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Stuart Blitz has a dream. One day, someone will type ‘blood testing technology’ into Google and get the name of his company, Seventh Sense Bio, rather than Theranos.
Seventh Sense Bio and other legitimate blood-testing companies have had a shadow cast over them by the spectacular Theranos fraud, now made infamous by a best-selling book from Wall Street Journal investigative reporter John Carreyrou, Bad Blood: Secrets and Lies in a Silicon Valley Startup, and a major film by the same name in production starring Jennifer Lawrence.
Blitz, as chief business officer of Seventh Sense Bio (7SB), points out that his company made good where Theranos famously failed. For one thing, 7SB’s primary product, the TAP, has received approval from the U.S. Food and Drug Administration, an important step with regard to consumer confidence. Another difference is ambition. Blitz wants to change the blood-testing industry by removing “friction” in the process. Unlike Theranos CEO Elizabeth Holmes, he is not declaring war on the lab-testing industry or decades of medical practice. Instead, he’s selling to LabCorp, Quest Diagnostics and other giants. Indeed, LabCorp and pharma giant Novartis are investors.
In one way, Holmes was very correct, Blitz concedes. The market trends are moving toward making testing easier, with less centralization. Blitz spoke with Karma Network Contributing Editor Michael Moran.
Michael Moran: Where did the idea for the TAP device and the company come from? Was there a eureka moment or was this something brewing for a long time?
Stuart Blitz: Seventh Sense actually was spun out of our lead investor, which is Flagship Pioneering, with support from Bob Langer at MIT. Bob Langer, a famous academic and scientist there, has founded tons of companies and so they originally were looking at technology in the diagnostic space, something that would work almost like a check engine light for your body. They played with that idea for a few years and had this early version of a device that they were using to inject different materials to the body when needed. But they found that the diagnostic challenges were too much. So an early version of our current product grew out of their need for very high quality, reliable capillary blood. All of a sudden, the people running the study realized, wait a second, this is actually the market we should go after: the blood collection space.
If you followed the diagnostic space, you know Theranos and Elizabeth Holmes kind of get all the headlines. But I think that she was very correct about the trend of the market, which is moving toward more lab testing. And less friction in lab testing, and less centralization.
And I think other companies are realizing that to put all these instruments all over people’s homes may not be the right approach either. The actual problem we think we’re solving is, how do you get a blood sample? Because if you look at all the lab tests done today, when you go to get your medical provider, your blood is drawn by a phlebotomist and then you get your labs done. They actually throw most of those tubes of blood away and they do that because they just don’t need that much blood in a lab setting. So we have developed a product called TAP which you just stick on your arm, press a button and it painlessly gives you enough blood to do lab tests in the home.
Michael Moran: I don’t want to hit too hard on the Theranos thing because you probably are sick of talking about it. [Laughs] But right up top, let’s acknowledge that what you just described could easily come out of the mouth of Elizabeth Holmes. The exception, I suppose, is that Theranos was promising to do a range of tests across the board that were probably impossible with that small amount of blood. Is that getting the distinction right?
Blitz: That’s right. So what she was trying to do was do all the typical lab tests you do, but on a microscopic amount of blood. Over the years, that volume (of) blood kept increasing, increasing, increasing. Our approach and goal is simpler. Who we are is just a blood-collection company. We enable patients to painlessly to extract their own blood without having a need for a person there, a phlebotomist, and then you can send that blood back into a lab for results. We’re developing a whole platform around that, but using the amount of blood that medical science understands is needed to do accurate lab tests.
Michael Moran: Let’s talk about how you funded the company. You mentioned you were spun out of the Langer Lab at MIT, but you’ve taken on some larger investors more recently, including LabCorp and Novartis. Take me through that journey.
Blitz: After that happened the company sort of pivoted away from the “check engine” idea – and this is a bit before I joined – the company attracted LabCorp as an investor and then Novartis, one of the world’s largest pharmaceutical companies. LabCorp’s interest is as you would expect. They are spending tons of money on blood draws, and obtaining blood samples more easily, with less infrastructure, is an interesting idea for them.
Regarding Novartis, their interest is very much about solving a really big issue in clinical trials. How do we get a blood sample during the trial phases when subjects are spread far and wide So they invested too.
