Here Is a Human Being (12 page)

Lapidus assembled a scientific advisory board of thought leaders in the field, including Quake, George Church, and automated sequencing pioneer Leroy Hood.
³⁹
Helicos’s board of directors came to include venture capitalist Noubar Afeyan, the guy who launched Craig Venter’s commercial sequencing venture Celera Genomics while still at ABI.
⁴⁰

It was an impressive lineup. But all of this after reading a paper that outlined a method that had managed to sequence only five bases at once? The average gene was two thousand bases long. The human genome was 6
billion.
What exactly was Lapidus thinking?

“Quake had addressed the fundamental physical and chemical questions behind single-molecule sequencing,” he said. “The judgment you make in the entrepreneur game is this: When is enough proof-of-principle enough? I’ve had three at-bats in my career, and in terms of assessing technical feasibility, I have a pretty good track record. That may be the one skill I have.”
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Lapidus contacted Steve Lombardi, the former ABI executive and battle-scarred veteran of the Genome Wars who’d persuaded Craig Venter to join forces with the company and guided its North American sequencing business from 1989 to 1998. Lombardi, a large and friendly man with a beard, glasses, and New England roots, was trained as a nucleic-acid chemist. After seventeen years at ABI, which was not exactly well-known for its forward-thinking corporate culture, Lombardi decided he needed something else. He moved to one of the other Silicon Valley–based genome-technology behemoths, Affymetrix, and while there worked in corporate development, R&D, and marketing.
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Affymetrix was a darling of the biotech market in the 1990s as it led the way in the development of microarrays, thumbnail-sized glass chips that could hold tens of thousands of DNA fragments. By probing the chips with a DNA sample of interest (say, from a patient’s tumor), one could measure the extent to which an entire genome’s worth of genes were turned on or off in any given cell type.
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Affymetrix went on to develop chips that could allow one to genotype a million or more DNA markers at once, thereby providing the technology used by personal genomics companies such as Navigenics to offer glimpses of customers’ genomes (see chapter 4). But Affymetrix had struggled in the new millennium: the bursting of the biotech bubble hit it hard while other companies, most notably Illumina, caught up in microarrays and branched out into other technologies, namely sequencing.
⁴⁴
Affy was accused of preferring litigation to competition in the marketplace.
⁴⁵
In the course of researching this book, Lombardi was one of many former Affyites I talked to who had moved on.

But Lombardi was not committed to jumping ship when he went out to dinner with Stan Lapidus in early 2006. It would be a huge professional risk: after all, ABI had ruled the DNA sequencing roost for nearly a decade, 454 had already launched its next-gen machine, and Solexa and ABI itself were poised to join the fray with their own would-be successors to the Sanger method. Whatever Affy’s problems, why would Lombardi leave a comfortable gig there to move back across the country and join a company built on an unproven technology that would be, at best, fourth to market? But he liked the people he saw at Helicos, many of whom he knew personally from his years at ABI. And like Lapidus, he was seduced by the simplicity of single-molecule sequencing.

