Editor’s note: Local Tech Wire’s initial Top 25 Companies List will focus on emerging firms in North Carolina – those selected to present at CED’s Venture 2002. Who are they? What are their products? Why should investors put money into their firms? LTW is surveying the presenters to get the skinny about each. LTW will feature another company each day — and some days two — leading up to the April 30-May 1 showcase.As databases continue to explode with information being developed through ever more complex genomics, biotech and chemistry research, the scientists dealing with the “info glut” need ever more sophisticated software to make sense of it all.
Into that growing market niche steps Synthematix, Inc. with what it calls “informatics toolkits.”
Led by an experienced management team, bolstered by a number of already developed products, three pending patents and a revenue stream, Synthematix executives will be pitching venture capitalists and investors for $2 million at Venture 2002.
“Synthematix’s products consist of a suite of software and informatics products that allow chemists to build, access and mine databases of chemical synthesis procedures,” says Tom Laundon, the company’s chief operating officer.
Although the company has competitors, Laundon insists Synthematix has created “the first cheminformatics software and database architecture ” for what he calls “organized and searchable institutional memory in pharmaceutical, biopharma and other chemically-intensive companies.”
Once the company receives more funding, Laundon says Synthematix will use it to accelerate development of two products now in beta development as well as marketing, other new products and infrastructure. Synthematix currently has 15 employees. So far, investors (Catalysta Venture Partners, Glenwood Venture Partners and individuals) have put $750,000 into the firm. The company was founded in 2000.
Research tells Synthematix that the market for cheminformatics was approximately $350 million in 2001. That figure is expected to grow by 25 percent a year along with increasing demand for bioinformatics information. And Laundon says Synthematix projects revenues of $72 million by 2006 out of a total market expected to hit $1 billion.
After $50,000 in revenue from a beta project with GlaxoSmithKline in 2001, Laundon says he expects revenues to hit $850,000 this year.
The company was co-founded by Clay Thorp and Robin Smith, each of whom has a long resume in fields related to Synthematix.
Thorp, the founding partner of Catalysta Ventures, before helping start Synthematix where he now serves as chief executive officer, also was co-founder and president of Xanthon, a genomics research company in Chapel Hill. Thorp also was director of development at Novalon Pharmaceuticals, which was sold in 2000.
Smith, who is chief technical officer at Synthematix, previously worked for BurroughsWellcome (now GSK) and Lord Corp. He also was president and CEO of RYSCOR Science. While at BurroughsWellcome, Smith had plenty of experience working in chemical research as part of the so-called SWAT team (Synthetic Work Acceleration Labs).
Laundon previously served as vice president of business and technical development at the North Carolina Biotechnology Center.
Q&A with Synthematix:
Answers provided by Laundon
Times are tough. If you had only one chance and one paragraph to convince an investor, how would you answer this question: “Why should an investor choose your company?”
Synthematix offers a new and compelling product that meets an industry-acknowledged market need. The market for our products is large and growing at greater than 25 percent per annum. Our management team is experienced and balanced with expertise in sales, marketing, business development, finance, operations, software development and chemical synthesis.
What makes your company unique? Do you have a proprietary and/or a patented technology? Please explain why it is unique and what the status is of any patent filings.
Synthematix has filed three patents to date on its technology and methods. The earliest filing took place in January, 2001. The Company also owns three trademarks. The software and systems are unique in the industry in terms of the architecture and ease-of-use.
What makes your product(s) and/or services unique vs. your competition? (Who is your competition, and what do they offer?) If you have no competition, why not?
A number of companies offer software products for chemical and biological research and development. The largest four that are most relevant to Synthematix are MDL (division of Elsevier NV), Accelrys (subsidiary of Pharmacopeia), Tripos (NASDAQ) and CambridgeSoft (private). Each of these companies sells software products to R&D chemists but none offer the integrated database architecture, search and reaction planning capability that is present in Synthematix’s offerings. In fact, these companies are likely partners with Synthematix and our software in complimentary and compatible to their products.
Does your company already generate revenue? If so, how much? Are you cash flow positive?
