San Diego-based Genalyte was making this a reality long before Theranos burst onto the scene. And with $36 million in new funding — the round was led by Khosla Ventures and Redmile Group — they’ll likely outlive the field’s infamous and now-crippled unicorn.
“It’s going to happen. Diagnostics is going to be decentralized,” said Genalyte founder and CEO Cary Gunn, in a recent phone interview.
The company’s vision is to transform the physician-patient relationship by making routine blood tests a painless, 15-minute exercise that begins and ends in the doctor’s office.
According to Gunn, Monday’s funding announcement is best described as a senior preferred financing round. Its initial capital came from angel investors in San Diego, but as the product became more proven they were joined by investors in Silicon Valley.
“We did make the decision to keep the company very small and very focused on the hard scientific problems until they were solved. I think a strategic mistake is to grow a company too rapidly when there are large technical questions left unanswered.”
Genalyte has spent nine years developing a patented silicon chip technology, which it calls the Maverick Detection System. It builds on the company’s expertise in electrical engineering, as a spin-out from Caltech in Pasadena, California.
Gunn said the aim now is to refine the ergonomics of the chips and perform the necessary clinical trials to gain FDA approval. That process is expected to take several years, however, early studies have produced promising results.
On Nov. 12, Genalyte presented two clinical abstracts at the American College of Rheumatology (ACR) Annual Meeting, which included the results of two pilot studies comparing the Maverick system to standard lab procedures and patient diagnoses.
According to the company, the data showed an “extremely high correlation between positive and negative results comparing whole blood tested on the Maverick system with serum tested using previously approved devices”
In the wake of Theranos’ tests failures, questions have been raised as to whether a single drop of blood can ever provide an accurate diagnostic picture. This is true in some respects.
Gunn said blood from a finger-prick contains interstitial fluid and damaged tissue from the puncture wound. In one drop of blood, the contamination ratio is high and confounds most diagnostic tests.
To ensure accurate results, Gunn said the company aims to capture 10 drops of blood, enough to dilute any sample contaminants. The actual Maverick system requires just 10 microliters, or a third of a droplet, to activate all 128 sensors.
Maverick chips are printed with arrays of photonic sensors that recognize proteins or biomarkers through their binding mechanisms.
“The silicon chip itself is watching the chemical reactions take place,” Gunn said. “Anytime two molecules bind, we can see that happen. So the technology is capable of almost an infinite number of tests.”
By working with small quantities and running the sensors in parallel, the Maverick can deliver data in around 15 minutes. The technology also removes the need for additional reagents or tags that are commonly used to highlight the protein of interest.
“The sensors themselves are really small, so you could get about 12 of them on the end of a human hair,” Gunn explained. “That means that we can use a very small amount of protein and a very small amount of blood to perform this test.”
The technology has been demonstrated in DNA and sequencing tests, but the company chose to pursue what it believed to be the greatest unmet need, protein biomarker testing. Genalyte’s first target has been the field of rheumatology, a specialty that often lacks innovation and enterprise.
Blood panels are the departure point for nearly every treatment decision in certain autoimmune diseases such as systemic lupus erythematosus (lupus) and rheumatoid arthritis (RA). Right now, those patients are stuck on a two appointment roster.
If they feel unwell they book a doctor’s appointment. They turn up and the doctor orders the tests. The patient might have the flu, or their disease might be flaring — there’s no telling until the inflammation test results come back. The patient goes to the laboratory for a blood draw and then goes home.
By the second appointment, the medical provider has the results and can begin a real discussion about treatment options. No action may be required or they may need to increase their immunosuppressant dose. Whatever the outcome, the process has taken weeks, two doctors visits, two co-pays, and quite possibly, two chunks of time off work.
“There will always be a need for esoteric testing that needs to be referred to a laboratory,” Gunn said. “But for the vast majority of routine testing, there’s no reason why that can’t be done in the doctor’s office.”
Genalyte’s pioneering assay is for antinuclear antibodies (ANAs), proteins present in a number of autoimmune diseases as a product of the body attacking itself. A second product in the pipeline is a panel to determine whether an autoimmune disease is flaring.
“We are starting with rheumatology, but I call that our entry point,” Gunn said. “Our goal is to decentralize the vast majority of diagnostic testing to be near the patient and near the physician.”
Genalyte has achieved many milestones and built success in its own right, but it is interesting to hear the company’s thoughts on the rise and fall of Theranos.
Was the potential there?
“You can walk into our front door and I can take a prick of blood from your finger and I can give you a huge number of tests in ten minutes,” Gunn said. “So yes. Not only do I think that’s possible, I know it’s possible. It’s a matter of taking it through the appropriate regulatory processes and business processes.”
What’s your biggest takeaway from the Theranos saga?
“In diagnostic testing, in all of healthcare, I think you have to start with the patient first. And if you do what’s right for the patient and you do what’s right for the doctors and everyone else in that order, you’ll create a very powerful business.”