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Oxford NanoLabs, BioNanomatrix Raise $25M In Private Funding for Nanotech Sequencing

Two privately held early-stage companies developing new nanotechnology-based DNA-sequencing methods recently received additional funding that will enable them to increase their headcount and help them commercialize their respective nanopore and nanochannel technologies.
Oxford NanoLabs, a UK-based spinout from the University of Oxford that is working on DNA nanopore sequencing (see In Sequence 2/27/2007), last month raised £10 million ($20 million) from existing non-VC institutional and private investors. Meanwhile, BioNanomatrix of Philadelphia raised $5.1 million in a Series A funding round last month to develop its single-molecule sequencing and genome-analysis platform.
Oxford NanoLabs’ new funding, which included £2.4 million from seed investor IP Group and its subsidiary Top Technology Ventures, will allow the company to “ramp up our R&D and to deliver the nanopore sequencing products that we are working on,” CEO Gordon Sanghera told In Sequence last week.
Over the next 12 to 18 months, the company plans to double its headcount of currently about 30 employees, adding “almost all exclusively technologists to push the platform forward,” Sanghera said. It will also ramp up outsourced contract manufacturing of electrical detection components and silicon-based electronic chips that it will intregrate with the nanopores.
Oxford NanoLabs’ sequencing method is based on protein nanopore technology developed by Hagan Bayley at the University of Oxford. In 2006 his group published an article in the Journal of the American Chemical Society that showed that a modified alpha-hemolysin pore can distinguish four different mononucleotides. In combination with an exonuclease that clips off one nucleotide at a time from a DNA strand, this could be used to sequence DNA, they suggested.
“We made a lot of significant inroads to that conceptual approach since that time,” Sanghera said, adding that the company is currently filing patents on the technology and plans to publish at least two scientific papers on its progress later this year. Next month, Oxford NanoLabs plans to talk more about its development goals “to prepare the ground for when the publications arrive,” Sanghera said.
Besides sequencing applications, the nanopores could be used in diagnostics. The company has already completed a prototype handheld diagnostic device and is now starting to look for partners for product development. However, “the R&D focus, almost exclusively, is on the nanopore sequencing because it’s such a step change,” according to Sanghera.
The technology has already attracted attention. “We have actually [had] huge interest from traditional electronics companies,” Sanghera said, as well as from “traditional sequencing companies” and other life science firms.
As of now, Oxford NanoLabs does not have a formal partnership with any of them. “What we do have is a very loyal investor base and plenty of cash to really focus on product development, and doing deals right now may be a distraction for us,” Sanghera said.
Oxford NanoLabs was founded in 2005 with approximately £500,000 in seed funding from university technology-commercialization company IP2IPO, now called IP Group. In 2006, Oxford NanoLabs raised £7.5 million in a second financing round from a number of hedge funds. Following the latest funding round, IP Group holds a 35-percent beneficial stake in the company valued at £19.5 million.
Also last month, BioNanomatrix raised $5.1 million in a Series A funding round, led by Battelle Ventures of Princeton, NJ.
The company will use part of the cash to contribute matching funds that are required under an $8.8 million grant from the National Institute of Standards and Technology. BioNanomatrix and partner Complete Genomics won that grant last fall to develop a low-cost high-throughput DNA sequencer that uses BioNanomatrix’s nanochannel chips and Complete Genomics’ sequencing chemistry (see In Sequence 10/2/2007).

“What we do have is a very loyal investor base and plenty of cash to really focus on product development.”

The company will also use the funding to build its R&D and business-development teams further. Since last fall, BioNanomatrix has already tripled its headcount to 12, most of them in R&D, and plans to increase it to about 15 by the end of the year, CEO Michael Boyce-Jacino told In Sequence last week.
The collaboration with Complete Genomics is “going very well,” he said, and the companies expect to talk more about their plans by the end of the year. “Officially, in terms of whole-genome sequencing, it’s a long-term project. But there are some very nice stepping stones,” he said, such as “adapting [the technology] to, essentially, low-resolution sequencing and mapping across very large regions of the genome.”
Near term, the company is working on commercial applications other than sequencing that involve imaging single linear DNA strands. For example, in genotoxicity assays, the platform could be used to assay DNA damage by sizing the DNA fragments.
It could also be used in cytogenetics to assess rearrangements in chromosomes, or in optical mapping to detect structural variations such as gene copy number variations, or other DNA variants. These applications require that specific sites on the DNA be labeled with site-specific probes.
The platform could also be used to assist in genome assembly, similar to optical restriction maps (see In Sequence 4/1/2008). “We have had a lot of interest from a number of the big sequencing groups about it to assist in the assembly of data coming from a lot of the next-generation sequencing systems,” Boyce-Jacino said. “We think that’s a really good research application [of the technology].”
Last year, BioNanomatrix also announced a partnership with Agilent Technologies to develop an instrument that will use its imaging technology, nanochips and reagents, and a measurement platform developed by Agilent. Application areas include genotoxicity, cytogenetics assays, “as well as potentially DNA sequencing,” according to a statement the companies released at the time.
“We are actively evaluating the match of our platform to different approaches of DNA sequencing,” Boyce-Jacino explained last week. “In the case of Agilent, they have some particular approaches that they have evaluated in-house, and we are looking at adapting those to our system.”
BioNanomatrix’s technology is based on nanochannels developed by Han Cao and colleagues at Princeton University, which owns the intellectual property covering fabricating and using the channels. 
The channels are 100 nanometers or less wide, millimeters to centimeters long, and spaced at approximately 200-nanometer intervals. A typical chip contains on the order of 5,000 channels. Single molecules of double-stranded DNA are fed into each channel, enabled by a chip design that helps disentangle the DNA without breaking it. “You can get physically more DNA into the same space than any other approach out there,” Boyce-Jacino said. “That, we think, will be a major advantage in terms of the speed of the analysis.” That speed, he said, is limited by imaging technology and how much information can be packed into each image, or field of view.
Other investors in BioNanomatrix’s Series A round were Battelle Ventures’ affiliated fund Innovation Valley Partners and KT Venture Group. Seed investors Ben Franklin Technology Partners and 21Ventures participated through debt conversion.
In addition to the current funding round and the NIST funding last year, BioNanomatrix, which was founded in late 2003, has received $400,000 in seed funding as well as total of about $900,000 in several SBIR phase I grants.

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