The Company received $50,000 in service fees from a beta project with GlaxoSmithKline in 2001. $45,000 in revenues have been received in 2002 to date and the company expects additional sales in Q2 with significant sales beginning in Q3. The company projects $750,000 in sales for 2002 and cash neutrality in Q4, 2003.
What is your target market? What is the size of that market in terms of dollars? What share of that market do you believe you can win?
The bioinformatics market was reported to be $0.7 Billion in 2001, with the cheminformatics segment representing approximately 50 percent of the total. The total market is reported to be growing at 25 percent per year and Synthematix is defining a new space within that rapidly growing market. By 2006, Synthematix projects revenues of $72 million of what will have grown to a $1 billion market for cheminformatics products.
What will you do with the invested funds? What is the timeline for product delivery? If you have existing products and services, how will additional funding help you expand your company, if that is the intention, or will you develop new products?
The funds we are seeking will be used for marketing, product development and infrastructure. The first two products are already in beta form and in selected use. The formal launch of the product will take place in July, 202 but we expect sales of our services business and paid beta versions of the software before July. Additional products under development will be accelerated with the funding and should be introduced in January 2003.
What do you want from an investor other than money?
Our ideal investor would bring knowledge and experience in the life sciences industry as well as in IT oriented solutions. We expect that an investor in our upcoming round would participate as a member of the board of directors.
Why will investors be impressed with your management team?
Our management team contains a blend of experience and expertise that
includes:
- Successful founding, growth and exit of technology businesses
- Domain expertise in pharmaceuticals and life sciences
- Management of sales and marketing teams
- Technical software development
- Financial and budget management
- Knowledge of chemical synthesis practices and opportunities for improvement
- Energy and focus on the market opportunity
What is the exit strategy for the investor from your company? Are there potential strategic alliances with larger companies? Do you wish to take the company public? Or do you wish to grow the company and either sell it or acquire other companies?
The management team intends to build a high growth, profitable business. Upon execution of the plan, the results will allow Synthematix to consider an IPO at an appropriate time or to consider relationships with other chemistry or cheminformatics companies, both public and private.
What do you want to see in a term sheet? What would you consider “fair”?
The term sheet should provide the resources and the flexibility for management to execute on the business plan with appropriate projected returns and safeguards afforded the investors.
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SYNTHEMATIC, Inc.: THE FACT SHEET
TYPE OF COMPANY (Software, IT, Biotech, etc.): Cheminformatics (i.e. life sciences software)
ADDRESS: 4815 Emperor Blvd., Suite 214 Durham, NC 27703
PHONE NUMBER: (919) 474-0742×105
WEB SITE: www.synthematix.com
MANAGEMENT TEAM MEMBERS: Clay B. Thorp, CEO and co-founder, Robin Y. Smith, CTO and co-founder, Tom Laundon, COO
BOARD MEMBERS: Tom Cori, Ph.D., former Chairman and CEO of
Sigma-Aldrich; Kazumi Shiosaki, Ph.D., former Senior VP, Drug Discovery, Millennium Pharmaceuticals, Inc.; Tom Wheeler, Ph.D., former VP of Chemistry at GlaxoWellcome, Myra Williams, Ph.D., former CIO for Glaxo, Inc.; Steve Baldwin, Ph.D., former Chair of Chemistry at Duke University; Tom Sorrell, Ph.D., Professor of Chemistry at UNC-Chapel Hill; and Michael O’Connell, Ph.D., a health-care informatics expert and founder of Waratah Corporation.
INVESTORS: Catalysta Ventures, Glenwood Venture Partners, Angel investors.
COMPANY MISSION STATEMENT: Synthematix is an early-stage company that is providing the first cheminformatics software and database architecture for building Organized and Searchable Institutional Memory in pharmaceutical, biopharma and other chemistry-intensive companies. Synthematix’s products consist of a suite of software and informatics products that allow chemists to build, access and mine databases of chemical synthesis procedures.
REVENUES: $50,000 in 2001, $850,000 expected in 2002
YEAR ESTABLISHED: 2000
NUMBER OF EMPLOYEES: 15
Thursday’s profile: TEAMM Pharmaceuticals
Previous profiles:
TalkingNets: www.localtechwire.com/article.cfm?u=481
Bandiwdth.com: www.localtechwire.com/article.cfm?u=468
