Codon Devices Inc. brought in $20 million in its Series B financing to work on its synthetic biology platform, as well as to increase staff and expand operations into Europe and Asia.
The Cambridge, Mass.-based company was founded in 2004 to take the idea of constructive biology, which uses synthesis, design and engineering capabilities across all areas of biotechnology, and transform it into commercial applications.
Synthetic biology represents the next "powerful, broad-reaching paradigm shift in the marketplace," said John Danner, Codon president and CEO. "It's where the true engineering mindset can be brought to biotechnology."
Though activity in the synthetic biology space has been going on for the last several years, only a few major players have emerged due, in part, to the difficulty in developing and consolidating technology that can produce synthetic DNA-based sequences quickly and at low cost.
At Codon, work has centered on its BioFAB platform, which is designed to combine informatics, robotics and sequencing technologies to synthesize genetic codes. The company is working to scale the platform to construct engineered genetic devices hundreds of kilobases to megabases in length.
In addition to producing genetic constructs at higher capacity and lower costs, the BioFAB platform also "allows us to deliver constructs that are not achievable with early low-tech" gene sequencing technologies, Danner told BioWorld Today. "We think this will shift synthetic biology from being a niche, luxury item" to something that's cheaper that other technologies, such as recombinant DNA."
Short-term work at Codon will focus on using synthetic biology to "provide a much better option" to recombinant DNA, Danner said.
The company's Series B was led by Highland Capital Partners, of Menlo Park, Calif., an investment firm that primarily participates in early stage and seed rounds and backs firms involved in activities relating to drug development, scientific services and tools and medical devices.
Codon has "enormous market potential," said Bob Higgins, managing general partner at Highland, who joined company's board. "It's really a combination of great people, great technology and strong IP."
Codon was founded through a collaboration of academics - George Church at Harvard, Drew Endy at Massachusetts Institute of Technology (MIT), Joseph Jacobson at MIT and Jay Keasling at UC Berkeley - with start-up investors. The company raised $13 million in a Series A round in 2005. (See BioWorld Today, June 6, 2005.)
Funds from the latest round will be used to expand the company's presence in the European and Asia Pacific markets, continue industrialization of the platform and hiring additional employees in commercial and technical fields, Danner said.
The company, which has about 40 employees, intends to hire another 20 to 30 people over the next year.
Codon, which pulled in its first revenues in November, expects to use the Series B funds to move toward sustainability. With that "infusion of capital, we'll be able to mature the business" to the point at which it could seek access to public markets, or other avenues to capital, Danner said.
The company's business model is three-pronged. First, it offers a custom engineering business to meet customers' specific research needs. For example, Codon recently delivered a sequence-verified 35-kilobase genetic construct to Cambridge, Mass.-based Microbia Inc. for its Precision Engineering business unit.
Codon also develops constructs for retail product sales, with that part of the business expecting to grow over the next year, and the third area of business involves optimizing constructs for in-use applications that could be open for partnership and licensing opportunities.
Codon provides its platform specifically for large industry customers, and has $10,000 minimum order requirements. Its work also is applicable to areas beyond therapeutics and drug development. The BioFAB platform is also used for agricultural products and in biorefinery work.
"We're going after some very high-value applications," Danner said, adding that "the harder the biology gets, the more potential there is for constructive biology."
Joining Highland in the Series B round were Alloy Ventures, of Palo Alto, Calif.; Flagship Ventures, of Cambridge, Mass.; Khosla Ventures, of Menlo Park, Calif.; and Kleiner Perkins Caufield & Byers, also of Menlo Park, Calif. See Financings Roundup, Page 5
In other financings news:
• Active Biotech, of Lund, Sweden, said its board resolved to conduct a preferential rights issue for about SEK240 million (US$34.7 million). The issue entitles existing shareholders rights to subscribe for one new share for each 12 shares held at a price of SEK60 per share. MGA Holding AB and Nordstjernan AB committed to subscribe for the full amount of their firths. Funding will be used to enable continued development of the company's clinical portfolio.
• Akesis Pharmaceuticals Inc., of San Diego, raised about $800,000 in a private equity placement of 1.4 million shares priced at 60 cents each. Investors also received three-year warrants to purchase 207,500 shares exercisable at a price equal to 60 cents each. At the same time, Akesis entered a senior secured credit facility to borrow up to an additional $1 million from any time until Dec. 15, 2009. Proceeds from the financings will be used in part to support clinical development of AKP-101 in Type II diabetes.
• MannKind Corp., of Valencia, Calif., said underwriters exercised in full their overallotment option to purchase an additional 3 million shares, bringing the total offering to 23 million shares priced at $17.42. With a concurrent public offering of $115 million aggregate principal amount of 3.75 percent senior convertible notes due 2013, the company expects net proceeds of about $497.2 million. JP Morgan Securities Inc. and Merrill Lynch & Co. are acting as joint lead managers and joint bookrunners for both offerings. Wachovia Capital Markets LLC, CIBC World Markets Corp. and Leerink Swann & Co. Inc. are acting as co-managers of the stock offering. Shares of MannKind (NASDAQ:MNKD) closed at $17.72 Monday, up 12 cents.
• Predictive Biosciences, of Lexington, Mass., secured $10 million in Series A financing, which was co-led by Highland Capital Partners and IDG Ventures Boston. The company was founded earlier this year and is focused on developing biomarker and assay technology for cancer diagnostics. Paul Maeder, of Highland, and Michael Greeley, of IDG, will join Predictive Biosciences' board. The company also appointed Tony Shuber chief technology officer.
RegeneRx Biopharmaceuticals Inc., of Bethesda, Md., entered agreements with certain investors to privately place an aggregate of about $9.6 million of common stock. The transaction involves the sale of 5.3 million shares priced at $1.80 per share. Investors also received warrants to purchase up to an additional 2.1 million shares at an exercise price of $2.75. Participants in the financing include existing and new investors, along with affiliates of Sigma-Tau Group, RegeneRx's largest stockholder. Piper Jaffray & Co. acted as sole placement agent. Net proceeds will be used for general corporate purposes and to advance clinical development of its Thymosin beta 4 technology platform. Shares of RegeneRx (AMEX: RGN) closed at $2 Monday, down 38 cents.