Bruce V. Bigelow- January 3rd, 2018

Genalyte, a biomedical diagnostics company that has maintained a low profile in San Diego while raising almost $92 million, is getting ready to debut technology that targets a market long dominated by centralized lab services providers.

Kevin Lo, an Internet veteran who recently joined Genalyte as president, said in a telephone interview the company is creating a next-generation lab services business that doesn’t require blood samples to be sent to centralized labs for testing. Instead, Lo said Genalyte founder and CEO Cary Gunn has led development of a cloud-connected device, equipped with automated, lab-on-a-chip technology capable of returning test results in 15 minutes.

“We’ll be delivering lab results [at the point of care] in an industry that’s been dominated by two centralized lab services providers,” Lo said, referring to New Jersey-based Quest Diagnostics (NYSE: DGX) and North Carolina’s LabCorp (NYSE: LH).

According to a pre-holiday statement, Genalyte plans to demonstrate its diagnostic technology next week in San Francisco during the 36th annual J.P. Morgan Healthcare Conference.

The company has yet to lay out much about its business or strategy. Since 2007, when Gunn founded Genalyte, the company has raised $91.8 million in at least four venture rounds led chiefly by Khosla Ventures and Redmile Group. Genalyte now has more than 75 employees. Lo, who continues to work in Silicon Valley, said he wants to expand Genalyte’s presence by tapping the resident talent in the Bay Area.

Lo, who was named last month as Genalyte’s president, was previously a senior executive at Facebook (NASDAQ: FB), where he was responsible for leading the social media giant’s “connectivity” efforts to sign up the 4 billion people who are somehow not part of Facebook’s online community. Before that, Lo managed Google Fiber—the gigabit Internet broadband service provider that set out to spur the growth of tech communities in Kansas City, Austin, Provo/Salt Lake City, Raleigh-Durham, NC, and other U.S. metro markets.

A spokeswoman said the company “is not quite ready” to discuss whether Genalyte has customers or is generating revenues. Some physicians are using Genalyte’s automated diagnostic equipment as part of the company’s field study, she said.

Still, it’s clear that Genalyte is laying the groundwork to move the business of biomedical diagnostics online, with the idea of creating an integrated delivery service for test results that can be generated from a drop of blood. According to Lo, the key to the company’s technology is the ability to run a large number of blood tests in parallel, with a short turnaround for results.

The company says it plans to provide its Web-based assay device for use “at the point of care,” such as a doctor’s office. Under the current model, Lo argued that nearly a third of patients seen in a doctor’s office don’t follow through with blood tests that have been ordered. For those who get their blood drawn, Lo said too much time elapses before results are available.

Lo acknowledged that hundreds of the most important blood tests are typically done in-house at major hospitals, but he said there is “a long tail” to the market that consists of thousands of more specialized tests. Exactly how this would unfold remains to be seen, but a number of new companies are trying to change the way diagnostics has traditionally been done—and to provide the results online. 23andMe and Color are testing spit samples for genetic analysis; uBiome tests stool samples for an analysis of a person’s microbiome. In the bigger picture, there is a movement to make testing capabilities accessible to consumers.

With technology innovation driving fundamental changes in healthcare, Lo said he sees “a very real opportunity to apply a lot of the lessons we’ve learned in IT to healthcare.” With the expertise he has acquired in cultivating new markets for online services, Lo said the questions for Genalyte are now along the lines of, “What is your entry path?” and “How do you build up a capability over time?”

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