If at first you don’t succeed……
There are certain dreams that just won’t die, no matter how improbable they may be. Roche actually realizing their diabetes unit is in major trouble is one. Medtronic (NYSE:MDT) actually developing a workable patch pump or closed loop insulin delivery system is another. The Chicago Cubs just making it to a World Series let alone wining it, is yet another.
Yet the biggest dream of all is the quest to develop a non-invasive glucose monitor; a quest that has now gone on for over 20 years and wasted millions of dollars. But just as Cubs fan hold out the false hope that after more than 100 years of futility their beloved team will actually reach the promise land, companies in the non-invasive space continue to foolishly believe they too will one day reach the promise land and have a workable device.
Actually the Cubs and non-invasive companies have a lot in common. Although the Cubs stretch of futility passed the century mark, their fans continue to fill Wrigley Field. The same can be said for non-invasive companies who continue to raise more money from investor who are dumb enough to believe that one day their investment will yield results. Also like the Cubs, non-invasive companies continually reinvent themselves in desperate attempt to keep the dream alive. Never mind that nothing really changes and most of these reinventions are nothing more than doing exactly the same thing under a different name. And like the Cubs, all these transparent changes haven’t yielded a single tangible result. (Frankly there is a reason most true baseball fans realize that Cubs actually is an acronym that stands for Completely Useless By September.)
Finally the Cubs and non-invasive companies are both great at providing entertaining material. The most recent example in the non-invasive world came today when VeraLight announced their Scout DS® Device was granted a Health Canada Medical Device Licence for non-invasive diabetes screening. According to a company issued press release; “Scout DS measures skin fluorescence using proprietary technology to detect abnormal concentrations of advanced glycation endproducts (AGEs) which are diabetes-related biological markers found in skin. Previous studies have shown the presence of skin AGEs correlate well with diabetes and are a predictor of the disease’s serious complications. Analogous to a “diabetes odometer,” AGEs are a sensitive metric for the cumulative damage the body has endured due to the effects of abnormally high blood sugar and oxidative stress.”
It’s no coincidence that this news comes just as VeraLight is trying to raise even more money. Imagine that.
Now for those with short memories or those new to the diabetes world, VeraLight is not a newcomer to the diabetes space, just ask the folks at LifeScan who wasted millions investing in the company back when it was called Rio Grande Laboratories. Yep, back in the day LifeScan was duped into investing millions of dollars into Rio Grande hoping they could develop a non-invasive glucose monitor. It wasn’t until LifeScan realized the system just didn’t work and pulled out of the arrangement that Rio Grande, as has become standard operating procedure in the non-invasive world, was reinvented as VeraLight.
This reinvention also went beyond just a changing their name, in a desperate attempt to keep the dollars coming in the company changed their philosophy, another common theme for these companies when they realize their system just don’t work. Rather than develop a non-invasive device used daily by patients, they decided to reposition their device as non-invasive device for detecting diabetes. It’s a well-known fact that there are millions of patients who have diabetes but are not aware they have the disease. According to the most recent data from the American Diabetes Association there are 7 million undiagnosed patients.
The folks at VeraLight join a growing list of companies who believe there is value in telling a patient they might have diabetes. Diabetic Investor has always been amused by this approach as it’s the ultimate shell game. Whether it’s performed non-invasively with a machine or by the patient answering a series of questions, what all these so-called screening companies have in common is there in a no-lose situation. Should it turn out the patient develops diabetes they can claim victory, should they not develop diabetes they win again by claiming their test lead the patient to take the steps necessary to avoid diabetes.
Never mind that no physician would diagnose a patient with diabetes simply on the basis of test results that yields nothing more than a risk assessment number. Not unless that physician was on idiot that is. Let’s assume for a moment that a physician uses the Scout device which in turn yields a result that indicates the patient could have diabetes, what’s the next step? Unless the physician is a complete idiot, the next step would be an actual blood test. Perhaps Diabetic Investor is just too grounded in common sense but wouldn’t it be more cost effective to know for sure whether or not a patient has diabetes and simply do the blood test first if the patient is exhibiting the many symptoms associated with diabetes.
Someone needs to explain to Diabetic Investor the value in knowing that a patient may have diabetes. More importantly what value does this bring to the patient? Some would argue that a patient who receives a score that indicates that they are at risk for developing diabetes could make changes to their lifestyle to prevent the development of diabetes. While this may be true it is also unrealistic. The central fact is only a handful of patients will make the necessary lifestyle adjustments and even then there is no guarantee they won’t develop full blown diabetes. Human nature being what it is the majority of patients will say they while they may be at risk for developing diabetes why worry about something they don’t yet have.
Anyone who doesn’t believe this only needs to look at the millions of people who smoke cigarettes. There is clear and indisputable evidence that smoking is bad for a person’s health, yet millions still smoke. The same can said for women who don’t have annual mammograms and for men who don’t have an annual PSA test.
The reality is no matter how many times a company like VeraLight attempts to reinvent themselves, at their core they are nothing more than modern day snake oil salesmen; selling the same magic potion in a different bottle, under a different name. The real shame here is there are investors dumb enough to keep investing in these companies. In that way these investors are like Cubs fans who continually fill the ballpark even though management is doing the same old thing and producing nothing more than hope. The central fact is management has no compelling reason to build a winner as long as their fans are dumb enough to keep coming to the ballpark to watch an inferior product; until fans wise up and stay away from Wrigley nothing will change. The same is true for the many non-invasive companies, until investors stop funding these companies or at minimum demand some real results, holding management accountable we will continue to see companies like VeraLight exist.
Although Diabetic Investor doesn’t like the tactics employed by companies like VeraLight, we don’t blame them for continuing to practice them. As long as there are stupid investors who eagerly part with their money without doing even the most basic due diligence it would foolish to stop taking their money. As the famous poker player Canada Bill Jones once said, “A fool should be separated from his money.”