Raindance Technologies has closed a $20 million fifth round of funding with strategic investment from Myriad Genetics, the biotech company at the center of this month’s debate about we should be able to patent human genes.

Myriad’s involvement in the landmark federal case has not put a road block in its expansion plans. The company has signed a multiyear commercial agreement with Lexington, Mass.-based Raindance. The terms of the investment dictate that Raindance will provide technology to improve Myriad’s hereditary cancer test and speed up its process for large-volume genetic testing.

Raindance’s best-known genetics research product, dubbed “Thunderstorm,” helps its customers target 20,000 regions of the genome using any of the commercially available gene-sequencing technologies.

In recent years, the cost of sequencing the human genome has fallen, reaching a low of $1,000 in 2012 due to a microchip and machines designed by genomics company Life Technologies Corp. Raindance is one of the companies that seeks to capitalize on these developments, and it’s providing research tools for the growing crop of genetics labs.

“Imagine all diagnostics some day being reduced to a simple blood test,” said CEO Roopam Banerjee, who believes Raindance products are a “step in that direction.” The company’s overarching mission is to develop more reliable methods for researchers and physicians to detect disease and predisposition risk.

In a phone interview, Banerjee said he took on additional funding as the company is at an “inflection point.” He explained, ”We – along with our customers — have generated some compelling data to track complex human disease noninvasively.”

Raindance claims its customers will process 50,000 samples in 2013 and 100,000 samples in 2014 alone. According to Banerjee, the company doubled its sales in the previous year and anticipates explosive growth in the wake of the funding.

Existing investors Mohr Davidow Ventures, Quaker BioVentures, Alloy Ventures, Acadia Woods, and Sectoral Asset Management also participated in the funding round.

Top image via Raindance 

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Intel and the Oregon Health & Science University are teaming up on a supercomputing project to speed up analysis of human genetic profiles, which could help with personalized treatment for cancer.

The goal for the multiyear partnership is to make genetic analysis a routine part of patient care.

“We are generating an enormous amount of data, which has historically been unmanageable,” said Joe Gray, a research director at OHSU’s Knight Cancer Institute, in an interview.

Gray envisions that the project will involve a “lot of back and forth” between geneticists, engineers, and biomedical scientists before they can map the human genome to identify the mutations that lead to cancer.

Such a map would provide a better understanding of an individual’s genetic makeup, so biomedical engineers can cancer treatment that kills only the mutating cells, not the healthy ones.

It sounds simple, but Gray’s project is grappling with delivering the right kind of computer power for a project of this scale. “We are talking about a terabyte of data per patient that describes the molecular architecture of a disease,” he explained. If this is extended to millions of patients a year, it’s an awful lot of data.

Researchers will use Intel’s Xeon E5 HPC CPU, which offers Intel Trusted Execution Technology (TXT) and Intel Node Manager Server power-management technology.

Aside from the technology, which is steadily evolving to manage this volume of data, the other challenge is an ethical one.

“Privacy is a clear issue, and the data needs to be handled confidentially,” said Gray. When asked about whether the data will be stripped of any personally identifiable information, Gray admits to another “gray area.” Our DNA is like a molecular blueprint — theoretically, it is possible to match and reestablish a patient’s identity without having a direct link.

But the partnership with Intel is designed to explore the architectures best suited to deal with this data, and tackle ethical issues at a later date. The more immediate goal is to identify a number of challenging biomedical projects, and to experiment with hundreds of hardware and software packages.

An example of a project is tracking a typical cancer tumor through its thousands of genomic changes. “Some of them are important in the way that the disease responds to therapy,” said Gray. The team intends to build computer algorithms to predict how best to manage the disease as it progresses.

This isn’t the only partnership between a technology company and medical institution; Illumina and Life Technologies Corp recently announced rival Boston-based clinical genomics initiatives.

“Our joint team plans to do research not only into the mutations but also the ‘circuitry’ that enables malignant cells to spread,” Intel’s general manager for health care Eric Dishman, noted in a blog post. “The ultimate hope here is to learn how, for a specific individual, this circuitry can be “turned off” to stop the spread of cancer cells.”

Dishman, recently had his genome sequenced when recovering from a kidney transplant.

“It, too, took weeks of computing and then months upon months of analysis to make sense of my own unique case,” he concluded. “Today, these tools are too slow, too expensive and too rare—I want to make sure everyone has access to the kind of customized care that I lucked into.”

Curious to learn more? We’ll be inviting world leading geneticists to delve into the tricky, ethical issues at HealthBeat, our health care conference on May 20 & 21 in San Francisco. 

Scientific researcher image via Shutterstock

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As the cost of DNA sequencing continues to fall, entrepreneurs and investors see an opportunity to bring bioinformatics tools to a mass market.

“Innovations in DNA sequencing have led to an explosion of data,” said Rachel Pike of venture firm Draper Fisher Jurvetson (DFJ), adding that the developments will have “real and lasting implications” for drug development, as well as the biological production of chemicals and fuels.

Until recently, it has been costly and time-consuming to map the 3 billion units of DNA, known as base-pairs, that make up the human genetic code.

To bring gene sequencing to a mass market, DFJ is stepping up its investment in the space. Today, the storied venture firm funded a company that processes genetic information for the purposes of clinical medicine and research. The Seattle-based startup, “Spiral Genetics,” has raised $3 million to build out tools that help researchers process and analyze genomics data.

“Our CTO was looking at a lot of the bioinformatics programs available that had been created by the open source community,” said CEO Adina Mangubat of the company’s early days in 2009. “We all realized that in a few years there would be a huge need for fast scalable bioinformatics tools.”

The company charges based on the amount of data analyzed. Customers can either purchase ‘pay as you go’ credit packs or sign up for an annual subscription. Mangubat would not disclose any customers but said the cloud-based technology is currently used in myriad use-cases from selective corn breeding to childhood cancer diagnostics.

Mangubat is confident that we are already experiencing the benefits of the explosion of data and gene sequencing technologies. Already, the space is getting flooded with new technologies — Spiral Genetics competes with Knome and DNAnexus.

To push into the medical research field, Spiral Genetics also announced that it has secured a partnership with Omicia, a provider of technology that is used by researchers and clinicians to analyze genomes and prioritize disease-causing variants.

Genomics entrepreneurs and researchers believe the low cost of human DNA sequencing is the most exciting development since the completion of the Human Genome Project.

“It’s no longer business as usual in medicine,” said Dr. Dietrich Stephan, cofounder of Navigenics, in a recent interview. Patients will be “touched and informed by genetics” in the next 2-5 years, he said, and hospitals will increasingly adopt these gene-sequencing technologies to better treat and diagnose disease.

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Futurist and entrepreneur Michael Vassar has an issue with the U.S. medical system. He hopes to “humiliate” it into providing better quality care by creating a “product that works better than the system.”

With $500,000 in startup investment from PayPal cofounder Peter Thiel, he has handpicked a crack team of physicians and software engineers (including Skype founder Jaan Tallinn) for a new health care company called MetaMed. The goal is to leverage data and statistics to take the guesswork out of medicine.

“It seems very possible to add 10 or 20 years of healthy life expectancy to a person who gathers all the relevant data today,” said Vassar in an interview with VentureBeat.

It’s possible, but only for Metamed’s affluent private clients.

MetaMed provides high net-worth individuals with access to its team of doctors who dig deep into patient history, metabolism, genomic variation, results from companies like 23andme, and other research to deliver a full medical report.

MetaMed cofounder and chief scientist Michael Vassar

He cites some terrifying statistics from recent reports to highlight the extent of the problem they are trying to solve: Over 30 percent of fatal illnesses are missed during diagnosis, doctors only spent an average of 11 minutes with patients during primary care visits — and this figure hasn’t changed since the 1930s — and cancer death rates have decreased by less than 5 percent over the past 40 years.

It’s still early days, so MetaMed’s New York-based team is primarily occupied with providing doctors with high-quality research for a tricky case or medical conference. ”Doctors don’t usually have a public health or statistical background,” he explained. “So they aren’t in a position to distinguish between popular hypotheses in the medical field.”

