Axios Pro: Health Tech Deals

November 07, 2022

Axios Pro Exclusive Content

Happy Monday, Health Tech readers! Let's jump in.

1 big thing: Sequencing your (whole) genome

Illustration: Sarah Grillo/Axios

Genetic testing startup Sequencing wants to drive more insights into rare and chronic diseases — not by partnering with Big Pharma, as rivals like 23andMe have done, but by more comprehensively scanning the genome.

Why it matters: The Los Angeles-based startup raised $5 million in seed funding led by Lerer Hippeau, bringing total funding to $7 million, CEO Brandon Colby tells Erin exclusively. The capital will fuel acceleration of its whole genome sequencing (WGS) tech offering.

  • WGS is a more comprehensive form of genetic testing than what several consumer-facing competitors offer.
  • Red Sea Ventures, Global Founders Capital, XRC Labs, Correlation Ventures, Mucker Capital and Gaingels joined the round, which will also go toward growing Sequencing's team.

Between the lines: Although consumer genetics services are not as popular as they once were, their troves of DNA data continue to grow.

  • Those databases are minable for insights that power drug development and virtual care while providing potential support for treating rare and chronic diseases.

Zoom in: Many DNA testing companies have partnered with pharmaceutical companies, telehealth businesses and health record platforms (see: 23andMe and GlaxoSmithKline and Lemonaid).

  • Seqster, a data-syncing platform that enables patients to combine health information from electronic health records, wearables and DNA sequencing services, last year raised $12 million in Series A funds.

Yes, but: Sequencing has a very different business model from 23andMe or Seqster — and it's one that Colby says puts a premium on privacy.

  • Rather than selling aggregated DNA data to Big Pharma or other health techs, Sequencing provides its tests and lab processing capabilities to bioinformatics startups including Athletigen Technologies and Toolbox Genomics, which then do their own genetic analysis on the data.
  • "It’s important to us to not have to sell a person’s data to make money," Colby says. "We don't sell into the pharmaceutical industry and we don't sell to insurance providers."

How it works: Sequencing charges consumers $399 for its WGS-based tests, which are more comprehensive than the SNP-based tests offered by 23andMe and Ancestry, for example.

  • You can think of SNP-based testing as highlighting several lines of text in a book, while WGS reveals the whole book.
  • Sequencing also individually encrypts each person's genetic dataset and stores it in a unique location rather than aggregating one large database, per Colby.

What's next: The company plans its next fundraise in 2023, Colby says.

State of play: After a 2017 rage year for consumer genetics services, privacy concerns and lagging interest nearly killed demand in 2019.

  • 23andMe (Nasdaq: Me), for example, has been a money-hemorrhaging investment since it SPAC'ed its way to the public markets in 2021.
  • Helix, which once offered a range of consumer-focused services very similar to those now sold by Sequencing, in 2019 pivoted to focus on population health research.

What they're saying: According to Colby, Sequencing doesn't need to drive the sale of a larger genetics companies' products or sell to Big Pharma in order to grow.

View archive