San Diego startup Element Biosciences announced Tuesday that it raised $276 million to bankroll its bold bid to develop a new and disruptive DNA sequencing platform.
That puts the company in direct competition with Illumina, the world’s leader in genetic sequencing, also headquartered in San Diego. And while observers don’t expect Illumina to lose its position as top dog any time soon, they’re impressed by the team Element has put together and say there’s plenty of room for new players in the sequencing market.
That’s apparently what investors thought, too. Ten firms participated in the mammoth Series C funding round, with new investors such as T. Rowe Price and Morgan Stanley’s Counterpoint Global team joining Fidelity Management & Research Company and Foresite Capital, among others.
For all the excitement, precisely how the company intends to make sequencing less expensive lower cost and easier to use isn’t clear. The San Diego Union-Tribune asked Element about its product and the timeline for bringing it to market, but the company declined to provide additional details.
It’s common for startups to reveal little about products still in development. But Element CEO Molly He shared the company’s philosophy behind what would be its first-ever product during a December 2020 panel hosted by the Rosalind Franklin society, a nonprofit that recognizes the contributions of women in the life sciences.
“We wanted to look at a DNA sequencer in every single technology element,” she said, “and really rethink how we can make it better.”
Specifically, the company is focused on improving signal-to-noise ratio at every stage in the sequencing process. That’s a bit like how you might adjust the dial on your radio to bring down static and make it easier to hear the actual broadcast.
If Element succeeds, there’s a large and growing market waiting. DNA is often known as the book of life, and there’s much to be learned by reading it. Sequencing is helping researchers diagnose and treat rare genetic diseases, wage war against cancer and understand the mindbogglingly complex community of bacteria that live in our gut. During the pandemic, researchers have used sequencing to develop coronavirus vaccines in record time and to track the emergence and spread of viral variants.
Life sciences firm is developing next generation genomic sequencing platforms for researchers fighting cancer and autoimmune diseases.
Despite Illumina’s leading position in the sequencing world, there’s still room for competitors, says Dawn Barry, cofounder of Luna DNA, a local startup that offers ownership shares to anyone willing to provide their genetic information for research.
“I think Illumina is always going to maintain a dominant position in the sequencing economy, for sure,” Barry said. “There certainly are opportunities for other players to enter the market with specific applications or in a specific market segment.”
She would know. Before starting Luna, Barry spent 12 years at Illumina in various roles, including as vice president of applied genomics. She says Element could carve out a niche in the sequencing market by focusing on generating and interpreting single cell genomic data, or by targeting regions of the genome that other sequencing platforms have a hard time reading.
Because Element has kept quiet about its operations, Barry doesn’t know whether the company is focusing on these or other areas, or precisely how its technology works. But she’s deeply familiar with Element’s team, filled with former Illumina scientists and executives. John R. Stuelpnagel, chair of Element’s board of directors, co-founded Illumina in 1998 and was its first CEO. And Molly He once served as Illumina’s senior director of scientific research.
“They’ve got that great foundation,” Barry said. “I have really high hopes for that team.”
Element has raised $400 million since it was founded in 2017. At first, the company operated out of a room it rented in the basement of General Atomics. There was no air conditioning and the room flooded when it rained, He told attendees of the Rosalind Franklyn Society panel.
It’s a story of humble beginnings that echoes her own journey, one that she says began with her leaving China with $20, some English and her American dream to attend graduate school at UCLA, where she earned her doctorate in protein biophysics. That kickstarted a journey that took her from academia to the biotech industry to a stint at Foresite Capital, one of the backers of Element’s recent funding round.
“This is really my passion — to look for something that is fast-paced and have an opportunity for me to build from scratch,” she said. “And at the same time, I can actually make an impact.”
Element Biosciences has 175 employees, nearly all of them at the Alexandria GradLabs life science building in La Jolla, though the company also has operations in the Bay Area. The company plans to hire 40 more employees by the end of 2021.