Medtech firm Ark launched with US$40m Series A funding

The company is formed through the merger of VC firm Venturecraft and medtech startup Mirxes

Singapore

IN a bold move for venture capital firms in the region, Singapore's Venturecraft has merged with medtech startup Mirxes to form Ark, a cancer detection company armed with a US$40 million Series A investment.

The investment was led by Venturecraft shareholders and backed by Gaorong Capital (formerly Banyan Capital), one of China's top five venture capital firms with a portfolio of over US$1.7 billion in committed investments. Venturecraft's shareholders include Alibaba's co-founder, Sun Tongyu.

Ark's goal is to eliminate late-stage cancer-related deaths within the next 30 years. The company has developed an industry-first blood test that uses micro ribonucleic acid (miRNA) as cancer markers, making the test more sensitive and robust.

The early-stage cancer detection test was developed by Mirxes, which was spun off from A*Star in 2014. Under the merger, both Mirxes and Venturecraft became wholly owned subsidiaries of Ark. Mirxes is now the research and development (R&D) and manufacturing arm of the company, while Venturecraft is the corporate venture arm that will also drive marketing and commerce.

Zhou Lihan, co-founder and co-CEO of Ark, told The Business Times that by building an entire value chain, the company is able to keep the cost of the cancer detection test affordable. "For traditional medtech companies that only do manufacturing or R&D but outsource the rest of the value chain to third parties or collaborators, each part of the value chain will have to capture enough revenue and profit," said Dr Zhou, who was previously chief technology officer of Mirxes.

"But the fact that we're building this entire value chain ourselves means we are able to still be profitable while making our product affordable."

Ark's first product will be a stomach cancer blood test which detects early-stage stomach cancer before clinical symptoms appear. It was developed and validated in collaboration with the Singapore Gastric Cancer Consortium, A*Star's Diagnostics Development Hub (DxD Hub), the National University Hospital and Tan Tock Seng Hospital.

Venturecraft first invested in Mirxes in 2016, pumping S$4 million into the startup. The company belongs to a special breed of venture capital firms called "venture builders". Besides owning stakes in startups, venture builders provide operational resources, networking opportunities and industry knowledge to grow them. Venture builders are more commonly found in the US and Europe; examples include Obvious Corp, which spun off Twitter, and Germany's Rocket Internet, which owns a stake in Zalora.

Now armed with US$40 million in fresh funds, Ark is preparing to step on the gas pedal with its commercialisation efforts for its two key markets, Singapore and China.

Dr Zhou said that in the next 10 days, the firm will submit relevant documents as well as analytical and clinical performances of its product to regulators in Singapore and China. It expects a reply from Singapore's Health Sciences Authority in April or May 2019.

Ark has also already set in motion a plan to launch Asia's largest clinical study, with the goal of enrolling 50,000 participants through partnerships with local governments and medical institutions.

The funds will also be used to develop new blood tests that can detect many other types of early stage cancers including lung, breast and colon cancers. Ark has also gone on a hiring spree, with its headcount more than doubling to over 110 people in the last four months.

To fill the gaps in its value chain, the firm is planning to launch the largest lab in China - in terms of throughput - for miRNA technology, said Isaac Ho, co-founder of Ark and Venturecraft. In the first phase next year, the lab will employ about 90 people.

As for Venturecraft's portfolio companies, Mr Ho said that the firm will continue to develop the startups that have products and solutions that are complementary to Ark, and exit the others.

Remaining startups in the portfolio include Reebonz, Kaleido Biosciences, e27, Glissade Dental, Attonics Systems and AIM Biotech.

Mr Ho pointed out that the merger with Mirxes has helped to streamline the firm's investment choices and improve their strategy. In particular, early stage medtechs now have access to Ark's large pool of clinical resources to validate their business model and technology.

Mr Ho described it as "not going in blind", or being at the mercy of founders. "It helps us to look at better technology that we can validate ourselves. So in a way, we are doing due diligence for them, using our own platform," he said.