By Mary Welch
Maxygen Inc., a two-year-old company that focuses on DNA shuffling, raised $20 million in a private placement from new and existing investors. The money will be used to accelerate internal programs, hire more staff and seek deals involving either in-licensing or complementary technology.
"We wanted to raise $20 million and we found the reception from our existing investors to be quite positive," said Simba Gill, chief financial officer and senior vice president of business development. "One of our goals was to expand our investor base and bring in new high-quality investors, specifically European investors, and we did that with Lombard Odier."
The existing investors were led by Technogen Associates L.P., of Palo Alto, Calif. New investors included Lombard Odier Ltd., of Zurich, Switzerland; Invemed Fund L.P., of New York; and CMEA Life Sciences Fund, of San Francisco. Gill declined to discuss further financial details other than to say the stock had a "very high valuation."
The Redwood City, Calif., company has 110 employees and "with this new placement, we will have sufficient funds for the next three or four years, which is a nice position to be in," Gill said. "This placement will help us lower our burn rate even though we will be hiring a to-be-determined number of new people."
Maxygen was spun out from a London-based Glaxo Wellcome plc unit, Affymax Research Institute, of Santa Clara, Calif., with a portfolio of technologies developed by Pim Stemmer. Other founders are Alejandro Zaffaroni, Russell Howard and Isaac Stein. The company's technology, molecular breeding, also known as DNA shuffling, can create new properties of a protein or polynucleotide through the evolution of its DNA sequence. Molecular breeding can be applied to a wide range of targets, including individual genes that encode proteins or enzymes, whole plasmids or viruses, and multigene clusters that encode metabolic pathways.
So far, the company has concentrated on development deals instead of developing programs internally. Its biggest collaboration is with Pioneer Hi-Bred International Inc., of Des Moines, Iowa. The two companies signed a deal worth up to $85 million to accelerate the development of advanced genetics in corn, soybeans and other crops. The project's intent is for the DNA shuffling, when used with other genetic technologies, to allow Pioneer to bring advanced crops to the market sooner. (See BioWorld Today, Jan. 26, 1999, p. 1.)
In 1998, Maxygen entered into collaboration with Pfizer Inc., of New York, to improve the selectivity of an enzyme required for production of the active form of a marketed natural product. It also is working with DSM Anti-Infectives, of Delft, the Netherlands for improved manufacturing of certain classes of penicillin.
"We have been limited in our in-house programs because we have been involved in our partnerships and we were very careful to keep the burn rate under control," Gill said. "Our work involved a breadth of potential applications, everything from agricultural to chemical to human therapeutics and vaccines. We will be looking over a variety of opportunities and probably concentrating on those with a higher value."