MetaMed also works directly with patients who are suffering from a chronic condition like migraines, Lyme Disease, or even cancer. They receive varying treatment options from doctors, so turn to MetaMed for a concrete answer. ”We try to figure out what the global opinion is and not just take the dominant literature position,” said Vassar.

For about $400 per hour for a doctor and $200 per hour for a senior researcher, patients will receive an in-depth report and a medical consultation to discuss the results. It’s not dissimilar from ultra high-end company Private Health Management, dubbed by the Wall Street Journal as the “doctor to the 1 percent.”

When asked about whether MetaMed will share any of its medical findings, Vassar said he is open to a conversation. But Vassar said the company is not in the business of “awareness raising” and won’t be “spending millions trying to convince the public of every finding.”

MetaMed is aware of the security and compliance issues in the health care industry, so they are clear that patients need to volunteer their personal health information. This data is stored on a secure server, and is never shared without patient’s permission.

The company is on the lookout for physicians to hire to add to its medical advisory team as it expands its service internationally. According to Vassar, one of the major challenges to growth involves recruiting doctors at the top of their field, especially those in specialties. “There are just not that many good doctors out there; not every city has even one, unfortunately,” he said.

When asked about what makes a good doctor, he said it’s those who feel that their residency forced them to “violate” the principles they learned in medical school. Vassar doesn’t go as far as outspoken entrepreneur Vinod Khosla in suggesting that technology will replace doctors, but he does believe that machines can perform a “much better job of medical diagnosis.”

The idea for MetaMed was formed when Vassar was the president of the Singularity Institute, a research organization focused on the field of Artificial Intelligence.

At that time, Steve Jobs was suffering from pancreatic cancer, prompting Vassar to consider a scenario in which the late Apple CEO brought together Nobel Prize-winning scientists and physicians from around the world to consider his case. “That is the solution we are trying to create with MetaMed,” he said.

Medical research image via Shawn Hempel, Shutterstock

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Narges Bani Asadi is a founder and CEO of Bina Technologies. 

We are at the dawn of a new age of personalized medicine.

Just as Moore’s law transformed computing – and, as a result, all aspects of our professional and personal lives — so, too, will the interpretation of the human genome transform medicine. We are moving from the inefficient and experimental medicine of today towards the data-driven medicine of tomorrow. Soon, diagnosis, prognosis, treatment, and most importantly, prevention will be tailored to individuals’ genetic and phenotypic information.

As we enter the second decade of the 21st century, investments in molecular biology, bioinformatics, disease management and the unraveling of the human genome are all finally bearing fruit. Personalized medicine promises to revolutionize the practice of medicine, transform the global healthcare industry, and ultimately lead to longer and healthier lives.

The urgent need for personalized medicine

The need for personalized therapies abound, as a recent WSJ article emphasizes. Right now, two of the immediate applications for personalized medicine are cancer diagnostics and newborn screening.

This year, over 580,000 Americans – 1,600 people per day – are expected to die of cancer. Similarly grim numbers can be found with newborn medical care: One in 20 babies born in the U.S. are admitted to the neonatal intensive care unit (NICU), and 20 percent of infant deaths are a result of congenital or chromosomal defects.

Both of these trends can be fixed with the rise of personalized medicine, which is a classic technology-based transformation. The digital information age was made possible by fundamental advances in semiconductor technology, which in turn drove down computing costs. Processing speeds have continually doubled every two years and applications have long since exploded, making the trend ubiquitous.

With DNA sequencing, technology advances are happening even more rapidly. Processing power is doubling every six months, and decreasing costs and increasing speeds have made it far easier to discover links between DNA sequence variations and human disease.

Several key things need to happen in order for us to make major headway, however.  The collection, processing, and storing of molecular information will become a new and significant driver of demand for information technology. While publicity helps spur investment and capture the public imagination, the underlying science behind personalized medicine is what will ultimately allow us to make good a long-held promise.

This TIME magazine cover from a few weeks ago articulates the enthusiasm with which we have taken up the mantle of genome-driven therapy — but it’s nothing new.

Supporters have been talking about the promise of DNA for a long time. Check out this TIME cover from 1971, or this one from 2003. Cost and complexity have been the biggest bottlenecks in the process so far, but we are closer now than we have ever been to harnessing the power of DNA-based therapies.

Here are the key technological and medical advances that we believe need to happen if the vision of personalized medicine is to hold true.

Ultrafast, accurate and low-cost DNA sequencing

Ever since the $3 billion, 13-year Human Genome Project jump-started a new industry in 1990, we have seen a revolution in DNA sequencing throughput and cost. Moore’s law is nowhere on display as clearly as it is in the sequencing market.

Recent innovations in sequencing technologies have dramatically cut the time it takes to work through an entire genome to less than twenty-four hours. Today’s sequencing instruments not only perform the chemistry of sequencing, but they also perform the initial conversion to raw sequenced data, a process commonly known as primary analysis.

Additionally, today’s sequencing instruments dramatically lowered the cost of sequencing to within $5,000 per genome.  In fact the cost of sequencing is no longer prohibitive and many U.S. citizens have said they would be willing to pay out-of-pocket for whole-genome sequencing (WGS).  The key breakthrough here is being able to have entire genomes sequenced in under a few hours and at affordable rates.

But the minimum threshold is practically here: We’re very close to sequencing an entire human genome forty times over in less than a day, with an error rate of less than one in a million in the raw reads. This is why people are excited about personalized medicine. We’re at an inflection point.

Estimated arrival date: Immediately
Companies to watch: Illumina, Life Technologies, PacBio, Oxford Nanopore, Complete Genomics

Rapid, low-cost, and accurate secondary analysis

Elaine Mardis, Director of the Genome Institute at Washington University once mused that while the cost of genome sequencing has plummeted, the cost of the subsequent data analysis has not kept pace. The challenge is threefold: Analysis needs to be fast, cheap, and most importantly, accurate.

Once a genome is sequenced, it must be assembled into a complete genome. This assembly, commonly known as secondary analysis, is typically done using supercomputers and takes several days to complete. During secondary analysis, raw reads are assembled to form a complete genome, allowing scientists to from a complete picture of an individual’s genetic variations.

Imagine putting together a jigsaw puzzle that has a billion pieces. That’s exactly what secondary analysis does.

Because this step requires a supercomputer, infrastructure, and trained bioinformaticians, the costs for secondary analysis are significant. When you factor in the cost of the supercomputers, the supporting physical infrastructure, the system administrators and the bioinformaticians, secondary analysis can reach into the $10,000’s per genome analyzed.

Fortunately there are emerging disruptive technologies that are able to take raw reads off sequencing machines and assemble finished genomes more quickly and at scale.  The key breakthrough here is being able to assemble a complete genome in under a few hours, with high accuracy, and at low cost. 

And then there’s the data question. While sequencing a single genome creates terabytes of raw data, data from assembled genome that has gone through secondary analysis cuts that data a thousandfold to merely gigabytes.

As a result, secondary analysis is also the area in which big data, high-performance computing, and genomics really start to overlap. Recent innovations in the former two categories are what make secondary analysis possible in four hours or less.

Estimated arrival date: 3-6 months
Companies to watch: Bina Technologies, DNAnexus, RealTime Genomics, Broad Institute, Academic Institutions

Connecting the dots between genetic mutations and disease

Completed genomes and their identified genotype then need to be interpreted for biological relevance. This step is commonly called tertiary analysis. This is where a certain mutation (or set of mutations) is matched with a certain disease or physical trait (phenotype).

In a genome of a billion bases, it is estimated that each one of us has roughly 10 million  single nucleotide variants (SNVs). Each SNV alone or in combination can have negligible to extraordinary effects on our normal biological function. The challenge is to find those SNV’s that have an impact on biological function and then prescribe a treatment strategy.  It’s like looking for a needle in a haystack.

This is a big data problem. To make matters worse, there are no standard processes for how this analysis needs to happen. Establishing a standard process and putting some real horsepower behind it will make it possible to perform effective, timely tertiary analysis.