“I remember coming back from dinner with Stan and my wife said, ‘You look like you’re thinking about this.’ And I said, ‘If it works it could be the next big thing.’ I was fifty-one, the house was paid for in Palo Alto, and my daughter was a senior in college. If there was ever a time to take a flyer, it was now.” The Lombardis packed up their belongings and their 175-pound mastiff, Jezebel, and drove east.
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When I asked Steve what was so intriguing about Helicos’s “true single-molecule sequencing,” his answer was a hybrid of business and science, the take-home message of which was “less is more.” Success in the next-gen market was going to be about how much DNA one could pack on the surface of a flow cell—that is, the small surface where the actual business of sequencing took place inside the machine. “We think we’re going to be able to more effectively play the game of price versus performance,” Lombardi said. “We think this will end up being about the length of read times the number of DNA strands one can fit on a flow cell. And inherently, we are thousands of times better on the number of strands because we can pack single DNA molecules together very tightly.”
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The other appealing bit of simplicity for Lombardi was the way in which Helicos streamlined the entire sequencing process, a perpetual thorn in gene jockeys’ sides—recall Jay Shendure’s description of PCR as a pain in the ass. “How did the ABI 3700 transform the sequencing industry in the 1990s?” said Lombardi. “Workflow. With automation, you needed to do less work both before and after the actual sequencing. The same is true for the HeliScope,” he said, flashing me a slide of the company’s large fridge-sized sequencer. “Here’s our sample prep process: purify the DNA from the sample, shear it into small pieces, do a simple enzymatic step, and then load the flow cell. It’s a simple process, a scalable process, and a repeatable process.”
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The next-gen landscape roiled and consolidated: 454 was bought by Roche for $140 million.
⁴⁹
Illumina bought Solexa for $600 million and quickly became the front-runner in next-gen sequencing, and ABI bought Agencourt Personal Genomics for $120 million.
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Helicos, on the other hand, opted to walk alone, going public in May 2007.
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As the other guys went looking for suitors, why did Helicos choose to remain a pure-play, stand-alone sequencing company, especially since it was relatively late to the party?

“It’s pretty simple,” said Stan Lapidus in a voice that had clearly worked its magic on venture capitalists and investment bankers. “If you believe that this class of technologies changes the way scientists do research, changes the speed with which pharma companies make their way down the funnel to get compounds that might actually work, and changes the way diagnostics is conducted—and I believe all of that as much as I believe anything—then you have to believe that we’re not building a company that is to be opportunistically sold. Rather, we’re building a company for the long run—we’re building a company with legs.”
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Lapidus went on to say that Helicos’s remaining independent made sense because it was not a one-trick pony; in his view, single-molecule measurements represented a paradigm shift that extended well beyond genomics. “Until now biological measurement has been carried out from a chemist’s viewpoint, measuring stuff indirectly in moles—a wacky way to view things. That makes no sense to a cell biologist because cell biology is based on low concentrations of stuff in a cell overall, but with very high
local
concentrations. In other words, biology is inherently about single molecules. Indirect measurements in biology have slowed progress down, just as they have in every other science. The War on Cancer hasn’t moved as fast as we had hoped because we measure cancer indirectly. Another way to think of Helicos is as a company whose mission is to
change measurement science
in biology. Today we’re focused on nucleic acids; in the future we may focus on proteins, carbohydrates, antibodies, all on a single-molecule scale. In our view the HeliScope is the universal biological measurement platform.”
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Investment analysts I spoke with saw more practical reasons for Helicos to go public: money. When Illumina ponied up $600 million for Solexa in late 2006 during a terrifically soft biotech market, it was a clear signal to Wall Street that next-gen sequencing was hot. John Sullivan, a pompadoured Bostonian who covered the sequencing market for Leerink-Swann, said the richness of the Solexa deal “made it easier for Helicos to tell its story to investors.”
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Un Kwon-Casado covered Helicos for Pacific Growth Equities, which, like Leerink Swann, was a Helicos backer. Over lunch on a stereotypically foggy San Francisco day in December, this tiny, amiable, astute woman patiently explained why the company’s $43 million net was not all that important. “It’s not about how much money you raise,” she said, “it’s about what your company is worth
after
you raise the money. Today [December 2007], Helicos is worth about $200 million. At this stage they couldn’t get $200 million from a pharmaceutical company—it’s too early. Someday they could be worth $1 billion. Or they could be worth zero.”
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At Marco Island, Helicos’s chief science officer, Bill Efcavitch (another former ABI engineer), gave a talk that aimed to show how the company had conquered the homopolymer problem—that is, the inability to get the enzyme to correctly read through repetitive regions of DNA. Using a newly invented molecule to make sure the sequencing reaction occurred with high fidelity, the Helicos brain trust presented data on successful sequencing of homopolymers. After the talk, Steve Lombardi came bursting through the doors, buoyant. “People were questioning whether you could do this on a single-molecule platform. And these guys just nailed it. It sort of closes the book on the technology component. Now it’s just development at this point, which has its own risks and pitfalls.”
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Indeed. Helicos burned through $33 million in 2007. At the time of the public offering in May, the expectation was that the first instrument would be shipped by the end of that year. By summer the company had multiple prototypes on its factory floor in Cambridge. But Helicos had been promising to deliver an instrument for years and had yet to do so. Would the company be accused of crying wolf? Not only that, now Lapidus, Lombardi, and company were constrained by the rules of disclosure and discretion Helicos had to follow once it became publicly traded. Would its silence be interpreted as bad news?

