Bad blood: US govt bans bio-test biz Theranos' CEO for two years

It's game over for controversial blood-testing company Theranos with the news that its CEO Elizabeth Holmes will be banned from owning or running a medical laboratory for two years. The decision by the Centers for Medicare & Medicaid Services (CMS) also shuts down the company's California testing lab (it has another in Arizona …

[a_yank_lurker]

Not Surprised

This is result of mismanaging medical testing and generating bad data. If someone could prove these results lead to a wrong diagnosis that resulted in a preventable death things could prove rather dicey for her.

As far as the medical industry, she is toast; to well know for a major screw up to be hirable for almost any position.

[Anonymous Coward]

Re: Not Surprised

As far as the medical industry, she is toast; to well know for a major screw up to be hirable for almost any position.

She could always go into banking. She has the right contacts, and screw ups appear to be no barrier to new jobs with unbelievable benefits as they found a way to make governments and tax payers carry the actual risk of their gambling.

[Anonymous Coward]

Bizarrely Forbes still values Theranos at $800 million

or so says CNN

Given that at this point they have a bunch of tech widely reviled as worthless (even if there are some clever ideas behind it), all their customers alienated, and one operating lab doing the same sorts of tests that larger competitors have been doing on a bigger scale for longer (so probably better streamlined and debugged), where is this residual value. A whole load of Aeron chairs? The rights to the kiss-and-tell exclusive?

[Elf]

Re: Bizarrely Forbes still values Theranos at $800 million

As someone who has kitted out a number of StartUps with Aeron chairs, and I'll guess that they also have a coffee house quality espresso machine so we can account for %25 of the company's assets. (If not Aerons, then Standing Desks).

[Anonymous Coward]

One Drop Of Blood

I've seen some recent studies showing that one drop of blood is not necessarily like another.

From a layman's standpoint, I can see where that makes sense.

If you have some organs excreting chemicals into the system at certain points and other organs removing them at other points, it stands to reason that you would need a large enough sample to give you an average reading.

If that is the case, perhaps it is not the technology behind Edison that is at fault but the concept itself.

[SirWired 1]

Denial: It's not just a river in Egypt

It's astounding that they are continuing to act as if Medicare/Medicaid suspension, the closing of their largest lab, the disappearance of their largest source of customers, and the CEO being banned from the industry is no more than a minor setback. I guess since Holmes herself firmly has her hands on the reigns, and is apparently delusional, the luckless PR flack is just along for the ride.

News Flash: Nobody gives a $hit that you are allegedly overhauling the CA lab to meet the standards you should have met to begin with (had you actually hired people that knew what they were doing) when said overhauled lab will have pretty much zero customers. No insurance company would touch your lab with a ten-foot pole at this point, and no doctor would refer patients there. (And where would the patients go? All those Walgreens centers are gone.)

It would be one thing if they had a huge pool of cash with which to complete a promising technology, and then turn themselves into an IP licensing business. But given the HUGE liability from all those tests they had to throw out, I'd say any cash they have is already spoken for. And there's no evidence they have yet to reveal that the technology IS promising.

What I don't get is how she got all that money to begin with. I mean, she was hailed as some sort of visionary, despite there being no evidence that she had any actual product plan beyond a rhetorical question: "What if we could run a bazillion tests with a drop of blood?" Yes, that would be a wonderful thing, but at no point has she managed to demonstrate that she (or anybody she hired) had the least clue how to achieve it.

If I get my wife to dress up in black turtlenecks, have her enroll in a fancy school to drop out of, can she also get billions of dollars in funding by holding a press conference? "What if you could drive an SUV 100 miles on a single gallon of gas, and no batteries?"

What if? Indeed.

[jonfr]

Re: Denial: It's not just a river in Egypt

"What I don't get is how she got all that money to begin with. I mean, she was hailed as some sort of visionary, despite there being no evidence that she had any actual product plan beyond a rhetorical question: "What if we could run a bazillion tests with a drop of blood?" Yes, that would be a wonderful thing, but at no point has she managed to demonstrate that she (or anybody she hired) had the least clue how to achieve it."

It's called the internet bubble version 2.0. I guess this might mark the end of that bubble. I'll wait and see what happens next.

[Anonymous Coward]

Re: Denial: It's not just a river in Egypt

> It's called the internet bubble version 2.0. [ ... ] I'll wait and see what happens next.

Internet Bubble 3.0.

[a_yank_lurker]

Re: Denial: It's not just a river in Egypt

I read somewhere that the VC firms who specialize in biotechnology and pharma startups all took a pass. They all apparently wanted more proof the concept would actually work, eg published research with some sort of preliminary trials. The VCs who did back her were Silicon Valley types who know nothing about the biotech/pharma industry; especially the worldwide regulatory environment to bring stuff to market.

[JLV]

Re: Denial: It's not just a river in Egypt

Oh, I see. Let's do an MVP, mostly without the V part of it, see if people are interested, and if they are we'll actually make it work.