Essentially, we have to create software tools  to enable scientists and clinicians to extract maximum biological meaning from complex genomic data (think: Palantir for genomics). The key breakthrough here is the ability to identify specific disease phenotypes that are linked to specific genotypes — connecting specific mutations to specific markers — in a repeatable way.

Up until now the majority of genomics variations have remained uninterpreted and the so-called look-up table that links our genetic variations to actionable information has been very sparse.

This is a chicken and egg problem. We need to sequence more genomes and put them in the context of disease population studies to learn more. The good news is the unveiling of several very large scale genomics projects — including the Million Veteran Program and the UK’s 100K Genome Project – provide massive new datasets for discovering and building ever-growing knowledge of genome interpretation.

Whoever puts the power of tertiary analysis into the hands of those who need it most will be in a very strategic position to capitalize on the multi-billion dollar opportunity that personalized medicine ultimately represents. This is about creating an industry standard.

The payoff? These toolsets can be used to support clinical trials and develop comprehensive genetic test panels, which in turn make medical interpretation possible.

Estimated arrival date: 6-18 months
Companies to watch: Bina Technologies, NextBio, Ingenuity, Knome, Station X

Injecting genetic information into medical care

Now that you have theoretically sequenced the patient’s genome, and identified the list of candidate mutations, the next step is to combine this knowledge with other medical factors — the patient’s history, environment, family background, microbiome, diet, etc. Improving patient care and developing personalized therapies depends on intelligently leveraging complex molecular and clinical data from a variety of internal, external, and public sources. The key innovation at this juncture is mainly cultural.

Genomic data needs to be integrated with patient health records so that it can be interpreted by trained physicians who can put genomic insights in wider context. The goal is nothing less than redefining disease at the molecular level and integrating this data with patient histories.

The end result? Clinical researchers can translate novel biomarkers and drug responses into improved treatments, which in turn can be tailored to each patient’s genome.

The challenges here are several. Again, there are no standard protocols for pulling this information together in a common environment. Today, too many databases exist in isolation and are not cross-mineable. Even basic availability is an issue, not to mention structure, formatting, and method of data delivery. There will need to be a lot of integration before we’re able to put all of the information at a researcher’s fingertips simultaneously.

More importantly, today’s physicians are not yet widely trained to interpret genomic information. Fortunately, this is a problem that can be solved with education and profitability.

Roughly 100 years ago, a new disruptive technology brought about a new discipline of medicine: radiology.  As radiology matured, the x-ray film became a standard, as did its underlying formats. Before long, radiology data had become part of the patient record and medical schools started introducing radiology as part of their physician training program.

The same must happen with genomics data, which must be standardized before it is effectively utilized. The practice of medicine must likewise introduce new training methods to prepare the next generation of doctors to leverage genomics.

As such, we quickly move from investigating the genome and researching disease  to actually developing diagnostics and insights into therapies.

Accordingly, regulatory approval will be necessary for any such resulting therapy — a further but ultimately surmountable hurdle.

Estimated arrival date: 12-36 months
Companies to watch: 23andMe, InVitae, Personalis

Getting the big guys to pay for it

The final step in making personalized medicine a reality is implementation. The practice of healthcare should change dramatically as new therapies and approaches redefine the roles of hospitals and physicians.

The hurdle here is one of creating favorable economics, which can cement whole genome sequencing (WGS) as a standard of care. Payors and medical insurers have to include WGS as part of their reimbursement program.

We’re already beginning to see the benefits of genome sequencing in public health. The widely publicized account of Nic Volker’s recovery in 2011 captured the public’s imagination in a way that genomics had  never done before.

Numerous scholarly articles are trickling in, touting the benefits of WGS and how it can cut healthcare costs and improve outcomes. As these cases become the norm rather than the exception, insurance companies will inevitably be forced to pick up the tab.

Recently Wellpoint, one of the nation’s largest payors, has hinted that it will approve reimbursements for Sequenom’s MaterniT21 Plus fetal genetic screening tests. Anthem Blue Cross has agreed to reimburse AlloMap’s genetic testing in Stable Heart Transplant Patients  — a big step. Even lab testing giants LabCorp and Quest Diagnostics have been openly bullish on the genomics revolution and have signed numerous partnership agreements with innovative genomics companies.

Payors and providers will likely rely on molecular information to manage scarce healthcare resources. The second major impact will arise from incorporating molecular information into drug discovery and development.

The blockbuster drug model will be redefined. Disparate disorders could actually be caused by similar molecular mutations, so drugs that have a common molecular target but appear to treat seemingly disparate diseases will emerge. Perhaps the most significant impact will come from the rise of synthetic biology, the process of directly manipulating, engineering, and manufacturing cells. Synthetic biology will redefine how researchers study disease and test drugs during preclinical development.

Big payors and pharma companies will be properly motivated by both new profits and major cost savings. It is reasonable to expect that personalized medicine will be a dominant conversation on a national stage, as outcomes dramatically  improve and personalized medicine becomes the locus of medical innovation for a decade or more.

Estimated arrival date: 24-48 months
Companies to watch: Kaiser, VA Hospital, Merck, GSK, Genomic Health, Genentech, Lab Corp, Quest Diagnostics, Roche

The revolution is coming

Here’s a simple chart spelling out the phases of escalation as the genomics landscape matures and draws closer  to realizing our long-held vision of personalized medicine.

It should be pointed out that sequencing — the term most familiar to an everyday consumer — is no longer the locus of innovation. That’s a good thing.

That sequencing has evolved to the point it is at today is nothing less than extraordinary. Sequencing is suddenly cheap, and fast. As a result, sequencing will soon be a commodity however, and the amount of genomic data on our hand is about to multiply by an order of magnitude.

Talent and investment dollars have already started to flow downstream in an effort to address the challenges that cheap and fast sequencing has itself created — namely, taking piles upon piles of data and deriving insights from that pipeline raw material .

There’s a huge opportunity right now, again, at the intersection of high-performance computing, big data, and genomics. I am eager to see these worlds continue to collide, and at increasing speed and frequency. Personalized medicine is closer than you think, but only as a multidisciplinary approach takes hold.

Narges Bani Asadi is a founder and CEO of Bina Technologies. Bina is working to commercialize years of multidisciplinary research at the intersection of systems biology, big data, high performance computing, and genomics. Narges holds a Masters and a Ph.D in Electrical Engineering from Stanford University.

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This post was written by entrepreneur and academic Vivek Wadhwa.

Companies all over the world are becoming increasingly worried about their ability to innovate and compete in the fast-changing technology world. That’s according to GE’s third annual “Global Innovation Barometer” released Jan 17.

The survey of 3,100 senior business executives in 25 countries showed the anxiety that these executives feel about innovation and how confused they are about global competitiveness. One in three said the increased competition and accelerated pace of technological advancement is having a negative impact on their local economy. And while 71 percent said they favor the opening of their markets to foreign trade, investment, and technology imports, an equal percentage want protectionist government procurement policies that favor domestic technological development. There was a 53 percent overlap in the people who expressed these two opposing views. Executives from the U.S. were only a little less divided than Indian executives on this issue.

Business executives agree on some things. They agree, for example, that they need to better understand customers and anticipate market evolutions, attract and retain innovative people, and stay ahead of the technology curve.

It’s clear to me from the GE study that companies may have become more fearful of the future. They are really confused about what lies ahead and what they and governments should do.

It has been said countless times, but it still bears repeating: Technologies are advancing at exponential rates in fields such as robotics, artificial intelligence (AI), computing, synthetic biology, 3D printing, medicine, and nanomaterials. These advances are making it possible for small startups to take on the largest corporations in the world by developing technologies that make established products obsolete. Combinations of exponential technologies can, as I’ve written before, threaten entire industries — as robotics, AI, and 3D printing promise to do to China’s manufacturing industry, as cheap tablet computers will do to the personal computer industry, and as advances in sensors and genomics will do to the medical devices and pharmaceutical industry.

