By Randall Osborne
West Coast Editor
Two months after scrapping its merger with PE Biosystems because federal regulators could not approve the deal fast enough, Third Wave Technologies Inc. raised $48 million in a round of private financing for its own work with single nucleotide polymorphisms (SNPs).
Overseers are directing more scrutiny at emerging technologies such as those related to genomics, but the Justice Department's low-throughput approach to sifting details of the merger may turn out to be not such a bad thing.
"It's actually more profitable not to have done the merger," said Ian Edvalson, Third Wave's senior vice president of corporate and business development.
Third Wave will use the funds to boost its Invader system and devise new applications for it, Edvalson said. Invader uses two nucleic acid probes, one of which is recognized and cleaved by an enzyme, to identify a specific sequence of DNA or RNA. The presence of the released cleaved probe then can be measured using existing readout devices such as microtiter plate readers, mass spectrometry and DNA chips.
The firm markets three sets of analyte-specific reagents and assay controls based on Invader technology for use in the clinical environment, including reagents specific for mutations in factor V (Leiden), factor II (prothrombin), and methylene tetrahydrofolate reductase genes. Under development are other analyte-specific reagents for infectious disease, inherited disease and therapeutic selection.
Earlier this month, Third Wave said it entered an agreement with Specialty Laboratories Inc., of Santa Monica, Calif., to refine new applications for the Invader technology, which Specialty has adopted for use in routine clinical work.
Invader's assay platform avoids the cumbersome and time-consuming gel electrophoresis step, working directly from unamplified DNA and providing more accurate results than may be had with polymerase chain reaction technology, which has been the method of choice in high-volume assays - and a mainstay for PE Biosystems, of Foster City, Calif.
Collaborations related to the Invader system number "in the dozens," Edvalson said.
In the foiled, all-stock merger, PE Biosystems, a PE Corp. business, would have acquired Invader, which would have been combined with PE Biosystems' real-time sequencing detection system. The firms still install the two technologies as part of deals with other companies. (See BioWorld Today, Jan. 25, 2000, p. 1; and May 30, 2000, p. 1.)
"While you're in this limbo period [waiting for regulatory approval], you're unable to work together," Edvalson said. "That was the real problem. We have a very good working relationship, and we anticipate continuing to put together deals," with PE Biosystems directly and with third parties.
Much has happened rather suddenly at Madison, Wis.-based Third Wave, whose genomics technology has let the firm ride a powerful wave, backed by high investor interest. Edvalson, who declined to speculate on an initial public offering, agreed the atmosphere has been almost frantic. "That's a nice way to put it," he said.
Third Wave's financing round was led by the venture capital firm BB Biotech, and included Janus Capital, Putnam Investments, American Express, Scudder Funds, INVESCO Funds Group, Tisch Family Interests, Essex, Galleon Investments, CIBC Capital Partners and Jennison Capital. Also taking part were investors from previous rounds, including The Wellcome Trust, Schroder Ventures, The Burrill Agbio Capital Fund, UK Medical Ventures, Venture Investors of Wisconsin and Wisconsin Alumni Research Foundation. CIBC World Markets Corp. acted as the placement agent.