Theranos COO jumps ship amid company's regulatory fallout

Theranos' Palo Alto, CA, headquarters--Courtesy of Theranos

Theranos has been sinking fast, and now, one of its top brass is jumping ship. COO Sunny Balwani is exiting the company after more than 5 years amid regulatory scrutiny for Theranos' proprietary technology and operations.

"I am deeply grateful for the opportunity to contribute to Theranos' mission to make healthcare accessible through its technology and products," Balwani said in a statement. "I will continue to be the company's biggest advocate and look forward to seeing Theranos' innovations reach the world."

Balwani's departure comes as Theranos faces pushback from the Centers for Medicare and Medicaid Services (CMS), the Securities and Exchange Commission (SEC) and a federal attorney over its testing practices. In March, the CMS threatened to shut down Theranos' Newark, CA-based lab and prevent CEO Elizabeth Holmes and Balwani from owning or operating other labs for at least two years.

Last month, the SEC and U.S. attorney in San Francisco said that they were looking into allegations that the company deceived investors and regulators about its technology.

Balwani, who joined Theranos in 2009, has taken flak in the past for his questionable qualifications and leadership of the company. In October, a WSJ report showed that Balwani was overseeing Theranos' Newark lab, even though he did not have any medical or science background upon joining the company.

Employees working at the Newark lab pointed to issues with Theranos' proficiency testing, a standard measure of accuracy. Balwani then ordered employees to only report results from tests performed on traditional devices, rather than those carried out on Theranos' proprietary Edison machines, former employees said.

Balwani's departure doesn't have to do with the company's regulatory problems, Theranos spokeswoman Brooke Buchanan told The Wall Street Journal. The company is overhauling operations and actively recruiting new top brass including a chief medical officer, head of research and operating chief, Buchanan said.

Fabrizio Bonanni

Theranos is also expanding its board of directors with individuals "who bring a wealth of scientific, medical and executive leadership," to the company, it said in a statement. Fabrizio Bonanni, who formerly served as SVP of Amgen's ($AMGN) Quality and Compliance unit, will join Theranos' board.

Bonanni's "leadership and guidance in operations, quality and compliance is exceptional, and we are fortunate to add his experience to our team both on the board and to work with us internally," Holmes said in a statement.

The company will also add William Foege, an epidemiologist and former director of the CDC, and Richard Kovacevich, the former CEO of Wells Fargo ($WFC), to its board of directors. The appointments come a month after the company said it was beefing up its scientific advisory board with "nationally respected laboratory and medical experts" who specialize in pathology, epidemiology and diagnostics.

- here's Theranos' statement
- read the WSJ story (sub. req.)

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