Performance Plants secures $12 million in VC to achieve revenue sustainability

Kingston-based Performance Plants Inc has raised $12 million in the first tranche of an anticipated $15-million round of venture financing to move to revenue sustainability by 2009. The 11-year-old plant biotechnology firm secured the funding from a syndicate of venture capital firms to relocate off the Queen's Univ campus into a new facility and ramp up product offerings based on its Value Enhanced Stress Tolerance (VEST) technologies - one of several technologies under development. It is the largest private investment in a Canadian ag-biotech firm in history.

Most of the VC who participated in the latest round have supported Performance Plants in the past. The lead investor is Investment Saskatchewan Inc, which provided $6 million, with the other three contributing $2 million each (see chart).

"Now we can concentrate on developing the business instead of raising money all of the time. This is the first tranche. We're still looking for another $3 million but we decided to close this and get the ball rolling on developing revenues and licence fees," says Dr David Dennis, founder, president & CEO of Performance Plants. "We are already receiving some licensing revenue and we'll ramp that up over the next 18 months."

Performance Plants is building a potent business around its model of developing technologies to stabilize plant yield under water deficient conditions and partnering with major seed production and distribution companies to commercialize its discoveries. To date, it has focused almost exclusively on the development of transgenic food crops. But Dennis says the privately held firm is seriously considering branching out into bio-energy by engineering plants that are ideally suited for ethanol production.

NSERC CHAIR

Performance Plants also has a long-standing collaborative relationship with the Univ of Toronto where it co-funds an NSERC Industrial Research Chair held by Dr Peter McCourt. McCourt was instrumental in the formation of Performance Plants and has assembled a team around the chair, attracting additional funding and repatriating three Canadian researchers.

"It's been a very fruitful relationship," says Dennis,who has known McCourt since his days as a Queen's researcher. "It's been so successful that we hope to do another NSERC chair."

Performance Plants has an in-house, trait-based functional genomics program in Kingston where about two-third of its 30+ employees work. It also has a facility at Innovation Place in Saskatoon, where it sends its proprietary genes to be inserted into experimental crop varieties. It typically absorbs the cost of patenting and partners with major firms which shoulder the costs of crop development and regulatory approvals.

"We have a pipeline of genes at one end and products at the other in collaboration with bigger companies," says Dennis. "The best advice I ever got was ... to ask farmers what their problems were and then address the problems. That way, you immediately have a product focus. The research has to have a product in mind."

-R$