Guardant Health, a three-year-old, Redwood Shores, Ca.-based company whose non-invasive genomic sequencing test for cancer requires just two vials of blood, has raised nearly $100 million in Series D funding roughly one year after closing on $90 million for its Series C round.
The financing was led by OrbiMed Advisors, with earlier backers participating, including Khosla Ventures, Sequoia Capital, Lightspeed Venture Partners, Pejman Mar, Formation 8, and Heritage Group.
Guardant, a 135-person company that has now raised almost $200 million altogether, isn’t talking about its valuation. But cofounder and CEO Helmy Eltoukhy, a Ph.D who worked at the Stanford Genome Technology Center before cofounding and quickly selling an earlier company, talked with us yesterday about what Guardant’s investors are funding exactly. Our conversation has been edited for length.
TC: Your test alleviates the need to cut out a piece of tissue and sequence the DNA in that biopsy. Other than being less invasive, why is it better?
HE: You can take a single tumor and every part will have potentially different mutations. Through two teaspoons of blood, we can see the entirety of the disease.
TC: How has your technology changed in the last year? What prompted so much new investment?
HE: The way it works is as these tumors grow rapidly, they are also dying rapidly and shedding their content into the bloodstream, including their DNA signature. [Over time] we’ve made our sequencing technology about 1,000 to 10,000 times more accurate in order to see those fragments of DNA. It’s akin to the difference between high-resolution TV and old black-and-white technologies. Because we can see those trace fragments, we can reconstruct the genome.
TC: How accurate is your blood test?
HE: It matches tissue biopsies with 99.3 percent diagnostic accuracy, and we see often more mutations [than doctors can find] in that tissue biopsy. Maybe the patient had a recent biopsy and nothing actionable was found, but now, with the mutations that we detect, that person can be given corresponding drugs that target those mutations.
TC: How many patients have used your test?
HE: Our run rate is around 20,000 patients per year now. As part of that, our knowledge of the disease is growing rapidly. Every time we sequence a patient, we find out alterations for cancer, and that’s allowing us to improve the performance of our test and the work we do with pharmaceutical companies in helping them with their targeted therapies.
TC: That’s your business model?
HE: One part of our model is being almost a full-service partner to pharmaceutical companies across every stage of a trial, including helping them find enough patients using our massive clinical volume so a trial isn’t delayed. Then, during the trial, we’re monitoring patients to see why a drug is working in some and stops working in others, so we can start learning about aspects of it while the trial is ongoing and not many years later.
We’re also creating the largest database of metastatic diseases, so we can think about new targets and new drugs that may potentially be developed based on new pathways activated in patients.
[As for revenue], we work with payers and insurance companies to be reimbursed for the tests we run. We also have direct hospital contracts where we get paid for every test we run, and we distribute tests internationally, where we get paid for every test we run. Last, pharmaceutical companies pay us for our testing services.
TC: Have the public woes of another blood-testing company, Theranos, impacted your business?
HE: It isn’t affected us too much. The proprietary technology that you develop is your secret sauce and you want to guard it as much as possible. But you have a duty to be transparent about the performance and limitations of your technologies. We’ve had 40 publications [produced about our] technology since we started. We’ve had external validation of the technology by leading cancer centers. So we’re very confident about the position we’re in right now and the approach we’ve taken.
TC: With the threat of a missed diagnoses and possible lawsuits, oncologists must still be a little nervous about relying on your tests. How many of them use the test in concert with tissue biopsies?
HE: It’s hard to put a stat on that. Tissue biopsies will be hard to replace for diagnosis, though; they’ll likely be around for 10 years. At least, that first tissue biopsy will likely be a mainstay for many years to come, but that next interrogation — the repeat biopsy — is often our test rather than a second tissue biopsy.
We started as a last resort when tissue isn’t available, but we’re finding that as physicians get more used to the technology, they’re using it as first resort because they’re getting results that are the same if not better than tissue biopsies and not subjective.
TC: How many oncologists are using the test?
HE: It’s approaching 2,000 in the U.S., and there are 10,000 oncologists in the U.S. It typically takes seven years for 50 percent of physicians to change their behavior — I think that’s a McKinsey stat. So we’re encouraged.
TC: How far away are we from screening healthy people?
HE: Biologically, we aren’t that far away, at least for some cancer types. Validating the technology and doing it in a way that’s not prohibitively expensive are the main impediments rather than technological barriers.
TC: Will you ever develop a product that lets people test themselves for cancer?
HE: We’re all about empowering the patient but in a way that’s responsible. We think when you’re thinking about something as serious as cancer, you have to have a doctor involved in some way. If people do diagnose themselves, what are they going to do other than become anxious?