PROVIDENCE – Nabsys, once a bright shining star in the emerging Rhode Island innovation ecosystem, and then more recently, an example of the risky nature of failed technology business ventures, having suddenly collapsed and shuttered its doors in September of 2015 despite raising some $65 million in venture capital, has now risen from the ashes and restarted itself as Nabsys 2.0.

In a news release issued on March 31, original co-founder and CEO Dr. Barrett Bready officially announced that he had completed the financial restructuring of the firm and reacquired control of the company, bringing back with him many members of his original technology team.

That team includes: John Oliver, Ph.D., chief technology officer; Steve Nurnberg, executive vice president of Product Development, and Michael Kaiser, vice president of Software and Informatics. In total, there are 12 employees currently that work out of the company’s facility at 60 Clifford Ave. in Providence, according to Bready.

Bready called the transition period since Nabsys 2.0 was restarted from the ashes of the original firm one of the “most productive” in its history.

“The fact that we were able to get the team organized so quickly meant that very little time was lost during this transition period,” Bready said in the news release. “The past six months have been the most productive in the company’s history.”

In Bready’s version of events, the company, after Bready left as CEO in late 2014, pivoted away from its original technology platform, choosing a different “and ultimately unsuccessful approach,” according to the news release.

“Today is the day we go public with the fact that we’re back and we are doing good things,” Bready told ConvergenceRI in an interview.

Bready declined to discuss the details regarding the refinancing of Nabsys 2.0

Renewed focus on original core technology
The original core technology, Bready explained, was based on the use of “semi-conductor-based devices to analyze long molecules, in order to make statements about the genome that are hard to make in other ways.”

The technology features nanodetectors that can analyze very long DNA molecules electronically, at high velocity and with much greater resolution than that offered by other optical approaches, according to Bready.

In his interview with ConvergenceRI, Bready acknowledged that while the cost of sequencing genomes has gone down in recent years, much of the technology and analysis has focused on what the individual pieces look like, but not necessarily how they fit together as pieces of an overall puzzle.

Nabsys 2.0, Bready continued, can offer a much more complete picture, in order to allow researchers, and ultimately clinicians, to draw conclusions about DNA that would be difficult or impossible with other technologies.

Renewed esprit de corps
Bready acknowledged that there had been some complicated feelings about the shutdown, which was brief, including some sadness, because not all the employees have returned.

That said, Bready said the team now engaged at Nabsys 2.0 were excited about the possibilities.

“Every single person that I asked – 100 percent of the people – came back [to work at Nabsys],” Bready said. “Some people had actually taken jobs elsewhere and had to give notice.”

The team, he continued, feels good about the work they’ve restarted – the technology that they’ve worked on for many years – that it will reach an ultimate potential.

“We’re focused on creating the best technology in the world,” Bready told ConvergenceRI, in response to a question about what lessons he had learned from the company’s recent collapse.

Similarly, Bready declined to answer questions about the news coverage following the company’s unexpected closing in 2015. “I haven’t thought about the news coverage,” he said, a bit unconvincingly.

The most important message, Bready continued, was to let people know “that the company was open” after the bump in the road.

Restart hidden in plain sight
Bready dated the restructuring of Nabsys to October of 2015. Since at least early December of 2015, the once deserted parking lot across the street from the Nabsys facility has been filled with cars again, and the brick building repopulated with Nabsys 2.0 workers, toiling away much like busy elves during the Christmas season, according to a visitor at that time.

If Bready was reluctant to talk about the restart of Nabsys with the news media before the official news release was issued on March 31, perhaps that was understandable.

The appearance of a For Lease sign in the window in September of 2015, with CBRE/New England offering 10,255 square feet, including office and lab space, led to a gusher of news stories and much speculation, a good amount of it inaccurate, according to Bready, about what had happened to cause the company to close up shop, with more than 40 former employees of the firm no longer using the parking lot across the street. [See link to ConvergenceRI story below.]

[The For Lease sign had been posted by Brown University, which owns the building, not Nabsys.]

Nabsys had been one of the poster children for Rhode Island’s emerging biomedical innovation industry, raising some $65 million in venture capital to support the development of its innovative DNA sequencing technology.

“This is a company with world-class aspirations attracting world-class resources that serves as a terrific example of what might become of our efforts to build an innovation economy here in Rhode Island,” as Gov. Gina Raimondo once described Nabsys. Raimondo’s former venture capital firm, Point Judith Capital, had been an investor in Nabsys.

Putting the rebirth in perspective
Richard Horan, managing director of the Slater Technology Fund, one of the earliest investors in Nabsys, offered his thoughts on the relaunch of Nabsys to ConvergenceRI.

