Medical Testing Is So Hot Right Now. This Startup Wants In

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The California headquarters of Cofactor Genomics is a bright little bungalow a few blocks from downtown Mountain View. Floral vines abuzz with insects and hummingbirds partially obscure the patio and its two Adirondack chairs. Jarret Glasscock opens the door with a bubble-cheeked smile and a plaid shirt and a self-admonition because his partner Dave (Messina) is not yet back with croissants.

He lets me into a house that is pastel-bright with throw pillows on the couch, a fur rug by the fireplace, and granite counters in the kitchen. We sit down at the distressed wood dining table and make chitter chatter. How are you fitting in here in Silicon Valley? How is the culture different from Missouri? How are startup people different from biotech people? Where do you go for drinks? Oh hi Dave, good to meet you. Thanks for the croissant and bottled water.

Now that you’re here, why don’t the two of you tell me how you plan to diagnose disease from little rings of RNA that most biologists considered junk three years ago? Let’s talk about your $1.5 million National Institutes of Health grant. While we’re at it, why did you decide to temporarily uproot your company—which is nearly a decade old and already pulling in millions of dollars—to join Y Combinator, the startup boot camp known more for putting nestling consumer tech companies like Instacart, Airbnb, and Dropbox into high orbit?

Maybe that last one shouldn’t be such a surprise. It’s because Silicon Valley is about what’s hot … and hoo boy are diagnostics hot right now. Google is cataloguing genes, Apple is crowdsourcing patient data, and a company called Theranos is valued at $9 billion for promising to sell fingerprick diagnostic tests that don’t hurt (much) and can cost consumers less than $10.

And now here’s Cofactor, an RNA sequencing company that is turning away from drug discovery for big pharma toward consumer diagnostics. That’s right, a pivot.

Maybe they belong here after all.

