In January 2025, The New York Times published an exposé by John Carreyrou on ExThera Medical, a California startup that allegedly repurposed its FDA-authorized COVID-19 blood filter for cancer treatment without regulatory approval.
Originally cleared for emergency COVID-19 use, ExThera marketed the device as a cancer therapy despite lacking scientific validation. To bypass U.S. oversight, the company operated in Antigua, charging $45,000 per treatment cycle.
The report alleges that ExThera executives misled patients with recovery claims and advised some to pause chemotherapy. At least six patients died, and many others experienced severe complications.
Following media scrutiny, the company cut ties with its majority investor, Quadrant Management, but the controversial treatment remains available, raising ongoing concerns about patient safety and regulatory oversight.
ExThera’s case isn’t unique—healthcare startups in emerging fields often present regulatory and ethical risks that can endanger both investors and patients. This highlights the critical need for thorough due diligence to uncover red flags early.
Vcheck’s Methodology Highlights Unseen Reputational Risk & Red Flags in Healthcare Startup
Following the NYT report, Vcheck conducted an in-depth investigation into ExThera Medical and its former investor, Alan Quasha’s Quadrant Management, uncovering major red flags.
ExThera faced derogatory media coverage for misleading claims about its device’s effectiveness and its offshore operations in Antigua, where it allegedly marketed an unapproved cancer treatment without oversight. The firm also had a history of legal challenges, including a 2016 breach of contract case, signaling potential business risks.
Following the COVID-19 pandemic, ExThera Medical entered into a partnership with Quadrant Management. Quadrant had its own track record of legal exposure, including at least six federal civil cases and four county-level actions over the prior 12 years. Additionally, Quasha had attracted ongoing negative media scrutiny over his business practices and Quadrant’s controversial investment strategies.
Vcheck’s investigation revealed that both the company’s leadership and business practices faced intense scrutiny, exposing major ethical and regulatory issues that should have been identified long before any investment was considered.
The Consequences of Skipping Proper Due Diligence in Startup Investing
The ExThera case underscores the vital role of thorough due diligence in healthcare and startup investments.
Had investors properly vetted ExThera Medical, they would have uncovered red flags like legal issues, misleading claims, and risky offshore operations that could have prevented both patient harm and financial fallout. Vcheck’s findings show that a more rigorous investigation could have prevented the ethical, legal, and financial fallout for both investors and patients.
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