Business on molecules
Six startups making money from genetic research
Elena Krauzova, Forbes
Genetic tests, which allow you to choose a fitness program or learn about a child's creative abilities, have turned from a knowledge-intensive product into a mass service in five years. Screenings based on such tests are offered by about a dozen specialized companies, and services for decoding the structure of DNA have appeared in popular networks of laboratories.
Which Russian companies working in the field of genetic research attract the attention of investors?
"Genotek"
The Genotek company, which was the first to take up the popularization of genetic research in 2010, received $2 million during the next round of financing on February 9, 2016 from a group of investors led by Maxim Basov, CEO and co-owner of Rusagro, and Alexander Voloshin, former head of the Presidential Administration of Russia. This is the second major round for the startup – at the end of 2013, it received $500,000 from the RuStarsVentures fund.
Genotek, founded by Moscow State University graduates Artem Elmuratov and Valery Ilyinsky, relies on the widest possible range of tests for ordinary users. For about 15,000 rubles, you can get a test about hereditary predispositions to a particular group of diseases or a test for the selection of personal training and diet. The company sells each new study for almost 5,000 rubles. A basic comprehensive test, the most popular, will cost 15,000 rubles, a complete genome decoding – 425,000 rubles. The average buyer's receipt exceeds 20,000 rubles. In 2015, Genotek doubled the number of tests, says Elmuratov. In ruble terms, the project's revenue has grown 2-3 times in two years, but in dollar terms it turned out to be less than the expected $2 million due to exchange rate fluctuations, the entrepreneur explains.
About half of Genotek's income comes from research for scientific laboratories – for example, the company studied new strains of viruses, in particular tuberculosis, as well as the genome of dozens of cancer patients, with the analysis of their tumors and healthy cells. Archaeologists also turn to Genotek for DNA analysis of the found remains. The average cost of such studies is hundreds of thousands of rubles. The creators of the project are experimenting themselves – for example, they are developing genotyping methods to determine the breed of dogs, but so far they have not met with enthusiasm from breeders.
The company will spend half of the received investments on the equipment of a robotic laboratory in the Kurskaya metro area in Moscow. It will open in the coming months, the creators of "Genoteka" promise. Firstly, many operations (for example, DNA extraction from saliva, cloning and initial testing of a fragment of a nucleotide chain) can be transferred from human hands to a robot, and secondly, there will be transparent walls in the laboratory, so that the new medical and genetic center will also become a marketing tool. The rest of the funds will be used to expand the staff of scientists, launch new tests and promote services.
Elmuratov estimates the Russian market of DNA tests at $10-20 million, in the coming years it will grow to $100 million, according to the founders of Genotek. By the end of 2016, the company expects to earn $ 2 million, about a quarter of this amount can be provided by export – the startup plans to conduct research in the field of bioinformatics (from genome assembly to specific data analysis tasks) 20-30% cheaper than American and European competitors. "Selling in dollars, paying for the work of Russian specialists in rubles, is a good strategy for a Russian startup," Elmuratov admits.
"Genoanalytics"
The company "Genoanalytika" was able to stand out from the competition, being the first in Russia to offer, along with other genetic tests, the determination of fetal diseases by the mother's blood. A few years ago, the possibility of such studies was generally doubted – scientists were arguing about whether the extracellular DNA of the baby was in the blood of a pregnant woman. Therefore, when in 2011 Egor Prokhorchuk (pictured), co-founder of Genoanalytics, read in one of the scientific journals about the beginning of clinical trials of noninvasive prenatal testing, he caught fire with an idea for business.
At that time, the company, founded by scientists from various Russian institutes in the field of molecular biology, had been selling services for decoding and interpreting the genome based on micro-matrix analysis for more than two years. These were the very tests that allow for a few drops of saliva to diagnose the carrier of mutations, common monogenic diseases, as in the American pioneer 23andMe. Genoanalytika was the first in Russia to offer this service to the mass market.
