Arzeda CEO Resigns; Company Looks to Prove Technology, Conserve Cash
Arzeda CEO Michael Martino is out. Martino, the former CEO of Bothell, WA-based Sonus Pharmaceuticals, has resigned his job as CEO of the Seattle designer-enzyme startup, and plans to take a new position with a biotech company in San Diego, according to an e-mail he sent today to friends and colleagues.
Martino’s resignation is effective as of this Friday, February 26, and he will start at his new job, which he isn’t disclosing yet, on March 1. Martino will maintain a seat on Arzeda’s board.
“Paying me a competitive salary would account for a material percentage of the money we’ve been trying to raise. From the company’s perspective, given that the focus over the next twelve-to-eighteen months must be on generating data to demonstrate the technology, the use of scarce and expensive capital to pay my salary is hard to justify,” Martino wrote. “From my perspective, given that I’ve been working on behalf of the company for over a year without compensation, I simply cannot afford to discount my services.”
Arzeda was founded by three young scientists from David Baker’s biochemistry lab at the University of Washington. It was born from the idea of using computers to design enzymes that don’t exist in nature, yet could be very useful for everything from new drugs to cleaner industrial catalysts. The company had sought to raise as much as $12 million in an initial venture round a year ago, but never nailed down that much cash. The company, did, however, negotiate a license from the UW Center for Commercialization, and developed a business plan focused on industrial catalysts. It secured some undisclosed financing from a partnership with DuPont, a $149,000 six-month grant from the National Science Foundation, and about $250,000 in financing from WRF Capital.
Now that Martino is leaving, the company’s fortunes will depend on the amount of progress made in the lab by the three founders, Eric Althoff, Daniela Grabs, and Alexandre Zanghellini. Once more progress is made, the company will be in position to hire a new CEO with more specific expertise in the industrial catalyst business, says Thong Le, a managing director with WRF Capital and a director of Arzeda.
“In this environment when capital is difficult to come by, the company needs to show more scientific progress,” Le says. “This is the responsible thing to do.”
Arzeda’s founders have financial support from DuPont until July 1, 2011, and from the NSF grant until fall of 2010, when the company expects to compete for another $500,000 extension of the original grant, Martino said in his note to colleagues.
By saving on Martino’s salary, the company is positioned to raise a small round of financing, worth $500,000 to $600,000, which should last a longer period of time, Martino said.