Human Longevity Inc. raced to a billion-dollar plus valuation on the hopes that it could apply advances in genomics to improve medicine. A drastic “down round” financing this week suggests investors have questions about its own longevity.
The funding round values the company—co-founded by genomics pioneer J. Craig Venter in 2014—at around $310 million, according to a Human Longevity regulatory filing obtained by Lagniappe Labs LLC, whose Prime Unicorn Index tracks valuations of privately held companies. That marks an 80% decline from the estimated $1.6 billion valuation in the last fundraising in early 2017, according to Lagniappe. The latest round will raise $25 million if all authorized shares are sold.
This round also includes onerous terms that promise priority payment in case the company shuts down or sells itself, and a so-called ratchet that would reset the share price investors in the new round paid if the company has to raise future capital at a lower price, according to the filing. Such terms are rare in venture-capital financing, and typically imposed on companies struggling to find new investors.
A letter to shareholders last month said the board had determined Human Longevity needed $25 million of short-term financing and that the best way to raise it was through a rights offering to existing shareholders, according to a copy of the letter reviewed by the Journal. Existing investors include biotech giant
, DNA-sequencing company
and pharmaceutical entrepreneur Robert Duggan.
A Human Longevity spokeswoman declined to comment on the fundraising or the valuation.
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Down rounds, where a private company raises money at a price lower than its previous valuation, accounted for 9% of venture financing in the third quarter, according to an analysis by law firm Fenwick & West, while up rounds accounted for 78%. Life-sciences companies recorded the strongest gains, Fenwick found, with their valuations rising 110% compared with their prior funding rounds.
The valuation of Human Longevity, founded in 2014, soared on hopes it could capitalize on the declining cost of DNA sequencing to power new medical advances. The company had raised as much as $500 million before this financing, according to research service PitchBook.
But key facets of its business didn’t develop as planned, say people familiar with the company. It had hoped to sell analytics to pharmaceutical companies as they increasingly incorporated genetic sequencing into drug development, these people say. But drugmakers have been slow with the new technology and wary of sharing data, they said.
A separate medical-diagnostic service for wealthy consumers also has failed to grow as quickly as hoped. The company claims “Health Nucleus”—which offers a full body MRI scan and complete genome sequencing, analyzed using machine learning technology—can help patients stay ahead of aging and illness. Human Longevity charges $19,000 for the full service, and $5,500 for a more-basic service.
Today the service is offered in a “spalike setting” at the company’s San Diego headquarters. Human Longevity plans to use money from its new financing round to roll out the service to partner MRI facilities in other cities, according to people familiar with its plans.
As the company has continued to burn cash, its workforce has dropped to around 150 from roughly 300 people at the end of 2016, according to one of the people. And its chief executive officer, chief medical officer and chief operating officer all departed in 2017, according to their LinkedIn profiles.
Dr. Venter, who helped sequence the first human genome, relinquished the chief executive role at the beginning of 2017, resumed it in December, then stepped down again in May, according to company statements. He remains a shareholder.
In July, the company sued Dr. Venter’s research institute in U.S. District Court in California, alleging misappropriation of trade secrets. The Institute says the claims are baseless. Dr. Venter didn’t respond to a request for comment.
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