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Startup MDx Firm Sequenta Raises $13M in Series B

By a GenomeWeb staff reporter

NEW YORK (GenomeWeb News) – Startup molecular diagnostics firm Sequenta today announced the close of a Series B financing round that raised $13 million, which it will use toward developing a technology that the San Francisco-based firm said could enable new models for treating diseases.

Leading the round was a consortium of investors including venture capital firms Mohr Davidow Ventures and Index Ventures, which also invested in Sequenta's Series A round, as well as individual investors, including financier Jacob Goldfield, a former partner at Goldman Sachs and chief investment officer at hedgefund Soros Fund Management.

The funds from the round will be used to continue development of an assay for profiling T-cell and B-cell receptors. While commercialization of the assay is still a number of years away, Sequenta Co-founder and CEO Tom Willis told GenomeWeb Daily News that the firm's technology and approach to identifying biomarkers of autoimmune diseases could lead to better diagnoses of diseases and treatments for a broad menu of ailments.

Currently, the prevalent method of measuring immune system activity is by measuring inflammatory biomarkers. This approach, however, has its drawbacks because they are "markers of inflammatory process not necessarily specific to the disease process", according to Willis. While the immune system is an "incredibly specific system," the specificity lies at the cellular level and not at the inflammatory level.

Leveraging advances in sequencing technology, Sequenta is developing a platform that offers substantial improvements in specificity and sensitivity, Willis said.

Today, sequencing 1 million molecules for 100 bases costs approximately $100, compared to a few million dollars a decade ago. Sequencing technology is "so vastly different today than it was 10 years ago that the analyte can be seen in a whole new way," Willis said.

The technology was developed in house as Willis and Co-founder Malek Faham took note of the "absurd revolution in DNA sequencing costs" over the past decade. The rapid evolution in sequencing technology, he said, was now making it possible to routinely glean genetic information at price points and throughputs that hadn't been possible.

That led the two to ponder the use of sequencing technology to profile immuno-repertoires, specifically T-cells and B-cells, which each generate a unique sequence of a few hundred base pairs long and antigen receptor sequences.

Willis and Faham, now Sequenta's chief scientific officer, thought immune repertoires "would be a great place to apply the technology in that it's perfectly matched to the technology in terms of the read lengths and the capacities of the technology," said Willis. In addition, the analyte is potentially relevant to some disease state "because the immune system is so central to many different kinds of human health and disease states," he said.

Taking Aim at the Clinic

Sequenta is not alone in recognizing the potential of sequencing technology for complex human systems such as the immune system. As GWDN sister publication In Sequence reported this past summer, an increasing number of researchers are applying sequencing technology to the immune system to gain deeper insight into the nature of disease and infections.

Other firms, such as Adaptive TCR and iRepertoire also offer immune repertoire-sequencing and -analysis services. However, Willis said that Sequenta is differentiating itself from its competitors by applying its technology clinically, rather than in the research market.

The technology developed by Sequenta is for profiling recombined DNA sequences in T- and B-cells. In short, a blood sample is drawn from a patient, individual molecules of nucleic acid derived from the T- and B-cells are spatially isolated and amplified by PCR, and then sequenced. Finally bioinformatic methods are used to reconstruct the DNA sequences.

The use of sequencing technology "now allows you to get all the million cells identified very precisely, so you can construct those nucleic acid sequences and amino acid sequences from these single runs," Willis said. "And that allows us to watch these cells, and they expand and then contract in frequency in blood. We can do that at exquisite frequency because we can see all 1 million cells. We can see cells changing in frequency from one part in 100,000 to one part in 10,000 … that would be completely invisible to any other way of looking at the immune system."

Addressing the sensitivity of Sequenta's platform, Willis said it can detect cells that may be associated with disease states at levels of one part in 1 million — a level that no other method can come close to, according to Willis. And on its specificity, while inflammatory markers cannot distinguish a lupus flare-up, for example, from a bad case of the flu, Sequenta's platform can.

Sequenta has the platform working "well" and the company is now doing early-stage clinical work. While the main focus of the technology has been directed at autoimmune diseases, the platform can be applied to a number of other diseases since the immune system is involved in such a wide array of indications, either through over- or underactivation, Willis said, though he declined to say what diseases Sequenta is targeting.

According to Rowan Chapman, a partner at VC firm and investor Mohr Davidow Ventures, Sequenta is developing a single assay that can be applied across a host of diseases. Chapman said the immune system is relevant to a wide swath of diseases including cancer, heart disease, and allergies, as well as autoimmune disorders.

"And the nice thing is that the same technology and the same assay can be applied to all of those different application areas," she said. What Willis and Faham have done is decide which applications would be best for the technology and in which order to develop them. "And what they're going to have to be doing is using the technology in the appropriate clinical studies to enable it going to market," said Chapman.

Neither she nor Willis would say specifically when Sequenta would commercialize its assay, but Willis said that it would most likely be after the next funding round, which may not be for another 18 to 24 months.

To date, Sequenta has raised $15 million. When Sequenta launched in September 2008, the broader economy had just begun to crater. While life science and molecular diagnostics companies, like other industries, has seen its challenges from the meltdown, Chapman said that Sequenta has not been slowed down by the economy.

Prior to founding Sequenta, Willis and Fahan co-founded ParAllele Bioscience in 2001, which Mohr Davidow also invested in. Four years later, ParAllele was acquired by Affymetrix.

When the company filed a document with the US Securities and Exchange Commission in August disclosing it had raised almost $6 million in its Series B, it said that it was targeting $9.7 million in the round, more than $3 million below the $13 million it ultimately raised.

That, Chapman said, shows "there is a lot of interest in the company."