Theranos Dials Back Lab Tests at FDA’s Behest
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I can understand a 19 year old starting a software company, but this is more like a 19 year old starting a semiconductor fab. Someone just gave a her millions of dollars and a decade to run what was basically an r&d lab with almost no relevant experience?
Then the company's board is composed of 2 former Secretaries of State, a former Secretary of Defense, 2 former Senators, a retired admiral, and a retired general. They only have one currently licensed physician (who also happens to be one of the former Senators), and no current CEOs [1].
[1]. http://fortune.com/2015/10/15/theranos-board-leadership/
At the moment, there is just a trophy, retired epidemiologist.
I don't think the makeup of the board is that weird. Yes, it may mean they're shady and are trying to leverage political connections as much as they can. But even if they had a great product, dealing with regulators would still be a huge problem/pain for them, and they would still ideally want a board with lots of politically influential people.
There are many reasons to be wary of Theranos. I don't think the board makeup and Holmes being a dropout are among them.
There's not a single person on the board who is an expert in anything close to their core technology. I can understand wanting some politically influential people, but only politically influential people. How is that not weird?
> You don't know what her coursework was a Stanford. She may well have skipped the intro classes.
I'm fairly certain Stanford some curriculum requirements. Even if they didn't, no matter how smart you are, you can't just hop in and start taking upper level Chemical Engineering classes because you took AP Chem in high school. There's too much prerequisite knowledge that you just won't have.
And you definitely can start taking upper level chemical engineering classes. It's very common in college to ask to pass out of a requirement by taking the final. I passed out of the required intro computer science course in college (and not with AP Computer Science), for example.
Pretty much everyone thinks this board is weird. There have been multiple articles written on how odd it is, and most companies tend to have multiple domain experts on the board. You won't find many companies outside of the defense industry with 7/11 board members who are retired political and military leaders.
For an example of a normal board of directors just look at a competing company's board--quest diagnostics--and notice the number of MDs, PhDs, financial experts, and CEOs of other companies, and the lack of former cabinet secretaries, senators, and retired generals. http://ir.questdiagnostics.com/phoenix.zhtml?c=82068&p=irol-...
>And you definitely can start taking upper level chemical engineering classes.
You can't walk into Stanford and start taking junior and senior level chemical engineering classes as a freshmen, you would have a complete lack of prerequisite knowledge.
>It's very common in college to ask to pass out of a requirement by taking the final.
It is not very common, in fact it's pretty rare these days to find a department that will allow this.
Even if they did allow this, there are stacks of prerequisite chemistry, math, physics, and general engineering classes before a student can even touch classes in the chemical engineering department (other than special classes like freshmen seminars).
It is totally common to skip prereqs. When I say common, I don't mean everyone does it. I mean every year a handful of students do it. In fact, it's probably more common at the top science/engineering colleges (MIT, Stanford, Caltech, Berkeley, etc.). I mean, every year these schools have a couple of geniuses that won gold medals at the IChO/IMO/IOI/other olympiads, have been taking college (not community college) courses while in high school, and/or did legitimate research while in high school (and I'm not talking about the "research" volunteerships that many high schoolers try to get), etc.
I went to Berkeley, and the EECS department let you skip any prereq by taking the final.
She's basically Color's Bill Nguyen. I wish I was as good as these guys at hustling.
Yet apparently none of that matters because his most recent venture was a flop. What I'd do for that track record!
Do you really think VCs would invest $400 million & Walgreens & Cleveland Clinic would do deals with this company, that put people's health at risk & create massive liability, without diligence because she is a woman?
Maybe Theranos will fail. Obviously fraud is unacceptable. And the lack of peer review helps no one. But, the idea that she was funded because of her gender is absurd. If anything, given all the data on this topic, she was funded in spite of it- because she was trying something very difficult & potentially revolutionary--not some dumb app.
I hope you'll reconsider your thinking on this. Its hard enough for women to get funded; maybe it's worth giving them the benefit of the doubt when they do.
> Do you really think VCs would invest $400 million &
> Walgreens & Cleveland Clinic would do deals with this
> company, that put people's health at risk & create
> massive liability, without diligence
One way to help yourself swallow a bad decision is to look at all the other people also making it, and convince yourself that if they're doing it, it must be all right.
Large-scale investors gravitate towards big risk/big reward ventures which require significant capital because it's saves having to make a zillion angel-scale deals. Plus, it seems sexier with extra-awesome brownie points to go after something which may be r/evolutionary.
PS: Color was a snausage clusterfuck of dbag, hubris behaviors that ruined the team (and the venture). Hopefully, that elicited a corrective learning experience.
It's more like starting Intel than Apple.
