Jonathan Rothberg, PhD, the brilliant, brash bio-engineering impresario behind companies such as 454 Life Sciences, RainDance, Ion Torrent, and Butterfly Network, is back in the biotech business.
Rothberg galvanized the next-generation sequencing (NGS) industry when he founded 454 Life Sciences in 2000, a spin-off from his 1990s genomics company CuraGen, which invented and commercialized a semiconductor chip-based sequencing system before being acquired seven years later by Roche. In 2007, Rothberg’s team produced the first personal genome sequence using an NGS platform—that of Nobel laureate Jim Watson. A subsequent start-up, Ion Torrent, developed another ingenious NGS technology that is now owned by Thermo Fisher Scientific.
Now, another Rothberg-founded company created through his 4Catalyzer startup accelerator, Quantum-Si, is gearing up to similarly disrupt academic research and drug discovery through an enhanced version of the sequencing technology he invented. Quantum-Si has created what it says is the first next-generation protein sequencing platform designed to provide a full solution spanning from sample preparation to sequencing and data analysis.
“At 454, we did things in a massively parallel way on a single substrate. At Ion, we changed that substrate into a semiconductor chip, and it was good to sequence DNA and short pieces. Quantum-Si is the next step,” Rothberg told GEN Edge from aboard his 55.5 m (180-ft) Damen Yacht Support vessel Gene Chaser. “It’s a universal chip, and we can use it for protein sequencing. We can use it for digital analytes, so if you want to know what proteins are in a sample. And we can actually take an off-the-shelf kit, for example, from PacBio, put it on our machine and do long read DNA sequencing so it’s a universal platform.”
Quantum-Si has committed itself to revolutionizing proteomics by transforming single-molecule analysis and democratizing its use by providing researchers and clinicians access to the proteome.
The company plans to use the $500 million (or more) it received through the business combination it has completed with HighCape Capital Acquisition, a Special Purpose Acquisition Company (SPAC) sponsored by HighCape Capital. The business combination and a concurrent $425 million private investment in public equity (PIPE), were both approved by HighCape’s stockholders on June 9.
Two days later, the combined company’s Class A common stock and warrants began trading on the NASDAQ Global Market under the symbols “QSI” and “QSIAW,” respectively. Shares of Quantum-Si opened at $10.65, but have slipped since then to $8.30 at the close of trading Wednesday.
Building a platform
“We went with a SPAC specifically because we are building a platform, and when you build a platform, you have to continue to build both the devices that make the platform—in this case a chip that sees chemistry and allows us to sequence proteins. But you also want to develop a series of applications, and the SPAC allowed us to raise the money to develop both the platforms,” Rothberg said.
The company’s SPAC raised nearly double the $353 million raised by the average initial public offering (IPO) last year, according to FactSet.
Quantum-Si’s semiconductor chip-based protein sequencing and genomics technology is powered by what the company says is the world’s first massively parallel single-photon counting semiconductor chip. The technology is designed to read proteins at single molecule-level resolution, specifically amino acids, in line with Moore’s Law—Intel co-founder Gordon Moore’s famous maxim that computing would dramatically increase in power, and decrease in relative cost, both exponentially over 18 months (later revised to 24 months).
Quantum-Si’s platform is an end-to-end solution consisting of the Platinum™ flagship next-generation protein sequencing instrument, designed to make the power of single-molecule detection and next-gen protein sequencing broadly accessible; the Carbon™ automated sample preparation instrument; the Quantum-Si Cloud™ software service; and reagent kits and chips for use with the company’s instruments.
Platinum, the size of a microwave, uses an approach to sequencing that Quantum-Si calls Time Domain Sequencing™. The technology removes dependency on color as an identification method, which the company has cited as a hurdle for applications beyond genomics where only four colors (to detect four nucleotides) are needed.
“What we use is time,” Rothberg explained. “The beautiful thing is chips are exquisitely accurate at measuring time, so we can differentiate between the different amino acids. We can even differentiate between modified amino acids. When you’re doing drug development for a large pharmaceutical company, you want to know which proteins are modified and we can see those modifications.”
