By Jim Shrine
Pangea Systems Inc. completed a $15 million private financing - the company's second with institutional investors - that is expected to take the company to profitability in the next 12 months.
Privately held Pangea, of Oakland, Calif., said it intends to raise another $3 million in the next two months, bringing the total financing to $18 million.
The company, which provides software and other bioinformatics technology for drug discovery, has about a dozen customers now, including some large pharmaceutical and agricultural firms, as well as the Chinese National Human Genome Center, in Shanghai. With proceeds from the financing, Pangea plans to fund ongoing development efforts.
"We think this is the ideal time [also] to ramp up sales and marketing activities," said Ward Wolff, Pangea's senior vice president and chief financial officer. "Now, we'll be able to take the next step."
The company was incorporated in 1993 and subsisted the first few years on investments from the founders, along with revenues from software design and implementation. A Series B financing of $10 million in February 1997 allowed Pangea to move ahead with its products and services.
"The competition is quite fierce for private equity right now," Wolff said. "We're pleased we were able to get this done before year's end, so, when we plan 1999 operating budgets, we have the certainty of this financing being completed."
In September, Pangea released GeneWorld 3.0, the latest version of the company's automated, high-throughput software application for DNA sequence analysis. The applications tool, GeneMill 1.5, is project management software for DNA sequencing.
Among the scientific tools offered by Pangea are pathway tools, which allow the user to construct, query, analyze and extend integrated pathway and genome databases; and EST clustering and alignment tools, with which users can construct full-length gene sequences from expressed sequence tags and partial sequence data.
The company also offers the Pangea United Life Science Environment (PULSE), a scalable environment for integrating different types of biological information. It also offers services to help manage bioinformatics programs.
"Our goal with this round of financing is to cover the needs of the company for the next 24 months. Our goal is to move to profitability within the next 12 months," Wolff said. "This provides a buffer and some room for operating flexibility."
In July, Eli Lilly & Co., of Indianapolis, became the first pharmaceutical company to license Pangea software. Since then, Monsanto Co., of St. Louis, has signed on, along with New York-based Bristol-Myers Squibb Co., and Hoechst Marion Roussel AG, of Frankfurt, Germany. Two weeks ago, the Chinese National Human Genome Center licensed GeneWorld, PULSE and computational tools.
The new financing was led by MDS Capital Corp., of Etobicoke, Ontario; and Boston Millennia Partners, of Malvern, Pa. Also participating were the previous venture investors, all of Menlo Park, Calif.: Institutional Venture Partners, Mayfield Fund, and Kleiner Perkins Caufield & Byers. New investors were Levensohn Capital Management, of San Francisco; and Moss Forest Ventures of Madison, Wis. Baltimore-based BT Alex. Brown Inc. was the agent for the transaction. *