The lab at Cofactor Genomics. Cofactor GenomicsDisrupting diagnostics (but really)When you get your blood drawn, doctors are looking for proteins and antibodies inside it—proxies for disease. Based on the presence and quantities of certain proteins or antibodies, a diagnostic physician can say with reasonable certainty whether you’ve been fighting off a particular disease.That’s the kind of test Theranos, the darling of West Coast biotech startup-land, is trying to upend. The twin elephants of blood diagnostics, Quest Diagnostics and Laboratory Corporation of America, use big needles, charge high prices, and make getting tested a hassle. Theranos wants to put things in the consumer’s hands. Instead of dreading the needle during your annual (OK, let’s be honest, every six years) checkup, you can pop into Walgreens, get a teeny fingerprick for a few bucks, and get your results by text message within hours.Theranos has convinced its funders that convenience is the future of diagnostics, raising $400 million from the likes of Larry Ellison and Don Lucas Sr. But there are other less traditional—and potentially more effective—ways to diagnose disease.Standard blood tests aren’t perfect, because they rely on your body to respond to disease by making proteins. But early in a disease, your cells might not have made enough proteins to show up. Or maybe the disease you have—Parkinsons, for instance—doesn’t really make proteins at all. And while testing for the protein-making genes could be a solution, DNA isn’t a good diagnostic tool. All it shows is your body’s potential, not what it’s doing.Cofactor thinks RNA is the missing link. “When most people think about genetic diagnostics testing, they think about DNA,” says Glasscock. But DNA only gives estimates of risk. “If you get a DNA test, the doctor will be able to tell you that instead of a 7 percent chance of cancer, you have a 14 percent chance,” he says. “Also, you have 12 percent chance of male pattern baldness, and you’re 4 percent Neanderthal—and you’re like, ‘No shit, Sherlock! But what’s happening with my tumor?'”So: Protein tests are reflective of your body’s current reality, but miss some of the details that DNA can pick up. “This idea of RNA diagnostics sits right in the middle,” says Glasscock.Closing the loopIn theory, RNA is the perfect diagnostic. When someone says they did something because it was “in their nature,” what they’re really talking about is RNA, which copies certain sections of your static genome—the DNA—to make proteins when they’re called for.Everything your body does leaves a trail of RNA. Flu? RNA codes for inflammatory antibodies. Parkinsons? RNA leaves a distinct trace in neurons. Cancer? RNA is the agent that enables your body to copy its malfunctioning DNA code.Now, some RNA doesn’t turn code into proteins. But even those bum molecules do all kinds of useful stuff—which means they can be useful diagnostic markers, too. Some of these noncoding RNAs help in a tangential way with the coding process, and some block genes from being expressed. Some even cut strands of DNA so they can be modified. Most of them are strings.And some of them are circles.Typically when RNA makes loops, it’s because it got tangled in the course of turning DNA into proteins. Some scientists discovered some legit circular RNA back in 1991, but that the data showed it to be scarce stuff. Around 2012, several labs started converging on the idea that circular RNA was actually incredibly abundant. Julia Salzman was, at the time, a biostatistician in Pat Brown’s genetics lab at Stanford University. She was looking for RNA sequences that were out of order with respect to their reference DNA, “because these could be biomarkers and potential drivers of cancer.” What she found were these seemingly scrambled bits of repeating RNA.Around the same time, Ned Sharpless and his lab at the University of North Carolina in Chapel Hill also were looking for cancer biomarkers in RNA. He too found weirdly repeating bits of RNA code. “I kept telling my post doc that he was wrong,” says Sharpless. “But he convinced me they were making a circle.”Through literature searches, both labs happened upon older research describing these funky, supposedly rare, circular RNA. Eurekas!Oh, does that not seem like a big deal? Ok, here’s why they were so excited: Every strand of RNA carries bits of code in your blood that link it to specific malfunctioning cells or tissue. The problem—there’s always a problem—is loose ends. Any noncircular RNA strings have loose ends that enzymes in your blood can latch onto and chew up. That means they don’t last long enough to make a useful indicator for any disease. Inside the body, nobody really knows what circular RNAs do—Sharpless has a six-pack of beer riding on an idea that ciruclar RNAs can code infinite, repeating protein sequences. But who cares? They don’t have loose ends. They survive in your blood. So outside the body, Cofactor thinks circular RNAs can do a hell of a job as diagnostics.Ok, we’re about halfway done with this story, so I figure I’d give those of you who have stuck it out this far some kind of reward. Thus far, we’ve been calling circular RNAs by their full name. Well, if you made it to here, I assume you’re going to tell some people at a party about these crazy loopy codes. But repeating ‘circular RNA’ gets tiring, so you can do what the pros do, and call it circRNA, or even cRNA. My only other advice is to practice saying it in a laid-back way, so people don’t think you’re a snotty psuedo-intellectual.Biotech in the BayGlasscock started Cofactor Genomics in 2008 in St. Louis after 15 years working as a computational biologist on the Human Genome Project. The ‘genomics’ in the name is a relic of that time, when he was selling DNA assays to academic contacts he’d built up over the years. “We had four months of orders backed up from the start,” says Glasscock.As time passed, his former lab mates Jon Armstrong (molecular biologist chief science officer), and Dave Messina (computational biologist and chief operations officer) joined. The company was growing, picking up pharmaceutical clients using its sequences to see how drugs affect