Genetic Engineering & Biotechnology News

JUL 2018

Genetic Engineering & Biotechnology News (GEN) is the world's most widely read biotech publication. It provides the R&D community with critical information on the tools, technologies, and trends that drive the biotech industry.

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Page 24 of 33 | Genetic Engineering & Biotechnology News | JULY 2018 | 23 market will make a correction for that," says Martinez. "By doing that, you don't play with people's lives." In contrast, Martinez contin- ues, Holmes really did play with people's lives, because she was promoting a nonexis- tent healthcare technology. Investors, board members, reporters, and others believed the falsehoods for a variety of reasons, one of which was the charisma and charm Holmes exuded. From the perspective of Holmes' close college friend, Carreyrou writes, "she had this intense way of looking at you while she spoke that made you believe in her and want to follow her." At one point, the board of directors was inclined to remove Holmes as CEO, but then she reversed the board's decision by using "just the right mix of contrition and charm." Holmes created an illusion of success by surrounding herself with powerful, successful people, even in the early days of Theranos. Aside from the fact that no one on the board had relevant industry or scientific expertise, the board did not serve the function of a true board. Case in point, when a board member brought up a concern, he was asked to resign rather than communicate the concern to the rest of the board. Another reason the Theranos charade went on for so long was Holmes would si- lence anyone who raised concerns. For ex- ample, chief financial officer Henry Mosley was fired on the spot when he pointed out to Holmes that they were deceiving investors. When Balwani joined Theranos, he helped Holmes quash anyone who raised red flags by marginalizing or firing them. Red Flags Waving While Holmes had many people duped or silenced, there were other corners of the indus- try that saw the red flags waving vigorously. "We all talked about it, like how weird was it to have a board where you don't have one single person that actually has experience in the business that you're trying to disrupt?" Marti- nez says. "I mean, it's completely nonsensical." For Martinez, the role of the board is one of the biggest lessons learned from the Ther- anos saga. "It definitely made me think more deeply about how I could do a better job as a board member," he insists. For David G. Grenache, Ph.D., chief scien- tific officer at TriCore Reference Laboratories, the claims themselves were a red flag. "I read about what they were doing, or claimed that they could do, and the first words that came out of my mouth were, 'That's impossible,'" Dr. Grenache tells GEN. "Most people who have made a career in laboratory medicine had to have had the same reaction," and they must have doubted the "fantastical claims about do- ing hundreds of tests off one drop of blood." "That's not achievable with our current tech- nology, so either she invented some really amaz- ing device, or it was nonsense," Dr. Grenache adds. "I was just stunned at the claims that they were making, at the prices that they could charge, and that she was getting all of this atten- tion without any science or data to back it up." The lack of peer-reviewed studies was a clear warning that Theranos' claims were dubious. Noted in Bad Blood, Theranos had only one peer-reviewed paper, which was pub- lished in Hematology Reports, but the data was for "just one blood test from a grand to- tal of six patients." Dr. Grenache describes the data as "underwhelming." One group of researchers did evaluate the Theranos blood-testing technology. The re- searchers published a rigorous peer-reviewed study, but only because they wanted to use the Theranos methodology. "We loved Theranos," Eric Schadt, Ph.D., who was one of the study co-authors, tells GEN. He is the founder and CEO of Sema4, a health information company. "When we first noticed that there weren't any publica- tions, we did think that it was very odd, and then we sort of thought, you know, why don't we just do this." So, Dr. Schadt and his colleagues conducted a head-to-head study comparing the Theranos technology to standard-of-care laboratories LabCorp and Quest. They found that Ther- anos test results were 1.6 times more likely to be outside the normal range compared with the other laboratories [Kidd, B.A. et al. "Eval- uation of direct-to-consumer low-volume lab tests in healthy adults." J. Clin. Invest. 2016; 126(5): 1734–1744]. "A lot of decisions are made based on what those test results are, and the fact that the Theranos tests were biased in this direc- tion of making you fall outside of the range was definitely troubling because it would trig- ger all sorts of potentially unnecessary inter- ventions," Dr. Schadt points out. He adds that the need to do such a study was, in hindsight, a red flag. "From the Wall Street Journal story, it did become strikingly clear that this should have been flagged by somebody long before we even wanted to do this study." A Cautionary Tale The truth about Theranos came out in 2015 through a series of Wall Street Journal articles by Carreyrou. Theranos, Holmes, and Balwani have since been charged with fraud by the U.S. Securities and Exchange Commis- sion. The tale of Theranos now serves as a