I do agree with you though that it's probably her sales ability rather than her gender that led to the investments. I think it's likely the investors thought she'd make a great cover story, and that contributed somewhat to her success, but I doubt her gender was anywhere near the defining reason.
Lots of billion dollar medical companies have leading politicians on their board. Donald Rumsfeld was on the board for Gilead Sciences. It is vital for these businesses that to be on good terms with the government, as it is the government helps define what is allowed.
Some would argue that this is just a form of corruption which endangers the lives of patients worldwide.
Citation needed.
Donald Rumsfeld was a biotech CEO before he got into politics! Why wouldn't you want him on the board of your biotech?
You seem to be twisting the facts here. I would also argue that the most drastic change with the FDA wasn't during the Reagan years, but during the Clinton years and Clinton himself wasn't really leading the effort.
WSJ called them out for fraudulently gaming proficiency testing:
> The two types of equipment gave different results when testing for vitamin D, two thyroid hormones and prostate cancer. The gap suggested to some employees that the Edison results were off, according to the internal emails and people familiar with the findings.
> Former employees say Mr. Balwani ordered lab personnel to stop using Edison machines on any of the proficiency-testing samples and report only the results from instruments bought from other companies.
> The former employees say they did what they were told but were concerned that the instructions violated federal rules, which state that a lab must handle “proficiency testing samples…in the same manner as it tests patient specimens” and by “using the laboratory’s routine methods.”
And they were very very careful and deceitful in their response:
> The sources relied on in the article today were never in a position to understand Theranos’ technology and know nothing about the processes currently employed by the company.
They were extremely careful in using the word "currently" - admitting obliquely that they'd changed their processes while making it seem that the employees didn't know what they were talking about. In reality, it appears that the former employees (and WSJ) rightly called them out for fraud, and somewhere along the way they "pivoted" to using standard techniques instead of the Edison snake-oil.
>> The former employees say they did what they were told but were concerned that the instructions violated federal rules, which state that a lab must handle “proficiency testing samples…in the same manner as it tests patient specimens” and by “using the laboratory’s routine methods.”
sounds like they tried to pull Volkswagen.
Suddenly a company that looks like a Kickstarter page has the valuation of companies like Quest Diagnositics. A problem here and in some investment circles is that people think every industry is ripe for disruption from some whiz kid but it is not always true. The lab industry is very competitive, and HMOs drive the margins down a lot.
This is a 50 billion dollar industry. If it was easy to prick someone's finger and run an entire comprehensive panel you better bet it is not going to be found by some teenager dropping out from college. Sure software has been done like this before, but this is hard science and engineering.
If someone would have posted on HN that a college dropout without a computer engineering degree is making servers that run on 1/10th the power, people would laugh them off unless they really made one.
As mentioned too cost is a big factor. It is at the point now where a basic blood panel is reimbursed at the same cost as a meal at a fast food restaurant. Even if this technology was not vaporware, it would have to be around the same price.
On the one hand, you have a mediagenic, celebrity CEO with little relevant qualifications or experience (and a penchant for posing for photographs in Steve Jobs-style turtlenecks) who raised millions at a stratospheric valuation on the promise of revolutionising healthcare and disrupting the lab testing industry, while making lofty claims about "scientific advancement", but has ultimately failed to deliver on that promise, while appearing to erect a facade designed to conceal the fact that the service they're offering isn't all that different from the incumbents', and deflecting questions about the technology they (claim to) have developed. The suggestion that they broke federal rules by fudging proficiency-testing is the icing on the cake.
On the other hand, the suggestion that they broke the rules is merely an allegation. On the topic of the company's progress towards it's stated goals, science is hard and a ten-plus-year time horizon doesn't appear unreasonable for achieving the objective Theranos is aiming for. Plus, they have successfully rolled out the HSV1 test. It's seems reasonable to expect that more will follow.
I am instinctively skeptical of founders who seem to focus more on cultivating their media profile than on getting their heads down and actually delivering. There are people whose overriding motivation is maximising media exposure but who completely lack the ability to deliver what they promise. Sometimes their behaviour is down to naiveté, over-confidence, self-delusion or a deep-rooted desire for celebrity, fame or recognition (such people seem to wear the CEO "brand" in the same way that others wear Dolce & Gabbana or Prada). Othertimes, they're simply con-artists, looking to fleece gullible customers or investors.
Given that Theranos has gained FDA approval for the HSV1 test, and the suggestion that they broke federal rules is unproven, I think Holmes deserves the benefit of the doubt. Her principal crime appears to be that she was a bit naive in making overly optimistic promises and embracing the celebrity CEO role, which has made her a target for schadenfreude.
