It's been something of a journey for Hannes Smárason: He started his career in genomics at deCODE Genetics, an Iceland firm known for discovering genetic risks that lead to common diseases. The business culminated in a $415 million sale to Amgen in 2012, and Smárason later went back to lead NextCODE Health, a deCODE spinoff with its database architecture and sequence-based diagnostics capabilities.
He has pratically been running the company since its founding, and two years after the WuXi AppTec acquisition in 2015, he was officially put at the reins at WuXi NextCODE in February 2017.
Smárason and WuXi have seen a lot of good news since then, including several industry veterans signing on at leadership posts and a $240 million series B from high-profile investors: Sequoia China, Temasek, Jack Ma-backed Yunfeng Capital, and 3W Partners.
Former Illumina and Thermo Fisher executive Rob Brainin was named COO, John Gu—formerly chief information officer for China internet giant Baidu—joined as chief digital officer, Christina Waters was tapped to extend the company’s rare disease programs and Louis Yuan, a recent Becton Dickinson executive with experience at Pfizer and Sanofi, was just appointed China GM.
With all these new developments happening at WuXi NextCODE, Smárason recently took time to chat with FierceBiotech about its technology, products, investments and the road ahead.
B2B & B2C offerings
NextCODE takes on its mission—to enable and empower anyone to use the genome—on two fronts: one serving biopharma companies, hospitals and big population projects, and the other one for the Chinese direct-to-consumer market.
The genomically ordered relational database, or GORdb, serves as NextCODE’s technological foundation. Smárason compared what GORdb does for accessing large amounts of genomic data with the revolution brought to the IT industry and the old ASCII file system by Oracle.
Genomic data today is largely stored in flat files, and in order to access those raw data files, one usually has to use sophisticated programming languages like Python and R, said Smárason.
But GOR creates an architecture where all of the data are organized according to genomic position. That allows easy management of massive amounts of data.
With the ability to store and mine data, the GOR-based platform has a significant role to play in precision medicine, helping drug researchers and clinicians identify key variants in the genome.
For individual consumer uses, NextCODE has developed three solutions: FamilyCODE, a carrier screening test for prospective parents, RareCODE, a pediatric rare disease diagnostic product and HealthCODE, a health check solution that detects potential disease risks to help better manage one’s well-being.
That business composition is different from some other well-known genomics firms. Illumina, for example, only develops industry solutions, primarily DNA sequencing equipment. Privately held 23andMe builds direct-to-consumer genetic testing.
So why is NextCODE going after both markets?
“It's really two synergistic business models all built on the same technology platform,” said Smárason. “They both generate a wealth of data and insights, which essentially come together in our knowledge base, and we use that knowledge base to expand our database to develop additional AI and applications.”
Competitions & partnerships
Going after both sectors of business doesn’t mean doing it all—In fact, Smárason said NextCODE is strategically focusing on areas that have less competition. For instance, NextCODE didn’t pursue the noninvasive prenatal test (NIPT) market.
“We do not have an NIPT test because we didn't think that we should necessarily go in and compete with BGI and Berry Genomics. They have very successful businesses there,” said Smárason. “Our strategy is really going to be built around finding these underserved market segments and then going after them very aggressively.”
To Smárason, B2C genomics, in China in particular, is still a fledgling industry yet to mature. That means being a first mover carries a lot of advantages.
NextCODE has a series of firsts that Smárason said makes it unique. It has GORdb as the only architecture of its kind and the first CAP/CLIA lab in China. It got a head start from building its database on the back of the world’s biggest population project in Iceland. And its presence in both the U.S. and China—two of the biggest markets in genomics—also saves it the trouble of finding a partner.
On top of all that is its relationship with sister company WuXi AppTec, one of the world’s biggest CROs.
“This means that we have instant access to all of the key decision-makers, which makes our business development go much more smoothly,” said Smárason.
The company has partnered with large biopharma companies like AbbVie, Takeda, Bristol-Myers Squibb and Janssen, and has taken part in major population genomics sequencing projects, including Genomics England and Qatar Genome Project.
NextCODE also complements its solution through a collaboration and strategic investment in DNAnexus, a cloud-based platform that facilitates cross-institutional collaborations on genomic projects. Other cloud inroads NextCODE sought to make include partnerships with AWS and Microsoft, as well as Chinese providers Huawei and Alibaba.
Medical institutions are also NextCODE’s key collaborators. Formed in 2015, its partnership with the Children’s Hospital of Fudan University, which focuses on sequence-based rare disease diagnosis, delivered some 11,000 clinical reports in the first year, with more than 1,000 new reports now being generated each month, the company said. Those data collected are fed back to NextCODE’s database for knowledge mining and technology improvements that could benefit future researches.
“There is so much happening in this field right now you have to function as an ecosystem,” Smárason recently said during an interview with WuXi’s very own WXpress about AI’s application in drug R&D. “I think that all the members of that ecosystem are important: the data generators, national health systems, research hospitals, diagnostic companies, pharma companies, having the people developing the right algorithms, having access to the large data sets.”
Future of the company & the industry
When it comes to genomics and AI and their roles in precision medicine, the size of the database is of course very important.
“What's interesting about genomics is that this is indeed the biggest data field, data challenge in the world today,” said Smárason. “If you look ahead over the next decade or so, by 2025, the amount of genomic data is going to dwarf other big data sources in the world. For instance, it's going to be 20 to 40 times larger than YouTube. So, it's going to be a phenomenal data link that you need to organize, mine and share.”
With Illumina spearheading the way in sequencing technology, getting that data is only going to get much easier, cheaper and faster. The real bottleneck, however, lies in going from raw data to meaningful insights, and Smárason’s eyes are set on bridging that gap.
“Everyone will soon be stuck with oceans and oceans of genomic information with nowhere to store it and nowhere to analyze it, and this is what we hope to be able to help the world unlock,” he said.
Over the past 20 years, about $1 billion has been invested in developing its core technology. While striving to grow its database from half a million people to about 5 million by 2020, NextCODE has invested tremendously in domain expertise.
It also went from being a team of 60 people three years ago to about 500 today. With the $240 million series B, it has invested heavily in IT infrastructure and built out computational statistics, data analytics, artificial intelligence and commercial teams.
In the next few years, it will focus on expanding its B2B penetration, with the goal of cementing its leadership position as the global platform for genomic data. Meanwhile, on the B2C side, it plans to ramp up rapidly in the China market.
Right now, the B2C side only constitutes about 10%-15% of NextCODE’s business, but Smárason anticipates significant growth from that business to eventually surpass the B2B section. That judgment is based on the market size of China—a country with about 1.4 billion people and 18 million new births each year—and the healthcare industry in general.
“Obviously, the biggest markets are with patients and consumers,” he said. “There's no reason why [NextCODE’s products] could not run into the millions of people per year once they have been fully penetrated."
“It's not often that you have this opportunity to completely disrupt the world's biggest industry using the world's biggest data set,” Smárason added, with a clear tone of excitement in his voice. “If you think about the journey of the genomic industry, it starts in research then goes into the clinic and then goes into the consumer. We're at the very start of that evolution.”