HandyLab gets VC of $19.2M for new tool

Tag : Hand Tool Bits
Ann Arbor-based HandyLab Inc. has closed on a $19.2 million round of venture capital, which thecompany will use to ramp up production, sales and marketing of itsnew diagnostic tool, completing the company's slow transition fromresearch to commercialization.

HandyLab's tool is a $100,000 machine called the Jaguar that usesurine, plasma and blood samples to analyze DNA. It dramaticallyspeeds up the time needed — from two or three days to an houror 90 minutes — to test for such infectious diseases as GroupB strep, gonorrhea, herpes and chlamydia.

The company began selling the Jaguar two weeks ago and expects tohave revenue this year “of at least several million dollars,and we expect significant growth over the next couple ofyears,” said President and CEO Jeff Williams.

The company has added eight employees in the past year, most sincethe first of the year, to bring it to 48 workers. It expects to beat 56 employees by the end of the year. Most of the additions arein sales and marketing.

HandyLab currently sells the machines to researchers. Clinicaltrials under way at the University of Michigan and two other undisclosed locations, if successful, could lead tosales to hospitals and medical clinics later this year.

The investment closed in June but wasn't disclosed until last week.It was the largest venture-capital investment in the state in thesecond quarter, according to the Washington-based National Venture Capital Association .

This week, HandyLab officials will market the Jaguar at the American Association Society for Clinical Chemistry 's annual meeting and trade show in Washington, the largest trade fairfor in vitro devices in the county.

HandyLab had a Jaguar prototype on display at the show last year.Williams said that based on the positive response then, they expectto be taking orders this year.

It is the fourth round of venture capital the company has received— totaling $46 million — since its founding in 2000 byformer UM engineering students Kaylan Handique and SundareshBrahmasandra.

Joining the round were three previous investors, VC firms based inAnn Arbor: Ardesta L.L.C. , EDF Ventures and Arboretum Ventures L.L.C.

Two new VC firms joined this round, Chicago-based Lurie Investments Inc. and Midland-based Dow Ventures , as did the investment arm of New York-based Pfizer Inc. , Pfizer Strategic Investments Group , said Williams. He said Pfizer was the largest investor, but hedeclined to detail individual investment amounts.

He said a strategic corporate partner also joined the round, butWilliams declined to name it.

“I have to hand it to Jeff. He did a masterful job of puttingtogether this financing. He added wonderful new investors,”said Mary Campbell, co-founder and general partner of EDF andpresident of the Michigan Venture Capital Association .

“This is the year we establish ourselves as a real commercialentity,” said Williams, former president and CEO of AnnArbor-based Genomic Solutions Inc. , which went public on the Nasdaq exchange in a $56 million offering in 2000.

He said the company had a small bit of revenue last year. It alsosells reagents and has contracts with other companies, includingone announced in June to develop a diagnostic test for influenza aspart of a $10.4 million contract for San Diego-based Nanogen Inc. by the U.S. Centers for Disease Control and Prevention.

“But this will be the first year we have significantrevenue,” Williams said.

HandyLab manufactures the Jaguar at its headquarters on StateStreet, just south of the Avis Farms industrial park.

The tool is about 37 inches wide, 30 inches deep and 29 inches highand weighs 230 pounds, far larger than the previous iteration thecompany had prototyped but much smaller than slower bench-toptesting equipment currently used in hospitals and clinics.

The first device HandyLab made weighed 25 pounds, which was farlarger than the handheld, so-called lab-on-a-chip devices thecompany's founders envisioned when they spun off their research andtechnology from UM.

The 25-pound version entered U.S. Food and Drug Administration trials three years ago, but Williams decided to pull the plug andgo to a larger model. The smaller the device, the moretechnological hurdles there were to overcome, which increasedmanufacturing costs and limited the number of tests that could berun. That version ran one sample at a time. The Jaguar runs 24.

Since the company sells reagents, cartridges and other consumablesused in tests as well as the machine itself, higher test volumemeans higher revenue.

“We think the market will be vastly larger than what weoriginally envisioned,” said Williams.

Williams said the company will begin expanding the list ofinfectious diseases its reagents test for and, as increased saleslead to increased manufacturing, expand its headquarters andmanufacturing facility sometime in 2009, either at its present siteor at a new location.

“It's a buyer's market for real estate,” he said.