The “disruptive innovation” that Harvard professor Clayton Christensen has long talked about is happening at an ever-increasing pace. Changes that would take many decades in the past are now happening in a fraction of this time. Witness the evolution of mobile telephones and the changes that these have caused to our work habits and family connections. This has had an even greater impact on hundreds of millions of families in the developing world who were cut off from each when they went to cities to work. Over a 10-year period, the number of cellular subscriptions increased from a few million to almost 6 billion — or 87 percent of the world’s population.

Changes in technology are already toppling giants. Look at what happened to digital camera pioneer Kodak. The company went from being a powerhouse in the photography industry to a laggard. Even though a Kodak engineer invented the digital camera in 1975, the company couldn’t adapt its business model fast enough to take advantage of the technology. Kodak filed for bankruptcy in January 2012. This will be the fate of many of today’s leading companies if they don’t leverage the advancing technologies and evolve their ways of doing business.

They don’t have as much time as they might think.

On a call to discuss the findings of the GE research, I asked the company’s marketing chief, Beth Comstock, why companies don’t have a greater sense of realization about what lies ahead — about the impact exponential technologies will have on their businesses. Comstock agreed that technology change should be a real cause of concern and said, “Perhaps some of the fear that’s coming through is the recognition that it is happening at a faster pace than many of us can comprehend.” She noted that countries such as Saudi Arabia, aware they will run out of resources one day, are spending the most on innovation, and that Israel is “trying to run a different play” — as a “startup nation.”

Every big company that wants to be in business at the end of the decade needs to “run a different play,” as Comstock put it, and they need to disrupt themselves before some startups — coming out of nowhere — do. Instead of trying to raise protectionist barriers, large companies need to build the same types of innovative products and services that the startups would.

Vivek Wadhwa is a fellow at the Rock Center for Corporate Governance at Stanford University and is affiliated with several other universities. Read more about Vivek Wadhwa’s affiliations. You can also follow him on Twitter — @wadhwa.

[Editor's note: This story previously appeared on WashingtonPost.com]

The cost of sequencing the human genome has plummeted. But how will this benefit doctors and patients?

Biomedical researchers hope to harness data about the human gene pool to usher a new era of “personalized medicine,” which could lead to a highly targeted treatment of disease.

Syapse is a Palo Alto, Calif.-based startup that claims to be one of the largest repositories of human molecular profiles. It has raised $3 million today.

The startup is on a mission to bring human genetic data out of the lab, and into the hands of doctors. ”Health care traditionally has been a field of observational science,” said CEO Glenn Winokur in an interview. “With the advent of being able to measure more complex components of the human body through sequencing, we are able to have more precise diagnosis and treatment.

“Many feel this [personalized or precision medicine] is the future of health care,” he continued, but revealed that the problem is “very challenging” as the data is “new, voluminous, and complex.”

The Social+Capital Partnership led the first round of funding. It’s a venture fund launched by a former vice president at Facebook, Chamath Palihapitiya, who will join Syapse’s board.

Syapse is one of a growing number of Silicon Valley startups that seek to remove some of the guesswork out of medicine.

Randy Scott, a cofounder and CEO of InVitae, said he is working with Syapse on a shared goal of “bringing genomics into everyday clinical practice to truly enable personalized medicine.” Syapse provides the software infrastructure to “connect genomic and clinical information across millions of individuals,” he said in a statement.

Scott is the former CEO of Genomic Health and is an important figure in the genomics sector. He has poured his personal resources into the creation of a dream diagnostic test to help geneticists look broadly for rare, inherited genetic disorders.

Related: Read about the efforts of genome entrepreneurs to sequence the DNA of millions of people, and learn more about the human gene pool.

Syapse is currently sequencing 3,000 patient genomes per quarter. It is working with laboratories and clinics using the latest sequencing technologies to diagnose and treat patients. Customers include Foundation Medicine and Genapsys.

Its flagship cloud-based technology, launched last summer, finds use from labs and companies as a way to deliver diagnostic reports. It generates a full report for physicians, which Syapse electronically delivers.

Winokur said by email that the funding will help expand the team, primarily in the hiring software developers. He also hinted at an additional product, which will be geared at delivering “genomics based solutions” to select hospitals, meaning that patients will someday receive drug therapies based on their individual molecular blueprint.

The company was founded in 2008 at Stanford University by a team of entrepreneurs and software engineers. It an undisclosed angel round, it received $1.6 million. Social+Capital’s limited partners include billionaire philanthropist and entrepreneur Eli Broad, and the Mayo Clinic, among others.

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Frankly, tech incubators are getting too ubiquitous for their own good. Why do we need yet another Y-Combinator or 500 TechStars imitator?

But when Silicon Valley’s newest accelerator, Alchemist, launched its first class of startups this week, investors opened their check books.

The startups that have been selected for the first class are far from sexy — unless a “software-defined infrastructure platform for heterogeneous computing” does it for you – but they’re all generating revenues. What they have in common is that they target their products at businesses, not consumers.

Ravi Belani, the program’s managing director, has introduced the program at the perfect time. Part of Alchemist’s appeal is that investors are wary of consumer-facing mobile apps and social games, which have millions of users who won’t fork over a dime. As a result, this year’s hot investing targets are business-to-business (“B2B” or “enterprise”) startups.

General Catalyst is just one of the venture capital firms that is keeping a close eye on Alchemist’s seed-stage startups. “Incubators have historically worked well in the consumer internet space,” noted Deepak Jeevankumar, an enterprise-focused VC at the firm. “With the right access to mentorship and design customers, Alchemist is well-positioned to guide enterprise startups,” he said.

Already, Andreessen Horowitz, Citrix’s Accelerator, True Ventures, Greylock Partners, and Founders Fund have invested in the program’s startups. Alchemist provides the startups with about $30,000 in initial funding, which is a larger sum than alternative programs such as Y Combinator.

“I think what Ravi is doing is exceptionally interesting,” said Kevin Spain, a partner at Emergence Capital.

At Alchemist’s packed Demo Day in Mountain View, Calif.

“There’s a real need for enterprise-focused accelerators in the market,” said Spain, explaining that B2B companies have a whole different set of requirements than consumer startups to get their products off the ground.

Lightspeed‘s Bipul Sinha, an investor with a focus on the enterprise, agrees that it makes far more sense for enterprise-focused startups to enroll in an accelerator. In an interview, he said the “product building and sales process” are very different from the consumer space. He added, “there is a need for mentorship and education.”

Belani isn’t surprised that investors have been so receptive. After all, VCs are beholden to their limited partners (LPs), who expect to see solid returns. “It’s fun to build stuff and make money,” said Belani. “And in the enterprise, your first customers will write million-dollar checks.”

During their six months at the accelerator (a typical accelerator program lasts three months), Alchemist connects the founders with chief information officers at Fortune 500 companies, and they learn how to present a compelling sales pitch. Most of the entrepreneurs have a strong technical background, so this education in marketing and business is vital.

To ensure the startups get the attention they need, Belani will only take on 10 teams per quarter. Belani has already raised enough money to fund 90 companies in the next two years, but won’t yet disclose the amount. The big picture vision is to foster a stronger relationship between Silicon Valley’s enterprise tech startups and key decision-makers at Fortune 500 companies. The current class met with top executives at Procter & Gamble, Best Buy, and Dell.

Ravi Belani, the managing director of Alchemist’s Accelerator.

“We have different needs than guys in a garage building a social game,” said Ryan Nichols, founder of Tylr Mobile, a startup targeting sales professionals that raised $500,000 last month. The serial entrepreneur, who spent four years at SAP, saw a lot of value in the program, which fronted about half of his startup’s seed round. ”I don’t need business 101 advice, but I’m absolutely hungry for expertise in making enterprise sales and help finding development customers with specific needs.”

Mark Trang, cofounder of Social Pandas (pictured above, flanked by his cofounders), heads one of Alchemist’s venture-funded startups. He said he tapped Belani’s “network of experts,” including former Oracle-on-Demand CEO Timothy Chou and DFJ’s Tim Draper, for advice on hiring, research and development, and PR. With its social tools for salespeople, Social Pandas has already raised a sizable $1.5 million seed round.

