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Illumina Accelerator Sees ‘Huge Impact in Genomics’ in New Startups

Xconomy San Francisco — 

Genomics startups are increasing in number and quality, so much so that three-year-old Illumina Accelerator has expanded with its latest class to accommodate five of them. Xconomy got an early look at the specialty accelerator’s sixth cohort, which includes a company named for a butterfly and the accelerator’s first digital health startup.

Illumina (NASDAQ: ILMN), a San Diego-based company that was a pioneer in gene sequencing technology, founded the accelerator in 2014, along with Russian billionaire Yuri Milner. The program, modeled on tech-oriented accelerators such as Y Combinator, provides genomics-focused startups with capital, lab space at Illumina Accelerator’s offices in San Francisco, access to Illumina’s sequencing equipment and expertise, and advice on developing a business from legal experts, recruiting professionals, and Illumina executives and scientists, says Amanda Cashin, co-founder and head of the accelerator. While Milner has been closely associated with the program since its inception, investing in preferred shares of selected startups alongside Illumina, Cashin declined to say whether he is still involved.

Illumina Accelerator takes an 8 percent equity stake in each of the startups. It also provides the companies access to a $100,000 convertible debt note, capped at a $5 million valuation, Cashin says. The program also helps the startups gain access to other funding from venture firms, seed investors, or angel funds, she says.

Illumina Accelerator provided Xconomy with a few details about the five new startups. Here’s what we know so far:

—Checkerspot: Named after a type of butterfly, Checkerspot is designing advanced physical materials that can be used in industrial applications, Cashin says. The company is producing “high performance materials enabled by biotechnology and chemistry,” she says.

—Chimera Bioengineering: The company aims to improve the efficacy and reduce the side effects of engineered cell therapies for oncology, such as CAR-T, Cashin says. It is doing so by building RNA-based gene regulatory systems to control the cell therapies, she says.

—Encompass Bioscience: This is Illumina Accelerator’s first digital health company. Encompass wants to integrate genetic information into the healthcare system in order to help better tailor treatment recommendations and guidelines for patients, Cashin says. Three of the company’s co-founders come from academia.

—Mantra Bio: Mantra studies exosomes, small lipid vesicles that are excreted from cells and deliver information, aiming to discover new drug targets and therapies, Cashin says.

—Solarea Bio: The only company not from the Bay Area, Boston-based Solarea is developing probiotic treatments that are derived from natural sources, Cashin says.

Of the previous 13 startups that have completed the program since 2014, a few have already made some funding splashes.

Xcell Biosciences, a San Francisco company that develops a type of cell culture that can be used in certain types of cell propagation and gene editing, raised a $12 million Series A round of funding in February.

EpiBiome, based in South San Francisco, raised a $6 million seed Series A round of funding for its process of engineering microbiomes that might be used against drug-resistant bacteria in early 2016.

New York-based Trace Genomics raised a $4 million seed round in mid-2016 for its work sequencing and analyzing the genomes of soil.

The accelerator can also provide a dollar-for-dollar match of funding that its startups bring in for amounts between $1 million and $5 million, thanks to a $40 million commitment from Viking Global Investors.

Until now, the program was limited to no more than four companies at one time, Cashin says.

“We increased it to five because we were so impressed with the quality of companies we saw and we continue to see,” she says. “Now is the time to make a huge impact in genomics.”