Good Start Genetics is making boosters from all corners of the life sciences sector in Massachusetts look really good today. The Boston-based startup, which is developing genetic tests for prospective parents, says today that it has finished raising an $18 million Series A round of funding. There appear to be a number of people and organizations in the Bay State that have helped bring the firm to this point.
Good Start has rallied some of the usual suspects in healthcare investing for its maiden funding round: OrbiMed Advisors, Safeguard Scientifics (NYSE:SFE), and SV Life Sciences. The capital infusion is intended to pay for development and the planned 2011 launch of the firm’s genetic sequencing-based service that hopes to test people prior to pregnancy to assess the likelihood of whether a couple will have a child with a genetic disease. The company believes that sequencing genes, rather than using standard genotyping or SNP-based tests that look for specific genes in a sample, could improve a doctor’s ability to tell a patient whether he or she could have a child with a genetic disease.
Founded in December 2007, Good Start has cleared a several hurdles to finish its first-round financing. The startup was born at Harvard University, based partially on science from the lab of genetics professor George Church, and a business plan hatched by students at Harvard Business School. The company got some early traction when it was named runner up in the HBS Business Plan Contest in 2008. Bob Carpenter, an influential director of the Cambridge, MA-based biotech giant Genzyme (NASDAQ:GENZ), was a judge in the business plan contest and was impressed enough with the Good Start team to take it under his wing. Carpenter is currently on the startup’s board of directors. Harvard’s Church is a scientific advisor to the firm.
More things started to click last year for Good Start, which operates out of the Boston University Photonics Center (though CEO Don Hardison says that the firm will be moving soon to somewhere in the Boston-Cambridge area). The Massachusetts Life Sciences Center, the quasi-public agency that manages the state’s $1 billion plan to spur growth in the state’s life sciences sector, awarded the company a $500,000 loan through its Accelerator Fund. Again, the Good Start team caught the attention of a major player in biotech, Marc Beer, a former member of the board at the Life Sciences Center. Beer, who was previously the CEO of the former Cambridge biotech ViaCell, also got involved with Good Start and has become the startup’s chairman.
With the pedigree of so many prominent advisors, Good Start has attracted some top-tier venture backers. New York-based OrbiMed was the first venture firm to commit funding to Good Start, Hardison says. And later came the Wayne, PA-based investment firm Safeguard and SV Life Sciences, which has offices in Boston, Foster City, CA, and London. OrbiMed and SV Life Sciences have closed the two largest healthcare-focused venture funds, both totaling more than half a billion dollars, this year.
“We feel like we really hit the jackpot with three really strong investors,” Hardison says.
Hardison joined Good Start as chief executive in April after a stint as chief operating officer of Laboratory Corp. of America, the Burlington, NC-based clinical test lab services giant. He says he was introduced to the company in January at the JP Morgan Healthcare Conference in San Francisco, where he met with the startup’s chairman Beer about taking the top job at the startup. Since he took the helm at the firm, he said, his big focus has been on closing the Series A round. (He noted that the startup has already paid back the loan it received from the Life Sciences Center last year.)
The startup’s four original founders remain involved in the firm, Hardison says. Paris Wallace and Eric Boutin, the Harvard MBAs, are executives of the firm, respectively. Greg Porreca, a former member of Church’s lab, is director of technology at the startup. Uri Laserson has remained in Church’s lab, yet he serves as a technical advisor to the firm.
Hardison highlighted some of the challenges that Good Start now faces, but he stressed that the company’s technological risk is low. The firm plans to use off-the-shelf genetic sequencing technology, initially from San Diego-based research tools and services provider Illumina (NASDAQ:ILMN). (He declined to discuss the details of the firm’s proprietary technology for capturing genetic information for its service.) A bigger challenge, however, will be breaking into the highly competitive market for pre-pregnancy genetic testing, according to the CEO.
Good Start plans to begin offering its sequencing-based tests through fertility clinics around the U.S., Hardison said. Doctors in such clinics already routinely order genetic tests for patients to help them find out if a patient is carrying genes for inherited disease such as cystic fibrosis, sickle cell anemia, and Tay-Sachs disease. He said the current genotyping and SNP-based tests that doctors typically order are not as comprehensive as gene sequencing. For example, he says that standard test for cystic fibrosis might only be able to show whether a patient has one of 23 mutations of the CF gene, while sequencing a patient’s genes enables doctors to learn whether they have any of the some 1,700 reported mutations of the gene that are linked to the disease.
The startup is now working on making sure that its sequencing service is in the same pricing ballpark as the existing tests. He noted that more than half the market, estimated at several hundred million dollars annually, is composed of patients who pay for the genetic tests out of pocket and without insurance reimbursements. Only a minority of states, including Massachusetts, provide insurance reimbursements for pre-pregnancy genetic tests. Key for the startup will be proving to doctors that its service provides more accurate results than existing tests at a price that is on par or lower than standard products.
Good Start appears to have impressed all the right people so far. Yet only time will tell whether the firm can win over doctors in fertility clinics, and couples who are looking for accurate genetic information before they make their decision on whether to have children.
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