target genes. This is how they came to understand RNA and its magical ability to capture genetic expression on the fly.Around 10 months ago—when they started noticing circular RNA in peer reviewed literature—the trio saw a chance to expand their business. “When we first saw this opportunity,” says Messina, “Jon cooked up an approach for effectively pulling out cRNAs, which would allow us to study them and see if we found associations with different disease states.”At the same time, they were still trying to keep up with their main business doing RNA tests for drug companies. They received a small National Institutes of Health grant for their preliminary research. Once that paid off, they wrote another grant asking NIH for $1.5 million to fully develop their cRNA diagnostic technology.But excitement for the possibility led to anxiety. “We see RNA as the future of personalized medicine,” says Messina, “and it will be a multi-billion dollar market.”Cofactor was not worried about helping create this multi-million dollar market. They worried about existing in it. They worried about scaling, about meeting customer demand, about internal communication, client relations. They worried about how to raise money, when to raise money, who to raise money from.“That’s what people don’t understand about Y Combinator,” says Glasscock. “I’m a geneticist who has been working in the field for 20 years, and they’re not going to teach me anything I don’t know about genetics. But they do make me realize all the things I don’t know about bringing my company to scale.”For a bunch of 30ish-to-40ish guys running a Midwestern biotech company, coming to Y Combinator was downright gadarene. “It all happened in 10 days,” says Glasscock. In early May they had their first phone call, then a week later flew halfway across the United States for a 10 minute interview. “We were halfway home, the same day, when we got the phone call.” A week later they were living in the cute little bungalow, about a block away from the YC campus.The hasty decision to join Y Combinator was a shock to three people used to the relatively slow metabolism of science. “When they first came in, they said they were working on finding a diagnosis for one type of disease,” says Qasar Younis, a Y Combinator partner. Younis says the trio told him they’d have their earliest evidence by 2016. “I said come on guys, that’s a lifetime away. I mean, I can’t even comprehend doing something in that time frame.” He and the other Y Combinator partners pushed the guys to go faster, and look at more than 50 different disease targets simultaneously.Timing is always going to create tension between biotech and Silicon Valley. Medicine moves methodically: Companies must prove their product is both safe and effective, slogging through years-long regulatory machinations at the FDA. Theranos has been around for more than a decade, tussling with the feds for lab waivers and such. It wasn’t until this summer that the FDA provided what the company needs to start a nationwide rollout of its fingerprick technology.For now, Cofactor’s goal is to roll its RNA tests out much like traditional blood diagnostics: You go to your doctor, a phlebotomist draws your blood, she mails the blood to Cofactor, they email the results to your doc, she calls you to say, yay! No cancer!Messina says eventually they’d like to transition to patient-directed tests (and possibly even saliva testing, which other RNA experts confirmed is both very possible and very awesome), akin to Theranos’ model. But like everything in the federally regulated biotech world, this is going to take years.And money.Ramping upStill, the signs are positive. In the little time that cRNAs have been around, they have attracted a lot of notice. About halfway through their Y Combinator run, the National Institutes of Health awarded Cofactor its $1.5 million grant.If you know anything about biotech, this seems like a laughably small amount of money. But it’s also a laughably short time frame for the government to grant that money. “What’s remarkable is our paper came out three and a half years ago,” says Salzman, whose 2012 paper brought cRNA back to the medical community’s attention. “For a scientific discovery to move from basic discovery to publication to a company taking that idea, writing a grant, submitting to the NIH, and the NIH approving—which usually takes multiple years, by the way—that represents the enthusiasm for these molecules to be used as biomarkers.”Messina, Cofactor’s chief of technology, says that $1.5 million is enough to prove that Armstrong’s approach for pulling out cRNAs is viable. “Because the cost of DNA and RNA sequencing has dropped, and because of the better technology on the market, it’s no longer this scenario of needing $200 million and 10 years to get to product,” he says. In 18 months he expects to have cRNA tests ready for market (albeit, a small market due to FDA lab restrictions).The federal nod is just a part of it. Cofactor is generating significant interest in the Valley. A week after its Demo Day presentation, on August 18, Glasscock says his company was 100 percent funded. He likens the Y Combinator experience to graduate school (minus the part about leaving with millions of dollars). “They don’t like when we use the words boot camp or accelerator, but I think those speak to the intensity of the experience,” he says.About halfway through their three month Y Combinator visit, Glasscock says he was feeling particularly worn down. The previous week had been especially tough. Then they got an email from Paul Buchheit, YC partner. The gist: Hey guys, it’s been a rough week. Let’s go for a hike together!“I showed up and Paul was wearing flip flops,” says Jarret. So he shrugged, thinking it wouldn’t be that bad. Miles later, he found himself atop Black Mountain, looking down on Silicon Valley. “We reached the top and you could see all the way down to the Bay, and where the big NASA structures are,” he says. “I think Microsoft is down there, too!”Actually, it probably was Google. But hey, he’s new.

Medical Testing Is So Hot Right Now. This Startup Wants In

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