By Brady Huggett
Chromagen Inc. closed a $15 million round of financing and it now has the means to make itself seen, the company said.
The assay development and detection technology company doubled the combined amount it raised in its previous five rounds, bringing its financing aggregate sum to $30 million since it began in 1994.
Dain Rauscher Wessels, of Minneapolis, acted as the placement agent and adviser to the company. Zesiger Capital Group, of New York, led the round, with Essex Capital, of Boston; S.A.C. Capital Associates, of New York; DRW Venture Partners, of Minneapolis; United Capital, of Denver; JAFCO, of Palo Alto, Calif.; and Nippon Venture Capital, of Tokyo, participating.
"There was a strategy and a purpose behind the funding," said Michael Conrad, president and CEO of Chromagen. "With the funds we will grow the company's operations. This is sufficient to get us to profitability."
Conrad said Chromagen has a net burn rate of about $100,000 to $200,000 a month, and if things go per schedule, the $15 million, in reality, will not be spent in its entirety.
"We will never actually use it all up," he said. "We will be profitable on a month-to-month basis by the end of the year."
Chromagen, of San Diego, was founded by Conrad and Stan Sewitch, who then recruited the help of Raymond Johnson. It had both its seed round of financing and its Series A in 1994. Conrad has a Ph.D. in physical chemistry but has a different approach to the business, he said.
"There are a lot of pointy-headed intellectuals out there trying to run companies," he said. "I have no intention of joining that pack."
The company's technology platform is comprised of Simultaneous Transcriptome Analysis of Target Expression (STATE) arrays, High Performance Signal Amplification (HPSA) assays and fluorescent StarBright dyes that can be applied in the drug development process from genomic target selection right through high-throughput screening and toxicology. The key, Conrad said, is achieving a diversified product portfolio.
"We have 30 products in our portfolio," he said. "We are expecting to generate 30 to 50 this year and be at 200 to 250 in five years. I think that's a pretty stable number."
Although there isn't another financing planned, if the right deal came along, Chromagen would entertain thoughts. But for now, he added, the $15 million does three key things for Chromagen.
"First, it gives up visibility," he said. "We've been a well-kept secret for a long time. Second, we can step up and meet our contractual obligations. Third, we can expand our portfolio in pharmacogenomics and proteomics." n