On Monday, Patricia Jones, the president of the American Association for Clinical Chemistry, made an unusual introduction at the sixty-eighth Annual Scientific Meeting and Clinical Lab Expo, in Philadelphia. “This session is not an endorsement of Theranos,” Jones said, somewhat nervously, adding, “Please be courteous.” The fact that it seemed necessary to issue a plea to avoid hostility in front of an audience of chemists and lab experts was testament to the emotions surrounding the presenter. Jones was introducing Elizabeth Holmes, the founder and chief executive officer of Theranos, a company that sought to revolutionize the collection and testing of blood but has, instead, become a subject of regulatory scrutiny. “This session, folks, as everyone is pretty well aware, has been controversial,” Jones continued. “It has generated a lot of interest from the lab-medicine community. We’re all aware that there have been some questions about whether we’ll see any science here today, and the viability of Theranos technology. This is a tremendous opportunity for A.A.C.C. members to decide that for themselves.”
Holmes herself then came to the podium. Standing in front of a room full of skeptical colleagues and reporters, she showed remarkable poise and self-possession. She did not appear to be someone under attack, whose company is fighting for survival. Rightly or not, there was an expectation in the audience that Holmes would use the opportunity to defend Theranos against its critics and that she would, as she has promised many times in the past, finally reveal data that would demonstrate that the company’s tests and technology actually work. In the end, though, this is not what happened. Holmes spoke for more than forty-five minutes about an entirely new product, a novel device still in need of regulatory clearance and more tests. It was an attempt to shift the focus from the past to the future. But the strange disconnect between expectations and reality left the scientists and experts who were watching with more questions than they started with.
At its inception, Theranos offered the promise of making blood tests cheaper and more accessible to patients in need of urgent medical information. With the company’s technology—designed to collect tiny blood samples, from fingertips rather than veins, and to analyze them on small, efficient machines—millions of people around the world would be in a position to learn of diabetes or cancer diagnoses earlier than they would with current technology, opening new avenues for treatment that could save lives. The company’s medical potential came packaged with Holmes’s compelling personal story. She was a science prodigy who dropped out of Stanford University to start her company at the age of nineteen and who demonstrated a talent for selling herself and her vision to powerful mentors and investors. She was a “disrupter” in an era when the world couldn’t get enough of them. Holmes became a Silicon Valley star—a young, photogenic female founder of a company with a billion-dollar valuation, on paper at least.
But the hype and media attention were far ahead of the company’s actual technological progress. And, after a series of articles in the_ Wall Street Journal_ raised questions about the accuracy of Theranos’s tests, the Centers for Medicare and Medicaid Services, the company’s primary regulator, conducted an inspection and revoked its license to operate one of its labs. The company is also under investigation by the U.S. Attorney’s office in California and the Securities and Exchange Commission. Holmes herself may be banned from operating a lab for two years. Walgreens, one of Theranos’s biggest clients, ended its relationship with the company in June. Based on its reported fund-raising rounds, Theranos was, at one time, valued at close to nine billion dollars. In June, Forbes announced that it was lowering its estimate of Holmes's fifty-per-cent stake in the company to zero. The company is appealing some of the regulatory sanctions and has been rushing to hire new, more experienced staff to run its labs.
As Holmes launched into her presentation on Monday, she hinted that she might confront the questions that many in the audience were eager to hear about. “This is the first time we have publicly presented the architecture of our technologies,” she said, adding that, before she proceeded, she wanted to comment on the trouble surrounding the company. “We take full responsibility for our lab operations and are working diligently to rectify all outstanding issues and to realize the highest standards of excellence in lab operations. Today, our presentation is focussed on introducing key inventions and the associated science behind our technologies, as distinct from the operations from our clinical laboratories.”
That turned out to be all that she had to say on the subject. She didn’t provide data on Theranos’s existing finger-stick technology, which had been the subject of so much media attention in the past, or information about the accuracy of Theranos’s tests. She did not address the critical question of how she would continue to run the company if she is barred from operating a lab. Instead, Holmes spent most of her time introducing a new, and unrelated, Theranos device, which she described as “the result of hundreds of scientists’ work over many years.” It’s called the “miniLab”: a proprietary machine, about the size of a small printer, designed to run tests on small samples of blood, which seems, at first look, to offer the potential to conduct tests remotely. Holmes explained that the device has not been approved by the Food and Drug Administration but that the company is pursuing regulatory approval. She displayed slides purporting to show accuracy data for the new device on eleven different tests, including for the Zika virus. By all accounts, her delivery was smooth and forceful, and, taken on its own, it would likely have been seen as a success. “I have to say, Holmes, who is wearing a suit, not a turtleneck, is doing an amazing job presenting this,” Matthew Herper, of Forbes, live-blogged as the event was under way. “I understand why people invested in her.”
The new machine will require further analysis, but it seems to represent a backing-away from the original promises made by the company—that it could run hundreds of tests on a single pinprick’s worth of blood. Offering a flashy new machine, with details about its design and performance, to other scientists is a gesture toward greater openness and transparency. But Holmes and the enterprise she built are facing an existential crisis of credibility, and the unveiling of their new invention seems likely to fall far short of quieting their critics. If Holmes wants to recover the faith of patients and investors, she’ll likely have more explaining to do.
*This sentence has been changed to clarify the total valuation of the company.
