Tethys Snags $33M in Equity, Debt for Predictive Diabetes Test
[Corrected: 9 am Eastern] Tethys Bioscience has secured $33 million to see if it can build a big business around predicting and possibly heading off one of scourges of modern life—diabetes.
The Emeryville, CA-based company is announcing today it has nailed down $23 million in equity investment, while borrowing another $10 million to finance the sales and marketing push for its commercial diabetes test. [Correction: An earlier version said it had raised $20 million in equity.] Called PreDx, the blood test seeks to determine the likelihood that an individual will develop diabetes. Greenspring Associates, Paul Capital Investments, Kleiner Perkins Caufield & Byers, Intel Capital, and Aeris Capital contributed to the equity portion of the deal, while Oxford Finance and Silicon Valley Bank provided the venture loan component.
Tethys, founded in 2005, has now raised more than $100 million in equity since its beginning. The company is built on technology for a blood test designed to look for certain protein markers of inflammation, fat and carbohydrate metabolism, and cell death. Tethys hopes that by looking at those markers in combination, it can predict whether a person is likely to get diabetes in the next five years. Diabetes is estimated to affect more than 24 million Americans, and incidence is expected to double over the next 25 years in lockstep with the obesity epidemic. The condition can cause blindness, amputations, and other complications, and costs the U.S. health system an estimated $200 billion a year.
Tethys’ hope is that insurers will be willing to pay for a blood test that can predict which patients are on course to get the disease, while it’s still early enough for them to change their behavior to prevent much of that pain and expense.
“Diabetes is preventable,” says Tethys president Mike Richey. “We can decrease healthcare costs by $10,000 per patient per year by preventing it.”
That’s a pretty powerful value proposition, but Tethys still has a long way to go to fulfill such potential. Its test was first introduced at the American Diabetes Association meeting in San Francisco in June 2008, and became commercially available in early 2009. Tethys has set up a central lab in Emeryville that receives blood samples from doctors, produces a composite score that grades diabetes risk on a scale of 1 to 10, and sends the result back to the doctor within a week.
Tethys doesn’t disclose its annual revenues, although the test is available at a list price of $585, and the company says doctors have ordered 15,000 PreDx (pronounced “predicts”) tests since early 2009. All the “major payers” have started to reimburse doctors who order the test, Richey says, although he declined to offer specific names of major insurers.
The early adopters of the Tethys test are mainly primary care physicians … Next Page »