Lots of lessons from this story, but two of the key ones are:
1. Clinical trials are costly and risky. The company's first investments were in 4 clinical trials for their most promising biomarkers, all of which failed. This effort consumed the better part of $26 million. The author bemoans not having tried to validate the biomarkers less expensively.
2. Focus is key. On-Q-Ity was founded around two very different diagnostics businesses, which had different needs from the outset.
The author concludes with this:
Diagnostics aren’t for the faint of heart and are a much tougher place to make returns today than other life science subsectors. Despite the frothy commentary about personalized medicine and the dawn of diagnostics, it’s a very tough business that faces many of the risks and costs of drug R&D but without the upside. It’s often not less capital intensive than therapeutics, faces similar “academic validation” concerns, is confronted by larger reimbursement and regulatory uncertainties, has commodity-oriented high volume, low price demands, and typically needs to get to commercialization before a material exit outcome. All these things add up for a challenging investment sector.
If we are to move beyond 3 novel diagnostic biomarkers reaching the market per year, we clearly need to change some of the key aspects of the path to market for molecular biomarkers.