SoftBank-backed 10x Genomics makes a clever buy to help unlock the human biological code

Key Points
  • 10x Genomics is making its first acquisition of a start-up, called Epinomics
  • That puts it in a position to sell tools to researchers to help them with epigenetics research, which could have big implications for understanding health and disease.
  • 10x is backed by SoftBank and Venrock, among others, and it sells hardware and software tools to pharma companies as well as academic researchers.
Serge Saxonov and Ben Hindson, co-founders of 10x Genomics
Courtesy 10x Genomics

Biotech company 10x Genomics, which helps analyze the human biological code to understand and improve health, is one of the best-funded enterprises in Silicon Valley at the intersection of biology and technology. Now, it's making its first acquisition, which it hopes will help it stay ahead of the game in one of the newest areas of scientific research.

The company is buying a venture-backed start-up called Epinomics, which is developing technologies for epigenetics research. Epigenetics is a super-hot field, as scientists have learned in recent years that sequencing genes isn't enough to understand human health. Something is turning those genes on and off, and that has massive implications for disease.

"The way I think about it is that the genome is a huge book of letters but epigenetics is what's being read," 10x Genomics CEO Serge Saxonov said in an interview. "We bought Epinomics, as it had developed a new technique to study that."

The company has raised more than $230 million from SoftBank, Venrock and other backers, and generated about $70 million in revenue last year selling its hardware and software tools for sequencing DNA to researchers, labs and pharmaceutical companies. Saxanov, who got his start as a director of R&D at Alphabet-backed 23andMe, said the company is "growing really rapidly," which puts it in a strong position for an initial public offering in the coming years.

The purchase of Epinomics was a "double digit deal," that involved significant cash, the company said, but it declined to share further specifics.

Overall, the genomics market is estimated to be worth about $27 billion by 2025.

Outpacing Moore's Law

SoftBank senior managing partner Deep Nishar said he spent months researching the genome sequencing space before deciding to cut his first life sciences check to 10x in spring 2016. In his view, it's a complement to the most powerful public company in the space, Illumina. While Illumina makes the machines that interpret DNA and turn it into code that can be analyzed, 10x integrates with them and other sequencing machines to help researchers perform deeper analysis.

Nishar, a veteran of LinkedIn and Google, said the cost to sequence genetic information has dropped much more quickly than predicted by Moore's Law, a long-standing theory that computing power available for the same price doubles about every 18 months to two years. The price of sequencing plummeted from about $10 million to $1,000 in less than a decade, making Moore's Law look sedate.

To fuel its growth, 10x needs to keep pace with the latest methods of genome analysis, including single-cell sequencing, which involves analyzing the sequence information within individual cells. The hope is that by doing that, researchers can better understand the therapies or drugs to give to patients with diseases like cancer, rather than to take a "one size fits all" approach to treatment.

"With Epinomics joining 10x Genomics, single cell epigenetics will now be available to a broader base of investigators across academic and commercial organizations," Epinomics co-founder Howard Chang, a professor of dermatology and genetics at Stanford University School of Medicine, said in a statement. "The innovations coming out of this acquisition will propel the genomics field forward."

Experts outside of the company say that 10x is making a strategic move with this acquisition, which could help speed up the pace of discovery at labs across the world.

"This deal isn't surprising as epigenetics is really one of the most interesting areas for understanding the next level of genetic information and how it relates to health," said Dr. Robert Green, a medical geneticist at Brigham and Women's Hospital.

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