Related: In 2013, analysts predict that 80 percent of the companies that will go public are B2B.

When Balani hatched the idea for the new model accelerator, he had no trouble convincing Khosla Ventures, Cisco, SAP Ventures, US Venture Partners, and his former VC firm, DFJ, to underwrite the fund. This is an impressive feat. With a few notable exceptions, said Belani, “Venture funds do not fund another instrument that is funding startups.”

Alchemist spun out of the Harvard Club in San Francisco, where Belani brought in top speakers to meet with talented college students. Likewise, the first batch of startups in Alchemist’s program met with entrepreneurs and visionaries like Adam Pisoni, Yammer’s cofounder and CTO; Melinda Gates; and Box’s 27-year-old CEO, Aaron Levie.

At a launch party for Cambrian Genomics, one of the startups enrolled in the accelerator.

At a recent get-together with the founders, I noticed an unusually large number of female entrepreneurs and developers. In another unusual twist, about half of the class are recent college grads, which suggests that the growing interest in enterprise-technology is permeating the top universities.

Andrea Faz is the twenty-something cofounder of ConnectBright, which offers a directory of reviews of B2B companies. Given her lack of real-world corporate experience, the mentorship was invaluable.

“We all unite on this common ground of innovating the sexiest industry [and that's the] enterprise,” said Faz.

With an explosion of seed-stage companies, and a relatively steady supply of first-round capital, it seems pragmatic to teach entrepreneurs how to make money. Alchemst’s founders will be in a strong position when they decide to raise, if they need VC funding at all.

In their own words, the first batch of startups are:

• SendTask, a next generation enterprise task management platform.
• Social Pandas, a social selling platform to help salespeople close deals.
• Xockets, a software-defined intfrastructure platform for heterogeneous computing cofounded by a former Cisco engineer.
• JyMob, a platform to choose the best people for your jobs.
• Selligy, a mobile service helping salespeople with their primary activity, sales meetings [Editor's note: Selligy was a finalist at VentureBeat's Mobile Innovation competition.]
• Active Scaler, a storage-load balancer for network driver enterprise storage.
• ConnectBright, an advocacy empowerment platform for B2B service providers.
• Cambrian Genomics, a DNA laser printer.
• MobileSpan, a BYOD platform for enterprises.

But Ayasdi, a startup that closed $10 million in venture funding today, doesn’t just talk the talk. Stanford researchers have been baking the complex algorithms behind Ayasdi (its quirky name means “to seek,” in Cherokee) for over a decade, with the goal of unlocking the hidden value in human genetic data.

In 2008, the founders, Gurjeet Singh, Dr. Gunnar Carlsson, and Harlan Sexton, decided to commercialize the technology. With the government stepping up its funding for science, they were able to pull in $3.5 million in grants from DARPA, the department of defense agency responsible for building new technology for the military, and the National Science Foundation. The result? A synthesis of machine learning technology and topological data analysis (TDA) that has impressed a score of Silicon Valley investors. Rather than typing in search-style queries, the tools allow for automated discovery of information.

As Dr. Carlsson explained in an interview, “The idea is to answer questions that you didn’t know to ask.”

Ayasdi CEO, Gurjeet Singh.

This year, the 30-person team of engineers will expand its marketing and sales efforts with funding from Khosla Ventures, Floodgate, Data Collective’s Matt Ocko, serial entrepreneur, Steve Blank, and more. Storied investor Vinod Khosla, who rocked the medical world with the statement that 80 percent of doctors would be replaced by machines, said Ayasdi’s “machine powered intelligence” has the potential to unearth “previously unattainable insights that will help solve some of our most pressing global, social, and economic issues.”

Eric Schadt, Director of the Institute for Genomics and Multiscale Biology, has a team of researchers using the technology to identify the genetic predispositions of many diseases, including cancer, which they hope will help them “glean new insights that will lead to breakthrough drug therapies.”

Related: In the burgeoning field of genomics, entrepreneurs aim to deliver more personalized treatments for life-threatening diseases.

Ayasdi is working with the nation’s top hospitals and medical researchers to uncover more targeted treatments for disease. Singh, the company’s CEO, told me that hospitals and big pharmas are routinely pulling data from public sources — medical researchers are required to publish their data  – and combine it with private data to yield new insights.

A data visualization depicting 14 variants of breast cancer

The data isn’t anything new — it’s the technology that has evolved. “We have automated the discovery of knowledge from data,” said Singh in a phone interview. “We were able to discover a new type of breast cancer without asking questions.”

Singh was referring to a recent breakthrough where Ayasdi mapped 14 variants of breast cancer. Using data collected during a 15 year period, and studied by thousands of scientists, the algorithms discovered a sub-group of patients that have a higher chance of survival based on their genetic profile. If a patient falls into this sub-group, it is unlikely that they will require chemotherapy.

Ocko witnessed this medical breakthrough first-hand in the minutes before he opened his check book. “The massive deficit that corporations and governments face as the amount of data gets exponentially larger is not more intelligence, it’s insights and intuition,” he explained by phone. The data-focused investor said the company’s ability to provide human analysts with “intuition from vast amounts of data in very short periods of time” is virtually unprecedented.

In another recent partnership, with Mount Sinai Medical Center, Ayasdi was used to point to targeted treatment options for E. coli sufferers. E. coli affects more than 265,000 people in the U.S. every year, and millions around the world. It is known in the medical community for developing resistance to many drugs, and doctors are never 100 percent sure if a treatment will work or not. Mount Sinai is using Ayasdi to analyze the entire E. coli genome sequence, which includes more than 1 million DNA variants. This will further our understanding of why some types of E. coli develop resistance to antibiotics and how we can combat the spread of the bacteria.

Singh, a former researcher at Stanford, told me that the company has secured 20 customers in the oil and gas, government, pharmaceutical, and healthcare sectors. Big name customers include Merck, the Food and Drug Administration, and the U.S. Department of Agriculture.

This story was written by Marc Goodman, chair for policy, law and ethics at

The Committee on Foreign Investment in the United States recently approved the sale of Complete Genomics, based in Mountain View, California to China-based BGI (formerly known as the Beijing Genomics Institute).  Some decried the committee’s investigation as the overarching meddling of government in business affairs while others hailed the committee’s efforts as an important measure necessary to protect national security.  In fact, both sides were right.

Attempts to regulate or restrict the export of American biotechnology are likely to backfire and hurt American competitiveness.  We’ve seen this pattern before.  Efforts by the US government to ban the export of encryption technologies during the 1990’s did little to prevent their use around the world. In fact, just the opposite occurred, it spawned the development of foreign firms in the encryption space and the launch of competing products.  In 2001, President George W. Bush banned federal funding for stem cell research, delaying important and potentially life-saving research into illnesses ranging from cancer to Parkinson’s disease.  The result: the US fell behind in this area and some of our best scientists went overseas to continue their research unfettered by American political affairs.  Regulating dynamic, fast-changing technologies is difficult.

This said, newly emerging technologies ranging from robotics to nanotechnology do raise significant national security concerns, as do the advances in genetics and synthetic biology.  Were we to ignore these concerns, we would do so at our own peril.  Whether or not we realize it, we are at the dawn of a new information revolution.  This time however, the information stored and processed won’t be with 1′s and 0′s on silicon chips, but rather encoded in the operating system of life itself: DNA.  Genetic engineering and synthetic biology empowers people to alter the molecular mechanisms of cells and viruses, agents that can replicate and spread, potentially beyond human control.  This shouldn’t just be a national security concern.  It should be a global security concern.

Though we are in the earliest days of developing the emerging field of synthetic biology, in the coming years, it promises to have massive impact on everything from business to medicine and energy to warfare.  The Chinese government and BGI clearly understand this and are pouring tremendous resources into research and development of these biotechnologies.  That US Representative Frank R. Wolf, Republican of Virginia, was the only member of Congress known to have publicly expressed concern about BGI’s purchase of Complete Genomics is not just startling.  It is also emblematic of how far the rest of Congress is from understanding how quickly the biotech revolution will be upon us and how dramatically it will impact all facets of our world.

