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Redwood City, Calif.-based Satoris, a biotech developing a blood test for Alzheimer’s disease, raised $5 million in a second funding round, VentureWire reports. The deal values Satoris at $13.8 million after the financings. The company had previously raised $1 million from individuals, and said it will seek another $15 million this year.

Satoris plans to use the funding to begin commercialization of its protein-based blood test for Alzheimer’s disease, which the company expects to make available in the first half of this year. It looks like Satoris initially plans to market the test as a tool for clinical research, not as a general-purpose diagnostic, as the VentureWire story says the company plans to target pharma/biotech companies and Alzheimer’s research groups.

That’s definitely a good idea. The test itself certainly has the potential to break some important ground — Alzheimer’s can’t currently be diagnosed except by neurobehavioral testing of already-sick patients or via a post-mortem autopsy, whereas the Satoris test appears to detect the disease at a much earlier stage. But its error rates remain quite high, despite what the company touts as a 90 percent accuracy rate. I explained why in this post, which unpacked the numbers and showed why even that level of accuracy would produce a tremendous amount of life-altering misinformation if used to screen the general public.

The VentureWire story doesn’t say so, but to make the test commercially available that quickly almost certainly means Satoris will offer it as a “home brew” diagnostic, which allows it to sidestep the FDA approval process. Home-brew tests are performed by companies themselves in state-regulated laboratories — doctors or hospitals send patient samples into the lab, which then sends back the results. These sorts of diagnostics are permitted under a federal law known as the Clinical Laboatory Improvement Amendments, or CLIA. Traditional diagnostics, which usually involve the marketing of test kits and associated equipment to reference laboratories, hospitals or individual physicians, require explicit FDA approval.

Satoris says the funds will allow it to devote additional resources to further development of the test, and expects its cash cushion to last “well into next year.” CEO Cris McReynolds told VentureWire that he expects to begin fundraising again at the end of the year. VentureWire didn’t name investors in the current round, but previously reported that they would include Life Science Angels and Brain Trust Accelerator Fund.

Satoris, a Redwood City, Calif., biotech developing a diagnostic test for Alzheimer’s disease, is close to raising $5 million in a second funding round, VentureWire reports (subscription required). The funds will allow the company to make its test available to outside researchers.

Satoris made a big splash in mid-October, when researchers identified 18 proteins they said could be used to identify people with Alzheimer’s disease via a simple blood test. What’s more, the test also appeared to detect incipient Alzheimer’s in people with mild cognitive impairment, meaning that it could theoretically be used to predict who is most likely to eventually develop the often devastating disease.

An Alzheimer’s blood test would be a major development, since there’s currently no good physical way of diagnosing, much less predicting, the condition. The disease is typically identified — often imprecisely — via cognitive testing. In fact, the only certain way to diagnose Alzheimer’s is via brain autopsy, which isn’t a particularly attractive option to most people.

Satoris says successful development of its test should help accelerate the development of new Alzheimer’s treatments. Which would be great, because at the moment, early diagnosis of the degenerative condition wouldn’t actually do anyone much good, even though the disease can cause brain damage well in advance of actual symptoms. Current treatments for the disease do little more than delay the onset of memory loss and other cognitive symptoms.

What’s more, the Satoris test may still be of limited usefulness simply because it is likely to produce huge numbers of mistaken diagnoses, at least in its current form. In the Nature Medicine paper that heralded the test’s discovery, the research team found that the 18 proteins correctly identified 90 percent of the blood samples from Alzheimer’s patients and 88 percent of the non-Alzheimer’s samples.

That sounds pretty good until you imagine trying to use that test as a widespread screening tool. An estimated five percent of Americans aged 65 to 74 have Alzheimer’s, according to this NIH fact sheet. Now imagine testing all of the roughly 20 million people in that age group with the Satoris test. It will correctly detect Alzheimer’s in 900,000 of the one million people that actually have it, which is great. At the same time, though, it will incorrectly diagnose more than twice as many people — 2.3 million — who don’t actually have the disease. That doesn’t even get into its possible predictive uses, where the potential errors — and their consequences — are even worse. (Hat tip to Derek Lowe, who recently crunched similar numbers over at In the Pipeline.)

All of which goes to underscore why diagnostic tests are actually a lot trickier than people frequently realize. While many of us would be more than willing to undergo surgery or take a drug that had a 90 percent chance of curing us, that sort of success rate is pathetically low in the diagnostic area, since false-positive and false-negative results can have such outsized consequences. No doubt insurers will be asking some hard questions if Satoris tries to bring the test to market without refining it a great deal further.

Which it looks like it intends to do. Satoris previously raised $1 million from individuals in 2004, and will be looking for another $15 million next year to launch a “home brew” version of the test — a tactic in which Satoris would test blood samples mailed to it by doctors, potentially allowing it to sidestep FDA regulation. The company’s current investors, however, appear unconcerned; Life Science Angels and Brain Trust Accelerator Fund are expected to participate in the current round, according to VentureWire.