Lombardi assured me that the beta testing was going well, but the machines were still not quite up to the specs the company had promised: 90 million bases per hour at the first pass and 25 million at the second, output that was unthinkable two years earlier but that now seemed necessary if Helicos were to continue to turn heads on Wall Street and in the labs that were considering the other new machines from 454, Illumina, and ABI—machines, incidentally, that were already on the market and whose sticker price was less than half of Helicos’s $1.35 million.

“The HeliScope is a pretty expensive machine to make,” said Tim Harris. “But $1 million is a serious barrier to potential customers and I tried very hard to convince management of that. I thought they should make a machine that went a third as fast for a third as much. I lost the argument.”
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“Gosh, the price of that machine would have to get cut in half before I’d even look at it,” said a wide-eyed Kevin Shianna over drinks at a Marco Island cabana in 2008. Kevin was a friend who ran the primary sequencing facility at Duke. “Even if that is the best technology out there, imagine us trying to get that money from our funders. Five hundred thousand is a lot of money, but when you start talking about one million dollars just for the instrument …” His voice trailed off. “And then you have to deal with the enormous amount of data that comes off of it. Now you have to buy server space. It starts to add up.”
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Kwon-Casado thought this reaction would be typical. “Seventy percent of the market will not buy this instrument because it’s too expensive,” she said. “A lot of labs have barely scraped together the budget to buy an Illumina. Helicos doesn’t have to be Illumina and move a hundred and fifty instruments a year to be a success. But,” she went on, “they haven’t launched on time, they haven’t published any data, and they haven’t shown how quickly they can ramp up production and improve their specs. They have a lot of work to do.”
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She confessed to being underwhelmed at the company’s IPO presentation. “They had this big-picture, fluffy investor presentation talking about diagnostics and all these huge market opportunities. They compared the HeliScope to the microscope—they said that this machine would be to human health what the microscope was to infectious disease! Come on. Just give us the technical details: How are you better than Solexa? How fast are you gonna get there? We were being asked to have blind faith in management that they weren’t just bullshitting us.”
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Meanwhile, just as Helicos was having its Wall Street coming-out party, third-generation sequencing companies were already raising money and generating buzz about technologies rumored to be still faster, cheaper, and more accurate than the current state of the art: Pacific Biosciences, VisiGen, Complete Genomics, and Intelligent Bio-Systems were all starting to court investors and high-profile scientists.

For Helicos, questions abounded: How could the company charge twice what the competition did without demonstrating tremendous accuracy? Where were the data? It was not clear when the first instrument would ship. Folks were getting nervous.

The Broad Institute’s Chad Nusbaum was more forgiving. “I understand their desire not to get a machine out before they’re ready. They’ve been very careful over the last year, which I think is good because they misjudged how far along they were a couple years ago. They learned from that experience.”
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And despite her own stated misgivings, Kwon-Casado, too, was cautiously optimistic Helicos would get its act together. If the instrument did what the company said it could do, she told me, the rest would take care of itself. “Listen, it’s a different technology. It’s not really competing with the Illuminas and ABIs of the world. It’s a different market segment. It’s a Ferrari to the everyman’s Chevrolet. The Ferrari market is a lot smaller; there’s not as much demand. But it has its place in the world.”
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