For America to remain competitive, the appropriate public policy response is to ban neither research nor international trade, but rather to invest heavily in both.  The United States government, through its public funding of DARPA, was responsible for the creation of the Internet and our nation reaped untold wealth as the progenitor of the information revolution.  Yet the economic gains realized from the Internet may be dwarfed by coming boom in genetics and biotechnology.  What role the United States will play in that brave new world is yet unanswered.  In the meantime, it is worth studying the progress being undertaken by other nations, including China, and by companies such as BGI, not as a means of inhibiting their scientific progress, but as a catalyst for driving our own.

[Top image credit: Mopic/Shutterstock]

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Sept. 9 - 10, 2013
San Francisco, CA

Early Bird Tickets on Sale

At CloudBeat, the healthcare panel kicked off with a harrowing statistic. The vast majority of breast cancer sufferers will not benefit from chemotherapy. And yet, most patients today receive this highly invasive treatment.

According to genetics expert Ken Stineman, over 80 percent of patients are treated with chemo so we can “catch that four percent.” Stineman, the senior director of enterprise architecture and security at Genomic Health, believes that we can do better.

Genomic Health offers diagnostic services to cancer patients. The company pulls in health information so patients can be treated based on their genetic make-up and we can take the guesswork out of medicine. Companies in this space, often referred to as “personalized medicine,” have spawned in recent years to take advantage of the plummeting cost of sequencing human DNA.

“We are generating terabytes of data about the human genome,” said Stineman. Read more here about how genomics entrepreneurs are building technologies to help you live longer. 

At CloudBeat, the Silicon Valley cloud conference that emphasizes real customer case-studies, Stineman revealed his concerns about whether cloud technology companies could be trusted with our sensitive genetic information. Chaos would ensue if this data gets into the wrong hands. Stineman’s ongoing concern: “How can we protect your genes and mitigate those risks?”

He revealed to Cloud of Data’s Paul Miller, a CloudBeat moderator, that there has been rapid progress in recent years. One year ago, most cloud companies had negligible experience dealing with sensitive health information. Stineman and his team chose to work with SAP (they were the first healthcare customer to use the SAP Business ByDesign product). SAP’s team was willing to get educated about compliance and regulatory issues, and engage in a dialogue about how to keep patient information safe.

Stineman would take this relationship between healthcare companies and the cloud one step further — he said that vendors should be liable for security breaches that occur, perhaps in the form of a data loss prevention fee.”If we’re going to trust you, you”ll have to be on the hook for some of that liability and cost,” he said.

Read more about one of the hottest topics at CloudBeat: healthcare and the cloud. 

Is there more to your bacteria then meets the eye?

The still-in-stealth-mode Ubiome is developing a technology to sequence human bacterial DNA. The hope is that this will yield new discoveries in the prevention and treatment of disease.

In a unique twist, funding for this research has not come from a grant or academic institution — the team has decided to ask stranger’s to contribute to the project on IndieGoGo. The goal is to raise $1 million.

This is the first crowd-funded citizen science project to map the human microbiome.

Backers will have the opportunity to be tested before UBiome hits the mainstream market. If the idea of having your bacteria analyzed doesn’t make you squeamish, here’s how it will work. Users receive a swab-kit for five sites: nose, ear, mouth, gastrointestinal tract, and genitalia. Each site has a unique microbiome that is home to a specific balance of bacterial flora.

The team will use cutting-edge DNA sequencing to analyze your samples and send custom bioinformatics back to you. Over time, they will store and process the data to make predictions about your health.

“It’s 23andme for the human microbiome,” Richman said. 23andme is a site that has popularized the field of genomics, and it analyzes relevant genetic data to determine your risk-profile for certain diseases.

“We believe the biological information era is going to follow the same trend that the internet did,” said Richman. “When citizens became empowered to explore the internet via search engines like Google, usage skyrocketed. With uBiome, people can explore their personal metagenome from home.”

Related: Read our in-depth review of the genomic startups that can help you live longer

Ubiome’s founding team

The core behind the project includes Richman, a serial entrepreneur who started her first company after high school; Dr. Zachary Apte, a biophycisist with expertise in cell biology; and Dr. William Ludington, a Bowes Fellow in the molecular cell biology department at the University of California, Berkeley. Advisers to the project include Dr. Pablo Valenzuela, a pioneer in the field of industrial biotechnology who has filed a total of 44 research patents.

The crowd-funded research is just the beginning– the team of scientists see vast potential for medical discoveries. To date, the sequencing of the human genome has offered few medical solutions short of gene therapy. However, our microbiome can become healthy through the right mix of probiotic cultures.

Furthermore, these microbial genes outnumber human genes 360 to 1, and scores of research has linked them to diseases like diabetes, obesity, heart disease, anxiety, and other conditions. Richman draws a comparison to the tropical rainforest in Brazil, which depends upon biodiversity — likewise, she explained, “our own health benefits from microbial ecosystems that perform vital functions for our health.”

Image via Shutterstock

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HealthBeat 2013 is a new conference showcasing how technology is transforming health care. We'll explore how IT is driving out inefficiencies on the hospital, practice, and patient levels. Check out full event details here, and register here.

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Today, scientists made a major step in cancer research; they identified the underlying genetic cause behind a rare form of carcinoma cancer, chordoma.

This discovery puts the emerging field of genomics on the map, may speed up the drug approval process, and reduces the risks associated with groundbreaking research for venture-funded biotech companies. For genetics researchers, it adds credence to the theory that studying rare cancers may reveal more fundamental aspects of cancer biology that are relevant across all types.

“There is a school of thought that rare cancers tend to be more genetically similar and easier puzzles to solve than more common cancers,” said Josh Sommer, executive director of the Chordoma Foundation.

The Chordoma Foundation, a Durham, North California-based nonprofit, identified a specific genetic risk factor that increases the chances that an individual will develop chordoma. Researchers at University College London, Royal National Orthopedic Hospital, and the Sanger Institute, found that over 95 percent of Caucasian chordoma patients have a variation in the DNA sequence at a site on the T gene.

“Our finding that this variation is associated with a five-fold increase in the risk of developing chordoma is remarkable in cancer genetics,” said Dr. Adrienne Flanagan of UCL, who led the study. “It is a major step forward in our understanding of how chordoma develops and can open the door to the development of an effective, targeted treatment.”

This discovery has only been made possible by recent technological developments in Silicon Valley. As we reported, the cost of sequencing the human genome continues to fall, in part due to a microchip and machine designed by genetics company Life Technologies Corp.

“It’s a repeatable and scaleable model that can rapidly push forward early-stage cancer research for pennies on the dollar,” said Greg Piesco-Putnam, cofounder of Aktana, an analytics technology used by large pharmaceutical companies.

“25 percent of everyone who dies from cancer dies from a rare form of it. Traditionally, these forms of cancer have not been economically feasible to find treatments for. This is a huge step forward in that battle,” Piesco-Putnam explained.

Already, the foundation that uncovered the genetic risk factor has partnered with 23andme. With a spit sample, they provide you with a genetic profile and can determine your risk for developing a common genetic disease. 23andme will provide 50 free kits to chordoma patients as part of an ongoing research study into rare cancers.

Read more about the discovery here.

[Top image credit:  Sofiaworld/Shutterstock]

BioNanomatrix is developing a single-molecule imaging and analysis system that the startup says is ideal for reading DNA sequences. The startup still isn’t divulging many details about its system, although the Philadelphia Inquirer suggested that the company’s “nanofluidics” technology could potentially read all three billion bases from a single DNA molecule without chopping it up first — a common step in most sequencing setups these days, albeit one that also increases the complexity of reassembling the fragmented sequences into a coherent whole.

According to that article, in fact, BioNanomatrix has produced a nanofabricated chip with more than a mile of tiny channels that can accomodate the full DNA molecules from all 46 chromosomes of 200 people at a time. That’s pretty spectacular if true, although of course the challenge with this sort of technology is always proving that it does what the company says it should.

