Watchmaking, at least before the days of digital watches, carries the connotation of precision engineering and complex assembly by a craftsman, an analogy that extends to the development of next-gen sequencing (NGS) technology. Richard Dawkins had also referred to the craft in arguing that natural selection can explain the complex adaptations of organisms, saying, “In the case of living machinery, the ‘designer’ is unconscious natural selection, the blind watchmaker.”

Trey Foskett is a fan of history and evolutionary biology. He’s also the CEO and co-founder of Watchmaker Genomics, which, as a nod to both the craftsman and Dawkins, was named for the company’s use of directed evolution to impart intelligent design into natural systems to develop NGS technology. Based in Boulder, CO, the company has established a computationally driven and vertically integrated protein engineering and production platform to create best-in-class, tailor-made solutions for DNA and RNA sequencing, synthesis, and editing.

The founders of Watchmaker Genomics are a trio of innovators that have worked at the intersection of biology, engineering, and computer science to create NGS reagents. Foskett started Kapa Biosystems, which focused on protein engineering and NGS reagents and was acquired by Roche in 2015. Chief Strategic Officer Steve McCone co-founded Enzymatics, which did a lot of large-scale, high-purity enzyme manufacturing. Chief Scientific Officer Brian Kudlow, PhD, was previously at the head of ArcherDX, an early NGS oncology assay.

In early June, Watchmaker announced that it had secured $40 million in an oversubscribed Series A, bringing the firm’s total funding to $53.5 million. The round was led by Decheng Capital, with co-investment from Eclipse Ventures. The additional financing will enable Watchmaker to scale the company more quickly to meet the genomics industry’s explosive demands and help realize further their vision of more personalized medicine and improved human health.

GEN Edge interviewed Foskett to learn how Watchmaker intends to use this funding to develop tools and techniques that will unlock the future of genomics, both in the lab and the clinic.

GEN Edge: How did Watchmaker get started?

Foskett: Stephen Picone, Brian Kudlow, and I came together to start Watchmaker with the primary thesis that many of the tools we developed in the last ten years were primarily focused on NGS as an R&D tool. The tools developed at that time that were to be implemented for laboratory-developed tests (LDT) and in the research use only (RUO) setting didn’t suit the clinical needs primarily driven by sensitivity and specificity performance and workflow requirements of the clinical space.

At a high level, the vision for Watchmaker was to transition a lot of these tools from research into clinical. There are a lot of opportunities to drive improvements for existing high-throughput pipelines, like germline and somatic sequencing, and also for the frontier of information space. While single-cell sequencing is still very much a research tool right now, there’s a lot of information informing on the clinical side in areas like circulating tumor DNA (ctDNA) and epigenetics that still have high clinical value. However, in the case of GRAIL and now with Illumina, those tools to do all their clinical work have been based on bisulfite sequencing, which is stone age!

Our first phase of products is supporting the existing pipelines, where we know we can make performance improvements from a reagents perspective, such as for LDT pipelines. From an R&D perspective, we’re focused on helping to build better tools. It’s a little bit of a chicken-or-egg situation: you need the tools to do the population scale studies and biomarker information to determine if there’s clinical utility, but it’s hard to build those tools with clinical intent until there’s utility in place.

We’ve got R&D efforts that are focused on new tools. Over time, we’re interested in supporting both original equipment manufacturer (OEM) channels and clinical assay companies. We’re interested in that ourselves, and we have a team from Archer and Roche and others that have built assays before. But right now, we’re focused on supporting existing companies and pipelines with new and better reagents and tools.

This confluence and interface of computer science, engineering, and biology are opening up many exciting new applications. The markets are bigger and more diverse from an applications perspective than ever. While we’re building our team, we’ve been trying to fill those buckets of competencies to participate in a lot of the growth in that space.

GEN Edge: What paths does Watchmaker take to get products to market?

Foskett: Our primary channels to market are through business-to-business and OEM. We take full or custom formulations of reagents and white label those for others to incorporate into their products.

We also have our direct-to-customer channel, where other groups would take a Watchmaker branded product. We’re focused on the DNA and RNA sample prep space. We take our product and incorporate that into their genetic testing pipelines. Here, we’re focused on commercial sequencing services, labs, LDTs, etc. They buy from Watchmaker a product that then they perform a service with.

Finally, we do customization across both formats volumes formulations, but it’s not an increasing focus for us after the financing. We’re not a CRO or CMO, but we do some custom enzyme engineering work. There are a lot of applications where the performance or the functionality isn’t there yet for some new applications. We work with groups to custom develop and engineer those enzymes and proteins. Typically, we would structure a deal if we’re successful with that co-development, then we become the supplier of that enzyme or that formulation. We don’t do one-off project work, but we will take on projects and share risks and costs.

GEN Edge: Has Watchmaker built out manufacturing capabilities for commercialization?