But it's not some random e-commerce or social network idea, or a 90s RAM-doubling utility scam, it impacts people's health directly.

You're right, if, as is likely, some of those many tests resulted in some really bad patient outcomes (death, for example), then whoever participated in this fraud should be held criminally accountable. Not to mention, I suppose, investor lawsuits.

I suppose it could have been taken as a bad omen that Theranos is pretty darn close to Thanatos.

[Pascal Monett]

Re: The VCs who did back her were Silicon Valley types

It says here that Theranos received funding to the tune of $690 million from 6 investors, in 8 rounds.

That's 6 guys who likely knew that the specialized investors had refused to back this project, but decided that they would give it a go anyways. Probably cautiously at first, but as Holmes put up her smokescreen of "success", they became more generous (the last round of funding is half the total).

So she totally played everyone, and now she's getting what for.

No sympathy.

[John Smith 19]

"how she got all that money to begin with. "

"in black turtlenecks, have her enroll in a fancy school to drop out of, can she also get billions of dollars in funding by holding a press conference?"

You forgot the near psychopathic levels of self confidence in herself she'll need, coupled with the utter lack of self doubt.

And of course she'll have to be comfortable blaming everyone but herself when it all goes t***sideways.

[Fatman]

Re: Denial: It's not just a river in Egypt

<quote>What I don't get is how she got all that money to begin with. </quote>

Fools and their money are easily parted.

[jonfr]

Not everyday

It is not every day that you read about person that has less net worth then my self (at least for the moment). It is impressive to go from $4,5 billion to $0 in this short time span. I'm not sure this company is going to survive this whole thing, so that is a factor.

[Anonymous Coward]

Considering her ownership stake

Self-interest dictates that she sell her stake in the company for whatever she can get and exit the business. She can't stay on as either CEO or an owner once her judgment kicks in, and the feds WILL show up and close the place down and lock her up for contempt if she tries.

The best plan seems to be to appeal the ruling to get some more time to find a buyer, possibly a big med device firm that thinks it can do something with the ip. Maybe she will get enough to start some other business, or go live on a beach somewhere.

[Mark 85]

Re: Considering her ownership stake

possibly a big med device firm that thinks it can do something with the ip.

You assume the IP is viable... I'm still wondering if they ever did any patents.....

[Anonymous Coward]

Re: Considering her ownership stake

I don't really know what they did with their IP. Unfortunately, this wouldn't be the first time that a Silicon Valley company peddled a lot of vaporware before fading into oblivion. However, it would be one of the most notable examples.

[Anonymous Coward]

Re: Considering her ownership stake

wouldn't be the first time that a Silicon Valley company peddled a lot of vaporware before fading into oblivion

Some BIG questions to answer for the SEC, the exchanges themselves, and the banks who put out the IPO. Whilst as an equity holder the investors should accept a lot of risks, the idea of allowing this snake oil outfit to trade in a secondary equity market was always nonsense, and simply a way for the VCs (who undoubtedly knew the company was worthless) to cash out at the expense of less well informed investors.

[Fatman]

Re: Considering her ownership stake

<quote>Whilst as an equity holder the investors should accept a lot of risks, the idea of allowing this snake oil outfit to trade in a secondary equity market was always nonsense, and simply a way for the VCs (who undoubtedly knew the company was worthless) to cash out at the expense of less well informed investors.</quote>

As I have said before:

Fools and their money are easily parted.

Also, how else do you think VCs (Vulture Capitalists) expect to;

1) make any money

2) get out of bad investments???

Simple: Find some easily mislead $ucker.

Nothing more than typical Wall Street behavior: sell $ucker$ Gold plated shit.

If you haven't seen it, the Wolf of Wall Street is an interesting flick. ( http://www.imdb.com/title/tt0993846/ )

[Anonymous Coward]

Re: Considering her ownership stake

"I don't really know what they did with their IP."

They never made it to that point, so only Holmes and her backers are out.

If there had been an IP, and all those investors had seen their investment evaporate, I imagine the SEC would be involved and asking some uncomfortable questions of their own.

[Charlie Clark]

Re: Considering her ownership stake

I don't really see the comparison between Holmes and Gibson.

And, apart from her being a woman, I don't really see much difference between Holmes and half of the Valley wonderkids, to whom all appearance does matter, even if the degree and form differs.

[JeffyPoooh]

"...revolutionary technology that doesn't actually exist."

"Theranos = a company that claims to have revolutionary technology that doesn't actually exist."

We're going to wear out this word during this era of hype.

[keithpeter]

Blood testing machines

I'm confused (it does not take much)

Every now and again, I get my blood pressure checked at work. They also stick a little tiny glass tube into my thumb and take a very small blood sample and pop it into a machine that does blood sugar, cholesterol &c, all good but cholesterol a little tiny bit high.

Recently had the big health MOT at GP having reached that age range. Three large blood samples taken from arm and analysed. Results broadly in line with the little chip machine. No egg butties and tofu instead of paneer for a bit.

