Wednesday, October 12, 2016

If it's not one thing, it's another: the latest on Theranos

I recently posted about the troubles surrounding Theranos, the much-hyped blood diagnostics company. Well, since that post, things have gotten even worse for the company and its beleaguered founder, Elizabeth Holmes. First, it withdrew from the direct-to-consumer blood testing business, shutting down its blood-testing facilities and laying off nearly 40% of its workforce. Instead, it planned to focus on its newly-introduced miniLab device (which when unveiled in August met with its fair share of scepticism).

One week after this announcement comes the news that a major investor, Partner Fund Management LP, is now suing Theranos, alleging that the company engaged in securities fraud and other fraudulent acts to attract investment. Partner Fund, which had invested nearly $100 million in Theranos, claims that both Holmes and former company president Sunny Balwani lied about the company's scientific capabilities, specifically about its flagship Edison testing platform.

I must admit that I certainly admired Holmes when I first read about her (and even felt a tinge of envy!). However, I never really understood the scientific basis of Theranos' technology - which is not surprising since the company seemed to fetishize secrecy - and eventually began to doubt the authenticity of their claims. I'm sorry my doubts were proved to be correct, and I think the most fitting story to this coda comes from the interview with Dr. Stephen Master, an expert who quizzed Holmes during her August presentation at the American Association for Clinical Chemistry:

"Q. Are there any lessons that you think investors and Silicon Valley can learn from what went wrong at the start-up?

A. There is the sort of obvious one, which is: when you are dealing with patients, the bar is set higher."

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