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Theranos Could Become a Point-of-Care Diagnostics Company

October 29, 2015 By Kalorama Information

Kalorama Information speculates that innovative and controversial laboratory lab testing company Theranos could conceivably transition itself into a point of care IVD company, over the next few years, focused on placements of its ‘Edison’ technology and associated revenue streams.  The statement was made in a recent blog post, though Kalorama is clear to claim no knowledge of the Palo-Alto, CA-based company’s strategy or plans. The healthcare market research firm observed in a recent blog post that some company moves, most notably its application for CLIA-waiver for their core product, make an eventual IVD strategy possible. Kalorama Information routinely reports on the IVD market and the point of care diagnostics in particular.

The firm’s most recent report on point of care diagnostics, The World Market for Point of Care (POC) Diagnostics, estimated that the professional (not self-testing) POC IVD market will be $10.1 billion by 2019. 

“We have no knowledge of any plans at the firm, but as market watchers we can say the economics of POC are conducive to such a strategy,” said Emil Salazar, IVD analyst for Kalorama Information in the blog post. “Clinical users could be attracted by low-cost tests developed for an Edison or Edison-derivative platform; the user-performed tests would provide rapid near-patient results and serve as an in-house revenue stream; and Theranos would collect revenue from instrument placements and reagent/disposable orders or reagent rental agreements.”

Intrigue regarding the company has given way to controversy as recent reports and allegations question the efficacy of the company’s core technology, and the company has fired back in interviews and press statements. While Theranos is ostensibly committed to revolutionizing and succeeding within the clinical laboratory service space, Kalorama conjectures that the company could transition to an IVD-centric business model. The company’s microfluidic analyzer technology has already been approved by the FDA for CLIA-waived qualitative HSV-1 testing and could thus compete in the dynamic point-of-care test (POCT) market space.

Theranos recently disclosed that the fingerstick sampling method used in conjunction with its in-house developed IVD analyzer, referred to as ‘Edison’ in reports, is now limited to only one test, a FDA-approved laboratory developed test (LDT) for herpes simplex virus-1 (HSV-1). The reduced role of Theranos’ proprietary testing platform was announced following recent questioning of the company’s protocol for proficiency testing (PT) as part of CLIA certification and request from the FDA to cease using ‘nanotainers’ or blood collection devices unapproved for Theranos tests.

Kalorama suggests that the fact that two regulators (CMS and FDA) hold oversight for the Silicon Valley start-up’s crucial business operations illustrates Theranos’ unique and potentially mixed approach to clinical markets. The company’s microfluidic analyzer technology has already been approved by the FDA for CLIA-waived qualitative HSV-1 testing and could thus compete in the dynamic point-of-care test (POCT) market space. The stated ethos for Theranos – to provide actionable information at the time it matters most– additionally remains just as viable if the company chooses to further develop its technology as a POCT analyzer.  

Kalorama notes that a CLIA waiver is highly unusual for a lab developed test (LDT), as such a designation is often used to allow the performance of the test outside of a laboratory at POCT sites such as physician office laboratories (POLs), small outpatient clinic labs and decentralized testing points in hospitals and field sites. Typically, a POCT device manufacturer secures a CLIA waiver to sell a product outside of the traditional IVD client bases of clinical and reference laboratories (CLIA moderate- and high-complexity labs).  In comments regarding the test’s newest clearance, Holmes identified: “This is a milestone in bringing our technology and services not only to our Wellness Centers, but also to physician offices and hospitals.”  Kalorama notes that those are end users markets commonly targeted by POCT device companies. 

The firm discusses the POC angle in greater detail in a recent blog post. For more information on point of care IVD markets, The World Market for Point of Care (POC) Diagnostics, can be found at: http://www.kaloramainformation.com/Point-Care-POC-9030928/.

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