cautionary one for investors, the media, and anyone else eyeing a biotech startup. Translational Medicine I know also that Sequoia Capital back around 2014 put in a call and inquired if they could have a look. The response that came back from Elizabeth was that she wasn't interested because she didn't need any money. There was a lot of suspicion in various quarters, but no one had any proof. In February 2015, John Ioannidis, a pro- fessor at Stanford University's medical school, published a skeptical op-ed about Theranos in the Journal of the Ameri- can Medical Association. [Editor's Note: The article was titled "Stealth Research—Is Biomedical Innovation Happening Outside the Peer-Reviewed Literature?"] A professor [Eleftherios Diamandis] at the University of Toronto published another skeptical piece ["Theranos phenomenon: promises and fallacies"], which appeared in Clinical Chemistry and Laboratory Medicine in May 2015. But no one had the goods. You know, no one. People were sort of whispering that they had doubts, but no one had the goods to prove it until I came along. GEN: As recently as 2016, at the American Association of Clinical Chemistry (AACC) meeting, Holmes was still publicly defending her company. How do you explain this behavior? Mr. Carreyrou: I think her performance at AACC was her Hail Mary attempt to restore her reputation and prove to the world that Theranos wasn't an empty shell, that it had actu- ally been working on something. But ultimately, what she showed, which was the latest iteration of the MiniLab, fell super-short of the claims she had made. Eighteen months later, in January of this year, she finally came out with a paper on the MiniLab in a peer-reviewed sci- entific journal. As I note in the epilogue of my book, the study was done with venous blood, regular quantities of venous blood drawn from the arm, so once and for all the empress was proven to have no clothes. As to why to this day she is still digging in her heels? She's now accepted, as of a few weeks ago, that Theranos is going to be liquidated, but she is telling people she's going to start a new company. Elizabeth doesn't realize how outraged people are by her behavior and by what the company has done. It doesn't seem to have sunk into her that she put tens of thousands of patients' lives at risk. She has been telling people for two years that she feels persecuted and that the press and Silicon Valley have been taking her down, and that I'm evil for having made all of this happen. To me, it's symptomatic of someone who is unbelievably narcissistic, who can see only the consequences on them- selves and who can't see the bigger picture of the harm they've wrought. GEN: Do you think that the Theranos disaster will make it harder for female entrepreneurs to succeed in biotech and raise venture capital? Mr. Carreyrou: I don't think so. I don't think it should. Elizabeth Holmes is an outlier, and most people will be smart enough to realize this. In fact, although I don't have any empirical data to prove this, I would say that on average women are more ethi- cal than men and less inclined to cut corners and do wrong. Women are coming up in Silicon Valley. Inevitably, as more and more do, some of them, as is the case with men, will be bad apples. And Elizabeth was certainly a bad apple. GEN: Can Silicon Valley entrepreneurs and investors draw any major lessons from the Theranos story? Mr. Carreyrou: As I alluded to before, the major lesson is that there is increasingly a convergence of medical innova- tion in the traditional Silicon Valley. A lot of people from there are saying, "We want to disrupt healthcare." If anything, that convergence is going to intensify. The Theranos scandal is a warning that people in this area, which is referred to as health tech, need to remember that the end user is the patient. Your product will have an impact on patients' lives because it will be used to make important health decisions. The fake-it-'til-you-make-it playbook, which has been part of the DNA of Silicon Valley for 30 or 40 years, really has major limitations when it is applied to a medical product instead of the usual vaporware. In fact, I would say that playbook does not work when it comes to a medical product. And the Theranos scandal has proven that. GEN: If you were to run into Holmes on the street, is there a question you would still like to ask her? Mr. Carreyrou: The biggest question on my mind would be how was she able to be so immersed in her ambition and her goals as to rationalize jeopardizing the public's health? GEN: When a movie on the Theranos scenario comes out, which actor would you want to play you? Mr. Carreyrou: Chris Hemsworth, the actor who plays Thor, because our biceps and calves are of similar sizes. That's a joke. Mark Ruffalo was great in Spotlight as an investigative reporter for the Boston Globe. So maybe he could sign up for another investigative reporting role. n As GEN went to press, a federal grand jury indicted Elizabeth Holmes and Sunny Balwani, charging them with nine counts of wire fraud and two counts of conspiracy to commit wire fraud. The charges stem from allegations Holmes and Balwani engaged in a multimillion dollar scheme to defraud investors, and a separate scheme to defraud doctors and patients. Holmes reportedly has quit her position as the CEO of Theranos but is keeping her seat on the board.

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