Gold Standard Diagnostics

Davis diagnostics company gains financing

Friday, 26 February 2010 00:00

The Davis-based medical testing company has completed a Series A round of private financing. How much was raised, executives won't say, but the round was led by a group of investors that includes local biotech entrepreneur and venture capitalist Roger Salquist.

Proceeds will be used to hire staff and prepare for a major product launch this spring. The three-year-old company sells medical testing kits it makes, as well as those manufactured by other companies, to clinical laboratories nationwide.

Gold Standard has the diagnostic expertise to design programs to meet the needs of different hospitals and clinical laboratories. Most companies in the industry focus on a particular type of test or disease.

Unlike other biotechnology companies that raise money on an idea and then attempt to develop it into a marketable product, Gold Standard already sells about 1,500 different kinds of medical tests to large laboratories such as Quest Diagnostics Inc. and LabCorp. But it wants to expand its business.

The company opened a small office in Davis in January 2007 with a lineup of medical tests. Unlike many startups, it generated revenue from the beginning.

Company cofounder John Griffiths, who is president and chief executive officer, already knew the business after developing a handful of testing platforms for other companies in the industry - and he brought some of his former coworkers with him.

Jennifer Roth, for example. Director of technical affairs at Gold Standard, she worked with Griffiths at a number of other companies over the past 15 years.

Growth has been strategic and by project. "We build it and then bring on people," Griffiths said.

Revenue grew 300 percent in 2009.

"We wanted to make sure the program has legs - and return on investment for us and our shareholders - and then step on the gas," said Jim Thompson, Gold Standard's chief financial officer.

The approach wowed Salquist, a venture capitalist who founded biotech company Calgene Inc. and ran it for 12 years before selling it to Monsanto Corp. in 1996. He served on the board of Lipomics Technologies in West Sacramento until it merged with Tethys Bioscience a year ago.

Salquist joined the board of directors at Gold Standard Diagnostics last month and helped with the financing round.

A founding partner and managing director of Bay City Capital, a San Francisco-based merchant bank and venture capital partnership, Salquist retired from the VC world in late 2000.

"I'd gotten out of everything, but found I was missing the excitement of startups," Salquist said. After a 30-minute visit with execs at Gold Standard Diagnostics in December, he was hooked.

"These quys are smart, and they understand the industry," Salquist said. "They've built a business base with no equity and are ready to launch a major expansion. I figure I can help. I am not a diagnostic guy, but I have a really big Rolodex." The Rolodex already has paid off.

"He's very connected to the tech field as well as to financing - and will help us with the next step in our growth, not only locally but on the national level," Griffiths said. "Within the first 30 days, he's arranged meetings with local scientists, collaborators and other companies."

Salquist also has referred potential employees. Gold Standard had nine in September but is up to 13 and expects to reach 20 by year end.

Pete Bernardoni, managing director at Wavepoint Ventures in El Dorado Hills, calls Gold Standard "an interesting company," though Wavepoint did not participate in the financing round.

"They are more than a startup; they have real products and revenue," Bernardoni said. "They are more of an emerging growth company."