Is HealthTell Just More Bad News for Theranos?
Less than a year ago, we wrote an article about Theranos titled “5 Reasons Why Theranos Could IPO Soon“. One of those reasons was that since it had been over 5 years since taking in their last funding round, firms who had invested $800 million into the most highly valued healthcare startup in the world valued at $9 billion would be looking to cash in their chips while the biotech market was still hot. Fast forward to today and those investors may be looking for a different sort of exit.
It all started when the Wall Street Journal slammed Theranos in an October 16, 2015 article titled “Hot Startup Theranos Has Struggled With Its Blood-Test Technology“. Less than two weeks later, the FDA ordered the company to stop using their technology in all of their 200 tests on offer except one. You can dig in more by looking at some of the official documentation here and here but the main takeaway is that Theranos is in damage control mode and losing opportunities now. Safeway who spent $350 million dollars over 4 years to build 800 in-store clinics dissolved their partnership with Theranos late last year. Theranos has left the door wide open for a competitor to come by and fill their shoes. One such company might be HealthTell.
Founded in 2010, California-based HealthTell has taken in $35.6 million in funding so far with the majority of that being raised just a few weeks ago. HealthTell is focusing on the “single drop of blood” idea which was the same value proposition Theranos was using. After taking just a single drop of blood, HealthTell can then scan it for antibodies and use the patterns they observe to identify 30 different potential diseases. Here’s a diagram from HealthTell which shows just where they see their test fitting in with other methods of diagnosing diseases:
The HealthTell technology is referred to as “Immunosignature” and can provide a real-time snapshot of an individual’s health at any point in time as opposed to genetic tests which tell you how “likely” it is that you could be ill in the future which just creates unnecessary worries. Immunosignature tests can identify any disease that affects the immune response (cancer, infectious disease, autoimmune, metabolic and neurologic diseases). The way that the technology works is that they use a peptide array that is specially designed to query the myriad of antibodies present in a human blood sample. The arrays are built using equipment and processes similar to those used in the manufacturing of silicon-based electronics, making it both cost-effective and scalable.
While Theranos wants to offer a test menu of over 200 types of tests, HealthTell just wants to go after fatal diseases first and then add on additional test offerings once they’ve secured your blood sample. Unlike Theranos, they make it a point to tell you how open they are about their technology works:
HealthTell takes pride in being a transparent, data driven company passionate about sharing our diagnostic technology with the world.
You don’t have to take their word for it, however. On the HealthTell website, you can read over 20 different publications from leading journals that describe the technology and test its effectiveness. Here’s one such study which was released about a year ago:
While the test technology may be complex, the above test is pretty simple. Take 39 women in various stages of ovarian cancer, mix them up with 49 women who have a benign breast disease, and then see if the Immunosignature test can correctly identify the ovarian cancer antibodies. It was able to with an accuracy level of 93%.
With all the troubles Theranos has run into lately, HealthTell must see this as an opportunity to strike and now they have $26 million to go make something happen. While this amount pales in comparison to what Theranos raised, HealthTell might be hoping to find a partner with distribution channels in place that can help them scale their business while minimizing costs. The HealthTell careers page cites an open position for a “Business Development Director who will play a key role in establishing Pharmaceutical and Diagnostic industry partnerships and developing new services business“. While this may imply the production of tests is in early stages, a recent article by Fierce Biotech states that HealthTell is producing over 100,000 tests already from their production facility in Arizona.
Given the regulatory hurdles Theranos is dealing with at the moment, HealthTell is probably being much more forthcoming in proactively addressing any regulatory concerns that might arise. Patients who are told they have cancer will immediately seek treatment, and in some cases will look to undergo very invasive procedures like mastectomies. The FDA has been very trepid about allowing companies to make diagnoses about the likelihood of or existence of a disease for precisely these reasons.
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