You rarely, if ever, see hedge funds, drugmakers, venture capitalists, and diagnostic companies rally around any single idea in biotech. But that unusual cast of characters is coming together to put their money to work in a startup, Cambridge, MA-based Foundation Medicine.
Foundation is announcing today it has snapped up $42.5 million in its Series B financing, giving it a total of $86 million of investment since its founding in late 2009. This round is unusual in that it brings together a quartet of investors that normally stick to public companies—Deerfield Management, Casdin Capital, Redmile Group, and one other unnamed fund—with strategic corporate investors that include Laboratory Corporation of America, Roche Venture Fund, and WuXi Corporate Venture Fund. That crew joins Foundation’s original investor, Third Rock Ventures, and two other VCs who previously invested—Kleiner Perkins Caufield & Byers and Google Ventures.
This high-profile and diverse group of backers was attracted by Foundation’s first-of-its-kind cancer diagnostic test. The idea is to take individual tumor samples from a patient, and cast a wide net to see what’s happening inside them, by analyzing the 200 of the most common molecular abnormalities that could be driving the growth and spread of that tumor. This is different from traditional cancer-marker tests which specifically have been designed to look for one thing a doctor suspects might be the problem—such as whether a mutated K-RAS gene is driving a patient’s colorectal cancer. By looking broadly across the genome, and putting together a summary report for the doctor on what’s normal and abnormal in the patient’s tumor, the hope is that Foundation’s technology will give the doctor new ideas on which targeted drug or combination of drugs will have the best chance of working for the individual patient.
Foundation first started selling its test last fall, and saw physician demand surge almost immediately on word of mouth. The buzz continued among leading doctors at the American Society of Clinical Oncology (ASCO) meeting in June, when Foundation started actively marketing the test. The startup isn’t saying how many orders it has processed in its first three months of active marketing, but it has seen “significant growth” in usage each month in 2012, which accelerated post-ASCO, even without having a national sales force in place, says CEO Mike Pellini. So far, the Foundation test, which has a list price of $5,800, has been ordered by 400 physicians in 16 countries. While that’s a small percentage of practicing cancer physicians, many of those customers are apparently happy with what they are getting, because three-fourths of the orders for the Foundation test are from repeat customers, Pellini says.
The new financing “is a testament to the fact that Foundation Medicine is a different kind of company,” Pellini says. “We’ve come a long way in only two years. The clinical availability of our test is changing the way cancer is treated, and investors have taken notice.”
Alexis Borisy, a partner at Third Rock who co-founded the company and remains its chairman, said he sees the company delivering on its original vision. “The core focus of the company since we were first sitting around the table has been to make cancer genomic analysis a reality in day in day out real world, everyday clinical practice,” Borisy said via e-mail. “We felt that many patients and their physicians would benefit from an understanding of what had gone wrong in the specific programming code of their cancer…..that having this information in day in day out practice could transform the practice of oncology and make a big difference for doctors, for patients’ lives, and for our healthcare system…..I think we all still feel this passionately.”
Foundation currently has 70 employees and, with the new financing in hand, it plans to hire
