Geospiza has pocketed $3 million in a Series A financing round that it will use to support an aggressive growth strategy in 2007.
The company plans to increase its headcount from 30 to 40 over the next year as it targets new markets for its Finch data-management software, including the genetic testing sector, Geospiza officials told BioInform this week.
“The big change this year is that we’re going to be really going out and changing the positioning of the company,” said Rob Arnold, Geospiza’s chief operating officer. While he said that Geospiza plans to expand Finch’s reach into a number of new areas, including biosecurity, “the big area we’re really concentrating on is personalized medicine.”
Geospiza has focused on the research market since it was founded in 1997, and the Finch suite has a strong foothold in many genomic research labs. The company currently claims around 50 organizations as customers, with a total of around 20,000 end users.
But the research market has its limits — especially when compared to the potential of the clinical laboratory market. “If you look at CLIA laboratories just in North America alone, I believe it’s somewhere around 180,000,” Arnold said. “Not all of them have the capabilities to offer these types of genetic tests, but it’s a much, much larger market.”
But tapping into that broader market will require more sales and marketing support, which Arnold said has been on a “bootstrap” basis over the last several years while Geospiza focused on product development.
Arnold said that Geospiza accomplished a number of milestones that it had set out at the beginning of 2006, which enabled it to secure the latest round of financing. “With the funding, we’ll add additional personnel in product development, and most importantly we’re going to be expanding our sales and marketing effort,” he said.
Banks said that several of Geospiza’s current customers, including the Mayo Clinic, Duke University, MD Anderson Cancer Center, and Johns Hopkins University, are already using Finch to manage genetic data in clinical settings.
Banks and Arnold acknowledged that it’s still early days for the genetic testing market, but pointed to a number of signs that indicate demand is on the rise for effective data-management systems in the field.
“There is intense consumer interest in these classes of tests, and people are finding their way to the laboratories to get these tests run,” Arnold said. As evidence, he cited a presentation from Quest Diagnostics at the UBS Global Life Science conference in September in which the reference lab reported that $660 million, or around 13 percent, of its 2005 revenues came from gene-based tests. Quest also considers genetic testing to be the fastest-growing segment of its business, according to the presentation.
The result, he noted, is that “our customers are coming to us and asking for these types of solutions” for managing increasing amounts of genetic data.
While genetic testing isn’t a new thing for many of these labs, “it’s just now that the volumes are increasing to the point where doing this type of work manually just doesn’t scale,” he said.
Todd Smith, CEO and founder of Geospiza, said that most clinical labs run a number of disparate desktop software packages to analyze data from genetic tests, and are not equipped to organize and manage large volumes of genetic information. “We’re seeing that companies cannot scale because they can’t hire more people” to manually process the data, he said.
Banks estimated that it typically takes an analyst between 30 and 60 minutes to manually process the data from a genetic test, which limits the output of a single person to about 10 tests per day. “If you’re looking at a lab that’s receiving requests for hundreds of tests, that translates into a need for tens, if not hundreds, of analysts working with this data,” he said.
Banks noted that the Finch platform is able to automate many of the steps in a typical analysis pipeline so that the average time for analysis can be reduced to 2 to 3 minutes.
“Like any other industry, when there’s enough consumer demand or consumer interest, people go from doing things manually to looking at automated systems, and we’re now really at that inflection point,” Arnold said.
New Data Types and Regulatory Requirements
In order to expand into the clinical market, Geospiza has stretched Finch’s capabilities beyond its traditional role as a LIMS for sequence data in the research lab.
“There is intense consumer interest in these classes of tests, and people are finding their way to the laboratories to get these tests run.”
“We’re branching out aggressively from sequencing,” Smith said. “The first step is dealing with fragment data.” He added that RT-PCR is “another important platform,” and that Finch also supports genotyping data from the Luminex platform.
In addition, the company has introduced new packages to enable its customers to validate Finch for use in regulated environments. Two of its specialized products — the Finch Suite for Molecular Diagnostics and the Finch Suite for Clinical Trial Data Management — come with a validation package that includes documentation for installation qualification, operational qualification, and performance qualification.
Arnold said that the company is currently working with its first customer to validate the Finch suite for use in a Good Manufacturing Practices-compliant environment, though he was unable to disclose the identity of the customer.
The company has also hired Jim Hancock, a 14-year quality-management veteran, for the newly created position of director of quality assurance.
“Implementation of a quality management system has been an important part of the infrastructure and foundation that we put in place,” said Banks.
Arnold said that the company has pretty much wrapped up an intense product-development phase that kicked off when it raised its first round of funding, worth $1 million, in 2005 [BioInform 4-29-05].
“We certainly did quite a bit of modification to Finch over the last few years, but now really it’s more refinement,” he said. “Functionally it’s there.”
He said that the company is considering seeking additional funding in 2007 to further support its marketing efforts.
“Both 2005 and 2006 have been big product development years for us. In 2007 we’re going to be launching into the market,” he said.