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IN DEPTH: BIOTECH
From the July 15, 2005 print edition
Dollars in the gene pool
DNAPrint Genomics taps fertile climate for acquisitions
Mitra Malek
Staff Writer
DNAPrint genomics Inc. is counting on its acquisition of a San Francisco company and a recent infusion of $35 million to make a substantial imprint on the genetic testing and drug development markets.
The Sarasota biotechnology company in late June bought Trace Genetics to beef up its forensics arm. Company executives say law enforcement officers have used DNAPrint's forensics technology in about 90 cases since early 2003. Trace uses complementary technology, which could strengthen DNAPrint's work.
The $35 million investment, approved in June by the Securities and Exchange Commission, gives the company another boost. Dutchess Private Equities Fund agreed to purchase $35 million of DNAPrint (OTCBB: DNAG.OB) stock at a discount over the next two years and resell it on the open market, helping DNA raise capital.
All the recent deals point DNAPrint to a significant share of the $150 million forensic and identity testing market and provide more resources for the company to grow its diagnostic and drug development areas.
Building DNAPrint
Chief Scientific Officer Tony Frudakis, a molecular and cell biologist, started DNAPrint in 1999 with his father, George, and called it Gaff Biologic. Soon after, Sarasota investors kicked in about $2 million. In 2000 the company went public through a reverse merger and changed its name to DNAPrint genomics.
The company gradually grew to about 12 full-time employees. The Trace acquisition boosts staff to 18 and gives DNAPrint a presence on the West Coast.
Another three employees are expected to come on board this month, Chief Medical Officer Hector Gomez said. And the company is "working on new acquisitions aggressively," Gomez said.
DNAPrint aspires to become a fully developed pharmaceutical company, with independent divisions handling forensics, consumer sales and diagnostics and drug development.
It wants to focus more on diagnostics and drug development, currently DNAPrint's smaller area. The company has partnered with the H. Lee Moffitt Cancer & Research Institute at the University of South Florida for nine projects. The partnership aims to develop new clinical tests for predicting patient response to drugs in post-operative periods, among other projects.
Nearly 200,000 people die each year from drug-related side effects, Frudakis said. "We're trying to make the drug-development process easier and safer, to personalize medicine."
In addition, diagnostic work can help companies bring new drugs to market more quickly because they already have identified who will respond to them, said Alan Louie, research director for IDC Life Sciences Insights.
Forensics currently comprises more than a third of DNAPrint's work.
And nearly half of DNAPrint's focus has been on consumer sales, which sells kits to people who want to learn their racial mixture. Based on a tissue sample a person obtains by, for example, rubbing a Q-tip inside their cheek, the company analyzes DNA sequences to determine which bio-geographical ancestry groups they are from: Indo-European, East Asian, Native American and Sub-Saharan African.
"It re-jiggers people's inaccurate, outdated notions of what race is and isn't -- you're either in one box or the other," Frudakis said. "Affiliation among boxes isn't often thought about."
Funding is robust
Company executives said they expect investment in biotechnology to increase and hope to benefit from the general trend.
Venture capital investment in life sciences shot up in the past two months, according to The Deal, an investment banking trade publication. Venture firms have invested about $2.72 billion since January, with $1.1 billion since the beginning of May, The Deal said.
"Funding is pretty robust right now," said Kevin Cimino, CEO of Athena Capital Partners Inc. of Tampa, which arranged the $35 million Dutchess deal. Athena also handled La Jolla Cove Investors' $8 million investment in DNAPrint in late 2003, which helped the company keep up operations.
DNAPrint shareholders this week approved a 1-for-20 stock consolidation to tap more money for growth.
Companies sometimes consolidate stock to boost individual share prices, making the stock more attractive to investors; shares had been trading for less than a penny each and jumped to about 16 cents each early this week.
The consolidation also enables DNAPrint to draw up to $40 million in capital from equity lines for future growth and potential acquisitions.
Crime-fighting science
Police and investigators in Louisiana spent at least a year looking for a serial killer to no avail. Based on eyewitness accounts, a multi-agency task force was on the hunt for a white male suspect.
Then in February 2003, authorities hired DNAPrint genomics Inc. to analyze semen from the crime scene.
The company amplified the DNA to determine a likely racial mix, including skin color. Tests revealed a person who was mostly African, with a little Native American heritage.
Authorities targeted felons that fit the profile and within two months arrested and charged Derrick Todd Lee, who was convicted.
Some bioethicists dispute the use of genetic stamping in crime solving.
But DNAPrint Founder and CSO Tony Frudakis says law enforcement otherwise uses far inferior sources of information.
"Eyewitnesses commonly lie, they're commonly mistaken," Frudakis said. "Ours is falsifiable. It's science."
Company info
NAME: DNAPrint genomics Inc.
ADDRESS: 900 Cocoanut Ave., Sarasota
NATURE OF BUSINESS: Developer of genomics-based products and services focused on forensics technology, consumer genetic tests, pharmacogenomic diagnostic tests and drug development.
PHONE: 941.366.3400
Year founded: 1999
WEB: dnaprint.com
mmalek@bizjournals.com / 813.342.2463
© 2005 American City Business Journals Inc.
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