Foskett: That was also part of our model. At Kapa Biosystems, we did some in-house manufacturing of enzymes, but we were limited in scope, and we didn’t have a lot of expertise. That was one of our theses for founding Watchmaker Genomics. With Steve’s background in Enzymatics, we could pull that off in-house. So, we do all of our manufacturing and are vertically integrated, which allows us to control quality and gives us a lot of opportunities to control and provide custom opportunities because we can make whatever anyone needs for ourselves and others.

From a cost perspective, we have a lot of control over that. Many of these new short-read eco platforms companies competing now with Illumina are trying to drive down costs. We see a lot of elasticity in that there are tens of millions of samples touched every year through sequencing, and as costs come down, the demand continues to increase for that. Part of our model is continuing to drive performance up and cost down. And that drives throughput. Being vertically integrated gives us a lot of flexibility.

GEN Edge: Is Watchmaker Genomics instrument agnostic? Do you see Illumina as a friend or foe?

Foskett: The question is very appropriate. Illumina and I worked closely in my past life. On the one hand, they want the support of their ecosystem. Illumina drives most of its revenue through sequencing—the juice that flows through the system. They do have sample prep, but they’ve been more of an instrument engineering company than a molecular biology company, even from the beginning. They support companies like ours and others that help feed the ecosystem. So, they’re a friend on one side of it.

We do compete in the sample-prep space. We’re small and they’re massive! But additional short-read ecosystems—like Ultima’s UG 100, with throughput that squares up against Illumina’s NovaSeq—are gaining traction. Companies like ours are needed to build the tools to support those emerging ecosystems. So, we’re agnostic. We’re a friend and foe with pretty much everybody. It’s a pretty incestuous industry. We want to enable platforms and applications to touch as many samples as possible with high throughput.

GEN Edge: You’ve just announced a successful Series A financing round. What are your plans having raised another $40 million?

Foskett: Part of the financing was to scale what we’ve built to date and across the organization commercially from a quality production and manufacturing perspective. Goal number one was to step on the gas by building out the infrastructure we already have. Then, from an R&D perspective, it’s a bit of a combination. We have a protein engineering platform that we’ve been working on for the last couple of years.

We’re adding more capital to invest because we’ve seen some excellent proof of concept. We were combining some computational and rational design capabilities with directed evolution coupled with some informatics and machine learning. There’s real power there. That’s why we started Watchmaker Genomics. We’re super excited around the convergence and potential power that brings to our ability to improve and create new functionality for really high-value parts of reagent development. We’re going to continue funding that program. That also goes to fund a lot of our IP estate and the continuing development of IP.

On the other hand, we’re also not a protein engineering company building a platform to help others solve their problems. With our applications experience, we know where some of the bottlenecks are currently, and we know where to focus this first round of enzymes and products. We also see the opportunity to pull forward and accelerate some of the new technology development and method development for applications in liquid biopsy and epigenetics, specifically on the methylation and chromatin side. That’s how we’re bucketing the investment. Then we’re accelerating and pulling forward some of our earlier R&D efforts, specifically in those areas.

GEN Edge: Where do you see Watchmaker in 5–10 years?

Foskett: The market opportunities are bigger than they’ve ever been and we expect that to continue to grow. We also see the diversity of the application space. We want to continue to play a role in our small way to move that forward to impact the transition from research tools to clinical tools and have an impact on human health. We’re just starting to see that happening and it’s beginning to accelerate from that personalized medicine perspective. That topic has been discussed for a long time. Now we’re seeing evidence of that with minimal residual disease (MRD) and in some immune-oncology applications, where an individual’s genetic and proteomic information informs therapeutic decisions.

We see that trend just continuing. Right now, we’re enabling others with our tools to have a direct impact. We’re a degree or two removed from the clinic and patient. But over time, we see things headed from a value creation perspective to a direct contribution to developing and launching end-to-end assays. But that’s not part of phase one; we can’t get that done with $40 million.

With the Series A, we have a new set of milestones that we want from a commercial perspective. Suppose we’re successful on some of the early R&D sides of things. In that case, there may be opportunities for us to continue to do additional fund fundraising, fundraising, and financing for the next phase of our business.

We have a mission and vision of what we want to do and where we will be in the next few years. But as we grow and work with customers and as the R&D engine gets up and running, there’s always an element of being disappointed if in 5–10 years we end up where I think we will today, because that means that we weren’t successful empowering our team, listening to customers, and staying close to the technology trends.

Obviously, we have business plans. You don’t get money without a plan. But you also have to be open-minded around where things are headed and be responsive and nimble around that. If you predetermine what your outcome is, it’s pretty boring. You need to build great teams, empower them, and get them focused on fascinating areas. It’s really cool where things ultimately end up.

NGS didn’t even exist in 2005 when we were founding Kapa. We had hints of it. And my co-founder Paul was developing what became the ABI SOLiD (Sequencing by Oligonucleotide Ligation and Detection) system. We knew that was possible but it was a market that didn’t exist. Nobody knew what impact it was going to have. Roche acquired us because we were a leading sample-prep company in that space for NGS ten years later, but we didn’t know that to be the outcome.

Just keep an open mind and stay focused on important areas. It’s really fun to watch how it unfolds!

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