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Claritas Genomics Shuts Down Operations

NEW YORK (GenomeWeb) – Claritas Genomics, a genetic diagnostics laboratory that spun out of Boston Children's Hospital, is closing operations.

Brian Quirbach from Claritas' client services team confirmed that the firm's last day of business is today. Clients were instructed to request and download all test results and data by January 18. The Cambridge, Massachusetts-based company will no longer conduct any testing, though the lab operations manager will be on hand for a few more weeks to respond to customer inquiries. Claritas had approximately 30 employees as of the beginning of this year.

Boston Children's Hospital, Claritas' majority owner, provided no comment before deadline on the decision to close the company down.

Claritas was founded as a partnership between Boston Children's Hospital and Life Technologies to develop genetic and genomics-based diagnostic tests, primarily for pediatric patients with hereditary disorders. The launch, announced in early 2013, followed a collaboration established between the partners in mid-2012 to develop sequencing workflows for Life Tech's (now Thermo Fisher Scientific's) Ion Proton platform in a clinical laboratory.

At the time, the partners said that Claritas was going to benefit from the expertise of Boston Children's existing Genetic Diagnostic Laboratory and would use the Ion Proton platform. The company was planning to develop relationships with other children's hospitals in the US and elsewhere to create a network of centers that would share data, in particular for rare diseases.

"We now have a practical paradigm for taking genetic and genomic research discoveries to the bedside, and we're excited to be able to scale up and offer this capability to patients everywhere," David Margulies, executive director of the Gene Partnership at Boston Children's Hospital, stated at the time. Margulies did not respond to multiple requests for comment for this article.

According to Barry Merriman, CSO of Life Technologies' Enterprise Genomic Solutions team at the time, who was closely involved in the formation of Claritas, the company received a large in-kind investment from Life Tech, which provided Ion Torrent Proton sequencing equipment, know-how, and technical support. In addition, he said, Boston Children's spun out its molecular testing lab, which became part of Claritas.

Later in 2013, Claritas won a $9 million one-year contract from the US Department of Veterans Affairs — along with Personalis, which was also contracted by the VA — to perform exome sequencing on approximately 19,000 participants in the Million Veteran Program, a project that has since been completed.

The company also partnered with Cerner that year on a personalized medicine initiative that involved the joint development of a laboratory information management system for genomic testing data. As part of the agreement, Cerner Capital made an investment in Claritas.

Claritas closed a Series A funding round in late 2013, in which it raised between $10 million and $20 million, and which included majority investor Boston Children's Hospital, Cincinnati Children's Medical Center, Life Technologies, and Cerner.

By mid-2014, the company had grown to about 60 employees, moved into a new building with a CLIA-certified laboratory in Cambridge, and launched the ClariView Exome for Pediatric Neurology.

The exome test involved the use of two different types of capture reagents and exome sequencing platforms — the Ion Proton and Illumina's MiSeq. Data from both platforms was merged and only variants seen by both technologies were considered, providing orthogonal validation. At the time, Boston Children's Hospital and Cincinnati Children's Medical Center were Claritas' primary customers, though it had orders from 80 to 90 other hospitals.

In late 2014, Claritas said it had begun using NextCode Health's platform to analyze and interpret data from its tests. Shortly afterward, in January of 2015, Claritas announced the closing of a $15 million Series B funding round that involved new investor WuXi NextCode Genomics (WuXi PharmaTech had just acquired NextCode) as well as existing Series A round investors, except Life Technologies, which at that point was part of Thermo Fisher.

Later that year, Claritas partnered with the Genetic Alliance to couple its testing services with the alliance's platform to connect patients.

Claritas CEO Patrice Milos, who was previously CSO of sequencing technology firm Helicos BioSciences, left the company in early 2016 and was briefly replaced by Hannes Smárason, CEO of WuXi NextCode, as interim CEO. Most recently, Claritas' website, which is no longer up, did not list anyone as CEO.

In early 2017, Claritas said it won approval from the New York State Department of Health to offer its clinical exome test and several pediatric neurology sequencing panels in New York state. Later that year, NYS DOH approved three additional Claritas diagnostic gene panel tests, all employing the firm's dual-capture, dual-sequencing approach.

According to Merriman, Claritas' unique approach of using two sequencing platforms, which lowered false-positive rates, combined with WuXi NextCode's interpretation and Boston Children's Hospital's (BCH) clinical expertise, "gave Claritas the best diagnostic exome in the industry in terms of technical quality and diagnostic power."

The decision to shut down the company, he said, "is the result of misalignment" between investors WuXi NextCode and BCH, "who had differing visions for a path forward in pediatric diagnostics." He did not elaborate, but others familiar with the situation suggested that Claritas and WuXi NextCode were considering a merger, which did not come to pass.

"Ultimately, with their controlling interest, it was a BCH business decision to close operations," Merriman said, which was "unrelated to the quality of [Claritas'] product."

A spokesperson for WuXi NextCode said that the company and Boston Children's Hospital do not have different visions for pediatric diagnostics and that they continue to work together. Rather, the two failed to find a way forward for Claritas' business, which was not sustainable in a tough competitive environment.

Others familiar with Claritas' business said that the firm, like many others in the genetic testing industry, had trouble garnering reimbursement from payors for rare disease tests and suffered from price wars with other laboratories. As a small company it also wasn't able to offer testing that did not come with potential patient payment obligations, which larger laboratories with better resources or payor contracts can do.

Ben Solomon, managing director of GeneDx, which is part of Opko Health, agreed that smaller genetic testing labs in particular can have a tough time. "The economic and regulatory environment is increasingly challenging, and it can be very difficult for smaller companies to have the necessary infrastructure for many critical components outside pure lab processes," he said. He noted that GeneDx's exome and genome sequencing tests have been growing quickly, with a 50 percent increase in test volumes year over year.