On the brink of shifting from a technology platform company to a product-based firm, Codexis Inc. brought in $37 million in its Series D financing, with plans to add an additional $3 million within the next two months.

Proceeds will be used primarily for continued research and development of its MolecularBreeding biocatalyst technology and to build a product portfolio for the generics market.

"We've reached a significant milestone in our evolution," said Alan Shaw, president and CEO of Codexis, adding that he anticipates Codexis "will become a major player" in the supply of APIs (active pharmaceutical ingredients) to the generic and branded markets.

Since the company spun out of Redwood City, Calif.-based Maxygen Inc. four years ago, it has focused on the biocatalyst technology, which is designed to craft chemical processes for APIs that are more efficient and more cost-effective. To date, Codexis has applied that technology to more than 15 collaborations with companies such as Schering-Plough Corp., of Kenilworth, N.J., and New York pharma firms Pfizer Inc. and Bristol-Myers Squibb Co.

"We've reached that critical point when we have a validated technology - everybody that has used it recognizes that it works - and now we're actually using it for ourselves," Shaw told BioWorld Today. The goal is to "capture a significant share of the global API market, which will drive our revenue growth going forward."

In fact, Shaw anticipates that the recent Series D will be the last private financing round for the company, which should reach profitability "within the next two to three years."

The company's work hinges on the application of its MolecularBreeding, or gene shuffling, technology to engineer enzymes with high purity in a shortened process to improve both manufacturing and productivity.

Shaw, who described it as "one of the most significant transformational technologies to come along in biotechnology," said the process begins with genetic material from a natural source. Relevant gene sequences are isolated from that material and then "shuffled" with other DNA before being screened for certain properties and actions. Biocatalysts that show increased productivity are isolated from surrounding "baggage" and screened again.

The process is repeated "multiple times," Shaw said, "until we end up with a gene sequence that can be put back in the host enzyme where it makes only what we want it to, in absolutely 100 yield.

"It's a chemical process development dream," he added. "We can make drugs so much cheaper because we can avoid the difficult chemical steps."

In addition to offering a process that's 50 percent to 60 percent cheaper, Codexis' technology is attractive to pharma companies like Pfizer because of its promise of high purity APIs and simplified manufacturing processes.

Pfizer began working with Codexis, and its parent company, Maxygen, in 1998, and expanded the alliance in 2004 to include up to $40 million to Codexis in up-front, access fees and milestone payments, plus a $10 million equity investment. (See BioWorld Today, July 27, 2004.)

On its own, Codexis is looking to break out into the $60 billion generics market. Its lead product is a generic version of Lipitor, Pfizer's blockbuster cholesterol-lowering drug. Codexis is working on a way to produce atorvastatin, the chiral building block and API in Lipitor. Beyond that, the company is working on generic versions of other big-name pharmaceuticals so it will be ready to move to the market as soon as those branded drugs go off patent.

"Our goal is to work on up to 20 of the world's top-selling drugs over the next three to five years," Shaw said.

The only restriction to the technology is that it works only for small-molecule drug development, and in 99 percent of cases, Shaw said, they need to be chiral small molecules.

With the promise of that technology platform, Codexis has no plans to dilute its potential value by "giving it away" to other companies or research institutions, Shaw said, adding that the firm did not want to be one of the technology companies that "made the mistake of commoditizing their technology."

"But our board said we will use it ourselves," he added, and the recent financing was "geared to allow us to do just that."

The company is expected to more than double in size over the next couple of years, growing to 150 people at its Redwood City, Calif., headquarters. Plans also are in the works to establish a research center in Singapore, which will staff up to an additional 80 people.

In close proximity to the Asian market, Singapore is a country that "has a high respect for IP, and has an impressive talent pool," Shaw said.

Codexis also intends to put some funds into expanding its facility in Germany. In February 2005, the company acquired Julich Fine Chemicals GmbH, which now operates as a wholly owned subsidiary. (See BioWorld Today, Feb. 23, 2005.)

The financing was led by BioOne Capital Pte. Ltd., of Singapore, and included investments from: CMEA Ventures, of San Francisco; Pequot Ventures, of Menlo Park, Calif.; Chevron Technology Ventures, of Houston; and Maxygen Inc. To date, the company has raised $72 million.

Along with the financing, Codexis named Daniel Wang, professor of chemical engineering at MIT, to its board.