With the media spotlight on the failure of the notorious (and now-disgraced) unicorn Theranos Inc., you would expect the company’s competition to suffer by association.
But San Diego-based Genalyte Inc., a company with a nearly identical vision to Theranos, just received a windfall of investor support. The company announced late last month that it had received a $36 million round of cash led by repeat investors Khosla Ventures and Redmile Group, bringing the company’s total capital raised to $82 million.
Genalyte — like Theranos — is working to disrupt the $50 billion blood-testing industry with technology that can run lab tests on only one drop of blood.
“There’s a broken piece of the health care system between when a patient sees a doctor, and when they get their test results,” said Cary Gunn, CEO of Genalyte.
That’s why Genalyte is developing blood tests that can run quickly, delivering answers to patients and doctors in minutes rather than days.
Sound familiar?
Theranos Scandal
For those new to the Theranos saga, the Silicon Valley company is best known for building a $9 billion enterprise based on blood-testing technology that was said to deliver test results in minutes (also using one drop of blood).
The company kept its technology behind a veil, siloing research departments and cultivating a culture of secrecy. Before publishing its data for peer-review, Theranos stoked the hype around its rapid blood test, landing partnerships with mega corporations, and building its valuation to unicorn status. But its reputation was slaughtered in 2015, when The Wall Street Journal reported that the company’s secret technology was, in effect, a sham. The test results Theranos was delivering were often inaccurate, and the technology was quickly benched by the firm.
Some speculated that the technology could never work, and that it was impossible to get accurate readings from such a small amount of blood.
Ripe for Disruption
Genalyte has similarly lofty goals. The company has spent nine years developing a patented silicon chip technology, which it calls the Maverick Detection System. The Maverick can run up to 128 tests on a single drop of blood in only 10 minutes, according to the company.
The local firm hopes its technology will be used in doctor’s offices, allowing patients to see their results while still in the company of a physician instead of days (or weeks) later.
To start, Genalyte is developing tests that will help diagnose autoimmune diseases such as lupus or rheumatoid arthritis.
Despite the meltdown of Theranos (or perhaps because of it), the blood-testing industry is still ripe for disruption, Gunn said. And his investors tend to agree.
“The diagnostics industry is on the cusp of a sea change, and Genalyte is the standard bearer in an effort that will transform not only diagnostics but how precision medicine is practiced,” said Vinod Khosla, founder of Khosla Ventures and an investor of Genalyte.
While Gunn said he shares the same vision as Theranos, the technology and business tactics are quite different at Genalyte. For starters, the San Diego company is completely transparent about its technology.
“We’re publishing peer-reviewed data, we’re doing clinical trials, and we’re being very open about how the technology works,” Gunn said.
So open, in fact, that Gunn offered to perform the test on me.
How It Works
After signing a few legal documents, I sat in a swivel chair in Genalyte’s laboratory. A woman in a white lab coat pricked my index finger and squeezed 10 drops of blood into a tiny cylinder. The machine can run on one drop of blood, I’m told, but they collect extra to dilute “interstitial fluid and damaged tissue” from the finger prick. It is supposed to ensure a more accurate reading.
The blood is mixed with saline and inserted into the Maverick Detection System, a boxy blue and gray machine that holds Genalyte’s silicon chip. The chip features 128 sensors, each so microscopic that 15 of them would fit on the end of a strand of human hair. As the blood flows over the chip, some molecules bind to the sensors signaling which diseases my blood might carry.
A computer monitor to the right of the machine shows my lab results calculated in real time, one right after another. Happily, according to the test, the results came back negative across the board for the auto-immune conditions it tested for.
From finger prick to test results, the entire process took less than 12 minutes. Imagine cutting days or weeks waiting for lab results down to 12 minutes.
“Waiting for lab results is a big point of stress for every patient at some point in their life,” Gunn said. “We hope to eliminate that stress.”
Path to Approval
It’s important to note that the Maverick Detection System is still an investigational device, not yet approved by the U.S. Food and Drug Administration. Gunn said it could be at least a year until the company even applies for regulatory approval.
But the company’s clinical trials show promising progress. In November, Genalyte presented two sets of clinical data at the American College of Rheumatology meeting. One study was able to show that Genalyte’s finger-stick test was able to get similar results to what a traditional blood draw got.
With the new $36 million round of cash, Genalyte intends to fully develop the platform and prove its performance through additional clinical studies.
GENALYTE INC.
CEO: Cary Gunn
Revenue: Not disclosed
No. of local employees: 50
Investors: Khosla Ventures, Redmile Group
Headquarters: Sorrento Valley
Year founded: 2007
Company description: Life science firm developing rapid diagnostic testing solutions for doctors, patients, and researchers
Key factors for success: Industry ripe for disruption, well-capitalized, promising clinical data
