Indianapolis DNA testing company Strand Diagnostics LLC has secured $30 million in series A funding to accelerate its growth, scale its operations infrastructure and expand its sales and marketing efforts.
Strand’s Know Error system aims to cut down on diagnostic errors due to mislabeling and biopsy contamination by uses bar coding, forensic principles and DNA matching to confirm that biopsy samples being evaluated for cancer — most often of the breast and prostate – belong to the patient being diagnosed.
Before taking a biopsy, a medical provider using the kit swabs the patient inside the cheek to collect a DNA sample that is sent to an independent lab. Then, the patient’s biopsy tissue in placed in a bar-coded specimen container and sent to a pathology lab. If the biopsy tests positive for cancer, the DNA lab uses the swab to conduct a DNA Specimen Provenance Assignment test to ensure that the DNA from the two samples match.
Michael Harmon, director of marketing and public relations for Know Error, said that more than 1 percent of the 20,000 DNA-matching tests the company has done so far have resulted in a nonmatch report, which means the biopsy was either contaminated or did not contain the intended patient’s DNA.
“This testing is important because it completes the diagnostic testing cycle,” he said. “When you know that the cancer sample belongs to that patient, you can confidently proceed with treatment.”
The $30 million investment comes from NantWorks LLC, a convergence-focused health technology company. This is NantWork’s second investment in Indiana healthcare this year; in January, the Los Angeles company announced it would create more than 230 jobs by locating its new pharmaceutical manufacturing plant in the former Pfizer facility in Terre Haute.
According to a U.S. Securities and Exchange Commission filing, the deal with Strand includes an initial $7.5 million in funding and three warrants with various exercise prices, plus the option to purchase two additional convertible notes in the principal amount of $5 million.
Know Error was launched in 2009 under now-defunct parent company Diagnostic ID.