A niche segment of the bioinformatics market appears to be defying an otherwise tight investment climate: In the past few weeks, Mountain View, Calif.-based pathway database firm Ingenuity and Genstruct, a pathway-focused drug discovery firm in Cambridge, Mass., raised a total of $13.8 million.
The ability of these companies to attract investors may signal a new era in the evolution of the commercial bioinformatics sector: Burned by software and content firms of the 1990s that based their offerings around genomic, proteomic, or gene expression data, investors appear to have gained a new level of confidence in companies that claim they can bring all that information together into a cohesive whole.
Genstruct, which today announced the completion of a $6.5 million Series A round, has developed a computational platform called “Molecular Epistemics” that is based on two components: “Knowledge Assembly” — a process that creates computable knowledge maps of biological systems; and the “Epistemics Engine” — a modeling and simulation platform.
Ingenuity, meanwhile, closed a $7.3 million Series D round in mid-August. The company, which currently offers a curated set of over a million gene and protein interactions called the Pathway Knowledgebase, is gearing up to launch a web-based application for analyzing gene expression data within the context of its pathway content later this month. The pending release of the new software, dubbed Ingenuity Pathways Analysis, caught the eye of microarray giant Affymetrix, which ponied up $5 million of the Series D round and signed a co-marketing partnership with Ingenuity.
Scott Jokerst, senior product manager for data management products at Affy, said that pathway-centric analysis is important for its own customers as well as other researchers conducting gene expression experiments. “You wind up with a lot of data that is associated with a lot of genetic events, and putting that into the context of the biological networks that might be in play is really important for research scientists so that they can begin to understand the biology that’s going on in their experiment,” he said.
Financing Brings New IP
Although Ingenuity’s and Genstruct’s shared interest in mapping biological mechanisms may have lured their respective investors, the companies diverge when it comes to their business models. While Ingenuity is marketing a suite of tools built upon a database that took five years to curate, Genstruct is targeting pharmaceutical partners interested in applying its technology in discovery collaborations.
“What we’re really doing is focusing on individual research problems. So if we’re working on a program in oncology — to validate a drug, to find biomarkers for efficacy — we build a model very specific to that system,” said Keith Elliston, CEO of Genstruct. “We’re not trying to sell our partner a piece of software, train them how to use it, or build the infrastructure to support it. We go in and solve the problem, so it’s much faster and much quicker.”
Genstruct plans to enhance its modeling platform with another technology that it picked up as part of its recent financing round. Along with the financing, Genstruct acquired the CELL (Coded Electronic Life Library) platform and other IP assets of another pathway-focused bioinformatics firm, Incellico. A. M. Pappas and Associates, which was a lead investor in Genstruct’s Series A along with Flagship Ventures, was also Incellico’s lead investor for a total of around $7 million in financing. “[A. M. Pappas] had the experience with the software product-based business model, and didn’t feel that there was a lot of future to that,” Elliston told BioInform. “They were pretty impressed with our discovery-based model… they thought that bringing the CELL platform into what we do would really strengthen and accelerate our business plan.”
Arthur Pappas, managing partner of A. M. Pappas, has taken a position on the board of Genstruct. He was unavailable for comment prior to press time.
CELL, an ontological database that integrates disparate biological datasets, meshes nicely with Genstruct’s core technology, Elliston said, and will allow the company to “disambiguate” biological entities as part of the modeling process. “One of the key problems when you’re trying to build large-scale models of biological systems is making sure that you’ve got the right attributes on the right entities,” he said.
As part of the acquisition, John Wilbanks, formerly CEO of Incellico, has taken the position of director of strategic marketing at Genstruct. Toby Segaran, vice president of R&D at Incellico, also joined Genstruct. In addition, several of Incellico’s 20-odd former employees are acting as consultants during the transition period, Elliston said.
Courting the End-User Market
For Ingenuity, which has raised around $50 million in three previous rounds of financing, the latest cash infusion was a welcome shot in the arm, “but from my standpoint the real benefit is the access to the customers and the validation that [Affymetrix] can provide us,” said Frank Mara, senior vice president of marketing at Ingenuity.
As the company prepares to launch its Pathways Analysis software product, it is hoping to target end-user biologists rather than bioinformaticists — a relatively new market for the firm, and one where Affy’s market penetration is obviously welcome.
Ingenuity’s Pathway Knowledgebase was geared toward in-house bioinformatics teams at large pharmaceutical firms who are able to build their own analytical pipelines on top of the content, but the new product will offer a user-friendly analytical capability that should appeal to a much broader audience, Mara said. The web-based interface allows any researcher to “take a gene set that comes off the microarray and put it in the context of the entire genome, a context that’s important for creating biological networks,” he said. The alternative, Mara noted, is comparing each gene in the list against the available literature to construct pathways manually.
The Pathways Analysis software is still in beta release, but the company has already signed a paying customer: the Genomics Institute of the Novartis Research Foundation. John Hogenesch, head of the neurobiology program at GNF, said the software “is essentially a substitution for a lot of literature text-mining and natural language processing tools that you may or may not have.” Rather than embark upon an in-house project to recreate the system, GNF opted to purchase it. “If you’re doing something like that in house, then you’re not doing something else,” Hogenesch said. “When there is a commercial tool available that does a reasonable job, you get it.”
GNF researchers submit microarray and other functional genomics data over Ingenuity’s secure web-based system, and get back information on individual genes linked to outside data sources along with a collated view of the role of particular proteins in particular pathways. “It also returns a weight based on how many genes show up in a particular pathway, so it tells you the pathways that are being perturbed and it also tells you what the roles are of the genes in the pathway if they’re known,” said Hogenesch.
According to Hogenesch, the ability to place gene expression data within the context of biological pathways is a step beyond statistics-based gene expression analysis, which “tells you which things change, but it doesn’t tell you which things are related to which, and it doesn’t focus your next experiment.”
Ingenuity is counting on the shortcomings of existing methods, which Hogenesch described as “information rich but knowledge poor,” to drive end-user biologists to its software. The company is providing a free trial of the software to Affy customers — as well as to the general public — through its website (http://www.ingenuity.com/products/trial.html), and claims that researchers will be able to reduce the time for analyzing some data sets “that used to take months or years down to hours or days,” Mara said.
Although it is pursuing a different business model, Genstruct is also counting on the market’s dissatisfaction with current methods to drive forward its own business. Elliston said that the company’s technology was developed to break down the “cognitive barriers” created by a pesky byproduct of systems biology: enormous data sets. “There’s simply too much knowledge and too much data for people to analyze in a conventional way,” he said.
Genstruct has not yet disclosed any customer deals, but according to Elliston, “We’ve been working with one of the major pharmaceuticals through several different projects.”