NanoString Technologies this week closed a $30 million series C round of venture capital financing.
The Seattle-based firm said the financing was completed through two tranches, and the funds will be used to accelerate commercialization of its nCounter Analysis System for research and diagnostic applications.
The most recent round of financing was led by Clarus Ventures and included existing investors OVP Venture Partners and Draper Fisher Jurvetson. In connection with the investment, Clarus Ventures Co-founder and Managing Director Nicholas Galakatos will join NanoString's board of directors.
NanoString plans to use the proceeds of the financing round to round out its manufacturing, R&D, and sales and marketing teams, and to expand the applications that run on the nCounter into areas such as microRNA profiling and copy number variation analysis, according to a company official.
Lianne McLean, vice president of marketing, told BioArray News this week that the company plans a "significant" round of new hires to support the full commercialization of the nCounter and move it into new application areas.
NanoString currently employs 40 people, mostly in R&D and manufacturing and production, she said. By this same time next year, the company hopes to have around 60 full-time employees to beef up those involved in product development and marketing and sales.
"We have been running pretty lean, so we need to increase the size of our manufacturing and development groups and to add to our product development teams so that we can focus on applications for the system," she said.
Additionally, she said that the company will probably not seek more financing. "Our plan is that this will take us through profitability," she said. "We do not plan to raise additional funds." Prior to the most recent cash infusion, NanoString had raised $17 million since its inception in 2003, she said.
The technology behind nCounter, developed at the Institute for Systems Biology in Seattle, works through color-coded tags attached to target molecules that enable scientists to produce digital gene-expression data. Indeed, digital gene-expression has been NanoString's feature application to date.
While the nCounter does not use array technology, it has been marketed to array users as a replacement for quantitative PCR, a technology that is frequently used to validate gene sets obtained through larger gene-expression studies. More recently, NanoString has also positioned the system to second-generation sequencing users.
"We don't go up against microarrays. We fit better into the validation space," McLean said of the firm's niche. "We are being used in post-array work for validation and the next-gen people want to validate their data in a more cost-effective way across a different platform," she said.
NanoString's primary target customers are those "looking at a large number of genes across a large number of samples," who might get bogged down in validating those markers using existing methods, like qPCR. While most sequencing users are breaking in their next-gen tools, McLean said it was better for the company to reach them now. "We see that next-gen sequencing arch is going to be a long one," McLean said. "It's nice to be positioned downstream to connect with that community right now, though it is early days," she said.
NanoString has also "been successful in the validation and clinical research area," according to McLean. Because its assay does not rely on any enzymology to prepare a sample for analysis, the nCounter can be used with such samples as blood lysates, cell lysates, and RNA from formalin-fixed, paraffin-embedded tissue samples, a factor that she said makes the platform attractive to those doing clinical research.
As NanoString absorbs the most recent financing round, it is looking to move beyond digital gene expression into other areas, most notably miRNA profiling and copy number analysis.
"Our technology uses molecular barcodes that can label anything, and currently it's being used in gene expression," McLean said. "We have projects to look at miRNAs and CNV analysis," she said. "Ultimately, down the road, there are lots of areas where we could apply this concept."
NanoString initiated the commercial roll out of the nCounter last year by inking a series of early access agreements with institutions like the University of Washington, the California Institute of Technology, Baylor College of Medicine, and the University of Miami’s Miller School of Medicine (see BAN 2/19/2008).
McLean said this week that nCounter's early access period is now over and that the firm is selling systems worldwide, with placements in North America, Europe, and Japan. Most recently, it closed deals with two service providers, one in the US, the other in Europe. While McLean declined to name the new American customer, VIB in Belgium is already advertising services on the nCounter in its website.
Additionally, NanoString in November 2007 opened a commercial office in San Mateo, Calif., to coordinate its US sales and marketing activities, while it signed on distributors to cover other markets. France's Novoptim will be selling the nCounter in Europe, McLean said, while a partner has recently been found to cover the Japanese market, McLean said. She declined to name the new Japanese distributor, but said that NanoString would soon make an announcement on the deal.