SEATTLE Geospiza has raised $1 million in its first round of venture-capital financing as it takes steps to accelerate its product-development strategy in the wake of its recent distribution agreement with Applied Biosystems.
Geospiza, founded in 1997, has always taken a "conservative approach" to growth, Kevin Banks, vice president of business development, told BioInform last week. The company's decision to raise outside funding was not taken lightly, he said, adding that the modest amount of financing, provided by several undisclosed angel investors, was entirely by design.
"We could have raised $5 million," he said, but noted that Geospiza is trying to grow in a "planned manner" while ensuring a good return for its investors. Banks would not disclose actual financial results but said it was pro-forma profitable in 2004.
Geospiza will use the financing to further develop its Finch data-management suite in line with the distribution agreement that it signed with ABI in February [BioInform 02-14-05], Banks said.
Geospiza embarked upon a strategy to expand its business development and marketing efforts last year [BioInform 05-03-04], and Banks said that work in that area has paid off with the ABI agreement. The deal was a "tipping point" for the company that will now enable it to focus its resources on product development, he said.
Rob Arnold, Geospiza's president and COO, said that the company has already seen a boost in Finch sales that are "directly or indirectly" linked to its agreement with ABI. While he declined to provide exact numbers, Arnold said that the ABI distribution channel has been responsible for "a large percentage" of the company's Finch sales so far this year.
And the opportunity for further growth is considerable. Banks estimated that ABI claims around 70 percent of the DNA analyzer market, but that Geospiza currently holds only around 3 percent to 4 percent of the total available market for sequencing and genotyping data-management software.
ABI currently has an installed base of around 200,000 instruments, while Banks estimated that Geospiza currently has around 50 installations and 10,000 users of its software.
Aligning its product roadmap with ABI's is therefore a top short-term goal for the 26-person firm, which aims to "conquer" the data-management issues associated with current and future versions of ABI's Genetic Analyzer over the next two years, Banks said.
Longer-term plans over the next five to 10 years call for Geospiza to broaden Finch's capabilities beyond sequence and genotyping data management into what the company is calling a SIMS (scientific information management system). This will enable users to capture and integrate information that comes off of one or more LIMS, and will encompass Q-PCR, microarray, and mass spectrometry data.
The company hopes this broader platform will enable it to claim a much larger share of what it estimates is a total annual market size of $10.5 billion for life science software and services.
But for the time being, Geospiza will focus on the market and the technology that it knows best. Todd Smith, Geospiza's co-founder and CEO, noted that the algorithms for analyzing sequencing and genotyping data are much more mature than for other instrumentation platforms, where a "gold standard" has yet to appear.
In the meantime, he said, the DNA analysis market isn't going anywhere. The flat sales that ABI has been reporting for its sequencing instruments over the last year can be attributed, at least in part, to a data analysis bottleneck, he said. "People are still having a hard time consuming data," he said, which reduces their overall sequencing capacity not to mention their instrumentation and reagent purchases.
The next release of Finch will include several new features, including an archive-management capability, an LDAP feature that will enable users to sign on with a single Windows password, and a distributed computing capability.
In line with the financing, Geospiza has appointed several new members to its board of directors, including Joseph Ashley, former president of Beckman Instruments' clinical instrument group, and Steve Wood, a member of the founding team of Microsoft. Other new board members include Hemchand Sookdeo of Wyeth Research and Tim Hunkapiller of Discovery Biosciences.
Geospiza will also be relocating to a new office closer to Seattle's Lake Union biotech cluster in June, Banks said.