Grail brings in $900M to ‘Illumina’te growing liquid biopsy space in series B

March 2, 2017 – 8:28 AM | By Andrea Gonzalez | No comments yet

By Omar Ford, Staff Writer

Liquid biopsy startup Grail Inc. said it has raised more than $900 million through the first close of its series B round, putting it on the path to develop a blood-based test for cancer screening. The Menlo Park, Calif.-based company is slated to bring in more than $1 billion in the round and could close on the remainder of the investment prior to the end of 1Q17.

Arch Venture Partners led the financing, with participation from Johnson & Johnson Innovation, Amazon Inc., Bristol-Myers Squibb Inc., Celgene Corp., Varian Medical Systems Inc. and Merck & Co. Inc.

In its series A round, Grail raised about $100 million from the likes of Bill Gates, Bezos Expeditions and Sutter Hill Ventures.

“The proceeds from the [series B] will allow us to advance the clinical studies that we’ve begun and initiate new clinical studies that are in our product development plans,” Ken Drazan, Grail’s chief business officer, told Medical Device Daily. “Some of these clinical studies are the largest studies ever done in medical diagnostics, if not the life sciences industry.”

Late last year, Grail launched the Circulating Cell-free Genome Atlas (CCGA) study, which will enroll at least 7,000 cancer patients and 3,000 healthy individuals. (See Medical Device Daily, Dec. 6, 2016.) The study will interrogate the biology of both tumor biopsy tissue samples and the circulating, tumor-derived nucleic acids in blood.

Large-scale studies like CCGA will support the development of a pan-cancer screening test for asymptomatic individuals, which could, according to Grail, make a major dent in global cancer mortality. The company said these studies have to include samples from tens of thousands of people in order for researchers to identify the patterns required to detect many types of cancer.

The studies will be extremely costly, Drazen said.

“We need to meet the needs of the marketplace in order to attract the right clinical institutions that want to work with us,” Drazen said regarding the massive funding rounds. “We need to be able to [show] them that [Grail] can commit to its multiyear studies.”

PATH TO INDEPENDENCE

Grail was launched by San Diego-based Illumina Inc. about a year ago. (See Medical Device Daily, Jan, 12. 2016.) With the first close of the series B, Illumina’s stake in Grail will be reduced to less than 20 percent.

Doug Schenkel, an analyst with Cowen and Co., said the separation is a win-win for both companies as it gives Illumina the opportunity to return to its genomic sequencing roots and Grail the chance to pursue other areas such as tumor-specific indications and patient monitoring/therapy selection.

Previously, Grail had agreed to not participate in those areas because Illumina did not want to directly compete with customers.

“It is worth adding that Illumina has not provided guidance on how much it will be paid to reduce its equity position in Grail,” Schenkel said. “That said, we believe the final amount is dependent on how much is raised.”

Grail uses Illumina’s gene sequencing technology to potentially spot any kind of cancer in the body before symptoms appear.

“We will still have a very close business relationship with Illumina because we prize their technology,” Drazan told MDD.

Illumina is now poised to change its contract with the start up to a market-based agreement. Grail will then be treated as a cost-based investment instead of a subsidiary. This move could make Grail one of Illumina’s largest customers over time, both by providing royalties on future testing and through the gene sequencing company’s appreciation in ownership.

IT TAKES A VILLAGE

Grail’s lifeblood comes from its partnerships with investors. On Wednesday, the start up noted that it was working very closely with immuno-oncology specialist BMS in a research collaboration.

As an investor, New York-based BMS will gain early access to Grail’s comprehensive clinical trial databases that may serve as a rich resource for understanding tumor genomics. Additionally, BMS would be able to examine its clinical data using Grail’s analytic tools to inform research and development decisions, guide strategies to advance point of care companion diagnostics.

“A key enabler of our immuno-oncology strategy is to leverage precision medicine to speed the selection of the most effective combinations of therapies for patients,” said Francis Cuss, chief scientific officer, BMS. “Grail’s future innovation potential is significant.”

BMS executives declined to discuss its level of participation in Grail’s series B round.

The partnership with Grail follows BMS’ recent deals with Genecentric Inc. and Enterome SA to explore how biomarkers can enhance response and resistance to therapy and inform clinical trial design.

In its collaboration and equity investment with Genecentric, BMS explored the use of the Durham, N.C.-based company’s cancer subtype platform to identify translational biomarkers for Opdivo, which may help inform future clinical trials.

In its discovery and development deal with Paris-based Enterome, BMS focused on microbiome-derived biomarkers, drug targets and bioactive molecules to be developed as potential companion diagnostics and therapeutics for cancer.

Drazan noted that Grail was very lucky to have support from BMS and its other investors.

“These are all important relationships for us aside from the financial support that they’re giving,” he said.

Grail is even reaching to players outside of the sphere of health care for support – such as electronic commerce and cloud computing specialist Amazon. The Seattle-based company contributed to Grail’s funding round. Drazan said it will be important to foster these relationships as Grail continues to grow.

“We need the advice and guidance of people that have built large, global and disruptive businesses,” Drazan said. “Those insights don’t have to just come from the health care industry.”

LIQUID BIOPSY OPPORTUNITIES

The true clinical impact of liquid biopsy technology remains to be seen, but the potential to represent a major shift in cancer treatment has attracted interest from a growing number of companies of all sizes.

The promise of liquid biopsy technology is so strong, in fact, that 20 stakeholders, including biopharma companies, diagnostic players and academic institutions, are working to create a large database for cancer genomic profiling data as part of the Cancer Moonshot effort.

This liquid biopsy database is expected to serve as the basis for the development of blood-based cancer tests, pooling data from assays that use circulating tumor cells, circulating tumor DNA and exosomes.

If Grail is successful with the CCGA study, then the company could be miles ahead of its competition in the liquid biopsy space, which includes Boreal Genomics Inc., Natera Inc., Personal Genome Diagnostics Inc., Pathway Genomics Corp. and Trovagene Inc.

While both blood-based and urine-based assays qualify as liquid biopsy tests, the majority of players in the space are focused on blood, leaving San Diego-based Trovagene Inc. one of few contenders on the urine-based side of the market.

Grail executives have yet to divulge a commercialization plan for any of the proposed products, but said that information would come in time.

While Grail executives note there are similarities with the other contenders in the space, they pointed out that the company differs because of the wide breadth of what it hopes to accomplish.

“The scale of programs that we’re pursuing and the disruption our products could have on the health care system are profound,” Drazan said. “For those reasons, partners feel like they would like to support that effort and be a collaborator, should there be an offshoot of an output of that research.”

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