And the fraud committed in gaming proficiency-testing - does she deserve the benefit of doubt in that too? Is it ok that many people at some point got back erroneous results from their lab tests because of equipment that she knew gave erroneous results?
If, on the other hand, it turns out that the allegations are true, then I would hope to see people serving time in jail.
The biggest criticism of their overall method that I've seen, is that blood from the finger is too likely to be contaminated to give good results for many of the tests they are performing.
Testing for the presence foreign virus (or virus antibodies) may be different in this regard than testing the level of naturally occurring chemicals.
Most software companies will retract upgrades when they're not stable. Are the stakes different here? At first glace, yes, but upon second glance, if your magical test is replaced with a normal blood test in a Theranos booth, you're probably Ok. In that case, Theranos is just a sales/marketing company - which is a viable business too.
http://www.wsj.com/articles/theranos-has-struggled-with-bloo...
"Hot Startup Theranos Has Struggled With Its Blood-Test Technology"
Also here is Holme's interview with Jim Cramer tonight regarding yesterday's article:
http://www.cnbc.com/2015/10/15/theranos-ceo-fires-back-at-ws...
Or do investors really have enough cash that they can blow a few million on companies that, if successful, should be worth many tens of billions?
[1] http://lookatmeimdanny.tumblr.com/post/101432017159/how-putt...
That's precisely it.
For uBeam I'm just waiting for it to blow up (I wonder if they only saw a high impedance voltmeter showing a big number)
The real issue is efficiency and charge time
Theranos have been very, very squirrelly on details about their testing platform, claiming that they need to keep them as trade secrets in order to maintain competitiveness. Ordinarily, the tests would be independently evaluated in the peer-reviewed literature, and through the literature is how scientists and physicians would assess the value of what Theranos is offering; without peer-reviewed literature, there is little to go on. Maybe it works, maybe it doesn't, only peer-reviewed literature counts so we don't know.
Theranos has an unusual board of directors for a diagnostic testing company, with surprisingly little medical experience overall. Holmes herself is a college dropout—it's very hard to compete in a highly specialized and technical field without the proper knowledge base and experience, and traditionally that would be with an M.D.+fellowship or Ph.D.+postdoc. In interviews, when things get the least bit technical, Holmes sounds like she doesn't know what she's talking about. Theranos' patents, of which Holmes is a named inventor, are (IMHO) vaguely written. Could Holmes be a diagnostics savant? It's possible, but I don't see credible evidence to suggest this is the case.
The popular media has hyped up the company technology a lot, but in reality microfluidics is not new to the diagnostics arena, and it remains unclear as to what exactly Theranos offers as an advancement on what others are doing. There are also many technical issues to be considered with fingersticks vs. venipuncture samples, and Theranos has never explained how they have overcome those issues other than unsubstantiated assurances that their tests match standard lab tests.
There is also a fundamental problem with the entire hypothesis underlying Theranos: which I very crudely summarize as more tests = better health. That hypothesis is sophomoric and does not hold under the current thinking of evidence-based medicine. One can over test, and it has real, proven consequences towards the health of the patient in terms of invasiveness, costs, and potential risks due to unneeded procedures.
Does Theranos have something unique? It's not impossible. My null hypothesis is that they do not, and until I see something in the peer-reviewed literature suggesting otherwise, I am thinking it's smoke and mirrors.
Edit: All that text and I didn't directly answer your question! Consider my bloviation proof of my credentials as an academic. The earlier WSJ article raised questions about irregularities in regulatory-mandated proficiency testing, a serious allegation. My interpretation of this new, linked article is that there might be something to the allegation.
And that story fits the "new disruptive startup" story well.
When I was there in the 1990s, they already had spent a decade or so of R&D on microfluidic technology. They saw it as a hockey stick, but the technical hurdles were (and continued to be) very large.
The idea that one very talented scientist could find a novel solution that this company, with dozens of dedicated biochemists, could not find is plausible. But I believe the reality is somewhat different.
And all those interesting research paper ,we're seeing from the academic community, aren't they targeting the issue ? or are mostly resume fillers ?
What I recall is that at the microfluidic level, a lot of the work becomes a mechanical issue not a biochemical one. You're working with very small samples in a disposable system (obviously cleaning a capillary between samples is practically impossible). Blood isn't the easiest substance to work with, especially when trying to move it through small channels.
On top of that, now you're trying to detect very small amounts of antigen in an even tinier sample size. Your technology needs to be incredibly sensitive but have a decent resolution as well. Some antigens you want a simple positive/negative outcome. But with some other tests you want a level or range (like thyroid).