What is different with these 'Edison' machines? Was this company extending what the little machine can do to other kinds of test?

[a_yank_lurker]

Re: Blood testing machines

The difference is the scope of the testing and that the current tests have considerable validation grunt work behind them. Theranos' idea was use a few drops for virtually all blood work. The concept seems sound but the test results have be validated for each parameter (literally hundreds) to be tested. For example one needs to establish the accuracy and precision for each test for the new method versus the conventional methods. Ideally this should be done with healthy and sick people to pick up differences. If this sounds like a lot of work, it is.

Note, in analytical chemistry, Holmes is what chemists snidely call a plumber, accuracy means that the average of enough replicate tests is the correct value. Precision is how close the each replicate is to the average. The ideal test is both very accurate and very precise which allows one to use very few replicates. Accuracy can also imply the result of one will documented test is close enough for routine use with the occasional retest being done, such as diabetic blood sugar monitoring.

[DavCrav]

Re: Easy to predict...

"The minute you have a back-up plan, you've admitted you're not going to succeed."

I don't even know what kind of mind would produce such a statement. I think she should remove her airbag from her car, since that's an obvious Plan B. And no need for these pesky rails and barriers everywhere: Plan A is not to crash, so stick with Plan A.

Muppet.

[Anonymous Coward]

The minute...

It's because she knows ell how to sell herself. That's the kind of lines which makes good PR for clueless journalists, it's the Jobs style, but one thing is when you say them after having become successful, another when you use them to deceive people...

[asdf]

Re: The minute...

>It's because she knows ell how to sell herself.

That might come in useful when Orange is the New Black becomes her reality.

[MonkeyCee]

Re: The minute...

That's quite unfair to Jobs.

He was very demanding of his designers and engineers, often to the point of being unreasonable. But at least the products he managed did something useful. Even if it was almost always something that someone else was already doing (often better and cheaper), Jobs was great at adding the gloss and glitz to something with function.

This was clearly bollocks from the get go. They couldn't even do the *normal* blood testing correctly, and their new tech has never worked.

[Anonymous Coward]

Belle Gibson and Liz Holmes

Both pretty young thing millennial women who built self based brand wellness "empires" who collapsed due to fraud and were hyped endlessly by Silicon valley hipsters. Both probably caused deaths with said fraud. Moral of story: run like hell from any "revolutionary" treatment pushed by a woman millennial with the hipster seal of approval.

[MrDamage]

Re: Belle Gibson and Liz Holmes

I already run like he'll from any place promoting "wellness". It's just crap rebranding of those "holistic health services" that sprung up and died in the 90s.

[John Smith 19]

Hmm. Jennifer Lawrence to do the movie? So kind of like the reverse of "Joy" ?

"Sorrow"

[Charlie Clark]

Live to fight another day

The story tells us as much about the ethos of Silicon Valley VCs as much as anything else. They tend to regard any form of regulation as bad for business: whether it's of workers rights (Amazon, Uber), radio waves or the provision of health services. People like Peter Thiel might happily applaud unreliable but cheap medical diagnostic services.

While Miss Holmes is going to be castigated for this I'm she'll move onto other things. She's obviously clever, determined, charismatic (being pretty is part of this) and not too scrupulous. Sounds like excellent CEO material, though probably not in the health services. At least not for a while.

And it sounds like the idea might even have legs, though it will probably need some proper money and researchers to get there. Makes a change from things like Groupon, Soylent Green, etc.

[Hollerithevo]

Make the film! Make the film!

I would love to watch Jennifer Lawrence as a scheming, lying, perhaps self-deluding businesswoman who wreaks havoc on her company, her customers and herself. Given her brilliant performance in American Hustle, she would chew up the scenery in this film.

[Anonymous Coward]

Not completely unusual

I know "quite a bit" about the medical diagnostics industry and fraud of this nature isn't as rare as one would hope. There are many startups that have flopped on the road after extracting a lot of cash from investors and large salaries for CEOs. It seems that the attraction of diagnostics to get rich quick merchants is that it's easy to make a pitch for a likely technology that will take a lot of work to prove viable. The tech sounds so plausible but ultimately doesn't work because it's insensitive or difficult to implement.

I can recall the (sincere) attempts to create a rapid test that involved the use of small glass cells to perform the test without the need for the time-consuming separation step of a typical test. Sadly that failed because it was very difficult to get reproducible results because of the physical properties of glass. It looked good to potential investors but couldn't pay off. I also recall a less than sincere Heath-Robinson (or Rube Goldberg) device that looked very impressive but that seemed to have no valid science behind it. It was bought by a single wealthy investor on the promise that it would make $BIG$ $$$BUCKS$$$ and he lost all of his money. Many more where those came from, all plausible sounding and all impractical, imprecise and impossible to turn into a viable test system.

I wonder if Holmes bought into this thinking it sounded like a cool idea and then got trapped in a bubble? It's a bit like the plot of "Follow the Money" the Danish drama about the energy company that has no real product, just a tottering pile of flim-flam.