DNAnexus Seeks to Capitalize on Data Pile-Up, as Leader in Genomic Analysis Software

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The time is right for someone to come along and build a great company in bioinformatics, according to Andreas Sundquist. He’s betting it will be his team at Palo Alto, CA-based DNAnexus.

Scientists have been complaining for years about massive amounts of data piling up on their servers as gene sequencing instruments have become ever better, faster, and more efficient. Yet even as San Diego-based Illumina built a business worth $5 billion as the market leader in these instruments and the chemical reagents they need, nobody has come along with a dominant software program to help researchers analyze and visualize what these billions of genomic data points mean for human health.

Sundquist, 30, has seen the data logjam get worse through his years in graduate school. He was 23 and just embarking on his career in computational biology when the original Human Genome Project was completed in 2003. He studied computer science and electrical engineering at MIT, and then went on to get his doctorate in computational biology from Stanford five years later. Those years were marked by extraordinary progress from companies like Illumina and Life Technologies that have brought the cost of sequencing below $10,000. One ambitious startup, Menlo Park, CA-based Pacific Biosciences, is racing to make a machine that can perform the task in as little as 15 minutes.

While all that innovation was happening, Sundquist and his peers at Stanford saw the software to analyze all this data is still produced by a cottage industry. The bioinformatics industry is mainly composed of custom-made programs at individual labs, with some open source programs, and a few small private companies like Seattle-based Geospiza and Westborough, MA-based GenomeQuest. The market is still tiny, probably in the “tens of millions” of dollars, Sundquist says. But it is bound to become more lucrative over time as fast, cheap sequencing becomes the norm and researchers will have to better analyze their data to delve deeper into what genomes can tell us about human health and disease.

Andreas Sundquist

Andreas Sundquist

“We saw a huge trend,” Sundquist says. “We believe there’s going to be a large market in sequence analysis.”

DNAnexus got going last July with a $1.55 million seed financing, led by First Round Capital out of San Francisco. Sundquist was joined by a pair of co-founders from the Stanford faculty—Arend Sidow, an associate professor of pathology and genetics, and Serafim Batzoglou, an associate professor of computer science. The company debuted with its commercial product in April at the Bio-IT World conference in Boston, and has signed up “hundreds” of users since, Sundquist says.

The idea at DNAnexus is to offer a low-cost, user-friendly way for researchers to do some basic analysis of their sequencing runs. Typically, a researcher will run a sequencing instrument to get the data he or she wants, and then spend six to 12 months “playing around with the data,” Sundquist says. That means finding out what tools are available, downloading them, and figuring out how … Next Page »

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