DNA start-ups attract cash from venture funds
Groups using genomics data to diagnose diseases on track for $3bn this year
An English stately home surrounded by a wetlands nature reserve in rural Cambridgeshire is an unlikely setting for cutting-edge advances in genomics. Yet scientists at the Wellcome Trust Genome Campus, built around 18th-century Hinxton Hall, are responsible for some of the biggest genetic discoveries of the past century — the basis for a global revolution in healthcare and medicine that has led to a new start-up industry.
It was here, in the early 1990s, that researchers helped sequence the first human genome — the entire source code of the human body. Today, their successors are racing to finish another historic task, the 100,000 Genomes Project, where DNA from that many Britons is sent here by the National Health Service, to pinpoint causes for cancers and rare genetic diseases that no one has been able to diagnose before.
The groundwork laid over two decades at labs such as those in the Genome Campus has benefited an explosion of genomics software companies worldwide — those trying to build applications and services on top of the hardware that has been mining DNA data over the past few years.
The cost of sequencing a single human genome has fallen sharply, from almost $3bn in 2001 to less than $1,000 today, due to the more advanced machines invented by companies such as Illumina, a San Diego group that is one of the most active genomics investors in the world, according to CBInsights data.
With the sequencing problem cracked and vast pools of genetic data being amassed, companies that can use algorithms to perform smart data analytics and provide diagnoses have become key targets for investment.
“It’s like the microelectronics industry: [DNA] sequencing is getting aggressively cheaper and quicker, so the new industries will be about managing the big data and the discoveries that come from it,” says John Chisholm, executive chairman of Genomics England, which is running the 100,000 Genomes Project, and is also former chairman of the UK’s Medical Research Council. “A worldwide movement is building pace here, it’s absolutely clear that once we understand the genome, it will totally revolutionise the life experience of humanity.”
In the past month, start-ups building clinically useful software and data-mining applications have received a windfall in venture funding. They offer services as varied as cancer screening and diagnosis, epidemic monitoring and fertility treatments.
In early September, Chinese genome data company Wuxi NextCode announced it had raised $240m from investors such as Silicon Valley VC firm Sequoia Capital and Alibaba founder Jack Ma. A week later, US consumer genetics company 23andMe confirmed a $250m round, also led by Sequoia, while Silicon Valley’s Color Genomics netted $80m from backers such as Laurene Powell Jobs, wife of the late Apple co-founder.
In Europe, where investors tend to be tighter-fisted, Sophia Genetics, which is based in Cambridge and specialises in developing algorithms for genomic data analysis, cashed a $30m cheque from Balderton Capital.
“In the last decade, the challenge of using genomic data for clinical diagnosis has moved from being primarily a chemical and hardware problem to becoming a data problem. And data problems are solved with software solutions,” says James Wise, a partner at Balderton in London, who led the round.
Although copious amounts of genome data have allowed companies to start analysing it, some believe that technological challenges remain. “We don’t know what cancer looks like that early,” says Helmy Eltoukhy, chief executive of Guardant Health. “It’s not a single disease, it’s 10,000 different diseases. It’s no wonder that early detection hasn’t worked to date, because we don’t know what we are looking for.”
Nevertheless as the cost of genomic sequencing falls, healthcare systems including the NHS are attempting to tailor and target their services to individuals, based on their unique genetic code — a way both to save lives and cut costs.
“In 2001, it cost the industry $3bn and 13 years of research to sequence a single human genome. Today we can do that for less than $1,000 in a couple of days,” says Paula Dowdy, senior vice-president for Europe at Illumina.
Soon the company, which also has lab space at the Genome Campus in Cambridgeshire, will be able to offer the service for a mere $100.
“It’s not just by accident that VC funding is coming to this market. The opportunity is clearly linked to that massive reduction in price. It enables completely new applications and attracts capital around that,” Ms Dowdy adds.
Venture capitalists are raring to take a bite out of this burgeoning sector: the amount of money invested in genomics is on track to hit $3.2bn in 2017, and has already surpassed the 2016 total, which was $1.7bn, according to CBInsights.
The deals are also becoming significantly chunkier — cancer detection company Grail, which recently spun out of Illumina, raised more than $900m in second-round funding in March, while another cancer diagnostics start-up Guardant Health raised $360m, led by SoftBank in May.
“We are increasingly becoming reimbursed by major insurance payers in the US, so we are planning a major commercial expansion,” says Helmy Eltoukhy, the chief executive of Guardant Health.
“Today, for £1,000 you can essentially diagnose any cancer: lung, colon, melanoma, ovarian, breast and so on. For hospitals, it’s a no-brainer,” says Jurgi Camblong, chief executive of Sophia Genetics, whose software will help diagnose more than 100,000 patients with cancers and congenital disorders in 2017, working with 350 hospitals around the world.
The more diagnoses it makes, the better Sophia’s algorithms become at spotting diseases in a patient’s genetic code. Ultimately, it should be able to diagnose cancers in the earliest stages, thus, significantly cutting advanced treatment costs.
If you know what you are looking for, gene diagnostics can be even cheaper, says Angela Silmon, chief executive of NewGene, a joint venture between Newcastle upon Tyne Hospitals NHS Foundation Trust and Newcastle University. “American companies like Color Genomics are offering breast cancer tests to the NHS for £160, so it has brought a lot of price pressure to the area, we just can’t compete,” she says.
At the Wellcome Genome Campus, scientists are alive to the possibility of commercialising their work and are starting to spin out companies that can service hospitals and clinics.
“We are in the early stages of a revolution. In the current phase, those businesses that focus on data-crunching tools and techniques will have something immediately marketable,” Sir John says. “After that, insights from the data — the therapies that save lives — those will reap the largest rewards.”