Biospect Bags $27M, New CEO

South San Francisco-based Biospect was founded and incubated last year by Prospect Venture Partners and raised $12 million in seed and Series A funding in 2002. This is a respectable amount for a new life sciences company that develops technology for detecting protein biomarker patterns, but the investors saw the chance this year to raise more and grab a new president and CEO.

Investors raised another $15 million to bring the company’s Series A round to a total of $27 million. The company had three tranches for the Series A: one last year and two this year. For this third most recent tranch, new investor Advent Venture Partners invested $7.5 million. Prospect remained the leader and invested about $9 million of the total round. In addition to Advent, the company acquired new individual investors from Europe. Previous investors Venrock Associates and Versant Ventures also invested again. The valuation, which investors and the new CEO declined to disclose, was set last year.

Biospect hired Deborah Neff as its new president and CEO. Neff, who was previously the worldwide president of BD Biosciences, joined Biospect at the beginning of August and sits on the board of directors.

Biospect will use the latest funding for further research and development. The plan is to release a new product in about six months. Biospect has about 30 employees and Neff predicts to have about 45 by October of 2004. Most of its new hires will work on research and clinical development.

“Right now we are kind of working through how we’re really going to use this funding,” Neff says.

Neff says that the funding will last the company between two and two-and-a-half years.

“The company has more than enough cash to see it through,” says Shahzad Malik, a partner with Advent Venture Partners. “Twenty-seven million is a chunky number by anyone’s standards.”

The company deals primarily with biomarkers, which are traces of diseases that can be found in bodily tissues, such as blood. They hold the promise of speeding up by years the time a patient can be diagnosed with a serious illness. Biospect’s investors say that their early investment in the company will push it to become a leader in the space, which they promise will be huge.

“We think the whole biomarker world is going to become a whole new industry over the next ten years,” says Jim Tananbaum, managing partner with Prospect.

Tananbaum was the company’s founding CEO and continues to serve as chairman. “This will serve not just in detection but also in therapies. We think this is going to permeate medical research and therapy over the next 10 years. We funded the company primarily to produce a leading company that supplies solutions in this arena.”

“This is a rapidly developing space,” says Malik. “There is no company that we’re aware of that is taking an identical track. I wouldn’t be stupid enough to say there aren’t other people around, but they have their own approach.”

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