CEO SUMMARY: Elizabeth Holmes, Founder and CEO of Theranos, Inc., was given the ideal platform by AACC to show the science behind her lab company’s much-touted diagnostic technologies. But in a surprise to the assembled audience, Holmes, accompanied by three PhDs on her team, chose to discuss: a) her company’s new business strategy; b) an unimpressive lab testing instrument; and, 3) correlation data for assays that used conventional methods and venous blood.
WHEN ELIZABETH HOLMES STEPPED UP TO THE PODIUM at the American Association of Clinical Chemistry’s annual meeting in Philadelphia on August 1, she had the perfect opportunity to present scientific data and make her case that the diagnostic technology claimed by Theranos, Inc., in recent years was indeed both disruptive and revolutionary.
Instead, Holmes delivered a presentation that many in the audience considered to be crassly commercial. She did not present scientific data, as was promised in press releases Theranos and AACC issued. Rather, Holmes, the founder and CEO of Theranos, introduced a new corporate strategy.
She opened her presentation by unveiling what she described as her company’s newest-generation lab analyzer, which she called the “miniLab.” Following a series of short videos which showed how this lab instrument operated, Holmes then put up slides showing data generated from the correlation of lab assays run on the miniLab.
It was obvious to the audience—and the very large contingent of journalists present in the hall—that Holmes was refusing to show any of the data associated with the lab testing technologies that she has touted during the past three years.
The consequences of her decision not to deliver the information promised in advance of the presentation were immediate. During the next 24 hours, most major news outlets in the United States published stories about her speech, along with the reaction of the AACC’s membership to the information she provided.
Taken collectively, news coverage of Holmes’ speech showed that the company no longer has much credibility with news reporters. Most of these news stories carried quotes by clinical chemists and pathologists who listened to Holmes and expressed skepticism about the new analyzer and testing model that Holmes introduced.
New Business Strategy
Press coverage of Holmes’ remarks centered around two elements. First, reporters specifically mentioned that Theranos failed to deliver the scientific data that was promised. Journalists described how Holmes used the opportunity to launch a new public relations campaign advertising her company’s newest diagnostic testing system.
The second common element in the press coverage was that the clinical chemists and lab scientists interviewed for these stories were disappointed that Holmes did not show the data on the technology she and her company had touted over the past three years.
As to the scientific community, there was a consensus of sorts. Clinical chemists and lab scientists who were in the conference hall had plenty to say after Holmes finished her presentation. The reaction of these clinical lab professionals in the audience was generally negative on three points. First they reacted negatively to Holmes’ decision not to present scientific data on her lab company’s self-described disruptive technologies. Second, many clinical chemists objected to how she delivered a commercial speech at a scientific meeting.
Third, lab scientists reacted to the lab instrument and assay correlation data that Holmes did present. The general sense of the scientific community was that the instrument—a desktop device of about 95 pounds with miniaturized internal components—appeared to use conventional technologies not much different than these clinical labs use daily. Also, during the question and answer session, it was pointed out to Holmes that the assays and correlation data generated by her miniLab analyzer used conventional methodologies and venous blood.
Stated another way, Holmes did not show an analyzer capable of doing “up to 70 tests on a single drop of blood.” Nor did she present data that demonstrated that capability. Those facts did not escape the notice of the clinical laboratory scientists in the audience.
“Every piece of technology they presented has been known for many years, and exists in other platforms largely in the same configuration, or in some cases in much more compact form in competitor’s platforms,” stated Geoffrey Baird, an associate professor in the department of laboratory medicine at the University of Washington, in a story published by The Wall Street Journal.
In fact, what nearly all the news reporters missed, but what did not escape the notice of the clinical chemists and pathologists in the room, is that Holmes had described a business model for clinical laboratory testing that represented a huge shift from what it has been doing in recent years: specimens collected in retail pharmacies, like Walgreens, are then tested in its CLIA lab facilities in Newark, Calif., and Scottsdale, Ariz.
