It?s a seed round and a mezzanine round wrapped into one, or at least that?s what Perlegen Sciences Inc. is hoping. The biotech firm recently brought big deals back to the VC market by securing $100 million in its first institutional round of financing. The game plan is to go public within the next 18 months, depending on market conditions.
The Santa Clara, Calif.-based company, which expects the new money to last while it sequences the genomes of 50 different people in order to identify the differences between healthy and diseased DNA, received a post-money valuation of $266 million from lead investor Lomard Odier & Cie, which invested $20 million.
“We went with Lombard because it is a well-known European bank and plays a big role in the biotechnology world, and they understand the sciences we are doing, which is important,” said Brad Margus, chief executive of Perlegen.
Lombar Odier & Cie was one of about 30 investors, the rest of which were mostly comprised of hedge funds, public funds and traditional venture capitalists. Some individual buyers also participated, including Dr. Alejandro Zaffaroni, founder of genetic information company and original Perlegen parent company Affymetrix.
Perlegen was spun out of Affymetrix in October 2000 and, until this recent funding, had been completely financed through approximately $10 million worth of Affymetrix investments over the past year. Affymetrix still owns 53% of Perlegen but has now relinquished majority control by putting 11% of its ownership in a voting trust.
“[Perlegen] validates what we already know,” said Kurt von Emster, a partner with Perlegen investor MPM Capital. “This is the next step to interact with genes. There are a lot of companies in the space, but no one is looking at the genome on this size or scale but Perlegen; and they have plenty of money to get to where they need to be.”
Perlegen?s long-term goal is to either come up with a drug to put an end to certain genetic diseases like schizophrenia or to, at least, come up with a diagnostic test that can determine whether or not a person has a genetic disease.
To identify the DNA, Perlegen will use an array technology that can have up to 60 million probes per wafer. That compares with the approximately 400,000 probes per wafer in other existing technologies.
The new financing will be used to help complete the first 18 months of testing. Over that time Perlegen will spend about $9 million a month on arrays and the equipment needed to sequence 50 genomes.
At some point next year Perlegen expects to see revenue but Margus is not sure when profits will come. The company will produce revenue either from partnering with pharmaceutical companies or by developing the drugs in-house and selling them directly to pharmaceutical companies.
Contact Danielle Fugazy.