DNAnexus, With Google Ventures and TPG’s Cash, Seeks Edge in $100B Genome Computing Market

10/19/11Follow @xconomy

If there’s anybody in the world of genomic computing with dreams of world domination, like a Bill Gates or a Mark Zuckerberg, it might be Andreas Sundquist. Others may have similar ambitions, but the co-founder of Mountain View, CA-based DNAnexus is one of the few with the chutzpah to say that he thinks a cottage industry of today, which measures its revenue in tens of millions, will soon count its money in the tens of billions.

“When you look at DNA sequencing and what’s happening, the sequencing itself is commoditizing. What’s not commoditizing is what you do with the data downstream,” Sundquist says. “We are building a new industry here. Within the next three years, I think we’ll see upwards of 1 million sequenced genomes. I really think that’s going to happen.”

And the long-term market opportunity for computing systems that analyze/visualize/interpret all that data, as full genome prices plummet from $4,000 to $1,000 and below? “It’s easily a $100 billion market.” And yes, I did ask him to clarify over the phone that he meant billion, with a “b.”

Sundquist, one of the speakers at Xconomy’s “$1,000 Genome” event next Monday at UCSF Mission Bay, has reason to be bold these days. He raised $15 million last week in a second-round financing led by Google Ventures and TPG Biotech, with classic tech investors like First Round Capital, SoftTech VC, K9 Ventures, and Felicis Ventures also on board. The company, which Sundquist co-founded with colleagues from Stanford University in 2009, isn’t saying yet how much revenue it generates, how many customers it has, or who they all are. But as part of the financing, DNAnexus and Google said they have agreed to collaborate on a free public site that will be a mirror image of one of the deepest and most valuable datasets in genomics today—which the National Center for Biotechnology Information is phasing out because of federal budget cuts.

Andreas Sundquist

Providing that valuable resource to customers is just one step in the process, Sundquist says. The bigger vision is for DNAnexus to prove, through its relatively low-cost, easy-to-use, Web-based interface, that it can serve as a default plug-and-play genomic analysis system for biologists. These are people who don’t typically have much math training, and often have limited access to the bioinformatics experts who have traditionally helped them play around with the data.

It’s not uncommon today for researchers to run a sequencing instrument to get the data, and then spend months “playing around with the data,” as Sundquist said in an Xconomy feature in July 2010. The goal is to minimize the amount of time a scientist has to spend fiddling around to find out what tools are available, downloading them, and figuring out how to make formats compatible with their instrument,

The pressure to come up with simple interpretation tools is going to be immense in the future, Sundquist says. One analyst, Isaac Ro of Goldman Sachs, noted in a recent report to clients that current sequencing labs spend just 2 percent of their budgets on computing, but that is fast climbing … Next Page »

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