Arradial Looks For $9M To Stay Afloat

Less than a year after revamping its business plan, Arradial Inc. is back in the venture capital fund raising market. The Bedford, Mass.-based drug discovery company has been selling Series A preferred stock on and off since being founded in late 2000, but is now looking to close the $9 million deal for good.

“We’ve seen about four or five investors so far, and have another four or so meetings set up over the next few weeks,” says Mark Tepper, president and chief executive of Arradial. “We’re looking to close by sometime in late July or early August.”

Arradial was the brainchild of Boston University researcher Samesh Kale, who began developing a silicon wafer-based drug screening technology while on sabbatical at Alexion Pharmaceuticals Inc. Alexion decided to spin the new instrument into its own company, after which the newly-minted Arradial secured approximately $3 million in seed funding from Oxford Bioscience Partners and the Boston University Community Technology Fund. Those investors pumped another $4 million into Arradial by March of this year, and signed Tepper to replace Kale as the chief executive.

What Tepper found when he arrived, however, was a company that knew it needed a facelift. The Arradial business plan was focused on selling its silicon-based micro-assay system to pharmaceutical companies to enable drug discovery using minute amounts of biochemical reagents. Moreover, the system distinguished itself from others in that it focused on dispensing and handling the liquid without involving channels or surfaces. The problem, however, was that the venture capital market didn’t seem terribly interested in companies like Arradial that weren’t doing any drug discovery of their own.

“Given the cost of developing the instrument, we decided to change our focus,” Tepper explains. “Instead of marketing the instrument, we decided to either partner [with pharmaceutical companies] or use it for our own drug discovery.”

With its transformation and therapeutic focus on diabetes and cancer in place, Arradial is in discussions to close its $9 million Series A deal. Not only is it looking for a firm to provide $2 million at a post-money valuation of $13.5 million, but it also hopes that investor will help lead a $20 million to $25 million second round deal next year.

“We feel that before we go into the Series B round, we need both a lead investor and potential partners on board,” Tepper says. “We’d love nothing better than for a lead that comes out of this, since the basis of our company now is to deliver drug leads.”

Contact Dan Primack