We previously covered BioNanomatrix last October, when the company formed a joint venture with Complete Genomics of Menlo Park, Calif. The two companies, which shared an $8.8 million grant from the National Institute of Standards and Technology last year, are aiming to sequence an entire human genome in eight hours for $100, although they haven’t set a date by which they hope to accomplish that feat. It’s a nice bragging point, since that’s about an order of magnitude faster and cheaper than anyone else is predicting at the moment, but it’s also little more than an unsubstantiated claim for the moment.

For more coverage of the high-speed genomics race, see my previous posts onPacific Biosciences and its nanowell technique, Intelligent Bio-Systems’ $5,000 genome challenge, and VisiGen’s promise of a $1,000 genome by the end of 2009. Don’t miss my Q&A with MDV’s Bill Ericson about the medical promise of fast, cheap genome scans.

Check out my recent Q&A with the venture capitalist over at VentureBeat Life Sciences for a conversation that also features digressions on the likelihood that we’ll end up living in a Gattaca-style dystopia and why most people taking cholesterol-lowering statins should chuck them instead.

Ericson, of course, has plunked down some serious cash in service of his convictions. He played a significant role in funding the genome-sequencing startup Pacific Biosciences, which announced itself with a splash last weekend, and previously backed Tethys Bioscience, a biotech with a test it says will predict your diabetes risk with high precision. I spoke with him recently about the PacBio investment, and somewhat to my surprise soon found myself in a broader conversation about the impact genomic data will have on the world. (I’ve edited the transcript for clarity and brevity.)

VentureBeat Life Sciences: Makers of biological tools like gene-sequencing equipment have been out of favor with VCs for almost a decade. How did you get involved with a genome sequencer like PacBio?

Bill Ericson: Back in the mid-1990s, it became clear that we were entering a period in which we could measure biological functions and patterns in ways that we hadn’t previously been able to do. When I joined Mohr Davidow, I wanted to focus on where measuring biology in more systematic, quantitative ways would lead. It was just the beginning of a period of rapid technological advances and of rapidly improving understanding of fundamental biology. I was convinced that all sorts of goods and services would flow out of that.

One area we considered greatly underinvested was sequencing. Other nucleic-acid measurement techniques are surrogates for sequence information, which we thought was the gold standard. At the end of the day, if you could do fast, accurate sequencing, you’d probably end up dominating the field.

One technology that got us really excited was at a company then called Nanofluidics [now PacBio], where three Cornell postdocs were working on zero-mode waveguides and using them to do sequencing. We convinced them to move their group to the Palo Alto area, where they incubated with us for the better part of a year. We wanted to invest in people and technology that could really take you to the next, next level of sequencing — as close as possible to the end state of sequencing technology. These guys had at least the theoretical ability to do the full human genome for $1,000 or less.

VBLS: What consequences do you expect from the advent of such high-speed sequencing?

BE: This is an information-generating technology, one that’s faster, cheaper and more powerful than anything else. Any number of new applications could flow from that. For instance, everyone believes that genetics plays a role in predisposing you to various diseases. If we do the population studies [that reliably link genetic differences to disease], you can arm physicians, patients and consumers with a better way of looking at health. Human health turns into much more of an information system that can be understood and proactively addressed, in sharp contrast to medical practice today, which is tremendously reactive and wasteful.

Once you shine the spotlight of sequencing on large populations, you’ll identify patterns that are invisible today. I would love to see genetic studies show that only five percent of the population actually needs to go on a drug that today is prescribed for 40 percent to 50 percent. That’s a tremendous win — no drug has no side effects. Sequencing could also be very useful in an area that frankly ought to scare all of us to death, which is the emergence of drug-resistant infectious disease. You could see the mutations [that confer resistance] happening in real time. In real time, you could be measuring somatic mutations [that give rise to cancer].

I think all these tools are going to give rise to new applications. It’s a lot like watching the computer industry — once PCs were adopted to the point of being cheap and readily available, people created applications for them. I honestly wish I could tell you precisely what will be valuable and what won’t, but we’re still in the early innings.

(More after the jump.)

VBLS: What about the potential downsides, such as genetic discrimination that could leave many people uninsurable, or even the possibility that society could end up stratified by genetic caste, as in the movie Gattaca?

BE: I worried a lot about those negative implications when we started investing, but American society is, I think, mature enough to deal with the information, whether by legislation or via general social norms. Insurance, for instance, we’ll probably manage through legislative approaches. There’ll be occasional flareups as insurers try not to insure individuals because of their genetics, but I think it’s not going to work.

On the privacy front, I think the issues are generally overblown. We live in a world where every bank account is available online. If someone gets into my bank account, it’s gone. If someone takes my genetic information, what are they going to do with it? Maybe post it on the Web to show people I have a predilection for Alzheimer’s disease? There’s more concern than there needs to be. When you drill down and ask what people are really going to do with the data, I think it’s overblown.

VBLS: What about insurance discrimination? Or, conversely, the possibility that strong genetic-privacy laws might make insurance companies vulnerable to adverse selection?

BE: Because insurance is run on an actuarial basis, I think that risk will be reflected in pricing over time. One unfortunate outcome is that people more likely to get sick will cost insurers more. I would hope there’ll be a compensating decrease in healthcare costs associated with insuring people who shouldn’t be insured. It’s the net dollars in and out of the system where that becomes an issue.

My bigger concern about the cost of the healthcare system today is the fact that it’s so reactive, not proactive. Things that should be managed early in the course of disease don’t get picked up until later. I’d like to see the policy dynamic tilted toward predictive and preventive medicine, and these tools should play a role in that. Take the Tethys test — if you can predict that someone will get diabetes five years in advance, you can change behavior. If you only say someone is at risk, I don’t think people will ever change their behavior.

So my big concerns are less about the negative consequences of genomics than about the positive consequences of putting these sorts of early-warning systems in every doctor’s office. When you talk to physicians, they’ll tell you the tools they have are so imprecise. Go to the doctor today and they might tell you your BMI is over 25, which puts you at an elevated risk of diabetes and possible heart disease. Why can’t they tell you, “We looked at the biology, and based on what the biology is doing, you’re well on the path to diabetes, and if you don’t intervene today, you’re going to be a diabetic?”

Similarly, many patients taking certain widely prescribed blockbuster drugs get no benefit. A great Business Week article last week encapsulated the case against [cholesterol-lowering] statins. [Among other things, the article notes that for every 100 people taking statins, only one will be spared a fatal heart attack -- one of the lowest risk-reward ratios in modern medicine. --D.P.H.] The whole statin industry is built up on very cursory information — the evidence that lowering cholesterol with statins will reduce your chances of dying from a heart attack is very weak at best. A better understanding of the underlying genomics would let doctors specifically treat patients with the greatest genetic risk of heart attack, instead of just giving statins to everyone with high cholesterol.

I think all these things require more and better measurement, to get inside the biology and really understand what’s going on. I don’t think it’s a short path — we’re not going to wake up in two years and say, “Now we understand it all.” Right now, though, doctors make a lot of suppositions without having a lot of data. There are things we need to measure much better.

TODAY’S HEADLINES:

• Pelikan Tech raises $69M for diabetes glucose tests (release)
• Utah’s LineaGen draws $6M for genetic diagnostics (VentureWire, sub req’d)
• Beijing’s IKang Healthcare gets $25M for medical-service centers (VW)
• BG Medicine drops IPO price range, seeks up to $52M (Edgar)
• Sepragen completes acquisition of Cyto Biologic Tech (release)

Utah’s LineaGen draws $6M for genetic diagnostics — LineaGen (no Web site), a Salt Lake City biotech focused on genetic diagnostics, raised $6 million in a first round of funding, VentureWire reports. Investors included
Sanderling Ventures, vSpring Capital and Mesa Verde Partners.

The company aims to identify genomic markers — presumably the single-letter DNA variations known as single-nucleotide polymorphisms — for a variety of diseases, including autism, multiple sclerosis, cancer and lung disease. LineaGen is using detailed databases on Utah’s predominately Mormon population, which keeps careful genealogical records, to identify markers that it can then turn into diagnostic tests for those conditions.

