Pfizer, Merck Lead Strata Oncology’s $26M Series B Round
In what company leaders describe as a “huge step,” Ann Arbor, MI-based precision medicine startup Strata Oncology this week closed a $26 million Series B investment round led by Pfizer Ventures and the Merck Global Health Innovation Fund.
Other contributors to the round include Deerfield Management, Renaissance Venture Capital Fund, Arboretum Ventures, and Baird Capital. Since its inception three years ago, Strata has raised a total of $38 million.
Strata CEO and co-founder Dan Rhodes calls the new capital—and the fact that Pfizer and Merck are backing the company—an important validation of Strata’s approach to advancing precision oncology and tumor sequencing.
“As often happens, when you try to solve a big problem, you find out it’s bigger and harder, but also that there is more opportunity,” Rhodes says. “We now have the resources to realize our grand vision.” Or, at least, move closer to realizing it.
Strata launched in 2015 with a mission to help bring free tumor sequencing services to as many cancer patients as possible. To help accomplish that, the company has established the Strata Precision Oncology Network, a group of cancer centers collaborating to help boost access to precision medicine. Strata started the network in 2016 to provide later-stage cancer patients with better access to tumor sequencing, the idea being that it will help match them to the right clinical trials. (Strata receives compensation from pharmaceutical companies for patient recruitment.)
Despite the promise of targeted therapies, genomic testing remains expensive because the tests are not yet widely covered by health insurance and are often inaccessible to patients who don’t live near a major cancer center or clinical trial site, Rhodes says. Some of the healthcare organizations participating in Strata’s network include Wisconsin’s Aurora Health Care, the University of North Carolina Lineberger Comprehensive Cancer Center, Kaiser Permanente-Northern California, and the University of Wisconsin Carbone Cancer Center.
Rhodes says Strata will use the new capital to expand its precision oncology network; build out the company’s clinical-genomic data and software tools; submit its tumor molecular profiling assay StrataNGS for approval by the FDA; and launch a study aiming to discover expanded uses for drugs that are already on the market.
The “indication expansion” study gives Strata the opportunity to “take on the conduct of drug trials,” Rhodes says. When a new drug is approved, Rhodes says, it is usually approved for one narrowly defined use. Instead of each drug company running its own indication expansion studies, Strata will facilitate testing on appropriate patients in its precision oncology network.
“We have the opportunity to substantially broaden the use of those approved drugs in other cancers with similar genetic profiles,” he says. “We can enable the next wave of indication expansion for approved drugs. It’s a much more efficient way to unlock huge market potential.”
Rhodes says another major focus for Strata this year is on the data and software side of the business.
“To systemize precision medicine—to do it well and respect the time of busy oncologists—we need to do it with data and software as much as we can,” he adds. “We’re investing heavily in tools to integrate our data with telehealth platforms to better track the treatment history and outcomes for the patients we test.”
The 30-person company is also on a hiring spree. Rhodes says Strata plans to add an additional 20 employees over the course of the year, adding to its current headcount of 30.
“We’ve hit a value inflection point,” he says. “Having Pfizer and Merck behind us validates our approach to precision medicine, and the new capital allows us to go as big as we need to to realize our vision. It gives us confidence that we are here to stay and doing things in a big way.”