Then Prokhorchuk realized that screening to determine Down syndrome and other diseases associated with abnormalities in the number of chromosomes in fetal DNA would become a "hot" topic, and connected scientists to develop their own technology. Usually, to diagnose chromosomal abnormalities in a future newborn, an amniotic fluid intake is needed, with a puncture of the fetal bladder, which increases the risk of miscarriage. Therefore, it is much safer to use the genetic method, by blood from a vein. More than 3,000 women have already passed the "My Gene" study. They often order tests to analyze the genetic causes of miscarriages, stillbirths or infertility – with these studies, "Genoanalytics" has also become a pioneer. The results of DNA tests complement ultrasound, biochemical analyses and other studies of pregnant women and the fetus, so that usually patients come in the direction of doctors from clinics. Clients of personal genetic testing services, as a rule, determine the importance of technologies themselves.
Today, the line of "Genoanalytics" includes five groups of research packages, from research for the selection of drugs to tests to detect predisposition to polygenic diseases like breast cancer. Each of the tests contains an analysis of several dozen indicators. A comprehensive basic test will cost 30,000 rubles. The founders of Genoanalytics invested about $5 million in their own DNA diagnostics technologies and laboratory equipment. "But we can safely say that tests for predisposition to more than 50 inherited diseases are done entirely in Russia and according to their own DNA analysis system," says the company's CEO Yulia Akhtitelnova.
The revenue of "Genoanalytics" at the end of 2015 amounted to about $ 1.1 million, the business went into profit back in 2012. About half of the income is generated by tests for doctors and scientific laboratories who find it difficult to make a diagnosis in complex cases of genetic diagnosis. When atypical omissions and errors in the nucleotide sequences are detected, it is difficult to compare substitutions in the genome of a particular person with the created database of dangerous modifications.
In 2016, Genoanalytika expects to increase revenue at least one and a half times. "Of course, medicine is a conservative and standards–bound industry, it is not easy to promote services here. Our tests are not cheap, and it is not possible to reduce prices because of the crisis, so technologies are not coming into life as actively as we would like. It is necessary that such methods appear in the diagnostic standards of the Ministry of Health, then more accurate and safe screening will become widespread," Akhtitelnova sums up.
Oftalmic
Oftalmic has found its niche in the market – it sells turnkey tests for the diagnosis of ophthalmic diseases. The creator of the project Marianna Ivanova, an ophthalmologist with extensive clinical practice, noticed back in 2008 that both she and her colleagues were often treated by patients with eye diseases associated with heredity. It is difficult to diagnose various types of retinal dystrophy, glaucoma or cataract along with several dozen other diseases exclusively in the field of ophthalmology using a general genetic test with high accuracy – more focused tests are needed, which were conducted only in two laboratories, in Moscow and St. Petersburg. Ivanova knew that "from the street" and even by appointment of a doctor, everyone in these laboratories would not be checked. This is how Oftalmic emerged, today offering about 60 tests only in the field of ocular DNA diagnostics. Prices range from 12,000 to 130,000 rubles. At the same time, Oftalmic, having analyzed the clinical picture, conducts not only the selection of the test, and then DNA testing, but also consultation, gives recommendations on experimental treatment.
Oftalmic clients come on the advice of doctors – differential tests are usually unknown to the general public, professionals talk about their need. So the brand is promoted by word of mouth among doctors and laboratory staff. Oftalmic also cooperates with other companies in the DNA diagnostics market. Thus, tests in the field of ophthalmogenetics of the Atlas biomedical holding, one of the most famous suppliers of genetic tests, were created with the participation of Ivanova's project. According to the founder of Oftalmic, "dozens" of patients apply for eye genetic tests every month. According to SPARK, Oftalmic earns only a few hundred thousand rubles annually, but for Ivanova, looking for changes in the genome that lead to eye diseases and explaining the results of genetic tests is also an important social mission.
UGENE
The office of the company "Unipro", which appeared in the early 1990s, is located in the center of Novosibirsk Akademgorodok - students who come for an internship and work can run to the lecture hall in 15-20 minutes, and to get to a meeting with users from three well–known biomedical institutes (Institute of Cytology and Genetics, Institute of Chemical Biology and fundamental Medicine and the Institute of Molecular and Cellular Biology SB RAS), employees need to walk several hundred meters.
For decades, Unipro has been one of the main developers of almost all Java platform software solutions (testing systems, compilers, libraries, etc.) for Sun Microsystems. At the same time, for eight years the company has been distributing the free UGENE software, which serves as a universal bioinformatic environment for working with data for molecular biologists around the world. Sophie UGENE can be downloaded for free for Windows, Linux or Mac platforms and work with genome sequencing data, "collect" sequences from pieces of nucleotides or amino acids, visualize processes in RNA and DNA, etc. UGENE also allows you to analyze proteins (work with amino acid sequences, visualize 3D structures of proteins, etc.).
