Quanterix Corporation, a Tufts University spinout, has raised $15 million in Series A financing to develop and validate a variety of ultrasensitive diagnostic and drug-discovery assays based on single-molecule detection technology, the company said last week.
The core technology was developed by Tufts University chemistry professor David Walt, who has a history of entrepreneurial activity including co-founding genetic-analysis company Illumina, in which Tufts took an equity stake when it was founded in 1998.
Tufts, which also has an undisclosed equity stake in Quanterix, is now hoping that the upstart company can follow in the footsteps of Illumina, whose 2000 IPO netted the university some $8 million, and whose BeadArray product sales continue to generate royalty payments for the school.
ARCH Venture Partners, Bain Capital Ventures, and Flagship Ventures co-led the $15 million investment in Quanterix, which was founded last year by Walt and former ParAllele Bioscience CEO Nicholas Naclerio, and which has an exclusive license to a broad intellectual property portfolio developed by the Walt lab at Tufts.
Quanterix will use the proceeds from its financing round to validate its Single Molecule Array, or SiMoA, technology, which enables researchers to observe simultaneously the behavior of thousands of individual molecules.
More specifically, the SiMoA technology comprises arrays of femtoliter-sized reaction vessels, each vessel sized to confine a single molecule of interest, according to Quanterix.
The arrays are formed by etching tens to hundreds of thousands of separate reaction vessels into the end of an optical fiber bundle. Each vessel can be used to trap single molecules, and the optical fiber bundle carries light into and out of each vessel allowing each well to function as an independent assay for a single molecule.
The system also features a proprietary image-capture device and image-analysis software.
“This is a very simple but very robust way of interrogating single molecules in a variety of settings,” Doug Cole, a general partner at Flagship Ventures and director at Quanterix, told BTW last week.
“Without getting into the details, the quest to be able to interrogate single molecules is long standing in biology,” Cole said. “It has had most of its success until now in the realm of nucleic acids, basically PCR. But this is much broader, and while it can be applied to nucleic acids, it can also be applied to proteins.”
Keith Crandell, co-founder and managing director of ARCH Venture Partners and also a director of Quanterix, said that the company’s main opportunity is in the area of ELISA-based diagnostic tests. Crandell said that there are currently a few hundred diagnostic tests that use ELISA to identify protein biomarkers of interest, but that research has shown that at least another 1,000 protein biomarkers exist that are below ELISA’s detection limit.
“I think [Tufts was] very happy with the way the Illumina deal worked out, and we used a similar structure [with Quanterix] …”
“The opportunity is to develop a reliable, low-cost, reproducible test with high specificity for these biomarkers, and that is what Quanterix is pointed toward,” Crandell said. “The brilliance in the technology is how simple it is. That allows it to be highly reproducible and low-cost.
“If you are going to push out the technology to the broadest possible group, you have to be able to deliver it consistently, and it can’t cost a lot,” he added.
The investors said they are also confident in the inventor behind the technology, David Walt. Best known as the inventor of the technology underlying Illumina’s BeadArray platform, Walt is the type of “superstar” faculty entrepreneur that tends to attract VC cash, according to Nina Green, director of the Tufts Office for Technology Licensing and Industry Collaboration.
In fact, Green told BTW that it was Illumina’s relatively quick ascent that spurred the creation of a full-time technology transfer office at Tufts, which before the deal contracted its tech-transfer efforts to a third party.
“David is a great scientist,” Green said. “He’s well-connected to many other great scientists and, as a result of the success of Illumina, he’s well-connected to some VC firms.”
In the case of spinning out Quanterix, Tufts’ tech-transfer office was prominently involved in the process. “He definitely brought us the syndicate, and they know David’s track record,” Green said. “We had been protecting the IP all along, so obviously we had skin in the game, and we negotiated a very reasonable and fair deal, and are really happy with the early success of Quanterix and integrity of the VCs that are involved.
Green added that Walt, “having had the success of Illumina and those connections, certainly made all of that possible.”
ARCH’s Crandell said that the firm had been familiar with Walt ever since it provided some seed funding for Illumina’s launch in 1998. Crandell also said that ARCH had an existing relationship with Naclerio and Green, who was also involved in Illumina’s genesis, though not in her current capacity.
“Everybody kind of knew everybody else,” Crandell said. “Green was involved in the Illumina spinout, and Tufts has an equity position and license with Illumina, so it was really building on past successes.”
Those past successes include not only the $8 million Tufts received when Illumina went public in 2000, but also the royalties it has collected on sales of the BeadArray platform. Green declined to provide an exact royalty figure but said that it “by far” continues to be the largest money maker for the university. Green confirmed that the school no longer has a stake in Illumina.
In the fiscal year ended June 30, Tufts’ OTL&IC reported approximately $4.0 million in royalty income from licensed technology, as opposed to from licensed trademarks or copyrights. About $3.6 million of that was due to technologies licensed from Tufts’ main campus, which includes the department of chemistry; the remainder is due to technologies licensed out of the medical center.
“I think [Tufts was] very happy with the way the Illumina deal worked out, and we used a similar structure [with Quanterix] to what we typically use in that we seek an exclusive license, and in exchange for that, the university usually winds up with some royalties, equity, and performance payments, and we cover the patent expense,” Crandell said.
Universities are typically pleased with such an arrangement “because it limits the risk, and they know the company will be well-funded and well-managed.”
If Tufts’ return on its Quanterix investment approached that of its return from Illumina, “we would be very happy,” Green said. In order to do that, Illumina and other companies like it may even play a hand.
“I’m sure Illumina and many of the other leading companies in diagnostics will be interested in this as it matures,” Crandell said. “Usually [you need] a small focused entrepreneurial group to take that risk to sort of drive it forward. That’s the stage we’re at.
“This was one of those deals that comes along every five years or so, and you have to jump on it because you’re working with such a good group of people and the technology is so promising,” he added.