In fact, venture capital investment into health diagnostics companies peaked in 2020 with $4.8 billion going into the sector, according to Crunchbase data.
New York-based LetsGetChecked was founded in 2014 to provide end-to-end infrastructure for at-home diagnostics, so when COVID happened, it was easy for the company to provide a quick test, said Peter Foley, founder and CEO of the company.
Though COVID became the forefront of testing, the pandemic also increased demand from people who needed to perform other health screeining tests, such as diabetes, thyroid and cholesterol, but now preferred to do so at home.
That phenomenon brought LetsGetChecked new clients, Foley said.
“It wasn’t just a massive need for COVID testing through the pandemic, but an unmet need for routine diagnostic tests, such as colorectal and cardiovascular risk management, and it needed to happen at home,” he said. “Companies may not have engaged in home care before, and it was an incredible way to engage their employees, gain their trust in deploying our services, and convert that business into other types of clients. This shift of health care to the home is a paradigm, and the way it will be done forever more.”
LetsGetChecked is among 1,129 health diagnostic companies that have raised venture funding since 2017, according to Crunchbase data. Since 2017, investors have infused nearly $20.3 billion into this sector.
Ramping up in a pandemic
Los Angeles-based Curative, which was founded in January 2020, saw an opportunity to offer COVID testing and pivoted from its initial focus of sepsis, said Isaac Turner, co-founder and chief technology officer of Curative.
Curative raised about $1 million in pre-seed funding for its sepsis work before anything COVID-19 related started, Turner said in an interview.
“We were getting ready to go out to raise a seed round when COVID hit,” he said. “After pivoting to COVID, we raised another $1 milion from angels and DCVC to get us off the ground with the COVID work. An $8.8 million round occurred a few months later to further fund scaling up COVID testing, which included Chris Anderson, Refractor Capital and a few other small contributors.”
The company was able to partner early on with KorvaLabs, which typically ran sports testing, but found work halted when sporting events shut down, Turner said.
The team started small, but more and more people began joining, prompting Curative to need more laboratory and office space. Curative now has three 24-hour labs and runs 1 million tests per week, Turner added.
Turner expects to go back to sepsis, but is grateful for the experience to work on COVID testing. Not knowing what would happen last year, Curative made a decision to scale in late 2020. Initially, the company brought on hundreds of employees on three-month contracts and now employs around 7,000 people.
“We learned a lot doing that,” he added. “Until we scaled, we didn’t realize how many systems it took to manage zero to 500 people, let alone thousands. Many of them only lasted six months before we were reassessing our needs and making assumptions around customer size.”
Managing widespread testing
Health diagnostic company founders say they have their sights set on different areas where testing will continue to be important, such as in schools, increased travel and people going back to work in close quarters, as well as in other countries where COVID-19 cases are still a problem.
The Centers for Disease Control and Prevention reported just 608,337 new COVID tests were performed on May 14, down from a peak of 2,310,689 on Jan. 6.
“Testing is down across the board,” said Gigi Gronvall, Ph.D., senior scholar at the Johns Hopkins Center for Health Security at the Bloomberg School of Public Health, who leads the COVID-19 Testing Toolkit. “Health resources are not infinite, and they are being put toward vaccines. At the same time, people who were getting tested are now getting vaccinated, as well as the general feeling that we are done with this.”
Schools will be of specific importance, Gronvall said. In March, the Biden administration announced it would invest $10 billion into COVID-19 testing for schools so that in-person learning could take place. And last week, the CDC announced that Pfizer’s vaccine was approved for children aged 12 to 15, but a dose for younger children is not yet ready.
San Francisco-based ixLayer, a company developing a cloud technology infrastructure for test scaling, is working to implement its platform so when that happens, there will be a more streamlined way to manage widescale COVID-19 testing, monitoring and patient follow-up.
What will be key for workplace and school testing is the ability to do faster and more accurate testing, which is better now than it was last year, Pouria Sanae, founder and CEO of ixLayer, said in an interview.
“It will be important to be nimble and stay close to the end-user,” Sanae added. “If a worker or student tests positive, there will need to be a way to handle that process.”
Laboratories can test 10 people with one sample. Those tests are only rapid, but also boast 90 percent-plus accuracy. There are also more on-site testing capabilities where a specimen is never sent to the lab, and results can be reported immediately to a school or local government.
Some of the challenges Sanae expects as school testing increases is managing guardian consent and that there are no patient portals for children. This means that cities and school districts will have to create a way to notify faculty, staff and parents if a child tests positive. In addition, the testing will need to be streamlined so that an elementary school of more than 1,000 children can be regularly tested with as little friction as possible.
Developing better tests
In addition to schools, ixLayer is fielding requests from the tourism and travel industry, Sanae said.
“The challenge is not just about the U.S. getting testing, but going abroad to places where people are not yet vaccinated,” he added. “Even if you are vaccinated, you can bring back a new strain of the disease.”
Several countries, including India, have experienced an explosion of positive cases this month, which presents a testing challenge, according to Fluxergy President Tej Patel. The Irvine, California-based company developed a portable platform that consolidates laboratory testing into one device.
LetsGetChecked and Fluxergy both operate in Europe, though Foley and Patel both said it is difficult to establish testing facilities in a new country due to countries having their own regulatory restrictions and distribution requirements. Many emerging countries aren’t able to manage shipments, as well as refrigeration requirements, making some of the vaccine deliveries difficult, they said.
And, as new strains of COVID appear across the world, each with its own transmission rate and effects on those infected, that can make developing tests to pick up each new strain trickier, Patel said. Fluxergy’s approach to testing is to understand and track the different strains, where they are going and how they are progressing.
“Understanding how the strains are transmitted will mean we can better determine if we need lockdowns or no lockdown,” he added. “Surveillance is critical.”
Databases are widely used to track different strains and how they progress. It also enables health care diagnostic companies to upload information on how their particular testing works against the strains, Patel said. As a result, there are currently hundreds of thousands of sequences for COVID, and diagnostic companies can use that information to develop tests.
Meanwhile, Gronvall notes that the disease is not done yet, nor will we be rid of it anytime soon.
Until enough of the population is immune through vaccination — over 121 million Americans fall into this category currently — there is going to be a role for testing, she added.
“The need for testing will go on, and I expect some companies with emergency-use authorization will go after FDA approval,” she said. “Testing, like rapid tests, have gotten better and are available in drug stores.”
However, she said “readily available” doesn’t always translate into the best data keeping. People who use an at-home test and test positive are supposed to let other people who may have been exposed know.
This is something Gronvall said isn’t likely to always happen because there is not a universal medical system with access to people’s status of vaccination, which means people will say they are vaccinated and not be, she added.
Although COVID has not been nearly as bad for children, there are still some mysteries. Gronvall pointed to new reports of babies and small children in Brazil dying of the disease, driven by decreased access to care and overloaded hospitals.
“This year, we are likely to see information regarding testing to come from schools and other mass testing programs,” Gronvall said. “We will see more routine testing of large, non-infected groups of people, and this will be more important for kids who will be vulnerable until they can be vaccinated. As more of the world opens up, we could see more kids contract the disease. I urge everyone who can get their kids vaccinated to do that.”
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