Liquid biopsy, a way of tracking cancer by identifying circulating tumour DNA in the blood, was one of the buzz phrases of 2015. Now, just a week into the new year, two companies with variations of this technology have scored huge venture cash infusions.
But it is salutary in light of medtech’s early-stage funding crunch that in neither case is the cash required to fund R&D. Both Guardant Health and Exosome Diagnostics are already selling their tests, and their funding – $100m and $60m respectively – will go towards reimbursement and commercialisation.
In medtech a round of $100m or more is fairly rare – only six companies managed to raise nine-figure sums last year – so Guardant’s series D haul is impressive. But the company has form, raising $50m less than a year ago and $30m 10 months before that.
Guardant plans to use its funds to help secure reimbursement for Guardant360, its test that uses rapid genetic sequencing to identify DNA shed by solid tumours into the patient’s blood. This is not used to diagnose the disease but to track the tumour’s progress and response to treatment. The test is on sale in the US as a lab-developed or home-brew test, allowing it to reach the market without obtaining formal FDA approval.
The company is appealing to venture investors as its test promises cost savings: eliminating the need for tissue biopsy makes this method several thousand dollars cheaper than the traditional method (Guardant Health takes $50m to make biopsy a thing of the past, February 16, 2015).
The company has not had to conduct clinical trials to gain approval. But it is now seeking reimbursement, and that will require some form of evidence for the accuracy and utility of Guardant360. Much of the new cash is earmarked for this purpose, with the rest set to go towards increasing 360’s uptake by doctors and expanding commercial operations.
An indication of Guardant’s strategic intentions might be given by the presence of a new investor. The round was led by a crossover fund, OrbiMed, suggesting that the California group might not remain private for long.
Exosome Diagnostics appears to be outpacing even Guardant, raising more from a series B round than Guardant managed with its series C last year. The recent investment, however, was the fourth close of the round, and while it is worth $60m in total this close only came to around $15m.
Including its series A round, Exosome has raised a total of $80m in six years, whereas Guardant has raised twice that in less than two.
Exosome’s latest tranche came from funds including Forbion Capital Partners, NGN Capital and Blue Ridge Capital, but also from a corporate VC, the diagnostics company Qiagen. Qiagen already has a partnership with Exosome dating from 2013 to develop co-branded kits for the capture and processing of RNA and DNA from bodily fluids. Qiagen also has a number of other collaborations in the area of liquid biopsies (Qiagen set to benefit from increased test regulation by the FDA, November 10, 2014).
Exosome will use its cash to launch its lab-developed tests, which include two plasma-based lab tests for lung cancer and a plasma-based panel for solid tumour mutations, as well as to seek companion diagnostics deals with biopharmas.
What is clear is that liquid biopsy technology is beguiling to VCs. Guardant Health must hope that it will be equally appealing to a wider group of investors should it decide to float.