Health
With $277 million in new funding, this startup hopes to unlock the secrets of biology
Molly He, CEO
Element Biosciences
OOver the past twenty years, genome sequencing – unraveling the building blocks of DNA that form our genetic code – has become an essential tool in medicine. It has accelerated the development of Covid-19 vaccines and led to new ways to treat cancer. It’s also a crucial part of precision medicine: tailoring disease treatment to each patient’s unique biology.
With its DNA sequencing platform Aviti, San Diego-based startup Element Biosciences is among the many players in this R&D sandbox. Today, the company announced that it has raised a $277 million Series D investment at a valuation of $1.03 billion. That new money brings the company’s total funding to date to $680 million. The round was led by Wellington Management, with participation from Samsung Electronics, Venrock, T.Rowe Price, Fidelity and others.
It’s a well-timed boon for Element. “Trying to understand the secret of life and making precision medicine accessible and affordable – it’s an expensive business,” CEO and founder Molly He said. Forbes, noting that the new investment will help accelerate the advancement and commercialization of its work. Key to this is improving Element’s efforts in “multi-omics” – the analysis and sequencing of DNA, which encodes genetic instructions; RNA, which implements them; and proteins, the building blocks of your body.
This is what Aviti sequencers do, and the company says it has installed nearly 200 of them in research labs, hospitals and pharmaceutical companies. By 2023, Element generated more than $25 million in revenue. The company is on track to “more than double” sales of its $289,000 machines and the biological analysis kits it develops for them by 2024.
Despite its growth, Element still faces an 800-pound gorilla in the lab: Illumina, which currently controls about 80% of the sequencing market. Although the stock is down nearly 80% from its highs a few years ago, Illumina still has a market cap of about $17 billion and reported revenue of $4.5 billion last year. Other major players in the sector include California-based Pacific Biosciences and Germany-based Qiagen.
“It’s a bit like switching from a toaster to a toaster oven: it just opens up new possibilities.”
Most of these competing DNA sequencers rely on what is called “sequencing by synthesis,” a proven chemical method that is now almost two decades old. Element uses a different type of chemical process for this: ‘avidity sequencing’. According to a paper published in the news Nature Biotechnology Last year, this method produced highly accurate results with a simpler workflow and fewer materials. That helps Element undercut its major competitors on price.
While it is challenging for new companies to make a real dent in an established market like this. As Josh Sommerfeld, head of health care in Wellington, wryly noted: “There are a lot of bugs on Illumina’s windshield.” But Element’s technical differentiation makes the company an attractive investment, he said, adding that the company’s move into multi-omics positions it well for the future. “It’s a bit like going from a toaster to a toaster oven: It just opens up new possibilities,” he said.
Element’s equipment also has a more flexible workflow than some of its competitors, Sommerfeld said, who optimize their products for large laboratories with large and constant flow of sequencing. This is not necessarily useful for smaller laboratories or for specialized research, which do not always need to perform large amounts of analyzes at the same time. “You only get a thousand miles per gallon when you drive a thousand miles. If you only have to travel three kilometers, you will have burned the same amount of gasoline,” he said.
Molly He, 53, first came to the United States in 1992, emigrating from China to UCLA to pursue her doctorate in protein biophysics and biochemistry. After three years in academia, she moved to industry, working for several biotech companies, including eventual competitors Pacific Biosciences and Illumina. In 2017, she left Illumina to found Element Biosciences along with Mike Previte, who is now the company’s CTO, and Matthew Kellinger, its VP of biochemistry.
Earlier this year, Element launched its new Aviti24 sequencer, which will ship later this year and can perform simultaneous multi-omics analyses. The company is also moving forward with artificial intelligence, having recently hired a new director to oversee the company’s efforts. Machine learning is already deployed in its products as part of the genome sequencing process, but he said additional development is needed as Element’s customers collect more and different types of data.
“I call this an investment in scientific freedom,” she said. “The most important thing is to ensure that we can provide scientific tools that can get into the hands of all scientists, regardless of how well they are funded.”
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