There’s a new sheriff in the Silicon Valley
As new health-related tests hit the market, the Food and Dr ug Administration is f lexing its regulator y muscle
HSAN FRANCISCO elmy Eltoukhy’s company is on a roll. The start-up is a leading contender in the crowded field of firms working on “liquid biopsy” tests that aim to be able to tell in a single blood draw whether a person has cancer.
Venture investors are backing Guardant Health to the tune of nearly $200 million. Leading medical centers are testing its technology. And earlier this month, it presented promising data on how well its screening tool, which works by scanning for tiny DNA fragments shed by dying tumor cells, worked on an initial group of 10,000 patients with late-stage cancers.
Just one thing is holding the company back: Guardant Health has yet to get approval from the Food and Drug Administration.
As a tidal wave of new healthrelated gadgets, apps and tests hits the market, government agencies like the FDA, Federal Trade Commission and others are showing up in Silicon Valley like they’ve never done before. They have slapped companies such as Theranos, 23andMe, Lumosity and Pathway Genomics with warning letters and fines and raised questions about products that regulators believe promise more than they can deliver.
More regulatory scrutiny is coming. Venture-capital investments in life sciences hit a record high in 2015, with $10.1 billion invested in 783 deals, and total start-up funding is approaching levels of the last dot-com bubble — a development that has some industry observers worried that pseudoscience is being confused with innovation.
But even as some companies push back against federal agencies’ reach, there’s now recognition that the government can be a powerful ally rather than a brake on progress. And its stamp of approval can take firms from being worth multimillions to multibillions.
Jeff Huber, a former senior Google executive who is now chief executive of Grail, which is also working on liquid biopsy tests, said his company reached out to FDA officials while still in the research-and-development phase and is “carefully considering their input as to the right approach.” “A core part of our reputation and brand is the scientific rigor we’re putting behind this,” Huber said. That includes designing rigorous, largescale clinical trials targeted to begin in 2017.
Putting a product on the market without consulting with the FDA is risky, but companies doing so have a legal argument for their move. Guardant Health contends that the liquid biopsy test it began selling to oncologists in 2014 falls outside the agency’s purview because the end result is data about the composition of a person’s blood, not a definitive diagnosis. Even so, its founder said he proactively contacted a local FDA office a few months ago to express his eagerness to work with the agency in the future.
“It’s the patient at the end of the day who is the person we’re trying to help,” said Eltoukhy, who has a Ph.D. in electrical engineering from Stanford University.
Given the super-hot field, the pressure to be first remains intense, however. Nearly 40 companies are working there, according to a research report by Piper Jaffray analysts William Quirk and Alexander Nowak, who valued the U.S. market alone at $32.6 billion a year.
Being tested for cancer today often means having a slice of tissue cut out — which can be painful and dangerous — and waiting days or even weeks for the results to come back. The promise of liquid biopsies is that the same information might be available based on an extremely low-risk blood draw that takes mere minutes.
Yet the science behind liquid biopsies is incredibly tricky because of how cancerous DNA is obscured by healthy DNA in the blood, with a sophisticated combination of molecular biology, informatics, genetic sequencing and other disciplines required to reveal it. Eltoukhy likens the challenge to trying to find the fine details in the “snow” on a TV screen that’s relying on an old rabbit-ears antenna.
Guardant Health has had early success with its screening tool in latestage cancer patients, and about 2,000 oncologists are using it to help create personalized therapies when first-line treatments have failed. The company says its test is the most comprehensive on the market, examining more than 150,000 places in the genome compared with the half-dozen or so that many competitors review.
In the abstract presented at the American Association for Cancer Research this month — though not peer-reviewed, it is being submitted to a journal, according to Eltoukhy — the company said the test was as “highly accurate” as a surgical biopsy in detecting cancerous DNA. Lung, gastrointestinal and breast cancers were most commonly found.
Still, the real game-changer would be a test that can pinpoint cancer in its earliest stages, when the amount of DNA in the blood is mind-bogglingly small.
Pathway Genomics claimed to have done just that when it launched a direct-to-consumer $699 screening tool last year for the early detection of up to 10 different cancer types among people at high risk but without symptoms.
The FDA disagreed. In a letter in September, the agency warned that it had not found any evidence to support the claims and that the product could “harm the public health.”
The company declined to talk about its discussions with regulators, but the FDA said Pathway Genomics has since made the test available only by prescription and “also limited the claims of what their test does.”
Separately, the company recently paid the Justice Department $4 million to settle allegations that it offered kickbacks to physicians. It admitted no wrongdoing.
The FDA’s mandate was written decades before anyone could imagine these new technologies, so the extent of its powers continues to be much debated.
The agency said in a statement that it considers all diagnostic in vitro tests to be medical devices, but that it has not always “exercised enforcement discretion over laboratory-developed tests except for those being marketed direct-to-consumers.”