Biotech Values

[DewDiligence]

Codon Devices Remains a Hot Prospect

http://www.boston.com/business/technology/articles/2006/12/18

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By Jeffrey Krasner
December 18, 2006

Codon Devices, of Cambridge, has closed a second round of venture financing, worth $20 million, as it seeks to further commercialize its novel method of building DNA and genetic material from scratch.

…Noubar Afeyan , chief executive of Flagship Ventures and chairman of Codon, said the company had to turn away other interested investors.

…Why turn away investors? Codon, founded in 2005, already has paying customers generating a solid revenue stream, including the National Institutes of Health, the University of Washington, and Microbia Inc., a fellow Cambridge start-up. Company officials declined to specify revenues.

Describing Codon's business inevitably involves some of biotech's hottest buzzwords. The company seeks to develop synthetic biology, in which biological materials such as DNA and genes are created from scratch. Currently, many companies take genetic material from living creatures and modify it to suit their purposes. Years ago, local companies were pioneers in using recombinant DNA, in which genetic instructions from one organism are inserted into the programming of another organism. That enables companies like Genzyme to grow large batches of human proteins in hamster cells, for instance.

Codon's product is a highly automated process that speeds the delivery and lowers the cost of custom-made biological materials. Those components then become raw materials for scientists researching diseases and drugs.

With the additional funding, the company hopes to expand its capabilities. Instead of just supplying building blocks, like strands of DNA, the company wants to be able to deliver complete functioning biological modules, such as genetic material that could conduct a specific task within a cell.

Drew Endy , a cofounder of the company and an assistant professor of biological engineering at the Massachusetts Institute of Technology, says the process is analogous to computer programming. Instead of working with individual zeros and ones, software engineers write code in a language that enables them to create specific functions.

"We can now apply the basic technology of constructing DNA to learn how to write better genetic programs," Endy said. "We need to develop the rules, the languages, and grammars that will help us create what our customers want." [OK, but let’s not carry the software analogy *too* far.]

John Danner , Codon's chief executive, said he plans to hire 10 to 20 employees this year, adding to the firm's 40 employees. Many of them will be salespeople.

"We've moved beyond the early adopters," Danner said. "We're going to the mainline marketplace." The company's next financing step could be an initial public offering, he said.

…"We're developing technologies that let you construct DNA from scratch," he said. "If Boston is going to continue to be a competitive hub of biotech, we need to be world leaders in this foundational technology.

"It's as important as recombinant DNA was a generation ago."
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