Theranos CEO Elizabeth Holmes trades new, unproven tech for old

Theranos CEO Elizabeth Holmes, here at a confer ence last year, is touting a new blood test, deflect ing criticism of the firm’s methods that are under investigation.

At this point, you’ve got to wonder whether Theranos CEO Elizabeth Holmes is just making it up as she goes along, or if her actions constitute some kind of mad, genius plan.

Perhaps a little of both.

At Monday’s annual conference of the American Association for Clinical Chemistry in Philadelphia, people expected Holmes to finally discuss the science behind the company’s much-maligned Edison blood-diagnostics technology.

Theranos, once valued at $9 billion, faces investigations by federal prosecutors and the Securities and Exchange Commission on whether the company misled investors about whether Edison actually works. The Palo Alto startup had claimed that Edison could diagnose multiple diseases from just a few drops of blood.

Instead, Holmes made no mention of Edison and instead pitched an entirely different product. That was a surprise even to the event’s organizers.

“I had absolutely no idea she was going to do that,” association President Patricia Jones told me.

You would think Jones would be upset. For years, the organization had been trying to get Holmes to talk about Edison at its conference. Holmes, who dropped out of Stanford to found Theranos, cloaked the technology in secrecy, supposedly to prevent competitors from copying it.

Now was a chance for Holmes to finally come clean in front of the nation’s top scientists and doctors. Instead, she pulled a 180, touting a new, unproven technology and sweeping questions about her company’s old, unproven technology under the carpet.

Jones was not mad. In fact, she called Holmes’ presentation impressive.

The new test, called MiniLab, is designed to allow people to draw blood at any location and remotely transmit the data for analysis. In other words, Theranos essentially developed a way to miniaturize the idea behind Edison.

Holmes has a history of changing course, which has been both a strength and weakness. Throughout the company’s short history, Theranos pitched several products and business models before finally settling on Edison, which was meant to run tests in a central lab on blood samples collected in clinics. The technology was so promising that Walgreens decided to distribute it at 40 locations in Arizona even though Edison was not vetted by outside experts.

Edison proved to be flawed. Theranos ended up using it for just a single test out of hundreds, using conventional equipment for the rest. And it eventually had to invalidate several years of test results, prompting Walgreens to terminate its relationship with the company. The Centers for Medicare & Medicaid Services, the agency that regulates blood-testing labs, has proposed sanctions, including shutting down its Newark lab, where it found severe lapses, and banning Holmes from the business for two years.

Holmes’ response to the controversy has been uneven to say the least. She initially dismissed the issue as a public relations problem and hired Brooke Buchanan, former top aide to Sen. John McCain, R-Arizona, to manage the crisis.

Holmes originally planned to hold a open-ended press conference with 200 members of the national media after her presentation in Philadelphia, a curious move for the subject of a criminal investigation.

Then last month, Buchanan abruptly resigned and Theranos canceled the press conference. Instead, Holmes was to hold interviews with journalists prior to Philadelphia. Those never materialized either.

Perhaps Holmes was smart not to talk about Edison, because prosecutors and regulators would probably comb her remarks for evidence. And by focusing on MiniLab, she is hoping to suggest that Theranos has a future beyond the Edison fiasco. Even if the ban on Holmes operating testing labs sticks, she’d still be able to sell hardware.

Though some attending scientists were upset about Holmes’ presentation, most were genuinely interested in MiniLab, Jones said. Holmes received close to 600 questions about the new technology, she said.

In the end, Holmes helped herself by focusing people’s attention on a promising new technology, Jones said. But the MiniLab maneuver didn’t do anything to shore up her scientific reputation.

“People who were already skeptical about Holmes are still skeptical about her,” Jones said.

August 2, 2016


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