Spiral Genetics, Started by UW Classmates, Looks to Crunch DNA Data in New Way

11/30/11Follow @xconomy

DNA data is piling up on servers and hard drives near you, and scientists are struggling to sort through it all as genome sequencing keeps getting faster and cheaper. Seattle-based Spiral Genetics is the latest startup in town with ambitions to help relieve some of the IT pain that biomedical scientists are feeling.

Spiral was founded in 2009 by a couple of students in a University of Washington-Bothell entrepreneurship class. Two years later, the company has introduced its first couple of commercial software programs, lined up critical support from Amazon’s cloud computing infrastructure, and signed up a handful of paying customers, including the BC Cancer Agency in Vancouver, BC.

It isn’t radically reinventing how researchers find the precious needles in the haystacks—disease-related genes. But the company is getting its start by bundling open-source programs that are currently available, and leveraging distributed computing power, in a way that can take genome analysis jobs down from several days to several hours. After toying with the idea of a consumer genetics-type of company like Mountain View, CA-based 23andMe, Spiral is now aspiring to compete with another big-idea Google Ventures-backed company in Mountain View—DNAnexus.

“It might sound cheesy, but I want to do something to heavily impact the world. We want to help reach that elusive goal of personalized medicine,” says co-founder and CEO Adina Mangubat.

The company is still very much in its infancy. Spiral Genetics got its start when Mangubat met with a classmate, Becky Drees, in a University of Washington-Bothell entrepreneurship class taught by Alan Leong. Drees, an experienced research scientist at the UW and the Institute for Systems Biology, had the idea of creating some kind of genetics analysis business. Mangubat was an undergraduate psychology major who realized she didn’t want to go to grad school in psychology, and needed to figure out what was next.

Spiral Genetics CEO Adina Mangubat

She was taken with the idea of a genetic analysis business, and helped flesh it out through their classwork. They had their eye on competing in a business plan competition. “I said, ‘If we’re going to do this, we better win,’” Mangubat says.

They won, but that didn’t mean they had a real company yet. But by the time Mangubat graduated in June 2009, the recession was going strong. If starting a company was risky, Mangubat says she figured entering the job market was probably just as risky.

The idea for Spiral Genetics evolved from the original consumer-genetics play into something that helps address the DNA data pile-up that is vexing so many researchers. The new plan was put in place by about March 2010, and Mangubat and Drees enlisted support in crafting their algorithms from Jeremy Bruestle.

You can say the market terrain in this field is tough. Plenty of companies have tried and failed to get much traction in bioinformatics—including big players like Microsoft. Much of DNA analysis is super-specialized for home-brew software programs, and many scientists lean on open-source programs to manage basic tasks. Most of the money for high-powered DNA analysis goes into the DNA sequencing hardware that’s made by San Diego-based Illumina (NASDAQ: ILMN), Carlsbad, CA-based Life Technologies (NASDAQ: LIFE), and others.

Spiral’s idea is to package some of the commonly used open-source algorithms and adapt them for use on a distributed computing platform, which harnesses the power of many computers during their downtime. In July, the company introduced its initial product, geared toward bioinformatics experts. Three months later, it rolled out a second product designed for less computer-savvy biologists who prefer a more user-friendly drag-and-drop interface, Mangubat says.

Pricing of the product—especially given how addicted this customer base is to free software—could end up being a challenge. Spiral is offering customers two options: a pay-as-you-go system or subscriptions. It asks customers to buy credits, sort of like iStockPhoto, based on how big or complicated the computational job is. It ends up costing about $2,400 to analyze a whole genome, and about $80 to analyze a partial DNA readout known as an exome. Given that whole genomes are now said to cost $4,000 to $5,000 apiece to gather the raw sequence data, it’s safe to say customers will need a lot of convincing to fork over additional cash for the analysis.

Todd Smith, a cross-town competitor at PerkinElmer’s Geospiza unit, says the market for bioinformatics programs still hasn’t gained the kind of momentum that many in the industry are counting on. But Smith, who has been a part of Geospiza since 1997, says he believes the computing wave for genomic data is still “a question of when, not if” it will take off.

“They are out there fighting the fight and trying to make a mark. I give them some credit for that,” Smith says.

Spiral has gotten by its first couple years on some financing from friends and family, followed by individual angel investors, Mangubat says. She isn’t saying how much the company has raised to date, and isn’t disclosing initial revenues.

The next big test will be to see if Spiral Genetics can raise money, and build up a strong roster of big-time academic customers. But the startup has passed one test already that most entrepreneurs have to learn at some point: Spiral didn’t fall in love with its original idea, and was willing to switch gears when a more promising opportunity presented itself.

“You have to be open to the idea that your company is going to morph. Over the course of a year, we morphed a lot,” Mangubat says.

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