Sam Altman, Silicon Valley VCs bet $48 million on Vital Biosciences led by CEO Vasu Nadella

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Vital Biosciences plans to unveil new technology on Monday, July 24, 2023, that it says can use a few drops of blood for 50 lab-grade tests in 20 minutes.

The idea will give cold sweats to any investor familiar with Theranos. That company, too, aimed to run large numbers of tests on small amounts of blood. It didn’t work, and its founder, Elizabeth Holmes, is currently serving 11 years in prison for fraud after the company rode a $9 billion valuation down to zero.

Vital Biosciences and its backers are aware of the parallels. “In some ways, it makes it more intriguing,” said investor Lachy Groom.

On Monday, the start-up will announce that Groom and roster of investors including Sam Altman, 8VC and Laboratory of America have put a total of $48 million into the company. That’s still a far cry from $900 million Theranos raised, but Vital Chief Executive Officer Vasu Nadella says it’s enough to finish developing its technology and launch clinical studies.

The notion of streamlining blood diagnostics holds an enduring appeal. “I’m not a fan of needles. I’m not a fan of blood,” said Groom, a former product manager at Stripe who invests out of his LGF funds. “I got so excited by what they’re tackling.”

Groom was introduced to the start-up by a friend who spoke highly of the team. After what he said was considerable due diligence, he concluded it would be difficult to pull off fraud twice in such a specialized field.

Vital Biosciences plans to conduct its first official demonstration on Monday at the annual meeting of the American Association of Clinical Chemistry in Anaheim, Calif. Theranos-watchers will be familiar with the event as the same one where Holmes spoke in 2016 to try to restore confidence in her company.

Debuting at AACC was deliberate, said Mounir Koussa, the start-up’s co-founder and its vice president of research and development. “We want to be on that same stage,” he said. “Let’s go to that same stage, and make friends, not enemies.”

A diagnostics machine called the VitalOne sits at the heart of the business. The device can run three main types of tests – hematology, clinical chemistry, and immunoassay – at the same time, the company said. The tests check for blood disorders like anemia; basic metabolic disorders, like high cholesterol or jaundice; and the presence of substances like vitamins or insulin.

The device is designed to be used in doctors’ offices. That contrasts with the typical setup where a patient might go to an outside clinic for their blood test, and that clinic in turn sends the blood off-site for testing. Those results usually take days or sometimes weeks to arrive.

The hope is that if results come in before a patient has left the office, a medical professional can take action without requiring a follow-up visit. Koussa said he felt the urgency of the work when his father missed an important medical phone call. The doctor was calling with alarming test results, and the delay meant his father didn’t get the right treatment for high cholesterol – leading to emergency quadruple-bypass surgery last year. (His dad recovered well.)

Vital Biosciences is part of a growing group of companies with echoes of Theranos. Other start-ups in blood diagnosis include Redwood City, Calif.-based Karius, which uses a single blood draw to detect pathogens, a process that often requires tissue samples. In Seattle, Tasso is working on several streamlined blood-collection devices, including a wear-at-home patch that received Food and Drug Administration clearance last year. And in Tel Aviv, Sight Diagnostics is working on a new device for complete blood counts, a test commonly ordered during annual physicals, that needs only a tiny amount of blood.

Meanwhile, Stanford University genetics department chair Michael Snyder said earlier this year that he had developed a micro-sampling approach allowing for the measurement of thousands of molecules from a single drop of blood. That so many such ventures have stuck around even after the Theranos debacle is a testament to the viability of the technology – or at least the eternal optimism of entrepreneurs.

Vital Biosciences was founded in 2019, and its VitalOne device won’t be available to the public for a while. The start-up expects to start the first of two Food and Drug Administration processes in 2024. One aims to prove VitalOne is as good as current testing methods, and the second must show it works well in doctors’ offices. Each step will take six to nine months. If successful, it will receive Food and Drug Administration clearance for use.

One of the perks of the device is that it can run tests on a smaller amount of blood than is normally necessary. The minimum it will require is six drops, or one-eighth of a teaspoon. It might be years before patients can expect that treatment, because most medical offices still use equipment for vein-drawn blood that requires larger quantities.

When the industry eventually adjusts to capillary blood draws – meaning small amounts taken from a pinprick to the finger or shoulder – Vital will be ready, CEO Nadella said. “We want to fit into the existing infrastructure,” he said. “We’ve got this capability of both.” The claim is reminiscent of one made by Theranos, which said it could run tests on only one drop, but Vital Biosciences’ founders say their approach much more tenable.

Theranos is also a singular example of what not to do. The debacle has been a lesson, Nadella said, in making only measured predictions and seeking out peer review. “The fact that Theranos happened raised the bar in a really big way,” he said. “There’s not a day that goes by where we don’t talk about Theranos multiple times.”