Series A Success: DeciBio’s Q&A with Trey Foskett of Watchmaker Genomics

August 2, 2022
DeciBio Q&A
Research Tools

Luka Jelcic: My name is Luka. I'm a senior associate with DeciBio. I've been working in life science consulting for the past five years. Really interested in the space and really excited to have this conversation with you.

Melissa Kolenovic: I also work with DeciBio, my background is in immunology. I used to actually work in manufacturing in biotech, but I transitioned over into consulting. I have a passion for the business side of things and understanding the market. We're really excited to talk to you and happy that you made the time to speak with us.

Great. Yeah, nice to meet both of you and I’m looking forward to the discussion. I can give just a little bit of background on myself to kick things off too.

Melissa Kolenovic: That would be great, actually.

I’m Trey Foskett, and I’m one of the co-founders and CEO at Watchmaker Genomics. Prior to Watchmaker, I co-founded a company called Kapa Biosystems in 2006, and our focus was on applying new protein engineering methods to big existing markets like PCR and qPCR. Next-Gen sequencing was also emerging at that time and was really enzyme intensive. The benefits of functional and performance improvements to the reagents being used in those sequencing platforms and the associated sample preparation were clear. So - a lot of our focus at Kapa pivoted to enzymes and reagents for NGS.

Steve Picone and Brian Kudlow, who are the other two co-founders of Watchmaker, were both parts of Archer DX, which was a company that was pretty early in applying NextGen sequencing for oncology assays. Steve brought a lot of quality, large-scale, enzyme, and manufacturing capability. Brian was the head of R&D, both wet-lab as well as the informatics and software development at Archer. Steve and I were really excited about the opportunity to combine our expertise in protein engineering and large-scale enzyme manufacturing, but I think most importantly Brian Kudlow’s computational biology background and experience with building NGS assays was the third piece that really informed a lot of the initial competencies that we wanted to build at Watchmaker.

A lot of the tools and technologies that were developed over the last 10-15 years were around sequencing as a disruptive, powerful R&D tool, but quickly that tool transitioned into more clinical types of applications. We saw that a lot of the tools that were developed during the R&D phase did not meet the needs of clinical applications, primarily around sensitivity and specificity, as well as workflow scalability and automatability. So, we came together to start Watchmaker with the belief that this transition to clinical sequencing and the complementary application space that leveraged sequencing as a universal readout was a really important space that presented an opportunity to continue to drive new products.

Luka Jelcic: Thank you so much for that intro, that touched upon a lot of the questions that I had. First of all, congratulations on your Series A, I bet you must be really excited, that’s a huge success.  I want to open us up with the first question: What was the key unmet need or gap that you saw in the market? You previously described the different areas that Watchmaker is planning on addressing, but what do you think was the real key need that Watchmaker was able to address or that led to this successful Series A and significant investor interest.

The markets within genomics research and clinical applications are so much larger and more diverse than they were 10 years ago, and we really see a lag with respect to products that continue to support this growth. We view the sequencer as a universal readout, not just for obvious things like RNA expression profiles and DNA, but also for areas like epigenetics and proteomic applications, even small molecules. Our view is that as the application space continues to grow and diversify, the need for better tools that improve sensitivity and specificity will continue to be a large opportunity.

As you look at more mature applications and lab-developed tests (LDTs), there are continued needs to drive workflow and performance improvements. A lot of areas of oncology use formalin-fixed, paraffin-embedded (FFPE) samples where the quality and input levels are low. Some of the tools we’re developing are aimed at continuing to unlock more information from these samples. We also still see areas in cell-free DNA being limited when you look at sensitivity and specificity. For emerging data types, the reproducibility and the scalability just aren't there for routine clinical applications, and this is where we see opportunity.

One of the motivations behind the Series A financing was to continue to develop improved tools for some of these emerging, potentially high-value data types. Another was to continue to build out our core technologies, one of which is a protein engineering platform that leverages some exciting new developments in the space, not just in biology, but in engineering and computer science. This platform drives our core innovation engine to improve certain functionalities of enzymes and proteins and engineer entirely new functionality.

Essentially, it’s a combination of improving on tools that are currently out there, but also continuing to invest in our technology platform that allows us to keep pushing the envelope of the performance of those tools which ultimately translates into increased clinical application and value.