Just as oncology drove the growth of sequencing via Ion Torrent two decades ago, Rothberg said, the need to understand these proteins in immunology as well as immuno-oncology are expected to drive growth for Quantum-Si.
Mass spec alternative
The Quantum-Si platform is on track to launch in 2022 for research use. The company has begun a limited release phase to enable undisclosed key partners early access to the platform: “We do have the instruments on three continents,” Rothberg disclosed.
Quantum-Si expects its benchtop Carbon and Platinum instruments to cost approximately $50,000 combined—compared with legacy instruments like mass spectrometers, which can cost $250,000 to $1 million or more and require specialized training.
“We have a common theme that we start companies because of somebody I love and we want to be there when someone we love needs the technology,” Rothberg told GEN Edge, speaking hours after he and dozens of Quantum-Si staff, family members, and friends cheered Rothberg’s daughter Gabby as she rang NASDAQ’s opening bell for the start of trading to celebrate her father’s newly-public company.
A chemical engineer by training, Rothberg was awarded a National Medal of Technology and Innovation by President Obama in 2015 for 454’s DNA sequencing technology. It marked the dawn of the NGS era, even if 454’s innovative technology was eventually overtaken by Illumina’s sequencing-by-synthesis technology (acquired from Solexa).
In addition to 454 and Quantum-Si, Rothberg has founded numerous companies that include AI Therapeutics (cancer and rare disease drugs), Butterfly Network (chip-based ultrasound), Clarifi (hedge fund software), DeTect (faster, more accurate diagnostics), Hyperfine (portable MRI), Ion Torrent Systems (chip-based sequencing; acquired 2010 by Life Technologies, since bought by Thermo Fisher Scientific), Liminal Science (deep learning non-invasive brain monitor), RainDance Technologies (droplet microfluidics; acquired 2017 by Bio-Rad Laboratories), Tesseract Health (retinal imaging diagnostic), and 4Bionics (holding company for Liminal, Tesseract, and Detect shares).
Rothberg said he is inspired by each of his five children “to do something that hasn’t been done before. Each one of the companies is creating something new, whether it’s an ultrasound on a chip for Butterfly, or the world’s first next-generation protein sequencing on a chip for Quantum-Si.”
Rothberg said the SPAC and PIPE deal has enabled Quantum-Si to partner with Kevin Rakin, chairman of HighCape Capital Acquisition and partner in HighCape Capital, a growth equity life sciences fund. Rakin is a veteran investor and CEO of public life sciences and genomics tool companies who co-founded HighCape in 2013, and whom Rothberg has known for more than 20 years.
“We really wanted somebody that understood that we’re building a new industry, and who understood next-gen proteomics would be as big as next-gen sequencing,” Rothberg said. “Kevin had watched us at 454 and then at Ion Torrent build next-generation DNA sequencing, so he knows exactly what it took to build next-gen protein sequencing. He knew it took a team to develop the platform and then a team to develop the applications, so that really was fortuitous.”
In 1995, Rakin co-founded Genaissance Pharmaceuticals, an early pharmacogenomics company specializing in integrating the use of single-nucleotide polymorphisms into the development of DNA-based therapeutics and diagnostics. He served as Genaissance’s president and, after the company went public, added CEO duties from 2002 until the company was acquired three years later by Clinical Data for $56 million.
(Rakin, it should be noted, later served as chairman and CEO of regenerative medicine company Advanced BioHealing from 2007 until it was acquired in 2011 by Shire, which named him president of its Shire Regenerative Medicine unit. Shire was acquired by Takeda Pharmaceutical for £46 billion (about $65 billion) in 2019. That year, Rakin agreed to pay the U.S. government $2.5 million to settle federal allegations tied to his tenure at Advanced.)
Finding match, market
Quantum-Si is the second Rothberg-founded company to go public via SPAC. The first was Butterfly Network, which has developed a portable ultrasound whole-body imager, for less than $2,000. Butterfly merged with Glenview Capital Management in a $1.5 billion SPAC deal completed in February.
