By Ron Leuty | San Francisco Business Times | March 10, 2017
A young Bay Area company, promising to make blood draws easier, has snared $17 million in funding from a group of venture capital firms and health care providers.
But if Velano Vascular Inc.’s promise of easier blood draws rings similar to that of Theranos Inc., the stories diverge quickly. For one, San Francisco-based Velano’s doesn’t approach the onetime $9 billion valuation slapped on Theranos, whose meteoric rise, fall and regulatory missteps have quickly become legend.
What’s more, their technologies are vastly different, and Velano, unlike secretive, Palo Alto-based Theranos, has been more than willing to let others try out its device.
Velano’s PIVO is a single-use, disposable device that sits inside peripheral IV lines. That means hospital workers don’t have to rely on repeat needle sticks, often early in the morning, to draw blood from sleepy patients.
“For patients, it’s a no-brainer,” Velano cofounder and CEO Eric M. Stone told the Business Times. “For practitioners, they can be more efficient.”
Stone understands the Theranos parallels, but Velano has clearly stipulated regulatory pathways to follow, he said. What’s more, hospitals and their doctors and nurses are skeptical of deviations from long-running standards of care and must be convinced that PIVO captures enough lab-quality blood to make accurate diagnoses for patients in their care.
Theranos claimed its needles-free technology would allow accurate diagnoses from a single finger prick, avoiding intravenous blood draws. But the company didn’t allow peer review of the technology before signing a deal with Walgreens that resulted in a quick buildout of 40 Theranos “wellness centers” in the Phoenix area and Palo Alto.
Ultimately, the technology was debunked — Theranos instead relied on traditional IV blood draws — thousands of diagnoses were called into question, the regulatory Centers for Medicare & Medicaid Services brought down sanctions on the company and founder and CEO Elizabeth Holmes, and once-fast-growing Theranos laid off hundreds of employees.
Velano, on the other hand, has worked to get its technology in front of health care administrators and in the hands of curious hospital workers. A partnership with Sutter, for example, placed PIVO inside Alta Bates Summit Medical Center in Berkeley.
“The front-door questions are, can it be more affordable for the end user or Sutter to deliver? Will it deliver for our staff?” said Chris Waugh, Sutter’s chief design and innovation officer. “Does it make for a different experience? Does it differentiate Sutter? Is it in line with our overall strategy to open up a bed quicker?”
What Sutter found during its trial with 5-year-old Velano’s PIVO is that patients who got a blood draw in one Alta Bates unit would ask for it in another unit that wasn’t part of the PIVO test.
Other pilot projects have taken place at Children’s Hospital of Philadelphia and Children’s National Medical Center in Washington, D.C.
The device, which last month received its third Food and Drug Administration clearance, has been used in tens of thousands of blood draws in the United States and overseas.
PIVO is not a needle and it’s not an IV catheter, Stone said. “It’s something in between,” he said, and that could mean fewer needles, less risk to hospital personnel drawing blood and saved time if blood needs to be redrawn.
“Those are real dollars,” he said.
Stone and Velano President Dr. Pitou Devgon, a staff physician in the University of Pennsylvania Health System and a former senior associate at Safeguard Scientifics (NYSE: SFE), founded the company in 2012 in Philadelphia. It gathered cash from 10 angel investors.
Velano’s $17 million round included an undisclosed publicly traded health care company and a global supplier that joined existing investors First Round Capital, Kapor Capital, Safeguard Scientifics, White Owl Capital, Griffin Hospital in Connecticut, Children’s Hospital of Philadelphia and Sutter.