Sysmex Challenger Sight Diagnostics Raises $71M As Capacity Soars 5-Fold
On August 5, blood-testing startup Sight Diagnostics raised another $71 million aimed at boosting its share of the $50 billion global market for complete blood count (CBC) testing — which doctors use to count a patient’s red and white blood cells and other blood components.
Is Sight Diagnostics taking share from Sysmex — the Kobe, Japan-based market leader? Sight’s product offers more bang for the buck so I expect that to happen in the future.
Sysmex — which has commented in previous articles here and here — declined to comment for this story.
(I have no financial interest in the securities mentioned in this post).
Sysmex’s Recent Struggles
Last December Sysmex was feeling confident, noting that of the 3,800 blood analyzing machines in the U.S., the majority of complete blood count tests are run on Sysmex analyzers. A Sysmex spokesperson denied Sight Diagnostics’ claim that “its OLO device offers better performance with less blood required and delivers faster results at a lower price than the Sysmex XN-Series.”
While Sysmex was growing profitably last December, Sysmex suffered a rough second quarter. For the three months ending June 2020, Sysmex’s revenues fell about 12% to $569 million while its profit tumbled 33% to $42 million, according to its first quarter 2021 financial report.
To be fair, Sysmex’s ADRs have increased modestly in 2020 — up 9% for the year as of August 10.
This weak performance raised several questions: How have Sysmex’s complete blood count testing machine sales been trending in the most recent quarter? What factors are behind the trend? Does Sysmex encounter Sight Diagnostics in competitive bidding situations? If so, how often does Sysmex win and why? Is Sysmex developing products that can use a small amount of blood to conduct CBC tests? If not, how is Sysmex protecting itself from the potential threat from Sight Diagnostics?
The cat’s got Sysmex’s tongue now. Julie Baron, PR for Sysmex America, Inc., wrote in an August 12 email, “Sysmex America, Inc. appreciates your interest but is not available to participate in this story at this time.”
Sight Diagnostics Scrambling To Keep Up With Demand
Tel Aviv-based Sight Diagnostics does not report its financial results. However, since receiving FDA approval last December for its OLO CBC device — its 510(k) clearance enables OLO’s use in moderate complexity laboratories though not for for point-of-care use — the company appears to be growing rapidly.
How so? Sight has increased its manufacturing capacity five-fold in the last six months, according to ejinsight. Why? Sight gives customers more bang for the buck — noting that OLO enables doctor’s offices and smaller clinics to do CBC tests that require less blood, and deliver accurate results in minutes — all at a lower price. Sight plans to use its new capital to open another manufacturing facility in Israel later in 2020 and to add distributors — it has already already secured them in Singapore and Thailand.
OLO takes two drops of blood, turns it into a high resolution image, and analyzes the image to perform a complete blood count (CBC) – analyzing the number of a patient’s red and white blood cells by type and the number of platelets. More specifically, drawing blood from a fingerstick or a venous sample, OLO can analyze 19 different blood parameters in minutes.
Founded in 2011, Sight Diagnostics has raised over $124 million in capital — most recently a $71 million Series D round announced on August 5. Since December Sight says that it “has secured contractual agreements with healthcare providers and distribution partners to deploy over 1,000 analyzers over the coming years.”
One of the investors in this round was Koch Disruptive Technologies which sees OLO as a disruptive technology to incumbent products. Chase Koch, Managing Director said, “We firmly believe that Sight’s method of using machine vision to analyze blood…is bringing truly innovative solutions to the CBC industry [and] driving a vision to decentralize information and increase consumer access in healthcare markets across the world.”
Sight is using its latest round of capital to boost sales. In a July 29 interview CEO Yossi Pollak said “we already have a team on the ground. We are using a hybrid [go-t0-market] model — selling directly to standalone emergency rooms, institutes, and hospitals — and indirectly through distributors [such as Cardinal Health CAH and McKesson MCK .]”
Sight’s direct sales flow from leads generated through inbound marketing. “We sell directly based on expressions of interest from inbound marketing. We do not compete directly with Sysmex which tends to provide CBC tests for central blood testing labs. We sell to smaller departments that are closer to patients that have smaller budgets and cannot justify the cost of the Sysmex machines,” he said.
Working with large distributors has advantages and disadvantages. “On the positive side, the large distributors have strong relationships which indirectly give us much greater access to the U.S. than we can get with our sales force. The challenge is that these distributors carry many products and we have to help them see the benefit of dedicating their resources to presenting our product to their customers,” Pollak explained.
Sight’s technological strengths include the vision systems that it uses to analyze the images of the blood and its machine learning technology. Sight aims to use its skills to diagnose Covid-19 by placing “devices in hospitals around the world to see if it can gather the data to detect anomalies that may indicate the severity of some of the aspects of the disease,” according to TechCrunch.
In theory companies that offer customers a better product for less money should wrest industry control from incumbents — unless these Goliaths fight back. If Sysmex is doing so, it is not talking about it.