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Theranos Blew It. But It Didn't Ruin Biotech Startups for Everyone


But at the University of Washington, bioengineer Paul Yager was using microfluidics to develop paper-based assays that he hoped would detect pathogens with just a nasal swab. And like Holmes did later, he also saw the potential in making these tests directly accessible to patients. He was ahead of his time. Investment dollars and talented post-docs went instead to big labs working on big, traditional testing machinery. And now he worries that his life's work will suffer collateral damage from Theranos' abuse of trust. Investors, he says, are already acting cagier towards him. He calls it, "the Theranos crater."

The crater analogy is apt: Theranos blew up in the middle of the biotech world. Anybody looking to raise capital for their new diagnostic technology will likely have to answer tougher questions from more skeptical investors. And nobody working on point-of-care diagnostics can make a promise like Holmes' 70-tests-from-one-drop rhetoric. But even without magic blood machines, point-of-care diagnostic investing is looking up. So while Theranos may have made it harder for some researchers to fund their ideas, the company also proved that the biotech market is ripe for point-of-care diagnostics.

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