Yulex Corp. and HTG Molecular Diagnostics Inc. (HTG) operate at opposite ends of the biosciences–one developing commercial applications for a hardy shrub native to the desert Southwest, the other designing gene-expression diagnostic tools. What the two Arizona firms have in common is their evident appeal to investors.
On March 16, Yulex announced that it had closed a $15 million private placement, led by Argonaut Private Equity. A week later, HTG announced that it had closed a $15.7 million Series D financing round, led by new investors Novo A/S and Fletcher Spaght Ventures, along with existing investors Merck Capital Ventures, Solstice Capital, and Valley Ventures.
The two announcements follow February news from Mesa-based Ulthera Inc. that it had closed a $10.5 million Series C funding round to support development of its ultrasound device for cosmetic therapies. Together, the trio of funding rounds represent more than twice the venture funding that Arizona bioscience firms secured in all of 2010.
The new funding for Yulex will support a major expansion of the Maricopa company’s production of natural rubber, which it derives from the guayule plant. Unlike tropical or petroleum-based rubber, guayule latex is hypoallergenic, making it a viable candidate for a variety of products in the medical-device field, from surgical gloves and medical tubing to dental dams and catheter balloons. The firm is also developing applications that include industrial resins and guayule rubber for hard-rubber tires.
Yulex will dedicate the new funding to the development of a 60,000 square-foot factory in Chandler, and to hiring staff to increase and diversify production. Jeff Martin, Yulex’s president and CEO, said in the Arizona Republic that the firm plans to add some 60 employees to staff the factory initially, and intends to hire 40 more for agricultural positions. The company’s headquarters will likely move to Chandler as well, Martin said, with its Maricopa site shifting to a dedicated focus on production and crop-science research and development. Martin forecast that the company would hire 300 new employees over the next five years.
“It has been a tough economy for a couple of years,” Martin said in the Republic. “This is not only good for Yulex; it is also good for the state. These are the type of green jobs that need to be created for the economy.”
Yulex contends that guayule latex is more environmentally friendly than latex produced in traditional fashion, as it requires only water as a solvent, rather than toxic chemicals. And after processing, the residual guayule fiber holds additional potential as a biofuel source, both for biomass combustion and ethanol. An additional social benefit is that guayule ethanol would not increase pressure on human food supplies, a drawback of ethanol produced from feedstocks like corn and soy.
Under an arrangement announced in December, Guayule seed developed by Yulex is distributed to farms across the southern part of the state by Arizona Grain Inc., which oversees the crop’s cultivation and harvesting.
Tucson-based HTG said that it will use its new financing to expand the adoption of its multi-plex gene expression testing platform, which is used in academic and cancer-research laboratories, as well as by pharmaceutical companies engaged in drug discovery. The funding will also bring HTG closer to having clinical applications for its technology.
“HTG had a breakthrough year in 2010 achieving significant milestones in our commercial adoption, expanding our product solutions, and building a pipeline of diagnostic tests,” said TJ Johnson, HTG’s CEO. “The financial investment and confidence from both new and current investors is a testament to our management team’s ability to execute against our growth plans and bring the value of HTG’s testing platform beyond the research phase into the clinical setting.”
HTG’s ArrayPlate qNPA (quantitative nuclease protection assay) technology is used for various drug-development tests, including target validation–proving that particular DNA, RNA, or a protein molecule is involved in a disease process. Relative to alternative technologies, using the qNPA process achieves efficiency and improved accuracy because it breaks down cell or tissue samples as it tests for particular gene activity, eliminating steps like extraction and target amplification. The more commonly used polymerase chain reaction technology, for example, involves generating millions of copies of a piece of DNA, which takes longer and can introduce contaminant DNA particles during the amplification process.
“HTG’s technology platform offers considerable benefits especially in formalin-fixed paraffin-embedded tissue samples, which are particularly difficult to evaluate,” said Peter Bisgaard, partner at one of the new investors, Novo A/S. “This technology is a cost-effective, valuable tool in the ultimate pursuit of personalized medicine options for patients.”
On the heels of the new funding announcement, HTG also announced a name change. Formerly known solely as High Throughput Genomics, the firm is now officially HTG Molecular Diagnostics. The new name reflects the company’s focus more precisely, Johnson said. In addition to its platform technology, HTG is now developing proprietary programs for specific tumor types, with initial focus on melanoma, lymphoma, and lung cancer.
For more information:
“HTG Changes Name to HTG Molecular Diagnostics,” HTG news release, 03/24/2011
“Merck Capital Ventures Joins $15.7M Series D for HTG,” HTG news release, 03/23/2011
“Maricopa-based Yulex snares funds to open Chandler factory,” Arizona Republic, 03/18/2011
“Yulex Corporation Secures New Site for Expanded Natural Rubber Production Facility,” Yulex news release, 03/16/2011