Luka Jelcic: Okay. In terms of the tools themselves, just to make sure that everyone fully understands: Watchmaker has a platform where you can develop specific enzymes to help with the sample prep for NGS, for DNA and RNA. Do I understand that correctly? So, when you're talking about improving, it's about improving that platform, engineering new enzymes, but also making the entire process smoother for your customers and clients?

I think that’s a good summary. We are investing in and applying our protein engineering platform to make improvements to the reagents and enzymes used in emerging applications, such as epigenetics and methylation, where the enzymes really haven’t been optimized and the assays themselves are still early days with respect to their performance.

We come with a lot of application and assay knowledge from our previous experience. We don’t just have a development platform, and we’re not a CRO or CMO. We’re really assay and application developers ourselves. We understand the types of questions that are being asked from a biological and clinical perspective, as well as the workflow and performance bottlenecks and pain points.

Workflow and automatability are also critical to making tools clinically relevant and user-friendly. You can have a powerful assay, but if it’s clunky, takes a long time, and isn’t scalable, then it ultimately may not be the right tool for a clinical readout. In addition to making the enzyme performance improvements that enable progress in the field, we also build those into application-specific kits that address the workflow needs of higher throughput assays and applications.

Luka Jelcic: Got it. On the clinical side I would also be curious to understand what the key use cases that you're targeting are; is it early detection, residual disease monitoring or is it just kind of broad diagnosis and treatment selection?

One of our commercial channels is what we would describe as OEM or business-to-business, where we work with companies who incorporate our products, whether it’s our enzymes or application-specific kits, into their products and resell them either as an LDT service or a product labeled with their brand. We’re working with a lot of different companies that have their own technologies, and that makes our potential clinical utility reach fairly broad.

We have products that support high-throughput germline testing, so hereditary disease. Somatic sequencing for oncology applications is another very significant focus area for us. We have an existing product for DNA sample prep and one that will soon be launched for RNA sample prep in the somatic oncology space.

We are also launching some products that will be focused on fragmented DNA applications with a primary focus on ctDNA. We're not going directly to build and market our own ctDNA assay, at least not for the foreseeable future, but we are working with other companies that would then take our products that have been optimized for low allele variant detection, low inputs, and short fragments, and incorporate them into their ctDNA assays.

On the epigenetic side, methylation and chromatin analysis are the next phase of products that we're developing. We'll be working with some of our commercial partners to develop the enzymes and reagents that are needed to continue to improve those application areas.

Luka Jelcic: Yeah, thank you so much. I think we have a good overview of Watchmaker. Those are exciting areas that you're targeting. I'll turn it over now to Missy to discuss more than the higher-level landscape.

Melissa Kolenovic: Thank you so much for your responses thus far. You did a great job explaining your tech and the value proposition of the company and what you do, but I was curious: You mentioned that scalability is an issue in terms of clinical uses of NGS and genomics, but what were some of the operational or strategic challenges for you when you actually started Watchmaker genomics? And how did you assess the market for its potential overall?

Sure. I, and the other two co-founders, had spent a decade or more in the space, and we could see gaps in the market where a lot of tools that were developed during the R&D phase of sequencing were lagging with respect to the needs of the clinical market. We initially targeted areas where we had already built tools in the past. We started Watchmaker with an understanding of some of the gaps in workflow and performance that we knew were going to need to be filled to continue to drive the clinical adoption of assays. We also knew that there's a frontier of new information and data types that are still in the R&D phase right now that will ultimately need new tools to migrate into the clinic. We also had combined industry experience which gave us a bird's eye view of where the diagnostic players were headed and what they thought were going to be the next high-value segments of the market.

We view enzymes as the analog to digital converters of high-value biological information. If you look across the space, so many of the commercial enzyme portfolios were built around Sanger sequencing, cloning, and some of the early PCR and qPCR diagnostic applications. What we were really excited about was starting a company that has a forward-looking portfolio of high-value enzymes for a post-cloning era. A lot of our focus has been and will continue to be, on applications of the future and understanding the specifications of the products needed for that portfolio.

