed to do an additional round of equity."
Since joining Molecular Applications, Williams has built the company from 15 to 45 people. With this new round of equity, she hopes to continue to grow, increasing expertise in DNA and protein expression. She also wants to put money into marketing and into producing new products. She said the next generation of software will be scalable for large companies or individual users. "We will be capturing science in our software that will provide new insight and facilitate the sharing of information across an organization." She said the new money allows the company to pursue these goals in a broader way.
"Myra Williams brought tremendous increase in value for the company," Fred Dotzler, general partner at Medicus Ventures said. "She has a great knowledge of our customers' needs." Dotzler first invested in Molecular Applications in 1994. Since then, he said the company has sold products to 25-30 major pharmaceutical companies. "We have a good base of customers and we have a product that works," said Dotzler, who also serves on Molecular Applications' board. Dotzler expected the additional money to go toward adding products and recruiting additional employees.
Boezi said now that she has invested in Molecular Applications, she will put her effort into making that company competitive rather than investing in further bioinformatics companies. She said the big players in bioinformatics are currently complimentary, with each staking out its area of expertise. "The question is, how big is the market?" Boezi asked. She does not want to invest in companies that might end up competing.
Yu said that a company like Molecular Applications couldn't exist 10 years ago because the need for data management didn't exist. She said that today, companies have huge amounts of data and need tools to help sift through them all. "They are unable to leverage the wealth of this data," she said, "It is a huge paradigm shift in drug discovery."