Riding on early cancer detection frenzy, Freenome scores $270M to push liquid biopsy tech beyond colorectal cancer

Covid-19 and its manifold secondary effects have forced many biotech companies to adapt their clinical trials to the new normal. For Gabe Otte, it simply reinforced the importance of the tweaks Freenome was already planning with the pivotal study of its blood test for colorectal cancer.

While an average of 800,000 to a million Americans would get screened every month in the pre-pandemic times — around 5,000 to 7,000 of whom would be diagnosed with cancer and proceed to treatment — many would-be cancer patients are now not getting found.

“It’s actually an epidemic,” the chief executive said. “In March of this year for example, we went from 800,000 screening colonoscopies to 56 across the country. Not 56,000 — 56.”

That’s the kind of issue Freenome was founded to address. Not just by providing the infrastructure to local clinics outside of metropolitan areas to participate in its clinical trial, or funding colonoscopies, but also offering a solution that can bypass the burdensome procedures altogether: a blood test that can detect colorectal cancer at an early stage where patients can be cured once the tumor is excised.

It’s also a story that attracted Bain to co-lead a $270 million Series C with old supporter Perceptive Advisors, in pursuit of news tests for other tumors.

The previous round came in at $160 million, a hefty amount for diagnostics — which Otte admitted has generally been “the ugly duckling of the biotech world.” But Freenome is not alone: It shares some investors with Grail and Thrive, both of which have raised large amounts to develop a multi-cancer screening test.

Freenome, on the other hand, has insisted on tackling one cancer type at a time. It also boasts of a “multiomics” platform that measures both circulating tumor DNA and proteins from immune cells that had been trying to attack the tumor.

The 14,000-participant pivotal trial began in May and data release won’t come until 2022 under the best-case scenario. But Otte noted that the product has aced a smaller but similar trial involving 3,500 people, presenting “out of this world” data at ASCO GI this January. Specificity (the ability to weed out true negatives) came in at 94%, while sensitivity (the ability to find true positives) was 94% for stage I/II cases and 91% for stage III/IV cases.

“In the Series B, people still had to just take our word for it, that this was the right way to go,” Otte said. “Now there’s proof that what we have been saying all along actually is panning out in terms of real performance on prospective samples.”

Now with a headcount of 150, the South San Francisco-based biotech is still finalizing which tumors to address next. It could be ovarian cancer, which is very treatable at the early stage, or it can be lung cancer, an area where several adjuvant therapies have become available in recent years. The key is to marry the “early detection with proper early intervention,” according to Otte.

New backers include Fidelity Management & Research Company, Janus Henderson Investors, Farallon Capital Management, Rock Springs Capital, Cormorant Asset Management, EcoR1 Capital, Catalio Capital Management and the Colorectal Cancer Alliance. Existing investors including RA Capital Management, T. Rowe Price Associates, American Cancer Society’s BrightEdge Ventures, Sands Capital, Andreessen Horowitz, DCVC, GV (formerly Google Ventures), Kaiser Permanente Ventures, Novartis, Polaris Ventures, Roche Venture Fund, Soleus Capital and Section 32 also chipped in.

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