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A Theranos Effect on Dx?

The brouhaha over at Theranos — the blood testing's company's CEO is facing a potential ban from running a lab by regulators — may make investors unwilling to take a chance on other diagnostic technologies, writes Steve Brozak, the president of WBB Securities, at Stat News.

Theranos, he notes, provided a compelling story as CEO Elizabeth Holmes dropped out of Stanford at age 19 to develop a company based on a technology that she said could change how blood testing is done. "Holmes was heralded as an iconoclast who would upend entrenched companies. Her story captivated the investor community, and her private company was quickly valued at several billion dollars," he says.

Brozak noted that, traditionally, investors haven't been as keen to invest in diagnostics as in therapeutics, because the returns were not as lucrative. And now with Theranos' troubles, he says it is taking attention away from other companies in the space that are also trying to improve and speed up diagnostic testing. For instance, Brozak notes that Lexington, Massachusetts-based T2 Biosystems (a company that is part of the GenomeWeb Index) has been developing a magnetic resonance imaging-based test to uncover fungal pathogen signatures in four hours, rather than the days that blood cultures take. Such a quick turnaround time, he says, would enable physicians to identify the fungus more quickly and prescribe more specific drugs.

Though T2 Biosystems' device is in use at some hospitals, Brozak says that other companies might not be as lucky in the current climate. "It's a shame that the fallout from Theranos will almost certainly make it difficult for diagnostic companies to raise capital long after we stop talking about its enigmatic founder's fall from grace," he adds.

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