“No doubt, the restructuring undertaken at Nabsys proved a painful process – pain that was shared by all involved,” Horan said.

But at the same time, Horan continued, offering a positive spin, there was much accomplished, and it occurred in a field that holds great promise.

“The fact that the core team has been re-assembled and operations have resumed is highly encouraging,” Horan said. “The key going forward will be [the ability] to attract the resources necessary to enable the company to get back on the trajectory it had established.”

According to Horan, what happened in 2014 and in 2015 was a management succession that did not succeed. “New leadership was installed that aimed the company at a market opportunity that the technology was not yet capable of serving,” Horan said. As a result, he continued, the firm struggled in its attempts to raise the next round of funding, which resulted in the layoffs and the financial restructuring.

In terms of comparison to other market players, Horan offered this perspective: “While it has been some 10 years in development and there has been more than $65 million of capital invested, it is important to appreciate that Nabsys is playing in a major league game with significant capital intensity and long-term development cycles,” he said.

By way of example, Horan cited the publicly-traded Pacific Biosciences, an emerging player in the field, that, like Nabsys, had been founded in 2004, and had raised more than $750 million to bring its technology platform to market.

“[Despite] generating upwards of $100 million in annual revenues, Pacific Biosciences has yet to reach break-even operations, yet investors continue to support the company, based upon the significance of the market opportunity being addressed,” Horan said.

Horan called it “most gratifying” to witness the commitment of Bready and the leadership team he has recruited back to pursue the firm’s original mission – “to develop a fundamentally new technology platform for genetic analysis.” That remains a compelling opportunity, in Horan’s opinion, as genomics accelerates the transition from translational research to clinical setting.

Debating the value of its economic impact
When the company closed its doors in September of 2015, much was written and discussed at the time about the value of the venture, particularly around what some saw as the broken promises of public funds in the company, decrying the potential economic value of the biomedical innovation industry cluster in Rhode Island in terms of lost jobs and lost investments.

Now, with the launch of Nabsys 2.0, Horan revisited the issue of measuring the firm’s economic impact.

While causation and credit in economic development is always a debatable proposition, in the case of Nabsys, Horan told ConvergenceRI, “There is a rather convincing case to be made that the approximately $1 million in seed funding from the state-sponsored Slater Fund contributed in a meaningful way to the creation of a company [achieved, by way of merger of two previously Slater-backed ventures].”

From its initial seed funding, Nabsys has since gone on to raise more than $65 million in capital to date, Horan said.

In terms of employment, Horan said, “Nabsys has generated more than 250 person-years of employment in high-value, high-wage jobs.”

From his perspective as an equity investor with the Slater Fund, Horan acknowledged that there were ever-present risks of follow-on financing, operating from a thinly capitalized fund, and inevitable issues of dilution to contend, in some cases quite significant as occurred with Nabsys.

Less debatable, Horan continued, with the benefit of 20/20 hindsight, was whether the economic development returns with Nabsys justified the risk that was taken.

“In the case of Nabsys, where the public sector investment has been leveraged by a factor of 65X in private sector support, the economic development returns have certainly proven to be attractive,” Horan said.

The future is bright
Bready told ConvergenceRI that he believes that future opportunities for Nabsys 2.0 are very bright, but declined to talk about what those opportunities might look like.

But he was willing to describe the landscape.

“In the last decade, the improvements in cost and speed of sequencing has been incredibly impressive,” Bready said. You have what’s known as NGS – next generation sequencing. In general, those guys are focused on details of the puzzle pieces, zoomed in on the puzzle pieces.”

In turn, Bready continued, the Nabsys technology platform is focused on putting together the pieces on a higher level, to give a more complete picture.

“We use electronic detection, which is much faster; each detector can have a much higher throughput,” Bready explained. “We can use more and more detectors on each of the chips, [achieving] electronic detection of long molecules.” As a result, he continued, “You’re looking at how the genome is put together.”

The failure of the firm and then the restart, Bready told ConvergenceRI, “was a good resolution to the bump in the road that the company faced.”

Bready said that while he didn’t have an operating role after he was replaced as CEO back in 2014, he was still on the board in the interim, and he had spent a lot of time thinking about Nabsys.

Bready, who currently serves as a member the Route 195 Development Commission, said he was excited by the prospects of really significant development happening on the former highway land.

Nabsys had been one of the first companies in the neighborhood, he explained.

“Part of building the ecosystem is having more companies nearby; there is a social element of having companies together, as well as the very practical question of recruitment,” Bready said. “If you change jobs, you can [easily] get another job without moving.”

Bready concluded: “As we grow the life sciences cluster that’s here in Providence, the ecosystem is looking better and better all the time.”