NanoString Technologies, a Seattle-based maker of genetic analysis tools, has nailed down $30 million in a third-round venture financing to boost sales of its first product, just as it was running low on cash while it tries to prove itself in the marketplace.
The round was led by Clarus Ventures, and was joined by NanoString’s two founding investors, OVP Venture Partners and Draper Fisher Jurvetson. NanoString, founded in 2004 from the lab of biotech pioneer Leroy Hood at the Institute for Systems Biology, has now raised $47 million since its beginning. This round ties NanoString with Calistoga Pharmaceuticals as the second-biggest fundraiser in the Seattle life sciences industry this year, behind the $42 million round raised by Kirkland, WA-based Pathway Medical Technologies.
NanoString’s new money will be used to help the company boost U.S. and international sales of nCounter, an instrument that’s supposed to give biologists a digital readout that says to what extent a given gene is dialed on or off in a tissue sample. The technology had a coming-out party in the pages of the journal Nature Biotechnology a year ago, and booked its first commercial sale last July. It is now competing against some heavyweights in the market for gene expression tools—Santa Clara, CA-based Affymetrix (NASDAQ: [[ticker:AFFX]]), Carlsbad, CA-based Life Technologies (NASDAQ: [[ticker:LIFE]]), and San Diego-based Illumina (NASDAQ: [[ticker:ILMN]]).
Machines that usually do this sort of precise gene expression analysis, known as real-time PCR, make up a market worth $1 billion a year that’s growing at a 20 percent annual rate, NanoString’s top executive at the time, Perry Fell, told me in this feature story last July. It’s the sort of technology that’s supposed to help researchers do a new kind of large-scale genetic experiment, where they might compare 100 genes from 100 different patients with diabetes to see how they respond to certain therapies.
“It’s a great company, the product is terrific, it answers a lot of important questions and gives you better results than competing technologies,” says Chad Waite, a managing director with OVP Venture Partners, who helped seed the company. But he’s quick to add, “We’ve still got work to do.”
Nanostring isn’t profitable, and it ran into bad timing