After I joined the company in 2016, we decided to submit the product for FDA approval. I saw the potential in the product for the mass consumer market. Everybody in the world generally has the experience of having their blood drawn, whether it’s with a phlebotomist or whether it’s a finger stick. So people tend to get it when we demo TAP. You put this device on your arm, you press a button and everybody’s like, ‘wait, that’s it?’ It’s totally painless.
Michael Moran: Where are you on the path to profitability? Are you at this point revenue positive or profitable, and if not, how do you get there?
Blitz: We’ve spent the last 12 months getting our manufacturing ready and getting a number of labs ready to use the product. We’re just getting on the market now in some pockets both in the U.S. and in Europe. We’re also working on an improved second version of the product.
Our view of the marketplace is that there are three billion blood draws done every year in the world, and there’s no reason why a good chunk of those shouldn’t be tapped with our product. There are so many use cases for TAP that I think it’s going to be really a matter of scale. So if you look at the traditional blood collection space, you know the one company that dominates that market is BD [Becton, Dickinson] who make most of the tubes and supplies in the world market. I think for us it’s really about establishing ourselves as the player that dominates in the at-home space.
Michael Moran: So how does one get into the home? There are an awful lot of tech companies trying to figure out that question, and even on a very macro scale, when you think about Amazon Echo, Google Home and others. How do you get something like this into the home and then what else does it need to pair with to produce useful tests?
Blitz: If we look at the direct consumer lab-testing space, it’s grown by a lot over the last few years, so now it’s a $200 million-a-year market just in the U.S. alone. There are mostly companies that are selling a cash-pay test to the patient. The old way is inefficient. As a patient, I have to make an appointment with my doctor, spend the time to go in, have the doctor say, ‘Okay, no problem,” or prescribe and authorize tests for you, and then I go to the lab to my blood drawn. That whole process is time consuming, and it may not be expensive – maybe I’ll have to pay a small copay – but it’s really inconvenient.
Today I can go to a number of websites and, say, buy a $79 lipid panel test, and that’s super easy. I can get a kit at home, do the blood draw with a finger stick at home and send it in. That market is growing but constrained by two factors. One is the fact that at some point you’re going to kind of exhaust all the people that are willing to spend 100 hours on a blood test and they say we can get this for free at my doctor, I want to do that.
The second is actually the blood collection. We know many of these companies struggle with getting a high-quality sample. So we feel that with our products we’re going to enable that market to grow a lot by giving patients and giving labs a very clear way to get a high-quality blood sample at home.
Michael Moran: Tell me a bit more about the product itself, TAP. This has a defensible IP?
Blitz: TAP is a little bigger than a half a golf ball. You stick it on your upper arm and you press a button and it fires a ring of thin needles into your skin and comes out very quickly. Those needles are so fine that the that there’s no pain, and the device is made under vacuum pressure. So the vacuum will slowly pull blood out through those holes into the reservoir. Then you take it off and send it back to the lab.
Michael Moran: The debate over how to engage with regulators featured very prominently in the Theranos story. Were you ever wary about taking TAP to the FDA?
Blitz: I think people that are that are not in healthcare devices or pharma business sometimes think that the FDA is an impediment and that they’ll take a lot of money and time to work with. And sure, it takes you more time and money to get approval, but once you do it, they’re asking the right questions. By and large the FDA is actually very, very pro-innovation. The questions they ask are ones that are that are reasonable. They want the technology to come to market; they just want to do it in a safe and effective way. So I think you take a very proactive approach with the FDA — be positive.
Michael Moran: What have you raised from investors and where is that investment going right now?
Blitz: We’re always adding money, and we’ll probably do another raise later this year to accelerate all of our second-generation efforts. We’re also bringing on some strategies to also invest in the company that eventually (will) be customers as well.
So far we’ve raised about $40 million. I would say that additional funding would be to accelerate the second version of our product and to begin to scale manufacturing to meet the market needs. Frankly, as we grow and really need to invest a lot of capital in manufacturing, we will look to other sources for that. It wouldn’t be traditional VC space, you know, it could be through acquisition or through an IPO. There are lots of different ways to do it, but we will walk up to that whenever we get there.
Of course, acquisitions are always possible too. Practically speaking, I see the company more as a fit with a much larger, deep-pocketed company simply because they can use lower-cost capital to scale manufacturing. I see that more likely than a standalone company that does an IPO, but they’re both options.