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Investor Interest in Proteomics Rising on New, Improving Technologies

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NEW YORK – Investor interest in proteomics appears to be on the rise as over the last year several private firms have announced large fundraising rounds and a number of other companies have made plans to go public.

At the same time, some more established life science companies have highlighted their exposure to the space, with, for instance, Bruker making proteomics a central pillar of its growth strategy.

The factors driving this uptick in investor interest aren't entirely obvious. The mass spectrometry-based technologies that have dominated the field for the last two decades continue to steadily improve, but these improvements remain more incremental than groundbreaking. And while a number of startups are applying new technologies to the challenge of measuring proteins at proteome-scale, these technologies are for the most part still unproven.

"I can tell you that, yes, there is an increased level of interest in proteomics," said Puneet Souda, a senior research analyst at SVB Leerink covering life science tools and diagnostics.

"It's not something that I would have anticipated," he said, but he noted that the relative maturity of genomics might be driving investors to take a look at proteomics "potentially as the next frontier."

As proteins are the primary functional molecules in the body and a common drug target, the case for focusing on proteomics is compelling. The field is considerably more challenging than genomics, however, given the enormous dynamic range across which proteins are present in the body and the lack of a technology analogous to PCR that can be used to amplify low-abundance molecules.

There are around 20,000 proteins in the human body and perhaps 10 times as many different forms of those proteins. Expert proteomics lab can typically use mass spec to measure in the range of 5,000 to 10,000 proteins in cell lysate and 300 to 1,000 proteins in plasma. Affinity-based platforms from companies like Somalogic and Olink can measure, respectively, 7,000 and 1,500 proteins in blood, though in the case of the Somalogic platform there are questions about how specific its measurements are to particular proteins.

Proteomics technologies, particularly mass spec-based platforms, are also expensive and require highly expert personnel to run, which has limited the field's reach.

Souda noted that mass spec technologies are improving, with newer platforms like Bruker's timsTOF Pro offering advances in depth of coverage and throughput.

"We're getting [mass spec] technology to a point where we are delivering several hundred to maybe a thousand or so proteins in a plasma proteomics experiment," he said. "We have gotten to this point largely off of improvements in LC-MS technologies, mainly Thermo [Fisher Scientific] Orbitrap at first and now Bruker's timsTOF."

However, he said that he believes the field is really looking for "improved technologies that can in a more accessibly way deliver on the promise of the proteome."

Improvements on the mass spec side will continue to drive proteomics forward, Souda said, but, he added, "in order to really solve the proteome problem, one has to think outside the box."

That is what a series of new entrants onto the proteomics market aim to do. Companies like Seer, Nautilus, Quantum-Si, Encodia, and Erisyon are developing non-mass spec approaches to tackling the proteome. These newer firms with their novel technologies are behind much of the recent investor excitement in proteomics, suggested Hesam Motlagh, chief of staff at venture capital firm Khosla Ventures. Khosla's investments in proteomics include San Diego-based diagnostics firm Genalyte and health monitoring and early detection firm DiscernDx, which purchased the assets of Applied Proteomics, which was also backed by Khosla.

"We are much more interested in things that could make like an order of magnitude improvement, and I think that is the way a lot of venture capital firms and a lot of investors think about where they would like to park their money," he said. "Yes, there have been improvements to mass spec… but overall I would describe them as incremental, and you still need to have a fair share of technical knowledge and resident expertise to be able to do proteomics with mass spec."

"So the exciting thing that seems to have been doing well, at least on paper right now, is, ok, if not mass spec, then what?" Motlagh said.

Redwood City, California-based Seer (where Motlagh was a senior corporate strategy and finance analyst from 2019 to 2020) went public in December through a $175 million initial public offering that was accompanied by a separate private placement of $135 million of Class A common stock.

The company's Proteograph system uses nanoparticle-based enrichment of proteins in samples like human plasma to enable deeper coverage in proteomic discovery experiments. The platform is based on the observation that when incubated in a biological sample, nanoparticles collect proteins, which form a "corona." Given this, nanoparticles can serve as an enrichment tool, allowing researchers to pull proteins out of a sample, which they can then identify and quantify using technologies like mass spec or other detectors.

Seer went public at $19 a share and hit a high of $86.55 per share in January. It has since fallen back into the $40 to $50 range and Wednesday afternoon was trading on Nasdaq at $44.20 per share.

In February, Seattle-based proteomic start-up Nautilus announced that it plans to list on the Nasdaq through a merger with special purpose acquisition company Arya Sciences Acquisition Corp III. The company has entered a definitive merger agreement with Arya and is expected to receive $350 million in proceeds through the deal, including a $200 million private investment in public equity (PIPE) transaction at $10 per share from investors led by Perceptive Advisors, an affiliate of Arya III's sponsor. The company also counts among its investors Bezos Expeditions, Vulcan Capital, and Andreessen Horowitz.

Cofounded in 2016 by Patel and Chief Scientist Parag Mallick, an associate professor at Stanford University, Nautilus has disclosed little publicly about its technology beyond the fact that it uses machine learning to make protein identifications based on measurements of multiple parameters describing the target molecules.

Also in February, Quantum-Si announced plans to list on the Nasdaq via SPAC. The Guilford, Connecticut-based firm will merge with HighCape Capital Acquisition Corp and receive $425 million via a PIPE transaction from investors including Foresite Capital Management, Eldridge, accounts advised by ARK Invest, Glenview Capital Management, and Redmile Group.

Founded by next-generation sequencing pioneer Jonathan Rothberg, Quantum-Si has, like, Nautilus, provided little public detail on the specifics of its technology but said that it uses a sequencing approach it calls Quantum Si Time Domain Sequencing combined with a semiconductor sensing device to sequence proteins, including post-translational modifications, at the single-molecule level.

Of the three firms, only Seer has published peer-reviewed data on the performance of its platform. None have yet launched their systems commercially.

Souda suggested the companies were going public despite being early in development in order to take advantage of the current investing environment.

"Investor appetite for life science tools technologies is fairly robust right now," he said. "Genomics has delivered, and I think that that has given [investors] some comfort that as long as there is fundamental innovation and that innovation is supported by investment, we are going to see products that are differentiated and help solve key problems that currently challenge the [proteomics] field. So proteomics is being looked at as the next opportunity."

Souda added, though, that ultimately, "science is important and data is important, and we need to see data here in order to get more convinced that these companies are truly going to resolve the proteomics challenge."

While these newer proteomics firms are not mass spec-based (though Seer's Proteograph system will likely be used in combination with mass spec at least in the near term), they have some connections to the mass spec-based proteomics world. Seer, for instance, counts Steven Carr, senior director of proteomics at the Broad Institute among its scientific advisors. Nautilus's Mallick is one of the main developers of the ProteoWizard mass spec proteomics software platform and the company includes mass spec proteomics pioneer Ruedi Aebersold as a member of its scientific advisory board.

The move to go public isn't limited to new proteomics outfits. Last week, Swedish proteomics firm Olink filed with the US Securities and Exchange Commission for an initial public offering of American Depositary Shares (ADS) through which it will list on the Nasdaq Global Market.

Investor appetite for proteomics is also apparent in the $214 million Series A round Boulder, Colorado-based Somalogic closed in December and in a recent $250 million public stock offering by Billerica, Massachusetts-based firm Quanterix, which last month saw its stock hit an all-time high of $92.57, though it has since retreated from that peak and on Wednesday afternoon trading on Nasdaq was at $62.08 per share.

"There are some really cool tools coming out of basic science that are within striking distance of reality," Motlagh said. "It's definitely a trend, I would say. It's not just a blip on the radar."

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