“People say there’s 500 SPACS, but there was only one SPAC for Butterfly, because Larry Robbins [Glenview’s founder, CEO, and portfolio manager] was the largest investor in all the enterprise hospital systems that we wanted to bring Butterfly to. So that was the perfect SPAC for Butterfly,” Rothberg said. “In the same way, Quantum-Si found a SPAC that was a match.”
Based in Guilford, CT, Quantum-Si also has offices in New York; San Diego, and Palo Alto, CA: Rothberg said the company has a headcount of over 100; “We will be doubling in size in the next 12 months.”
Quantum-Si has found a market opportunity in proteomics that, according to Allied Market Research is expected to nearly double, from an estimated $36 billion in 2020 to $70 billion by 2025.
The current market for the platform, according to Quantum-Si, is an estimated $21 billion, consisting of three primary user groups: users of legacy proteomics technologies, such as mass spectrometry; users of benchtop NGS instruments; and users of protein analyzers for analyte testing.
While the majority of that market leverages research use only (RUO) technology, Quantum-Si says it expects some customers may prefer a system that has undergone full FDA approval for clinical use. The company’s protein sequencing platform is currently intended for RUO applications.
“Many technologies across these segments are decades old with limitations that have prevented broad spread adoption of proteomics research,” Rothberg said. “We believe our products and technologies have the potential to provide users across life sciences research market access to the proteome in a simple, cost effective, unbiased, and scalable manner.”
For two decades, he asserted, proteomics has remained in an analog world even as sequencing advanced toward digital. That changed when 454 made NGS possible for the research community, enabling the sharing of data.
“Now we’re making proteomics digital so we can aggregate that information,” Rothberg said. “The technical hurdles have been the ability to see proteins at the single molecule [resolution] because you don’t amplify proteins like you can DNA, and [you didn’t have] the ability to differentiate between 20 different amino acids potentially and their modifications. Quantum-Si has solved the single molecule problem and the differentiating problem.
“It’s really the right time for proteomics now!”
Two week delay
As with many recent SPAC deals, the Quantum-Si SPAC transaction was delayed about two weeks after the U.S. Securities and Exchange Commission (SEC) began classifying SPAC warrants as liabilities rather than as equity. The SEC-induced delay had no material effect on Quantum-Si, Rothberg said.
Quantum-Si received approximately $534 million prior to transaction fees, including approximately $109 million cash and $425 million from PIPE investors—including Foresite Capital Management, Eldridge, accounts advised by ARK Invest, and Glenview Capital Management.
The cash will come in handy for Quantum-Si, which finished the three months ending March 31 with a net loss of $11.8 million, exceeding the $10.3 million net loss for January–March 2020. Quantum-Si has an accumulated deficit of $184 million as of March 31.
Quantum-Si’s management team and existing stockholders have rolled 100% of their equity into the combined company. The management team is led by John Stark as CEO; Matt Dyer, chief business officer; Mike McKenna, president and COO; Claudia Napal Drayton, CFO; and Christian LaPointe, general counsel.
Rothberg serves as executive chairman of Quantum-Si’s board. Last month, that board was strengthened when Quantum-Si appointed two business veterans: Ruth Fattori, former executive vice president and chief human resources officer at PepsiCo; and Marijn Dekkers, PhD, who served as CEO of Thermo from 2002–2009, and Bayer CEO from 2010–2016.
Also joining Quantum-Si’s board are: Brigid Makes, former senior vice president and CFO of Miramar Labs; Michael Mina, MD, PhD, Quantum-Si’s chief medical advisor and an epidemiologist at Harvard Medical School; Jim Tananbaum, MD, founder and CEO of Foresite Capital Management; and Rakin.
“Before you try to do next generation, you have to understand the last generation,” Rothberg said, explaining Dekker’s appointment by citing Thermo Fisher’s role in advancing mass spectroscopy during Dekkers’ tenure as CEO. “We want to make sure we understand the generation before. We want to understand it was too hard for most people to use those proteomics technologies like mass spec. They were only in central laboratories. And now we’ve done it so you can be in any laboratory or any CLIA lab.”
Or, for that matter, a nautical laboratory. Rothberg’s Gene Chaser includes a fully equipped research lab. “I have the technology on my boat,” he said.