6 top VCs share why an often-neglected part of the biotech industry is set to take off in the next 12 months
Running tests can be expensive, and getting insurance coverage can be difficult. That's starting to change as the coronavirus pandemic places a renewed importance on testing, particularly in the absence of effective treatments and vaccines.
. Medical-device company funding, including diagnostics, reached an all-time high of $4.3 billion in the second quarter of 2020, according to In the past year, testing companies like LetsGetChecked, Cue Health, and Mammoth Biosciences have all raised additional capital while turning their attention to the coronavirus pandemic and finding ways to test for the virus. In the first two weeks of August,12 top biotech venture capital investors which startups they think are poised to take off in the next 12 months. For a number of them, those picks included diagnostics companies rather than startups pursuing new treatments. "We're so reactionary in our healthcare system with the therapeutics we're building," Section 32 managing partner Steve Kafka said of one of his picks, Thrive Earlier Detection. "The opportunity here is to shift our way of thinking to more upfront prevention and use data to get out in front of healthcare problems."Cue Health's diagnostic testing platform.Other VCs pointed to startups working on detecting the coronavirus. Foresite Capital CEO and managing director Jim Tananbaum said diagnostics startup Cue Health will have a big impact in the next year.including one that's been emergency authorized for COVID-19 for use in doctors' offices."In a world where vaccination is not universal, understanding whether someone has the virus is critical," Tananbaum said. Meanwhile big developments in treatments and vaccines will mainly come from larger biotech companies and pharmaceutical giants, he said. Venrock Partner Bryan Roberts, an early-stage investor, named testing company LetsGetChecked as one of his picks, thanks to its coronavirus work. LetsGetChecked ships at-home lab tests for sexually transmitted disease and more recently for coronavirus. Sherlock cofounders David Walt, Todd Golub, Feng Zhang, and Deborah Hung with CEO Rahul K. Dhanda.When it comes to therapeutics companies, Roberts said the next 12 months is too tight of a timeline for startups just now starting up work on COVID-19 therapeutics and vaccines. Instead, it has been a tailwind for companies that are farther along because they were already working in infectious diseases. Diagnostics companies like Mammoth Biosciences and Sherlock Biosciences are also looking at new ways to test for the virus that are faster, and that might not require a lab to process the results. Kiersten Stead, managing partner at DCVC BioMammoth makes rapid diagnostic tests using the CRISPR gene-editing tool to detect viruses including the novel coronavirus. Sherlock similarly is using the CRISPR gene-editing tool to build rapid diagnostic tests, including one for the novel coronavirus. That's especially the case if they don't require a lab to run the tests. The inexpensive tests will give a quick snapshot of whether or not someone is positive for coronavirus, Stead said. "Those'll be key to helping us intelligently reopen," Stead said of the tests under development from Mammoth and Sherlock. Scientists work in a lab testing COVID-19 samples at New York City's health department, during the outbreak of the coronavirus disease in New York City, New York U.S., April 23, 2020. Picture taken April 23, 2020. REUTERS/Brendan McDermid/Beyond the pandemic, a number of investors saw diagnostics as promising. For instance, Thrive is building an early cancer detection test. Just launched in 2019, Thrive now has plans to start a trial it can bring to the FDA after raising $257 million in July. "I think they're at a point where they're ready to be game-changing," Abbie Celniker, a partner at Third Rock Ventures, which has invested in Thrive, said. Meanwhile, Section 32's Kafka said he anticipates Glympse Bio, which is developing a new way to look for diseases in the body with biosensors, could take off in the next year.. The hope is to find a less-invasive way to screen for the condition. Amy Schulman, a managing partner at Polaris Partner, highlighted the combination of diagnostics and therapeutics as the future of biotech, beyond just identifying diseases. "The best diagnostics are going to enable treatments that, without the diagnostic, wouldn't be possible," Schulman said. "It's not just a matter of more, better, faster." For instance, testing could help crack diseases that have been evasive to treat, like Alzheimer's disease or NASH. Schulman said a diagnostic could lead to better ways to measure if an experimental drug is working, leading to more efficient clinical trials. The goal: "To get a diagnostic not just for diagnostic's sake, but a diagnostic to enable therapeutics that, absent the data from the diagnostic world would never be possible," she said.Do you have a personal experience with the coronavirus you'd like to share? Or a tip on how your town or community is handling the pandemic? Please emailfrom Business Insider Intelligence on how COVID-19 is affecting industries.Get the latest medical and health industry news with our Healthcare newsletter. Sign up now.By clicking ‘Sign up’, you agree to receive marketing emails from Business Insider as well as other partner offers and accept our
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