The annual number of unique UGENE users exceeds 14,000, more than 1,000 specialists launch it weekly (and this is only according to voluntary statistics, which not everyone agrees to). About 20% of users are from the USA, 9% are from Russia, the rest are scattered around the world.
"We tried to sell the first software products in the field of bioinformatics, but there were no sales," says Yulia Danilova, Deputy Marketing Director of Unipro. – By distributing software under a free license, we can build a stronger brand, and those whom we teach at seminars, sooner or later, either can become commercial customers, or will bring them to us."
Now the creators of UGENE have several earning options. Some laboratories or educational organizations buy a commercial license for 40,000 rubles a year, receiving consultations from the project team, quick correction of defects, etc. UGENE programmers also undertake the creation of a personal user version of the program – if the customer is ready to give it for general use, then an hour of work will cost about 1000 rubles per hour, if it is developed exclusively for the individual needs of the customer – twice as much.
While UGENE has less than 5% of paid users, in the coming years, Unipro managers want to increase this figure to 10%. "We don't have any biologists in our team yet, but the experts involved are working with us. There are joint projects – this is an opportunity for us to learn about what the market needs, to work in a team with those who understand all the nuances of molecular biology," says Olga Golosova, UGENE product manager. "The open source model allows you to be in close contact with users, which means you have a good understanding of how to improve the product."
RosGenDiagnostics
For the CEO of the company Tatiana Nikolskaya, RosGenDiagnostics is already the second serious business. In Russia and abroad, she is known as the founder of GeneGo, which created a line of software products in the field of systems biology. Software solutions from GeneGo, combined under the MetaCore brand, were designed for experimental disciplines that require the analysis of a huge number of parameters. MetaCore systems helped to search for new targets for drugs and biomarkers. The users were the largest pharmaceutical and biotechnology companies, as well as the world's leading universities. By the end of the 2000s, sales were measured in tens of millions of dollars a year, the company did not reduce revenue growth rates even during the crisis years. As a result, after ten years of independent work, GeneGo was acquired by Thomson Reuters Corporation, the amount of the transaction was not disclosed.
In 2011, Nikolskaya conceived a new project – to create an automated procedure for genetic diagnosis and selection of the most effective treatment for cancer patients. In 2012, she founded RosGenDiagnostics, which was joined by former key employees of GeneGo for several years.
The effectiveness of drug therapy, traditionally prescribed on the principle of "one medicine for all", is estimated at 25-35%. All over the world, groups of scientists are looking for unique molecular genetic changes (gene mutations, changes in the expression of individual genes) to develop new targeted anticancer drugs and biomarkers necessary for their appointment. To date, according to Kantar Health, individual selection of drug therapy using biomarkers can be offered only to 17-20% of cancer patients. At the same time, existing tests often allow you to reject ineffective therapy, but do not allow you to choose alternative solutions. The search and development of new biomarkers can take from 5 to 35 years.
"Each patient's tumor is unique, the focus should be on the whole set of molecular genetic changes," says Tatiana Serebriyskaya, Director of Science and Development at RosGenDiagnostics (formerly Director of R&D at GeneGo).
RosGenDiagnostics is developing a product that will allow comprehensive analysis of the genomic and expression profile of the tumor (that is, to determine changes at both the DNA and RNA levels), and then make an individual molecular "portrait" of the tumor and select the most effective drugs for treatment. This approach will allow you to stop spending huge sums on ineffective therapy. The product under development includes a set of reagents for laboratory analysis and a software product that provides complex analysis.
While RosGenDiagnostics is at the beginning of its journey, it is developing technology and conducting small pilot clinical trials on the basis of the N.N. Blokhin Russian Cancer Research Center. The project is supported by the Skolkovo Foundation and, according to Serebriyskaya, has received investments from various sources in the amount of more than $ 500,000.
