Image courtesy of Roadless Co via flickr
Imagine how amazing the medical field could be if all it took were a few drops of your blood to diagnose a plethora of medical conditions? No more biopsies or needing endless vials of blood just to find out that boil on your backside is not a new kind of tumour.
Well, consider yourself lucky. Theranos are the company for you. The company reputes to be able to run multiple tests on incredibly small volumes of blood. They also claim that by running their tests on automated equipment, they remove the human error element – which is most often the cause of errors in testing – and they can mail results directly to the patient the moment they come in, meaning results come much faster and without the need for multiple trips to the hospital.
Theranos caused huge waves in the medical industry when they came onto the scene in 2013. People were excited by the prospect that this company could forever change healthcare for the better. Helped in no small part by their highly likable and eloquent founder, Elizabeth Holmes, the company have since gone on to have a net worth of $9 billion and are the poster child for the new wave of Silicon Valley backed companies in the areas of Medicine and pharmaceuticals.
Or at least it was until about a week ago, when the proverbial hit the fan in a spectacular fashion and opened up a can of worms so vast it may very well take the company with it.
Theranos, it seems, have not been keeping up with their claims. Example number one: the automation of its tests. An investigation by the Wall Street Journal unearthed some unpleasant details about the machine developed as the major cornerstone of this process. Apparently, some employees do not trust the machine to give accurate results. On top of this, employees alleged that the machine was only being used routinely for 15 out of the company’s nearly 300 tests as of December 2014. They also claimed that Theranos was failing to report inconsistent results coming from the automated screen that could question its reliability.
This makes it look like Theranos is attempting to fudge the numbers and report that their results are more accurate than they are. There are also detailed reports that allege that the company ran the required Medicaid proficiency tests on their equipment against commercially available alternatives and that their results varied wildly.
All of this came out around the same time as the FDA (the US body that regulates all food and medical related products) released documents detailing their criticisms of Theranos’ record keeping, stating that the systems aren’t clear, and that certain products aren’t registered and sold as medical devices when they should be. Theranos’ response was to state that they were currently in the process of transitioning their systems into a manner that matched with FDA approval, hence the lack of clarity. One has to wonder though, why they didn’t do this in the first place when they knew that they would ultimately come under the FDA’s review system.
People are now starting to lose confidence in Theranos and their lofty claims. The company is private and shares aren’t available on the open stock market, but that isn’t to say that people won’t lose money should their claims turn out to be false and the business goes under. A huge amount of their investment capital comes from tech wizards in Silicon Valley, none of whom would be best pleased if their hard earned cash turns out to have been flushed away into nothingness.
This wasn’t the end of Theranos’ woes however. Forbes has since reported on some dodgy dealings within the company’s stock. The company has converted its stocks into a two tier system, with some stocks being worth more votes on executive issues than others. This is not uncommon; Facebook and other companies do similar things. The difference here is the difference in votes between the lower tier and upper tier. In Facebook shares, it’s 10 to one. In Theranos’ stock, the difference is 100 to one. Some shareholders are claiming they never consented to this yet the company claims the consent was unanimous. This change also gave founder Elizabeth Holmes direct control of 50 per cent of the company, which means she essentially has direct control of the entire company and can’t be removed by her board of directors, as she has the power to remove them before that happens.
Taken together, things do not look good for Theranos. The company seems to have built its value around Holmes’ personality, and now that they’re not quite living up to all of their lofty claims, things are going downhill fast.
Unfortunately, this is a sight we’ll likely be seeing more of in the upcoming months and years. Theranos is one of many companies in the healthcare industry backed by Silicon Valley that have yet to live up to the results they claim to be able to achieve. Essentially, the biomedical start-up industry has been turned into a sort of a tech industry backed Kickstarter programme with much higher risk than reward. Science is difficult to explain to people at the best of times, but put a person with good public speaking skills in front of some people with huge amounts of money to burn, and get them to spout some buzzwords that sound good without having any major scientific backing and you could suddenly own yourself a multi-billion dollar idea and not much else. It’s a trend that’s sadly become all too common in recent times, and Theranos will surely not be the last company to have overstated the possibilities they can achieve.