‘Decentralize And Automate’
During the question and answer portion, Holmes stated, “Part of the vision we have for this is we want to decentralize and automate the pre-analytical processing steps while maintaining the connectivity to the certified lab and the ability to do analysis by certified laboratory personnel, as well as maintain oversight of control and replica data and calibrators.”
When asked if this vision meant that a Theranos Virtual Analyzer (TVA) in, say Dallas, would manage data produced by a Theranos miniLab in Mexico City, Holmes answered, “Yes. That’s the goal with the connectivity. In different certified laboratories, you have the expertise of laboratorians who are specialized in different areas, and our objective… is to pursue certain models in which we can decentralize certain tests while maintaining the connectivity to expert pathologists or laboratory technicians at the best centers of excellence for those tests.”
At AACC, Holmes Discusses New Business Plan, Shows New Lab Analyzer, called ‘miniLab’
INSTEAD OF SHOWING SCIENTIFIC DATA DURING HER PRESENTATION at the AACC’s annual meeting in Philadelphia, as had been announced, Founder and CEO of Theranos, Elizabeth Holmes, used her speech to launch a new corporate strategy. The slide above summarizes her vision for the company moving forward. She described these components: collection devices for small quantities of specimens, a “sample processing unit” called miniLab, and the Theranos Virtual Analyzer (TVA). Holmes said that the miniLab was intended to do pre-analytical and analytical functions using cartridges manufactured specifically for the tests to be performed. The Theranos Virtual Analyzer handles “remote interpretation of digital images and results, reviewed and released through the clinical lab.”
The slide below shows the components of the minLab sample processing unit. It has multiple instrument systems for analysis. On a single specimen in a cartridge manufactured to support multiple assays, Holmes stated that the minLab can perform chemistry, immunoassay, hematology, and molecular tests. The miniLab is a benchtop analyzer weighing about 95 pounds.
Holmes Did Not Directly Answer Questions About the Ability to Do Many Tests on Blood Drop
DURING THE QUESTION AND ANSWER PORTION of Elizabeth Holmes’ presentation at the AACC annual meeting, she was asked why she had not presented data on the diagnostic technologies her company had claimed over the past three years. This exchange took place between Holmes and Stephen Master, PhD, Associate Professor at Weill Cornell Medical College:
MASTER: I want to start out with a question about scope. What I am surprised about—and you look at the [many] people in this room and there is clearly a lot of interest in your company. I would argue that a lot of that comes from the claims that were made very early on that were very broad: 70 tests, a whole panoply of lab tests on a couple of drops of blood. The evidence that you presented fell far short of that. So how should we think about that?
HOLMES: There’s been a lot of news about our company and we chose this meeting today to begin engaging in a scientific exchange about our inventions and our technology. This technology that we introduced today is the latest version of our miniLab technology. What we wanted to do was to introduce the invention and the capability to run a broad range of assay methods on a single platform or across a single consumable. That’s what this data was intended to do. We fully understand in picking this place to come and introduce it that we have a lot of work to do to engage with this community…
MASTER: But it’s fair for us to say that the jury is still out on a lot of the central claims. For example, I can buy a point-of-care instrument today that does a finger stick lipid panel. That’s not the interest. The interest is in the larger piece. So are you saying, “That is to come at some future point?”
HOLMES: What we’ve shown today is the architecture, the invention of a platform that is capable of running multiple assay methods simultaneously. That’s what this presentation is for. We now have to engage in peer-review publications, engage in third party studies… piece by piece we are working to put that information out.
It was then noted by a Theranos PhD who was part of the panel discussion that, in cases in which automated algorithms were not adequate for specific types of tests, the model of performing the test in the field with results going to the TVA would allow review by a clinical lab scientist before results are released.
Holmes then added, “that is a core part of how we see the future of point-of-care testing. Not that it is waived—where you have no controls and calibrators and oversight. But where you maintain this connectivity to distribute the processing [and testing in the field] while maintaining the laboratory control and oversight of the test [via the Theranos Virtual Analyzer].”
These statements illustrate the different direction that Holmes appears to want to take her company, compared to the public statements of the past three years. However, before it can bring this business model to the clinical marketplace, Theranos will have to meet stringent FDA and CLIA requirements.