Austin biotechnology firm gets $25 million from private investors - Sent Using Google Toolbar

Austin biotechnology firm gets $25 million from private investors

By Lilly Rockwell
Monday, October 15, 2007

Rules-Based Medicine Inc., an Austin biotechnology company, will announce today that it has received a $25 million infusion from private investment sources, including a fund started by billionaire Sam Zell.

This is the first time the company, which was founded in 2002 as a spinoff from Luminex Corp., has sought outside financing.

The investors were led by Equity Group Investments, which was founded by Zell, a Chicago real estate magnate. The others are Cross Creek Capital, an affiliate of Wasatch Advisors Inc., and Stephens Capital Partners.

Zell's son, Matt, who is managing director of Equity Group Investments, will join the Rules-Based Medicine board.

"Matt Zell joining our board is obviously going to yield a lot of great perspectives and experience for us," President and CEO Craig Benson said.

The company used some of the money to fund a recent acquisition, pay off debt and buy out Luminex's interest. It will use the rest for other growth initiatives and future acquisitions.

"We are not the typical high-tech startup that is still losing a bunch of money," Benson said. "We were already profitable."

Using technology developed by Luminex, Rules-Based Medicine tests tiny samples of fluid — blood, semen or even cerebral fluid — for hundreds of biomarkers at once. A biomarker, such as glucose levels, can be an indicator of a disease.

Its customers include drug, biotech and consumer product companies.

The company's tests are considered faster and more cost-efficient than traditional laboratory approaches, Benson said.

The company also plans to expand its diagnostic unit, using its tests to diagnose medical conditions and diseases, which could lead to new therapies, Benson said.

Karey Barker, managing director of Cross Creek Capital, said Rules-Based Medicine has established itself as a player in the drug development field, particularly in animal tests.

"Instead of trying to hypothesize what a drug might do, this technology reduces the cost where they can look at a broad array of biomarkers that can tell them what the drug might be doing," Barker said. "They've got very good traction, and there is still a lot of room to grow."

Last week, the company received a $1.1 million grant from the National Cancer Institute to develop 50 tests for cancer-related proteins.

Also last week, it bought a German company, Experimentelle und Diagnostische Immunologie. EDI has developed a cell culture test that lets scientists mimic how the human body might react to various medicines.

Rules-Based Medicine employs 55 people; 40 are based in Austin.

lrockwell@statesman.com; 445-3819