Theranos, one of the hottest new biotech startups, has a huge credibility problem - Vox

The Wall Street Journal and VOX Updated by Julia Belluz 

According to Theranos founder Elizabeth Holmes, her technology amounts to nothing less than a health-care revolution: a disruptive and lifesaving innovation that delivers cheaper, earlier, and less painful results.

But Theranos, and Holmes, has also been surrounded by a dark cloud of suspicion. Critics have asked for proof that the company's technology actually works, and that its results are accurate. Holmes — the world's youngest self-made woman billionaire at 31 — and her PR team have mainly responded by citing intellectual property concerns and suggesting that the seeds of doubt have been sown by incumbent laboratory companies such as Quest and Laboratory Corporation.

Elizabeth Holmes talks with Matthew Herper at the 

2015 Forbes Under 30 Summit. (Image: Glenn Davis)

Some are questioning the accuracy and reliability of the results of their testing. Theranos offer a menu of tests, however only one test, HIV, has been approved by the FDA. And there have been some 'insider' employees who question the accuracy of the "Edison machine". These claims are refuted by it's founder, Elizabeth Holmes in a one thousand page rebuttal presented those claims to investigative reporter Matthew Herper of Forbes magazine  

In a series of tweets Elizabeth Holmes also counters Mr Herper's report.

There were other bizarre revelations in the Journal piece. Some parts of the Theranos website, which carried claims Carreyrou was probing, disappeared during his investigation. One former employee, Dr. Ian Gibbons, killed himself, and after the reporter spoke to his widow, "a lawyer representing Theranos sent her a letter threatening to sue her if she continued to make 'false statements' about Ms. Holmes and disclose confidential information."

The story goes on like this: Theranos repeatedly swings back at the Journal, even sending representatives to the homes of some of Carreyrou's sources to ask them to sign statements saying the newspaper "mischaracterized their comments."

Unsurprisingly, almost as soon as the story went up, the company published a statement denying many of the facts in the piece: Theranos' website elaborated their rebuttal statements.

Elizabeth Homes states;

“We’re under real attack from the lab industry which is seeding all sorts of stuff about us into the press,” Holmes told me, as you can see in the video above. Wait, I said to her. A lot of the people with questions Theranos are good, thoughtful people who are not in anybody’s pocket. She doubled down: “To be clear, the commentary in the press is 100% instigated by the lab industry and it showed up in the press about us last year and it’s just been repeated. What I would say is that we’re the only laboratory company that is really focused on transparency.”

According to Wikipedia, Elizabeth Holmes excelled early in life and later at Stanford University, where her original idea was developed.

Holmes proposed establishing a company to Professor Robertson in the fall of 2003, while she was a 19-year-old sophomore at Stanford. She used money that her parents had saved for her education to establish Real-Time Cures in Palo Alto. Later, she changed the company's name to Theranos (an amalgam of "therapy" and "diagnosis"),^[9] because she believed that many people had a cynical reaction to the word "cure."^[6] Holmes initially worked out of a basement of a group college house.^[3] She dropped out a semester later to pursue her business career full-time. Professor Robertson served as a director of the company.

The company grew gradually over the next decade, raising $400 million from Draper Fisher Jurvetson, Larry Ellison, and others. Theranos operated in "stealth mode" during this period, remaining highly secretive to avoid potential competitors and investors who could fund a competitor. The company took three former employees to court in 2007, accusing them of misappropriating trade secrets.^[12]

By 2014 the company offered 200 tests and was licensed to run in every state of the US.^[6] It had 500 employees and was valued at more than $9 billion. Holmes retained control of more than 50% of the company's equity.^[13]

As of 2014 Holmes has 18 US patents and 66 non-US patents in her name and is listed as a co-inventor on over one hundred patent applications.^[6] Holmes is the youngest self-made female billionaire on the Forbes 400 list at #111, with an estimated net worth of $4.6 billion.^[2]

Arguments that dominant laboratory companies such as Quest and Labcorp have much to lose if Holmes innovative testing proves reliable and accurate. She argues they are behind much of the controversy.

Elizabeth Holmes idea is to allow patients to order their own laborataory blood tests, walking into a Walgreens and ordering the test for themselves.

One other component for success  will be if health plans will reimburse for a Theranos test ordered by a patient or a physician. Bloomberg reports a Theranos-- Capital Blue Cross agreement for reimbursements.

Theranos may be a disruptive technology for the clinical laboratory world. It's progress will be measured ultimately by individual decisions regarding specific test by FDA and/or CLIA wavers. Ultimately consumer acceptance as well as physician endorsement will predict success or failure for Holmes.

Health Train Express supports her efforts despite doubts by her competitors and others. Large and established companies have much to  lose and/or learn from her creative efforts.

Theranos, one of the hottest new biotech startups, has a huge credibility problem - Vox