Deal Watch - Company Business and Marketing

Industry Standard, The, Feb 26, 2001 by Jim Evans

TURNING TO DRUGS It never seems to fail. When there's a downturn in the broader public and private technology markets, venture capitalists talk of focusing more heavily on biotech.

Maybe it's in their genes.

Or maybe it's because venture investors view biotech as a less-volatile market than the tech market. But that hasn't always been the case -- the IPO market for biotech companies was out of hand in the early 1990s and again at the start of 2000, according to Wendell Wierenga, CEO of biotech startup Syrrx. It has calmed down noticeably since then, he says, and investors are returning.

"With the downturn of tech stocks, there's been a sector shift positive for biotech," Wierenga says. "And the biotech market has reached a new level of maturation over the last 10 years."

Much of that maturity can be attributed to the discovery of the human genome -- a discovery that has led scientists to the next challenge: mapping and cataloging the hundreds of thousands of proteins produced by genes.

That's where Syrrx comes in. Syrrx is using technology to "assembly line" the process of discovering what the proteins do and how they fit together. The implications of this are enormous -- once scientists figure out the protein map, doctors may be able to figure out why someone gets sick. For instance, Syrrx does "crystallization experiments" where scientists turn protein in solution into crystals, which allows them to analyze the proteins in smaller volumes. The analysis and testing process is thereby accelerated. "This gives us the ability to solve a complicated process by doing thousands of trials," Wierenga says.

"In the past, the process has been painstaking," says Brian Atwood, managing director of Versant Ventures, a lead investor in the company. "We're applying proprietary industrial techniques to the whole process, which will result in a whole new level of productivity."

The big challenge for Syrrx is to distinguish itself in an increasingly crowded field. Competitor Structural Genomix is also racing to bring assembly-line techniques to the discovery of proteins, It has raised $80 million in the last year from Atlas Venture, Prospect Venture Partners, Appletree Partners, BA Venture Partners and the Sprout Group, among others.

SYRRX

CEO: Wendell Wierenga

LOCATION: San Diego

AMOUNT RAISED: $80 million total. $54 million in its third round in January. Investors include Versant Ventures, Bay City Capital and Chemicals and Materials Enterprise Associates