A variety of other companies have been embarked on similar projects, most notably DeCode Genetics, which has been conducting genetic analyses on the Icelandic population for years. VentureWire notes that Genzion Biosciences has been doing the same for French Canadians.

BG Medicine drops IPO price range, seeks up to $52M — Waltham, Mass.-based BG Medicine, a developer of molecular diagnostics, dropped its IPO price range and now plans to raise no more than $52 million. The company, which had previously sought to offer up to 5.2 million shares at a price between $14 and $16, now aims for a price between $8 and $10. Its latest SEC filing is here.

The company’s setback is but the latest in its unusual IPO history. It first reported plans to go public on Amsterdam’s EuroNext exchange, then apparently scrapped that idea and filed to list on the Nasdaq Stock Exchange. At its previously price range, BG Medicine stood to raise as much as $83 million, so its latest decision represents a fairly significant haircut to its earlier hopes.

Optical genome-mapper OpGen raises $23.6M in a restart — OpGen, a Madison, Wisc., biotech developing a genomic test for identifying disease-causing microbes, raised $23.6 million in what the company is billing as a first funding round. In fact, however, the funding is more of a restart for the company, which was founded in 2001 and previously provided genomic services to researchers.

OpGen is now focused on developing speedy genome-based tests that can help identify and track infectious disease microbes. The company has set its sights on clinical microbiology laboratories as potential customers; such laboratories now try to identify the source of a patient’s infection by growing up the responsible bacterial in culture, a process that can take days. OpGen’s technology, which identifies patterns in single molecules of DNA to identify particular microbial strains, can deliver answers within two to three hours, the company says.

Investors included CHL Medical Partners, Highland Capital Partners, Versant Ventures and Mason Wells.

Vital Therapies gets $28.1M for artificial liver — San Diego’s Vital Therapies, a device maker developing an “artificial liver,” raised $28.1 million in a third funding round. Investors included Versant Ventures, Delphi Ventures, HBM BioMed China, DFJ DragonFund China, MedVenture Associates, Valley Ventures, Toucan Capital and Heights Capital.

Vital’s main focus is on a cartridge-style device that mimics the toxin-breakdown and waste-filtering function of the liver. The device, which contains artificially grown human liver cells, is intended for use while patients await a liver transplant. The device has completed four early-to-mid-stage trials, two of them in China, where prevalent hepatitis frequently contributed to liver failure.

Finland’s Mawell draws €8M for healthcare IT — Helsinki’s Mawell, a bioinformatics company providing software and services to drug companies and hospitals, raised €8 million ($11.1 million) from the private-equity firm CapMan, VentureWire reports (subscription required). CapMan will become Mawell’s largest owner.

For some reason, biotechnology is rife with chameleons — companies that suddenly and radically alter their scientific strategy, disease focus or business model, sometimes to recover from a major failure, and sometimes just to be whatever faddish investors want them to be.

Today, for instance, Quark Pharmaceuticals — now a Fremont, Calif., developer of drugs that work via a new mechanism known as “RNA interference” — said in an SEC filing that it now hopes to raise as much as $80.5 million in an IPO. (That SEC document is here).

Quark, which is backed by Larry Ellison’s Tako Ventures, describes itself in the filing as a “clinical stage biopharmaceutical company” with an “initial focus” on drugs that work via RNA interference, or RNAi — a Nobel Prize-winning technique for “silencing” particular genes using carefully engineered snippets of RNA. It has two RNAi-based drugs already in human testing — RTP-801i, for a form of blindness called age-related macular degeneration, and AKIi-5, for kidney failure. RNAi drug development is getting a lot of big-money attention these days, as witnessed by Merck’s $1.1 billion acquisition of the RNAi biotech Sirna Therapeutics last year. (Pfizer has signed on to co-develop Quark’s RTP-801i.)

Quark, however, is a relative newcomer to RNAi, although that fact isn’t exactly clear in its filing. It acquired both of its leading drug candidates from Atugen AG, now a unit of Silence Therapeutics (which, confusingly enough, was formerly known as SR Pharma). The name Quark Pharmaceuticals is also new; until this month, the company was known as Quark Biotech, and before that as Expression Systems.

In other words, Quark’s conversion to RNA interference, or RNAi, looks like a classic chameleon move, made possible by its ability to quickly in-license drug candidates based on a hot new technology, thus allowing it to tout itself to investors as a cutting-edge biotech.

Based on what I know at the moment, I can’t say one way or another if Quark’s RNAi work is truly cutting-edge. I do, however, know that the company has an interesting and unusual pedigree that for most of its history had nothing to do with RNA interference.

Although founded in California in 1994 as Expression Systems — the name presumably refers to gene output, or “expression” — the company has long maintained its principal research facilities in Israel. Over much of its history, in fact, the company has frequently been classified more as an Israeli biotech than an American one. Consider, for instance, its listing on the Israeli Life Science Industry Web page. In addition, Quark’s SEC filing lists among its risk factors the fact that “[w]e have significant operations in Israel, which may be adversely affected by acts of terrorism or major hostilities.”

In 1997, the company renamed itself Quark Biotech and began to focus on genome-based drug development — that is, on identifying genes linked to specific diseases and then finding drugs that turn off those genes or otherwise mitigate their effects. In general, this sort of strategy hasn’t worked out so well, both because most of these disease-gene links have been faulty and because most genes have only a limited impact on disease.

Like other companies at the time — most notably Lexicon Genetics and Deltagen — Quark apparently thought it could identify these genomic drug targets by breeding mice in which important genes had been “knocked out.” A multi-year genomics research collaboration with the Cleveland Clinic Foundation led it to take the unusual step of moving its headquarters to Cleveland in 2001. Just two years later, however, when the company announced that it had created a mouse that totally lacked cholesterol — a discovery momentous enough for Science to publish it — the Cleveland Clinic wasn’t among its collaborators, and the company’s headquarters had moved again to Fremont, Calif.

Quark’s involvement with RNAi seems to date only back to 2004, when it licensed RNAi technology from the Silence Therapeutics unit Atugen. That collaboration pertained specifically to a gene called RTP-801 that appeared to play a major role in inflammation. The next year, the two companies expanded their agreement to cover RNAi drugs for five other undisclosed genes. Silence Therapeutics revealed that AKIi-5 was one of them in this press release:

SR Pharma expects to begin the clinical development of its proprietary AtuRNAi therapeutic molecules for systemic cancer indications in 2007. SR Pharma has sublicensed the AtuRNAi compound RTP-801i to Pfizer through its collaboration partner Quark Biotech Inc. for the treatment of Age-related Macular Degeneration (AMD) and a number of other indications. This compound entered the clinic in early 2007. In addition SR Pharma has licensed a further AtuRNAi compound, AKIi-5, to Quark Biotech Inc. This compound has been granted an IND for acute kidney injury and is expected to enter the clinic in 2007.

That’s just part of Quark’s interesting history. It has long worked with several Japanese pharmaceutical companies, which explains why its second and third-largest shareholders are two Japanese investment partnerships, the Trans-Science Global Bio-Technology Fund and Asuka DBJ Investment LPS. (Ellison’s Tako Ventures is the largest investor, with 42.3% of the company.)

Quark hopes to price up to 5.75 million shares between $12 and $14 apiece, which would make Tako’s 5.6 million shares worth as much as $78.4 million. Overall, the company could have a market capitalization of as much as $256 million following the offering.

Biotech chameleons like Quark are fascinating because of the ease with with they shed their skin and morph into something new, often without ever looking back. Some, of course, do so for perfectly legitimate business reasons, while others seem most eager to catch new trends and to ride them as hard as they can.

It’s often hard to tell which is which, though, which is one reason I hope to occasionally spend some time looking at particular biotech chameleons to see how far their public image diverges from their actual history. After all, there’s nothing wrong with making a fresh start — at least so long as potential investors know exactly what they’re getting into.

UPDATE: Turns out Silence wasn’t such an authoritative source on the details of its partnership with Quark. I revisited the subject and laid out the company’s obfuscatory language and how it Quark’s actual role in developing its RNAi drugs in this post.