From a perspective of just getting things up and running, we've been focused on building on core competencies in protein manufacturing, our computational biology infrastructure, as well as our protein engineering capabilities. We went after the parts of the market that we understood well and knew where the gaps were first; that was part of our business model. There was an intentional stepwise business model so that we could build out this early foundation first. Each product that we built was used as a steppingstone for the next sets of products, as well as an enzyme portfolio. With the Series A funding, we can really start to advance and accelerate some of our next round of products.

The last thing I'll say about the startup phase: we had forgotten what it was like not to have the large organizational resources (bigger teams and bigger budgets), and when we started up a couple of years ago, we realized we needed to recalibrate and reconsider resource allocation and the number of projects that we could take on. The time and effort it takes to grow and build a team was certainly something that we probably underestimated. That being said, I think there's a lot of value in small, focused teams that tend to have a lot more freedom around creativity and innovation, as well as the agility and flexibility to be very customer centric. That's certainly been a large benefit of being back on a small team again.

Melissa Kolenovic: Right, okay. Thank you, I really appreciated that explanation of your strategic insight. You mentioned that you seek to have a forward-facing portfolio; I found that very interesting because I'm sort of wondering how you monitor any potential industry changes or innovations where you could pivot or add to your portfolio to then increase the value of Watchmaker. What are your methods of sort of just keeping an eye on any potential points of the industry where you could demonstrate some benefit or get involved? Is the know-how coming from friendship, other partnerships that you're just monitoring? And on that same note, are there any innovations within the genomic sequencing industry or complementary industries that you see coming that you're excited about?

Great question. We are proactively interacting with thought leaders, companies, and institutes all the time. We can't follow and track everything, but I think we always have our ear to the ground through a lot of our partnerships, as well as thought-leading academic labs that give us insight into where the technologies are headed and where the pain points are. A lot of larger companies get very inwardly focused and really lose the opportunity to integrate the customer and market perspective across not just the commercial organization, but also all the way through the R&D, Quality, and Support teams.

Secondly, we emphasize being open-minded and agile in our responses to the dynamics in the markets. For example, with the “sun-setting” of some of the Illumina IP, there's been a sequencing platform emergence in the short read ecosystem. The environment is much more diverse than in the previous 10 years, and we have to ask what these new platforms offer that may be different from Illumina. From a product development perspective, how can we help support the needs of those platforms?

We're also excited about the long-read ecosystems. PacBio and others have been around for a while, but as you look at the application space and the technology improvements that have come with some of the long-read platforms, we see new technologies and new enzymes that are required to support that.

We’ve spent a lot of time discussing the NGS or “read” part of how we view the world, but there are also the “write” and “edit” pieces that build off NGS advances. Looking forward, we’re very excited about the opportunities in the synthetic biology and gene editing spaces that are enzyme intensive and where we think there’s huge scope for improving the tools and technologies. CRISPR tools for research are still very early days, and many interesting enzymes are needed for the edit space.

In some cases, there's overlap with the performance improvements that are needed in these applications, and with others, it's pretty far-flung with respect to all the different types of enzymes and functions that may be required. We can't do it all, but we do keep our ear to the ground and where we see either good partnership or really clear market needs, we see our financing as an opportunity to slowly expand our portfolio into some of these emerging areas.

Melissa Kolenovic: Definitely! You've mentioned partnerships a few times, and that brings me to another question. In March you announced your partnership with Twist, and your goal, according to the CEO and co-founder of Twist was to “be able to offer differentiated products that help simplify and streamline workflows”. Do you feel like you've accomplished this in these last few months that you've been partnered with them, and do you feel that your partnership will continue along for a significant amount of time in this industry?

Twist has been a great partner. I think the companies are good fits culturally, but we also complement one another from a technology perspective. There’s also a great deal of overlap with respect to our interests in emerging applications. We're really excited about that partnership and many great opportunities to continue to work together.

Melissa Kolenovic: That’s great to hear! I noticed that you attended the Advances in Genome Biology and Technology conference. Do you think that there are any advancements or partnerships that might come from your presence there? Do you think you managed to establish any relationships that might benefit Watchmaker in the long term, and have you noticed any key themes that are going help keep the industry busy?

AGBT this year was special; having everyone get to come back together in person was celebratory in a lot of ways. I think everybody was there this year to build the momentum around how everyone can work together and determine what are the opportunities and what are the gaps that still need to be addressed in this space. A primary focus for us - as a team - was to connect with existing customers, as well as build those relationships with new partners and customers. There's a lot of momentum that comes from that meeting, and we hope to make some public announcements over the next few months.

