Arzeda, Maker of Designer Enzymes, Prepares to Leave UW Roots with New Leader and VC Bucks

2/27/09Follow @xconomy

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a third and maybe fourth investor to fill out the Series A round. The first tranche will be worth about $3 million to $4 million, which Martino said he expects to arrive in April. The money should provide the fuel needed to hire a team of about 16 or 17 people, and operate the business to achieve its next milestones in nine to 12 months, when it expects the rest of the Series A round to kick in, Martino says.

Once the first tranche of money arrives, Arzeda will look to move into some space for wet labs, and to house more than $1 million worth of computing equipment. The computers are key for designing the enzymes, and the wet labs will have to be intimately involved in proving whether the new molecules really behave in the lab dish as expected, Althoff says.

The market opportunity is pretty amorphous at this point, since the company still has lots of different options it can pursue. As the business plan morphs into shape, Martino said he envisions three distinct kinds of early opportunities that offer low, medium, and high technical risk.

—The first, low-risk opportunity involves designing new enzymes to protect crops from herbicides, sort of like the way Monsanto’s Roundup Ready corn is made to stand up to its Roundup weed-killer. Arzeda’s opportunity (which he wouldn’t describe in any specifics) is likely to attract the company’s first important partnership with an agricultural biotech company, Martino says.

—The medium-risk shot involves making enzymes that can be the building blocks for biodegradable plastics that could replace petrochemical-derived plastics. (This idea would compete with Cambridge, MA-based Metabolix.)

—The really high-risk, swing-for-the-fence opportunity is to break down lignin from plants into much smaller molecules, to make cellulosic biofuels a commercial reality, Grabs says. This is the sort of technology that Silicon Valley venture capitalist Vinod Khosla has been touting for some time, because it holds the potential to make efficient use of whole plants as raw material for biofuels, not just the harvested corn or beans.

What all of those opportunities have in common is they involve a much shorter and easier path to the marketplace than his former line of work, pharmaceuticals. Still, Martino says he wouldn’t rule out pharmaceutical applications in the future, because it’s possible that Arzeda could design enzymes that speed up the expensive and time-consuming process of biotech drug manufacturing.

Of course, these are still early days for Arzeda, and the markets are far in the future. If the company can reach its goals over the next year, it will end up securing the full $12 million, enough to run 30 months, Martino says. That should be enough time to build up a lot more valuable technology to show investors and partners. “There’s a significant opportunity here to make an impact in an area that’s ripe for growth,” Martino says.

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