And no, it's not Theranos.

By Roger Parloff
May 20, 2016
May 20, 2016

Startups that aim to cut back on the use of needles for blood draws may face some skepticism these days—the unfortunate legacy of troubled unicorn Theranos.

But Velano Vascular, a tiny San Francisco outfit launched in 2012, bears little resemblance to Theranos, which aspires to perform diagnostic tests using blood drops lanceted from the capillaries of a finger.

To begin with, Velano’s invention taps into the same, scientifically uncontroversial venous blood (i.e., blood from veins, not capillaries) that traditional syringes tap into. In addition, its device is fully FDA-approved. Moreover, the company’s founders—CEO Eric Stone and president Pitou Devgon, M.D.—are willing to show you how its device works, something Theranos was never willing to permit.

In fairness, Velano’s aspirations are also a bit less ambitious than Theranos’s. The only patients the company can help are those in hospitals or other inpatient settings.

Still, that’s a lot of people—about 35 million a year, according to the Centers for Disease Control and Prevention. The average inpatient stays 4.8 days. Many of them need daily blood draws, and some need up to three a day. A subset of them (with problematic skin or veins) may require more than one poke before a successful draw can be made. All told, that’s a world of hurt ripe for alleviation.

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Velano’s deceptively simple idea was to enable hospital blood draws to be taken from the same standard intravenous (IV) catheter that so many hospital patients already have inserted in their arms anyway, instead of poking them anew each time they need their blood monitored.

“This is compassion in practice,” says Todd Dunn, the chief innovation officer of Intermountain Healthcare, a 22-hospital system based in Utah that has begun pilot studies of Velano’s device, known as the PIVO. “This could become a new standard of care.”

Two other hospitals, including Griffin Hospital in Derby, Conn., and Brigham & Women’s Hospital in Boston (a teaching hospital for Harvard Medical School) are also now testing the device, according to the founders.

The seeds of Velano’s approach were planted years ago, co-founder and internal medicine physician Devgon, 39, recounts in an interview. An elderly patient, with bruises up and down her arms from a week’s worth of needle sticks, asked him, he recounts, “Why are you continually sticking me when I’ve got an IV catheter in my vein? Why do you keep sticking me with needles?”

At the time, Devgon admits, he didn’t know the answer. The reason, he learned, has to do with the way a standard IV is designed. A needle is used to puncture the skin, but is then withdrawn and replaced with a plastic tube which, over time, becomes soft, like a noodle.

For most purposes, the noodle’s softness is a good thing; it’s more comfortable and less dangerous to the patient. But while a noodle is fine for injecting fluids and medications into a patient, it’s bad for drawing fluids out of a patient. Its soft walls collapse under the negative pressure of suction. In addition, small clots that form at the ends of the IV catheter may gum up the blood testing process.

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About five years ago, Devgon continues, he was sitting in a Starbucks when he realized that maybe there was a way to do what the elderly patient had wanted. He began envisioning the device that became the PIVO. (The name derives from “peripheral intravenous catheter,” or PIV, which is the medical term for the standard IV most hospital patients are hooked up to.)

The PIVO simply inserts a narrower gauge, stiffer tube inside the existing IV tube (the noodle) for the purpose of taking a blood draw. The device is used once and then thrown away. Then the IV catheter is reattached to the bag containing whatever fluids were being delivering to the patient prior to the blood draw.

When Devgon started envisioning the PIVO, mutual friends hooked him up with Eric Stone, now 39, a Wharton MBA and health-care entrepreneur.

“My experience with the health-care system goes back about 25 years,” Stone says, “when, as a patient, I was diagnosed with Crohn’s Disease.” (Today he is a national trustee of the Crohn’s and Colitis Foundation of America.) Stone had spent plenty of time in hospitals, so Devgon’s idea immediately resonated with him at a gut level.

Because of children’s especially acute fear of needles, in late 2014 PIVO was one of two projects selected from among hundreds of applicants to win funding from the Sheikh Zayed Institute for Pediatric Surgical Innovation, according to its director, Kolaleh Eskandariah. The institute, a unit of the Children’s National Health System in Washington, D.C., is an incubator for medical advances that can make pediatric care “more precise, less invasive, and more pain free,” she explains.

Since then, the Children’s Hospital of Philadelphia (CHOP) has become an investor in the company, as has the Griffin Hospital in Derby, Conn., and about 40 individuals, including Ed Ludwig, the former CEO and chairman of Becton Dickinson—believed to be the largest needle maker in the world.

 

Four institutional investors have also come in, according to Stone, including Mitch Kapor’s Kapor Capital and Safeguard Scientifics. Velano has publicly acknowledged receiving a total of $8.5 million in investments to date.

Velano won FDA approval for the PIVO in 2015, and it has also obtained two U.S. patents for it, according to a spokesman, with additional applications outstanding in both the U.S. and abroad.

“Five years from now,” asserts Stone, “this will be, without question, a new standard of care. “We will touch every patient on the planet with PIVO, as we’ll all spend time in a hospital at the start of life, the end of life, or on the journey of life.”

Could a behemoth like Becton Dickinson BDX (with $10.3 billion in revenue in 2015) have anything to fear from a fledgling outfit like Velano? (A spokesperson for BD did not respond to inquiries.)

“If [the PIVO] becomes a standard of care for a big part of the industry,” says investor Ludwig, BD’s former CEO, “it’s something BD would have to pay attention to, absolutely.”

In that event, he adds, acquiring Velano might also become attractive to “any number of companies. And, in particular, to BD.”

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