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Proxeon Raises $2.4M in Financing; Funds Will be Used to Build Sales and Marketing Capabilities

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Building on a just-completed year in which it expects sales of its Easy-nLC platform to drive revenue growth by more than 60 percent year over year, Danish liquid-chromatography and bioinformatics firm Proxeon said this week it has secured a DKK 14 million ($2.4 million) financing round.

The company plans to use the cash to reach break-even and to build up its sales and marketing operations, CEO Mårten Winge told ProteoMonitor this week.

“What we are doing now is financing to get to [a] cash-flow positive situation and break even,” he said. “And we anticipate this most-recent funding addition will be sufficient for that.”

He added the money will go mostly toward growing headcount to 40 from 30, mostly in Europe and North America. Additionally, the firm, based in Odense, Denmark, is looking to increase its distribution channels in Asia through corporate partnerships.

Investors in the round comprised existing Danish VC backers Vecata, Inventure Capital, and Vaekstfonden, and several members of Proxeon’s board, whom Winge declined to identify.

Because the company was able to raise the funds with existing investors, it chose not to look elsewhere for capital, Winge said. It would like to keep the lines of communication open with potential new investors, though it is not actively seeking any, he added.

The new funding is not targeted for technology development. Proxeon is developing a new line of consumables and columns for nanoflow HPLCs, which it hopes to launch at the annual conference of the American Society for Mass Spectrometry in June, but the emphasis at this point is to gain market share with its current suite of instruments and tools, Winge said.

“You could go down that road again and initiate a new R&D program and consume more money if you wish,” he said, “but the strategy with this company has [always] been to develop these products to completion, put them on the market, grow the sales, and then make the company self-sufficient.”

Key to that process is Proxeon’s flagship instrument, the Easy-nLC nano-liquid chromatography platform. Launched in 2006, the instrument followed the typical path to market adoption: First, researchers had to become familiar with the name, then the platform had to be refined, and then a sales and service support infrastructure for the instrument had to be created.

Last year, however, the instrument turned the corner as academic researchers and other firms became convinced of its utility. In late 2007, the company signed an original equipment-manufacturer’s agreement with Bruker under which Bruker offers the Easy-nLC along with some of its mass spectrometers.

Then in April 2008, Proxeon signed another OEM deal with Varian, which would sell the Easy-nLC along with its 920-MS triple quadrupole Fourier transform mass spec as part of an LC-MS set up. Varian markets the Easy-nLC as the Varian 216-LC.

And five months later, Proxeon announced that the instrument had been integrated with Thermo Fisher Scientific’s Xcalibur software for mass-spectrometry data analysis, allowing researchers to move data from the Easy-nLC directly to Xcalibur for additional analysis.

The agreements as a whole represent “a very conscientious strategy to make ourselves compatible and integrate with all the main mass-spec suppliers in the field,” Winge said.

In November, Proxeon scored a minor coup when it announced that Matthias Mann at the Max Planck Institute for Biochemistry would use the Easy-nLC platform to replace all installed LC instruments in his laboratory. In a statement announcing the move, Mann said that his lab has nine LC-MS systems and expect more in the coming years, “and we wanted to standardize on a smoothly running, high performance configuration and replicate that across our entire laboratory.”

Winge said that Proxeon is already seeing concrete benefits from Mann’s unofficial stamp of approval: other researchers have asked for the Easy-nLC instrument after seeing the machines in Mann’s lab. Since the product’s introduction, more than 100 instruments have been shipped, according to the company.

Winge declined to provide any revenue figures, but said that Easy-nLC was the primary driver for the company’s projected overall revenue growth of more than 60 percent in 2008. The other major revenue drivers were a protein database called Protein Center and various ionization sources, hardware, and consumables.

In the past few months, Proxeon has also had developments around its Protein Center, which debuted in version 2.0 in November. A month before that, the firm inked an integration and distribution deal with Geneva Bioinformatics covering Protein Center and GeneBio’s Phenyx protein identification platform. And in December, Proxeon announced a partnership with the University of Washington Proteomics Resource Center that gave researchers there access to the bioinformatics tool.

“2008 was a fantastic year for us, so in concept, we would like to multiply [the business] by doing more of the same,” he said, also declining to provide a figure for total revenues for the year.

With much of the life-science industry bracing itself for what is expected to be a rocky 2009 due to the ongoing financial turmoil, Winge expressed pessimism about the gray forecasts for the industry. Any contraction of business among mass spec companies will undoubtedly trickle down to a company such as Proxeon, he acknowledged, but so far there is no evidence that his business has felt that slow-down.

“We haven’t seen … people who have discontinued business discussions or withdrawn any purchase orders or [are] wanting to rework quotes,” he said. “From my perspective very little has happened in actuality.”

“There is quite a lot of concern … it’s definitely there psychologically, but I’m not so convinced it’s there in actual fact,” he added.

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