In the eye of the storm
Name: Elizabeth Holmes
Title: CEO of Theranos
Influence can take many forms, and Theranos CEO Elizabeth Holmes embodies this virtue for better or for worse. Over the past year, Holmes has marshaled the company through some of its highest highs and lowest lows, talking up Theranos' promise even in the midst of public backlash.
Theranos was one of the very few--but highly prized and much marveled upon--med tech companies with billion-dollar valuations. Now its fate still remains in the balance, and its image has been routinely tainted over the last several months with a series of complaints and allegations coming from all quarters. The extent to which these problems were known, and perhaps hidden, by Holmes and her staff will make it tough for the next med tech to grasp for that unicorn status.
Holmes was there when the company reached a high point last July, winning FDA approval for its finger-stick herpes test. The regulatory nod was "a milestone for everything we've been working toward," Holmes said at the time. "We will continue to go test by test through the clearance system."
But Theranos' walls came tumbling down in October, after multiple reports called the company's proprietary testing into question. One article said that Theranos had stopped collecting finger-prick blood samples for all but one of its more than 200 tests after regulators found that the company's "nanotainers" to collect blood samples were not approved by the FDA. Another story showed that Theranos' lab tools only handled a small fraction of tests sold to consumers.
The pushback didn't stop there. Earlier this year, the Centers for Medicare and Medicaid Services (CMS) flagged serious problems at Theranos' Northern California lab. The CMS cited Theranos for "deficient practices" that "pose immediate jeopardy to patient health and safety." One infraction was described as "likely to cause, at any time, serious injury or harm, or death, to individuals served by the laboratory or to the health and safety of the general public."
Now, Theranos and Holmes have to answer to the company's partners, who have some serious qualms about the recent string of events. Walgreens Boots Alliance ($WBA), one of Theranos' key partners, recently threatened to sever its ties with the company unless it fixes the lab violations cited by federal inspectors.
But Theranos is not going down without a fight. During the fallout, Holmes has continued to tout the company's transparency, even when its testing practices seemed nothing but opaque. Theranos needs to "do a better job of communicating" the technology behind its tests, Holmes said last year: "We haven't put into the public domain much of our work. We haven't talked about our devices."
With Holmes at the helm, Theranos has launched an aggressive response to the scandal. Many of the statements issued by the company reflect Holmes' confident-to-a-fault demeanor. "We value engagement with our regulators, and are committed to ensuring that all our labs operate at the highest standards," the company said last month after the CMS inspection. "We are open for business, confident in our technologies, and unwavering in our commitment to provide Arizonans with the care and service they deserve."
Still, Theranos' struggle--and by extension's Holmes'--has led to less confidence in "unicorns," or privately-held startups with new technology and billion-dollar valuations. Before, investors may have been more willing to buy into the hype. But now, as Theranos sops up its mess, investors and the industry are taking a more wary approach.
In 2004, Holmes met with a med tech investment firm to pitch an idea about putting blood tests on a chip. Holmes talked "from 30,000 feet about how these tests are going to change mankind" but did not provide any details about how she would make the plan a reality, Annette Campbell-White, MedVenture's managing partner, told The Wall Street Journal. After a few back-and-forth conversations with management, Holmes allegedly left the meeting.
Big ideas don't always translate into big success, as Theranos knows well. While the company's future remains unclear, one thing is for sure: Holmes is on board for the ride.
-- Emily Wasserman (email | Twitter)
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