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Phase Genomics CEO Ivan Liachko sits in the wet lab of the company’s space in Seattle’s South Lake Union neighborhood, where the genetic material of everything from strawberries to the human microbiome is decoded. Since the pandemic, the lab is operating with a skeleton crew, rotating shifts to minimize contact.(Kellie Schmitt Photo)

On the day in early March when I interviewed Phase Genomics CEO Ivan Liachko, we knew just enough about the emerging coronavirus not to greet each other with a handshake. Phase had just asked its employees to work from home that day, and its South Lake Union office and wet lab were quiet with ample parking in front.

“Social distancing” had not yet entered the lexicon, so we walked side-by-side around the lab and chatted over coffee as Liachko explained how Phase’s genomics technology is helping researchers make break-through discoveries across the globe.

Liachko also described the five-year-old University of Washington spinoff’s increasing customer base, new grant funding and his desire to support and encourage genomic start-ups in a region ripe for growth.

Now, nearly three months after that initial meeting, the entire landscape has shifted. While 16-person Phase Genomics has made no layoffs and just one furlough, the company’s revenue has taken a hit, and the pandemic has forced them to turn inward, Liachko said in a recent community-building videoconference with fellow life science leaders Dr. Jesse Salk of TwinStrand and Alice Ly from Alexandria LaunchLabs.

Phase’s story illustrates how quickly the pandemic has disrupted Seattle’s rapidly-growing biotech sector and how companies like Phase are adjusting their technology to a changed world – and possibly helping with COVID-19 in the process.

“These times present an opportunity to really focus on the core and just go in and start innovating like crazy,” Liachko said. “How can we adapt so that, when we emerge from this, we’re actually stronger?”

Focusing on the core

Even before the world’s attention fixated on a spiky microscopic coronavirus, Phase Genomics had been mapping and analyzing the genomes of everything from virus and bacteria to plants, animals and fungi.

“We’re doing the human genome, but also that oyster, that dog, that baboon,” Liachko told me that March morning, gesturing to the vivid photographs on the wall. “They all have funky stories behind them—every project is its own story.”

Ivan Liachko with photographs representing the wide variety of projects pursued by the company. (Kellie Schmitt Photo)

There’s the orca poop that was analyzed for antibiotic resistance, the lice that live on salmon in Chile and the virus that threatens blueberries. On a nearby table, a plastic bag filled with a clump of four-leaf clovers awaited its lab analysis.

The company analyzes specimens itself and sends out kits (two-pack kits start at $1000) to more than a dozen countries so that scientists can use the technology in their own labs – from work on antibiotic resistance in wastewater at the University of Idaho to research on wheat rust in Australia.

The problem with genome sequencing is that it takes DNA from the genome and shreds it into little pieces; you read the pieces. Imagine a blueprint for a house that’s ripped into a million fragments, then compacted and mixed together.

“If you think of that blueprint, our technology tells you which pieces are close to each other,” Liachko explained. “If you know which sequences are close and which are far, you can reconstruct the blueprint.”

And, if scientists better understand a species’ design, they can more easily find and solve vulnerabilities – significantly advancing their research.

‘A complete game changer’

Take wheat rust, a destructive fungal disease that threatens the food source around the world.

The past two decades have seen increasing outbreaks of virulent wheat rust fungus, an infection that can rapidly spread and cover long distances via airborne spores. The destructive disease can leave infected fields with no useful wheat yield, explained Benjamin Schwessinger, a researcher at the Australian National University.

After seeing a mention of Phase’s technology on Twitter, Schwessinger was intrigued—and a little skeptical. Before these kits, a similar process required about 50 different enzymes.

Phase ships its genomics kits to more than a dozen countries around the world, where scientists are using the technology to make new research discoveries. Kit prices start at $1000. (Kellie Schmitt Photo)

“Initially, I didn’t believe it – I didn’t think the kit would work,” he said. “But now I think it’s a complete game changer.”

After using the kit, researchers connected resistant strains in disparate parts of the world, and better understood its distinct workings – like the rust fungi’s two drastically different nuclei. That discovery is speeding up their research process.

Now, the hope is they can better detect the existing pathogens, advising farmers if their crops are more likely to get infected, and whether to use fungicide. Down the line, the information could be used to match pathogens with wheat varieties, allowing them to breed resistant crops.

“It’s a little like sailing around the world 300 years ago and discovering new continents,” Schwessinger said. “It’s a complete new discovery.”

Adapting to changing times

Since that day in early March, Phase’s South Lake Union office space and lab have stayed mostly empty. The computational staff can easily work from home and the lab is staffed with a rotating schedule to minimize in-person interactions.

The pandemic has led to myriad disruptions. Salespeople can’t be in the field and Liachko’s robust conference schedule—a big source of networking—has been wiped clear.

Liachko worries about finances, and whether sales will ever bounce back. Plus, how do you sell and market the kits if you can’t even go to conferences?

“You can only get so much traction off of Twitter,” he said.

Without the harried schedule, though, the company is turning inward and considering: What should we do with our time? What are we developing? How do we find new sources of income? How can we adapt to emerge even stronger?

The company has been funded mostly by revenue and grant funding – not venture capital—as an intentional step to stay scientifically independent.

Amid the new climate, there’s no new hiring planned and lots of grant writing: “I think a lot of people are writing grants like crazy,” Liachko said. (Overall, the company has received $3.5 million in grant funding including money from the NIH to develop a kit to?link antibiotic resistance genes to their hosts and funding from the Bill & Melinda Gates Foundation to work on a new genome computational model.)

The silver lining in forced isolation has been a renewed focus on its research and development effort that had slowed as they served a growing customer base.

For one, they’re working on a way to use their technology to discover novel viruses from the environment. And, they’re working on ways to apply their existing platform to COVID-19 efforts in areas like human genetics. Since their method improves microbiome discovery, it could help identify factors that improve the immune response to coronavirus infections.

Pivoting to a global challenge

Phase’s response to the pandemic isn’t unusual in Washington’s life science industry, said Leslie Alexandre, the president and CEO of Life Science Washington, a non-profit trade association.

Life Science Washington CEO Leslie Alexandre. (Life Science Washington Photo)

“Almost every company whose technology can be applied to COVID-19 has pivoted at least some of their R&D to this global challenge,” she said.

Funding for COVD-19 diagnostics, therapeutics, vaccines and biomanufacturing, as well as the underlying immunology and virology research, is pouring out of the federal government and global health organizations, she said. And turning to grant funding in these trying financial times is a smart strategy.

“Any time a company—particularly one as relatively young as Phase Genomics—can secure non-dilutive revenue in the form of a grant to continue with their R&D, it is a great thing,” she said.

Going forward, things will probably be different, even in a post-pandemic world, Liachko acknowledged in the recent video call. But they don’t have to be bad. This could be an opportunity to put things out that will be even more interesting, he said.

Perhaps, then, his final comments from our March meeting were even more prescient than we knew at the time: “Our technology is really about going to the unknown, discovering things others can’t discover.”

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