PhyloTech, Corey Goodman’s First Environmental Health Startup, Raises $1.2M in Seed Capital

Xconomy San Francisco — 

Corey Goodman, the prominent biotech entrepreneur, looked at the view from his home at Tomales Bay in Marin County, CA one day in the late ’90s, and was stunned by what he saw. Officials were taking water samples, looking for bacterial contamination that was making people sick. It was all a big mystery where it came from, and what to do.

“I remember thinking, here we are in the Bay Area, in the era of molecular biology and genomics technology, and we’re using technology to sample water that was about 100 years old, literally from the 19th century,” Goodman says. “You could watch public policy being made, and they were doing it blind. I figured there has to be a better way.”

It took a long time to find, but Goodman is betting he’s found the answer now in a startup called PhyloTech. This is Goodman’s first foray into environmental health, after a long and decorated career in academia, as the co-founder of such medical biotech companies as Exelixis (NASDAQ: EXEL), and Renovis, and as president of Pfizer’s Biotherapeutics and Bioinnovation Center. Now he’s the chairman of PhyloTech, and one of the angel investors who have pumped in $1.2 million in seed financing, along with Seraph Capital and Wavepoint Ventures.

The new company is led by Thane Kreiner, a former senior vice president at Affymetrix and a Goodman protégé. The science comes from the lab of Gary Andersen at the Lawrence Berkeley National Lab in Berkeley, CA. The vision is to perform the first-ever comprehensive, and highly selective analysis of all 55,000 known forms of bacteria in nature, what’s known as the “microbiome.” It’s possible to hunt for certain bacteria based on their genomic signature with next-generation sequencers or RT-PCR machines, but it costs too much, takes too long, and can only look for a limited number of varieties of bacteria in a sample. No technology until now has been designed to tackle something as broad as the full microbiome, Kreiner says.

Corey Goodman

Corey Goodman

PhyloTech’s method, licensed from Lawrence Berkeley, uses a gene chip it calls the “PhyloChip,” paired with bioinformatics software, that can spot specific signatures of all the bacteria in a sample of food or water, Kreiner says. By hiring a contract lab in North Carolina, and saving money on servers by renting space through a cloud computing vendor, PhyloTech has found a way to run these comprehensive tests for customers for less than $1,000 per sample and send back the results in a few weeks. This structure made it so the company could pursue a variety of hundred-million-dollar plus markets, like water testing, food safety, and even possibly diagnostic uses to look for clues into why people get allergic reactions, for example.

Based on PhyloTech’s lean cost structure, and the demand it sees from customers who have been coming to Andersen’s lab, Kreiner says it’s possible for the company to become profitable as soon as the end of 2011.

“The sky’s really the limit for our potential,” Kreiner says. “There could be multiple subsidiaries, spinoffs, and joint ventures over time.”

Besides Goodman and Kreiner, Janet Warrington is one of the co-founders and key architects who will help decide which opportunities to pursue first. She worked alongside Kreiner for 12 years at gene chipmaker Affymetrix (NASDAQ: AFFX), where she was the vice president of research and development.

The story about where this technology comes from is pretty interesting. Goodman, as mentioned above, was flabbergasted that state and federal environmental officials … Next Page »

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