VCs Sign Off On $43 Million For Signature BioScience

Believing that it may have taken its final dip in the private equity pool, Signature BioScience Inc. has raised $43 million in its fourth round of institutional funding.

The Hayward, Calif.-based developer of drug screening technology not only took in $13 million more than initially anticipated, but it also received a significant valuation bump over its $17 million Series C deal. That transaction, completed last September, gave Signature a post-money valuation of $52 million, but the company?s worth was pegged north of $120 million after its most recent round.

SG Capital Partners led the Series D deal with a $12 million investment. It was joined by fellow new investors China Development Industrial Bank, Lehman Brothers, Lotus Bioscience Ventures Ltd., IRR, Tallwood Venture Capital and Vulcan Ventures Inc. Previous backers Abingworth Management, Atlas Venture, CIBC Capital Partners, Coral Ventures and Prospect Venture Partners also signed on.

Dr. Jean Franciose Formela, a principal at Atlas Venture, said Signature is in good shape for the future. “As long as Signature executes its business plan and the IPO window opens, Signature will be ready to go public or do a mezzanine round, but they will not have to raise money in the near-term.”

Mark McDade, chief executive with Signature, added that the deal?s oversubscription proved significant. “It never hurts to have more funding, given the market condition we are in,” he said. “It?s nice to have the extra padding to allow for more burn.”

Signature expects to do anywhere from $1 million to $9 million in revenue this year and anywhere from $10 million to $20 million next year. By 2004 the biotech research firm is expects to hit its break-even point.

Signature has developed a form of spectroscopy that employs microwaves to generate signatures of drug screening targets or the interactions of such targets with small molecules. According to McDade, biotech companies, pharmaceutical companies and academics will pay to use Signature?s research to reveal information about human interaction with different molecules in a faster and more accurate way than was previously available.

The new cash will be used to fuel expansion by enabling Signature to expand internal discovery efforts and also to acquire novel targets and chemical libraries. Some of the proceeds could also go toward ramping up the company?s staff. It currently has 70 employees on the payroll, but is looking to hire another 50.

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