6 Blood Testing Startups to be the Next Theranos
It’s not easy to make it in today’s business world. Why do you think we have so many MBAs writing for us? The chance of becoming the next Uber or next Apple is infinitesimally small. Anecdotally, we all understand that most startups fail, but the bright minds at CB Insights finally started putting some hard numbers behind those stories last year and found about 70 percent of startup tech companies fail less than two years after raising their first financing. (Though we should also point out that that statistic includes companies that become self-sustaining, and the study was based on a cohort of about 1,100 startups.) The chances of joining the Unicorn Club, those private companies valued at $1 billion or more, is less than 1 percent. You’d think if you had reached those heights, it would be smooth sailing, right? Well … let’s take the case of biotechnology startup Theranos.
We won’t waste too much time retelling this story of woe, but as you may recall, Theranos promised to create a technology that could run about 200 diagnostic tests from a drop of blood. In 2015, we thought they would IPO. Led by Elizabeth Holmes, who dropped out of Stanford at the age 19 in 2003 to found the company, Theranos has since fallen on hard times. Turns out the tech didn’t really work, returning faulty test results. The company got hit by lawsuits and the feds started snooping around. Holmes was even barred from her own laboratories. Somehow the company has limped along and even rolled out a new product in 2016, mainly to test for the Zika virus. Even more amazing, Theranos got $100 million in debt financing last month, which Holmes claims will keep the company afloat this year.
So while it looks like we’ll have to wait a bit longer on CB Insights’ final post-mortem on Theranos, we’ve pulled together a list of six blood-testing startups hoping to become the next Theranos—but in a good way.
Genalyte out of San Diego is the most likely heir apparent. Founded in 2007, the company has raised about $91.8 million in disclosed funding for its Maverick Detection System. Its backers include top venture capital firms like Khosla Ventures. TechCrunch had reported that the Maverick Detection System can run up to 128 different tests on a single finger prick of blood in under 15 minutes. We didn’t immediately find anything on the company’s website to substantiate that claim, only that the Maverick Detection System uses silicon photonic biosensors to perform multiple tests off a single drop of whole blood in 15 minutes. The platform is built around a disposable array that contains 12 of these silicon chips that can detect in real-time when proteins or antibodies bind to the sensors.
The last we heard Genalyte had been conducting field tests of its system in collaboration with rheumatologist offices in San Diego and Orange County. In that case, Genalyte was assessing a 15-test panel for autoimmune diseases such as lupus and offering up much of the company’s data for outside review, according to a report in Bloomberg. Two separate studies of the company’s tests showed similar results to a current industry standard, the article reported.
However, it sounds like it’s finally show time for the Maverick Detection System. Genalyte plans to debut the system next week in San Francisco during the 36th annual J.P. Morgan Healthcare Conference, so you got to figure they have something to show that’s not just a Zika test in a box.
A Silicon Valley startup that got its start in 2016, Athelas was founded by not one but two college dropouts, including one from Stanford, which makes you wonder what they’re teaching these kids for $45,000 a year. Athelas has a $3.5 million vote of confidence from Sequoia Capital, another major player in the tech VC world, bringing total funding to about $3.7 million. Its 60-second at-home blood test, housed inside what looks like an Amazon Echo, is reportedly capable of testing for diseases such as the flu, bacterial infections, and even cancer, something that we looked at in-depth previously with other blood startups. Currently, the device is being used for cancer patients to monitor white blood cell counts for chemotherapy. White blood cells indicate the health of the body’s immune system.
The vampiric version of the Echo captures high-resolution images from a single drop of blood, then uses a computer to tag and count the cells, according to an article in Bloomberg. The process relies on machine learning, a form of artificial intelligence that, in this case, was trained on thousands of images of blood cells vetted by pathologists. Bloomberg also reported that Athelas has signed up two major pharmaceutical companies who are interested in the device as a way to find patients for their white blood cell-boosting drugs. More importantly, the company has been very transparent (the word appears twice on its website!) and even has FDA approval for using its device for imaging diagnostics.
Update 02/02/2022: Athelas hits unicorn status with $132 million raised for chronic care management. This brings the company’s total funding to $90.7 million to date.
Drawing out DNA in Disease
Silicon Valley-based Karius, founded in 2014, also has a connection to Stanford University, where the company’s pathogen-detection technology was first developed. It has raised $55 million, including a sizable $50 million Series A in August that included Khosla and Chinese tech giant Tencent. While requiring a full blood draw, the company can detect more than 1,000 infectious diseases (whether viral, bacterial or fungal) by analyzing fragments of DNA in the blood.
In a story from CNBC, Karius was able to help diagnose a three-year-old child with rat-bite fever in just one day, a diagnosis that might have taken months using standard procedures. The tech is still in the testing phase, and at $2,000 a pop, you better have something really, really bad. Rat-bite fever sounds really, really bad.
Update 02/24/2020: Karius has raised $165 million in a new funding to expand commercial outreach and for further clinical testing to build on previous studies of the Karius test. This brings the company’s total funding to $254 million to date.
On the East Coast in Massachusetts, Day Zero Diagnostics, an early-stage biotech company founded in 2016, has reportedly taken in about $3 million in Seed funding. Day Zero is developing a rapid, whole genome sequencing-based diagnostic that identifies the strain and antibiotic resistance profile of a bacterial infection from blood within hours. Its machine learning algorithm Keynome uses MicrohmDB, a proprietary microbial resistance database, to determine antibiotic resistance from genomic data. The idea is to avoid using broad-spectrum antibiotics, which is contributing to the global crisis of antibiotic-resistant bugs.
Update 01/25/2019: Day Zero Diagnostics has raised $8.6 million in Series A funding to continue their diagnostic system development effort and expand their R&D program to additional use cases in infectious disease where speed and precision matter. This brings the company’s total funding to $11.6 million to date.
Back in 20
Founded in 2013, San Francisco-based Orphidia (originally out of London), has $2 million in disclosed funding. Its main backer appears to be SOSV, which specializes in early-stage startups, and Orphidia went through SOSV’s biotechnology accelerator IndieBio. Orphidia is developing a portable device that can run 40 common diagnostic tests from a single drop of blood, returning results in about 20 minutes. Slightly more interesting: Orphidia uses microfluidic chips to test blood through automation. Microfluidics is the process in which small amounts of fluid flow through tiny channels. In this case, micro-pumps keep the blood flowing, while micro-valves direct the flow of blood throughout the chip.
There’s a Test for That
An Arkansas startup called NOWDiagnostics, which took in about $11 million in debt financing back in 2016, isn’t trying to jam a hundred diagnostic tests into an Amazon Echo. Instead the startup, founded in 2013, has a product line for a number of different screenings.
Its only U.S.-approved blood assay is a pregnancy test, which is more accurate than a urine test and offers equally reliable results compared to standard blood tests (with less blood) at point-of-care facilities without the need for a lab. The company also markets three cardiac tests and three toxicology tests in Europe, and is also developing rapid blood tests for sexually transmitted diseases (seven-in-one), food intolerance (seven-in-one), and common infectious diseases like pink eye and influenza (five-in-one).
The near-demise of Theranos doesn’t seem to have deterred startups or investors from trying to disrupt the blood diagnostic industry. Maybe the $18 trillion per year that the world is projected to spend on healthcare by 2040 is one incentive. But we’d like to think that some of these companies really are interested in helping fight chronic and infectious diseases, while combating the high cost of medical care. Surely the company that can develop highly reliable, cheap and minimally invasive diagnostic tests will fulfill the promise of Theranos. If not, they’ll become the next Theranos—but in a bad, rat-bite fever sort of way.
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