I can add some nuance to the WSJ article as a veteran of medical devices and FDA inspections:
The WSJ article quotes the inspection as a "surprise". There are only two reasons this inspection should have been a surprise to Theranos. Either in their conversations with FDA they appeared to be less-than-forthcoming, or if they were not familiar with how the FDA operated. Pre-approval inspections (i.e. you submit an application to FDA and before they make a judgment they do an inspection of your site) are very common for new technology and in some cases mandatory. When exactly they show up you don't know, but you plan for them to show up, and you expect it within a certain window of time.
Theranos CEO Elizabeth Holmes has been vocal about the FDA exercising oversight over all "lab developed tests", i.e. novel testing methods developed by a laboratory for use only by that laboratory and not for sale to others. Currently, these tests are not regulated by FDA, but FDA's sister organization the Centers for Medicare and Medicaid Services (CMS), under a set of regulations called CLIA. CLIA regs are not as stringent as FDA oversight and are more about good laboratory practices as opposed to the safety and efficacy of any new technology. So, Theranos and Holmes are trying to hold themselves to a higher standard, which is admirable.
The caveat with doing that is that you should be familiar with what that standard is going to be. I am suspicious that we're getting the full story from the Journal article, because I find it bizarre that no one at Theranos thought that FDA would consider their "nanotainers" a medical device: when FDA gets involved, anything that is part of a diagnostic system gets their oversight. Someone with 3 months experience in medical device regulatory could have told Theranos this.
I understand PR is an exceptionally hard game when you want to be a revolutionary company, but Holmes's response so far has been shameful. Theranos's first public response last night was a tweet [1] to John McCain, Joe Biden, and Arianna Huffington linking to a puff piece of bullet points and unlabeled line charts. On Kramer's show, besides focusing on touting the relationship to the FDA, she avoided answering the most basic questions that required stating actual numbers or facts [2]. And instead of doing a point-by-point response against the WSJ's claims [3], Theranos chooses to throw a bunch of impressive sounding numbers -- ("more than 1,000 pages of statements and documents"...because volume of printed paper is in itself evidence?) in the same vague way that it has been bragging about its purportedly revolutionary technology while refusing to even name the third-parties that they claim to have audited them, even to friendly journalists [4].
It's sad, it really does sound like she hit on a worthy-billion dollar idea. And she's put in the time and energy into it for many years to see it through. But I hate the way the way her company's official response has been to kick up a cloud of meaningless data in such a way to obfuscate true accountability, hoping that most people will think "Well medicine is above my head, there's probably just no way to test their genius inventions!"...good for the WSJ for actually putting some time and thought into examining the claims while many of its respectable peers have been publishing puff pieces, even as recent as this week [5] (yes, I know the NYT's style section is not the same as its investigative team, but it doesn't seem likely the NYT had an active investigation into Theranos).
[1] https://twitter.com/theranos/status/654547567426928641
[2] http://www.inc.com/kimberly-weisul/elizabeth-holmes-refutes-...
[3] https://theranos.com/news/posts/statement-from-theranos
[4] http://www.newyorker.com/magazine/2014/12/15/blood-simpler
[5] http://www.nytimes.com/interactive/2015/10/12/t-magazine/eli...
The Huffington Post recently published an op-ed by Holmes, which was tweeted out by Huffington: https://twitter.com/ariannahuff/status/654312511794212864
Senator McCain apparently visited the lab "last night" (as of today). Also, Arizona is the first state to allow people to get all the kinds of tests Theranos does without a doctor's note, and McCain had something to do with that:
https://twitter.com/SenJohnMcCain/status/654714209360437249
http://www.washingtonpost.com/news/wonkblog/wp/2015/07/02/fd...
Joe Biden visited the Theranos lab in July: http://www.usatoday.com/story/tech/2015/07/24/biden-visits-t...
Nothing wrong with having powerful friends -- including all the government and military people on Theranos's board -- but making such an early, blatant appeal to political authority instead of some kind of scientific or health authority, when the controversy is exactly about the scientific part...that doesn't feel like a convincing rebuttal.
http://www.glassdoor.com/Reviews/Theranos-Reviews-E248889_P2...
Her success was much more due to connections through her father than people acknowledge.
She grew up all over the world due to her father's government positions in international aid.
Her board is made up of prominent people involved in US foreign relations. Seemingly, these might be people her father dealt with working for the government in international aid.
If you go to raise money and you have prominent people already on your board, you're likely to find success.
For many tests, the report stated that the way they measure micro-samples is to dilute them out and run them through regular lab equipment. Not only is it hard to see how there could be any product or IP behind this approach, it's also going to impact the accuracy and detection threshold of the test.
All in all, it's hard to see what they have actually developed.
They sure do have a honking huge new HQ on Page Mill Road in Palo Alto, though -- that must have cost them $50 million right there!
As 23andMe found out the hard way.