To the second part of your question, this year was really the expansion of the short read ecosystem with new platforms that are now available. Companies like Element and Singular, who we have public announcements with, are exciting. Having a centralized high-throughput alternative to Illumina's NovaSeq, like what Ultima is building, is pretty exciting. There’s still a lot of work to do that will keep everyone playing in the short-read technology development space busy. From our perspective, just having more options and continuing to drive development is highly valuable.

The second big focus was spatial biology, especially relating to continuing to build out applications and data sets to support the value of the spatial and multiomics approach. Those technologies are very exciting, but still early days, and there's a lot of complexity in data analysis. There's also a lot of work to be done to link spatial data to actionable types of clinical questions. But that's how a lot of these new tools always work. They're more complex in the beginning, and as the technologies mature, they’re linked into clinical and other application areas. It always takes time.

Melissa Kolenovic: Sounds good, seems like there's a very optimistic future out there for any of the potential partnerships you've got coming in. I'm looking forward to hearing what new public announcements will be made post-AGBT.

You make a really good point that I'd just like to reiterate really quick. I think that the other aspect of AGBT this year, which was really great, in addition to what I said around just the human-human interactions, is there has obviously been a lot of volatility in the markets, the capital markets, and for publicly traded companies. In a lot of cases, it's easy to get fixated on the short-term gyrations in capital markets, stock markets and things like that. But I think that was another theme from AGBT this year too, that a lot of this near-term stuff is noise. When you look out over the next three, five, or ten years, it's just a good reminder to stay focused on the impact that these technologies have today on human health and the much bigger impact they'll continue to have over the mid and long term. The reality is that our industry is still in its early days in terms of the potential and the opportunity going forward. AGBT was a good reminder of keeping focused on that mid and long-term view.

Melissa Kolenovic: You anticipated a portion of the final question I was going to ask you, which was to probe on any volatility that's been occurring in the market and just kind of discuss what that's been looking like in the genomic sequencing industry. Alongside that, I was also going to ask about the potential increase in competition. It seems like this market, as you've said, is in its early days, and there seem to be a lot of opportunities. You, as Watchmaker, focus a lot on your core competencies and are playing to what you guys know from your backgrounds and what you do well, but I'm just wondering if you have any insights on how you can diversify among the potential rising competition, and how you plan on maintaining your competitive advantage? And for any potential readers who are interested in this space, what does your outlook on this market long term look like?

On one hand, there are a lot of rising competitors and innovative platforms, especially in the sequencing technology and spatial space, as previously mentioned. That's sort of always the case, which is what makes the field so dynamic and interesting. On the other hand, though, things move slower than most folks realize because it does take time to commercialize and ultimately translate technologies into the clinic. As it relates specifically to Watchmaker, we are aware of the competitive landscape, but we just see a really diverse opportunity set. At the end of the day, these are big markets, and the application space is only becoming more and more diverse. We stay focused on feedback from customers and thought leaders on where the industries are headed and don't spend a ton of time too fixated on the competitive landscape itself. We think we're uniquely positioned with our core competencies and capabilities, and we stay focused on where we can add value and what fits well with those competencies.

We are super excited and optimistic about the long-term opportunity to improve and develop new technologies and have them ultimately have a real-world impact on human health. Yeah, still early days, from my perspective, but I’m still very passionate about where all that is headed and tend not to get too focused on short-term market volatility. The needs and the value in medicine, personalized medicine, and human health are all still very nascent. As more advancements take place outside of genomics, the bigger the impact it's having on the new tools and technologies that genomics can use and benefit from, and then also contribute to. I don't tend to get too hung up on the short-term stuff.

Melissa Kolenovic: I'd like to really thank you for all your insight, and I really appreciate you taking the time to meet with us. We're optimistic and we'll be watching the progress of Watchmaker Genomics as the industry expands and as time goes on.

Luka Jelcic: Thank you so much again, for taking the time and talking to us it's been very interesting.

Yeah, thank you, guys. Thanks for the interest and thanks for taking out some time. If there are any other, you know, follow-up questions let me know. I’m happy to follow up on anything.

Precision Medicine is evolving at a rapid pace

Discover how we can help

Get in Touch