In the coming years, the main consumers will be pharmaceutical and molecular diagnostic companies in the USA and Europe, says the manager of RosGenDiagnostics. The company also hopes to enter the Russian market, despite the high cost of analysis. On average, RosGenDiagnostics spends about $3000-5000 on the study of one patient. Since most of the reagents for research are imported, due to the growth of the dollar in ruble terms, this amount looks significant, Serebriyskaya admits. Although the cost of similar research using simpler technologies in America does not exceed $ 5000-7000. "We hope that, despite the difficulties with the procurement of targeted drugs, the selection of treatment based on the characteristics of individual mechanisms of tumor development will not remain on paper," the Director of Science and Development of RosGenDiagnostics hopes.
OncoFinder
"In the last decade, cancer treatment methods have gone far ahead – chemotherapy really effectively fights cancer cells, gives a high level of remission," says Andrey Garaza, Development director of the OncoFinder project. – The problem is that you need to understand which tumor the patient has and which drug will be the most effective. Until they have learned how to do it well, about 70% of patients die due to suboptimal selection of chemotherapy. Genetic analyses can make it personal, it will increase the effectiveness of treatment many times and dozens of times."
OncoFinder also decided to "go down" in research deeper than simple DNA analysis and investigate disorders in individual genes at the level of RNA and protein behavior. OncoFinder founders Anton Buzdin, Nikolai Borisov and Alex Zhavoronkov have created a system that analyzes more than 1,200 signaling pathways, of which about 200 indicate the development of cancer to one degree or another. This requires an analysis of the behavior of more than 10,000 marker proteins. By comparing the activation of signaling pathways in healthy and cancer-affected cells, the researchers record anomalies that have arisen in a cancerous tumor at the molecular level. This statistic correlates with about 250 registered drugs – and OncoFinder provides a list of optimal treatment options.
Buzdin, Borisov and Garaza, natives of the Institute of Bioorganic Chemistry of the Russian Academy of Sciences, registered the company back in 2012, and then continued research with colleagues from other institutes of the Russian Academy of Sciences, from MIPT and FMBA. In 2013, they registered the company in Hong Kong. Since that moment, OncoFinder has received more than $ 1 million from private investors, the entrepreneurs assure. Today, the startup, according to its creators, sells diagnostic tests for the selection of optimal chemotherapy to almost 15 Russian clinics and more than 10 laboratories in Germany, Switzerland, the USA, Canada and other countries. Two Forbes sources familiar with the company's finances emphasize that we are talking about only a few regular customers.
Some clients send samples to the laboratories with which OncoFinder cooperates and receive a package of recommendations with justification of the choice. Others, with their own research capacities, buy only access to the OncoFinder cloud service so that their genome center staff and oncologists can personalize therapy based on their research. In the first case, the company pays about 60,000 rubles for a turnkey test (in Europe the price will be about $ 3,500), in the second – 1.5-2 times less. In Russia, OncoFinder sells tests and services with a margin of about 20%, and sometimes even at cost, abroad the marginality of sales reaches 80%, say the creators of the project.
"In all markets, the genetic diagnosis of cancer is reduced to the search for typical mutations, although in fact there is no universal cancer indicator, everything is much more complicated," says Garaza. – And at the same time, only a dozen drugs are being selected. It's the same in Russia. But the state, which takes on the costs of chemotherapy and spends 2-3 million rubles per course, should be concerned about careful diagnosis and the most accurate selection of the drug. Alas, so far there are few people looking in this direction."
The OncoFinder technique has not been widely tested in clinical practice, and this is the risk for a startup, says Yuri Kukushkin, co-founder of Future Biotech and previously investment manager of the RusBio Ventures venture fund. "The classic approach is to first develop a diagnostic approach, then prove its effectiveness (validate), and then go to the clinic," Kukushkin comments. — Some startups choose a more aggressive approach — when you enter the market faster and "refine" the product already on the market. This makes sense — if entrepreneurs believe that the method can help the patient, then they try to go the shortest way, but you need to be aware that compliance with regulatory requirements for a biotech startup is extremely important."
Nevertheless, OncoFinder, according to its founders, has something to brag about. In 2015, the company, according to the estimates of investors interviewed by Forbes, earned more than $150,000 (the founders themselves talk about annual revenue of $ 400,000). The project is negotiating a new round of investments for more active entry into the US and European markets, says Garage. Also, money is needed for research to personalize chemotherapy in cases of certain types of cancer – for advanced breast cancer, the entrepreneur gives an example, there are 20-25 effective treatment protocols, but in practice only 5-6 are included in the scenario – the rest seem unsuitable or "superfluous".
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12.02.2015