Friday, September 5, 2008

Anthill eschews VCs in $2.3M first funding round

By Stephen DeSantis

Anthill Technologies Inc. has raised a $2.3 million Series A tranche, part of a much larger placement the company is anticipating.

Its founder and CEO, Joseph Hogan Jr., said the company needs capital to ramp up its operations — particularly in equipment and personnel — in order to keep up with the high demand for its services.

The Woburn-based company helps drug discovery companies with chemical synthesis, purification and compound management.

The remaining tranche is anticipated by the end of September, said Hogan. He expects the company will be “cash flow neutral” before the end of the year.

Out of 18 contributors in the round, Hogan himself is providing the largest share of capital. He said that the funds came from private individual investors with no venture capitalists involved.

“The beauty of owning your own company is that you can do what really makes sense,” said Hogan.

Before he founded Anthill in 2005, Hogan began his career as a chemist and later went on to start Woburn-based ArQule Inc. in 1996.

ArQule, now strictly a drug development company, sold off the chemical services business into various pieces in 2006. Anthill scooped up most of the chemical operations staff afterward.

It is a family affair at Anthill. Hogan’s brought in his sons Joe and Matthew because of their expertise in the chemical industry. Joe Hogan III is vice president of strategy and legal affairs. Matthew Hogan is the company’s chief operating officer, and also an ex-ArQule executive. Daughter Rachel Hogan is Anthill’s marketing and communications manager.

“We are all graduates of ArQule,” said Hogan.

In August, the firm signed a contract with Zafgen Inc., a Boston-based pharmaceutical firm combating obesity. Zafgen will use Anthill’s ACOS synthesis and purification tools to help develop lead compounds using its approach to target vascular tissue.

High-throughput medicinal chemistry is big business because most pharmaceutical and biotech companies outsource this work for drugs in the discovery stage, said Hogan. The company is creating what Hogan calls a new “applied chemistry operating system” that will not only be geared toward biopharmaceutical drug discovery but to the industrial chemistry as well. According to Hogan, the industrial chemistry market is a mature, $2 trillion a year market that is 100 years old.

The industrial chemistry market, which includes everything from cosmetics to nutraceuticals, is fairly risk-averse and may be more conservative in adopting novel purification techniques, said Seth Taylor, principal at TSG Partners, a life sciences advisory firm with an office in Cambridge.

“The purification and synthesis business is basically two things: speed and cost. If a company can deliver high quality and still be competitive in those two areas, it could penetrate the larger markets. If not, they’d be in trouble,” he said.