Tethys Snags $33M in Equity, Debt for Predictive Diabetes Test

7/21/10Follow @xconomy

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 who focus on preventive medicine, Richey says. Most of the adoption has come from the mid-Atlantic states, through the south, and into Texas—a part of the country with disproportionately high rates of obesity and diabetes, which Richey called “the heart attack belt.” More work still needs to be done to justify the future payoff and savings before the test will be widely adopted in California or the northeastern states, Richey says.

Tethys currently owns 100 percent of the commercial rights to its PreDx test, and it does the sales and marketing on its own. The company has 122 employees at the moment, with about a dozen salespeople in the southern states, Richey says. The plan, with the new financing in hand, is to triple the sales force to about 30 people in those same geographies to capture a bigger portion of the available market, Richey says.

How big of a market opportunity are we really talking about? Given an American lifestyle that revolves around video games, television, and junk food, an estimated 57 million people in the U.S. are at risk of getting diabetes. Most of those people are overweight or obese, yet that’s not a guarantee that they will all get diabetes. Only about one-fifth of people generally considered at risk—because of obesity, family history, high cholesterol, or other factors—end up actually getting the disease.

Not all those at risk are going to shell out several hundred bucks for a test. But Tethys says it has potential to perform “several million tests” over the next five to seven years, at prices of between $200 to $300 at maturity, creating a market worth more than $1 billion in the U.S. for its PreDx test, Richey says.

Yet, I had to ask Richey why anybody would want to pay for this test. Today, most doctors will look at a person who’s overweight, with a family history of diabetes, and—without any molecular information from the patient’s bloodstream—will advise that patient to stop eating junk food, and start exercising more. If a patient got a personalized test like this, what will the doctor say to that same patient?

The same thing. So with or without the test, if people would just live a healthier lifestyle, they could greatly lower their risk of diabetes.

Tethys has clearly heard this counterargument before, and the company has a very interesting answer about human behavior. On an anecdotal basis—meaning it must be taken with a grain of salt—Richey says the company has heard that patients often don’t take their doctor’s advice alone to heart. But when an unequivocal blood test result comes back that says unless you change your ways, you will almost certainly get diabetes in five years, patients suddenly have the fear of God struck into them.

“The difference here is that this is an absolute wake-up call,” Richey says.

You can bet that if Tethys can ever prove such a claim with medical evidence, it would be a blockbuster medical paper. That’s exactly what the company is shooting for. The company … Next Page »

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  • Krassen Dimitrov

    “On an anecdotal basis—meaning it must be taken with a grain of salt”

    Fair point, but still: the test exists, it has sold, and is being funded by some of the best VCs in the biz, such as KPCB.
    Why should we take this “with a grain of salt” yet imaginary IPOs, veiled in non-existent “quiet periods”, and funded by the biggest losers in the industry (such as OVP) should be swallowed straight?
    http://bit.ly/cmcy6v

    On a separate note: if you are at risk of diabetes don’t take in too much salt, with anything… Seriously :))