Seer – A Pure-Play Stock for Investing in Proteomics

Is the old “invest in what you know” adage misleading investors? An article by Investopedia thinks so, stating that only investing in what you know actually increases risk. Says the piece, “many of the biggest returns will be made from companies you have never heard of and do NOT understand.” We’ll call these the Rumsfeld stocks – the “unknown unknowns.”

It’s tough to come up with an example of a stock that made it big which wasn’t easy to understand. In a previous article, we asked the question, What is the Best Performing Tech Stock Ever? When looking at compound annual growth rate, the answer was Netflix, a company that provides media as a subscription. That’s an easy business model to understand. So were the rest in our list. The question is, are there companies we don’t try to understand that we’re missing out on?

In figuring out which companies to cover here on Nanalyze, we’re quick to pass on anything that looks too complex for the average layperson to understand. When we came across Seer, we couldn’t quite decide whether or not proteomics was a rabbit hole we wanted to crawl into. In light of our desire to avoid any unknown unknowns, we decided to give it a go.

Seer – A Proteomics Stock

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Founded in 2017, Silicon Valley startup Seer has taken in $163.5 million in disclosed funding from investors that include Fidelity and T. Rowe Price. All that money has been used to build a platform for studying proteins, a field known as proteomics. Earlier this year, we wrote about a number of companies that are Designing Proteins to be Molecular Machines. In that piece, we talked about how the total number of proteins found in nature is minuscule compared to the total number of proteins that can be made using any combination of amino acids. It’s absolutely fascinating to think about what we might be able to create, but companies like Seer are interested in learning about what already exists.

The human genome of approximately 20,000 genes is estimated to give rise to 1,000,000 or more protein variants. The ability to study all these known protein variants is what Seer does with their flagship product – the Proteograph Product Suite.

The Proteograph Product Suite

The Proteograph Product Suite is an integrated solution that is comprised of consumables, an automation instrument, and software. The purpose of the suite is to analyze proteins, something that can be used to track health over time, gauge disease progression, or monitor therapeutic response. In the same way that next generation sequencing (NGS) transformed genomics, Seer expects their solution will enable researchers to perform proteomics studies at scale for the first time.

The proteome is relatively unexplored compared to the genome. Seer believes that’s because existing proteomics approaches require a tradeoff between scale and accuracy. Researchers are presently conducting small, under-powered studies that require significant processing expertise. At that rate, we’ll never achieve any sort of understanding about the ecosystem of proteins – the proteome.

The solution to the problem might be some good old fashioned nanotechnology. The backbone of Seer’s platform are custom nanoparticles that are engineered to attract proteins.

Nanoparticles and Proteins

Simply put, Seer engineers nanoparticles that attract particular proteins. Just about any biological sample can be interrogated by Seer’s nanoparticles. When the nanoparticles come in contact with a biological sample, a thin layer of proteins rapidly absorb onto the surface of the nanoparticles within minutes.

Credit: Seer S-1 Filing

Seer is able to engineer these nanoparticles to attract certain types of proteins, some of which are extremely rare. (A high abundance protein such as albumin is over a billion times more concentrated than a low abundance protein such as Interleukin-6, a marker of inflammation.)

Competitors in Proteomics

Seer lists two broad categories of competitors, the first of which includes large life sciences companies that serve customers engaged in proteomics analysis, names like Agilent, Thermo Fisher Scientific, and Merck. The second category includes a number of emerging growth companies that are developing proteomic products and solutions, such as Nautilus Biotechnology, Olink Proteomics, Quanterix, and SomaLogic. One of these companies was in the news just days ago having raised another megaround.

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Founded in 1999, Boulder, Colorado, startup SomaLogic briefly came across our radar a few years back when we wrote about 8 Startups Using AI for Personalized Health. In that piece, we talked about China’s iCarbonX, a startup that’s looking to take loads of healthcare big data and feed it to hungry machine learning algorithms. One of the companies they’re working with and invested in is SomaLogic, a startup that’s now raised upwards of $485 million in funding, the latest round of which was a Series A for $121 million that just closed days ago.

SomaLogic claims that their SomaScan Assay is the only proteomic technology that can measure rapidly (high throughput), broadly (thousands of proteins simultaneously) and deeply (high- and low-abundance proteins). They’re not only reading proteomics data, they’re making sense of it. Using a simple blood draw, they’re able to uncover specific patterns of protein changes that provide information on virtually every disease or condition of interest. Last year, they published a study which looked at 5,000 different proteins in almost 17,000 individuals for 11 different health indications. Their SomaSignal tests are now being offered commercially to select doctors in the Denver area.

After working with Novartis for nearly a decade, SomaLogic entered into a new 10-year agreement in which their technology will be used by Novartis for drug discovery and development efforts. The agreement includes plans to analyze at least 250,000 clinical samples from across the Novartis drug development portfolio.

To Buy or Not to Buy

While SomaLogic is developing a suite of tests, Seer is developing a research-use-only platform that’s currently with potential customers who are kicking the tires. The initial plan is to collaborate with a small number of key opinion leaders in proteomics. If these thought leaders adopt the Proteograph Product Suite, other researchers are likely to follow. The first Proteograph was delivered to one of the first collaborators in October 2020, and they expect to place another Proteograph with a second collaborator before the end of 2020. Broad commercial availability is expected in early 2022.

There’s a great deal of hype being generated by IPOs at the moment which dissuades us from even considering participation until the dust settles. (There are some exceptions to this rule, one being C3.) In the case of Seer, revenues are just starting to trickle in for a product that’s still being validated by thought leaders who will determine the extent to which other customers are keen to adopt the product. This uncertainty presents risk, and we’ll stay on the sidelines until there’s more traction that demonstrates the all too important product-market-fit.

Investors looking at the proteomics space will be hoping to find an Illumina equivalent, a company that develops tools which capture a majority market share in proteomics. It’s not apparent that any one company will emerge as a leader. What is apparent is the opportunity to sell billions of dollars’ worth of high-margin consumables. Says Seer:

Of the $32 billion proteomics market, $25 billion is estimated to be spent on reagents, $5 billion on instruments, and $2 billion on services.

Consequently, there’s plenty of speculation around which company will become “the Illumina of proteomics:”

Credit: Google Search

Conclusion

Each person has highly personalized, constantly changing levels of proteins that provide meaningful insights into his or her state of health and wellness at any specific time. Being able to fully understand the proteome – the entire set of proteins produced by all the genes in the body – will help inform the personalized medicines of tomorrow.

Should the IPO proceed as planned, shares of Seer will trade under the ticker SEER.

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2 thoughts on “Seer – A Pure-Play Stock for Investing in Proteomics

  1. I don’t see any presentation on their website – red flag ..
    I would be interested to find what is the expected revenue growth in the next couple of years. So far their revenue is next to nothing – I guess they just wanted to show something to look better at IPO.

  2. We’re pretty sure there was a presentation that this article was based off of. Forward-looking revenue projections and 20 bucks won’t get you a lap dance at Mustang Sally’s these days.

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