Startups, Diagnostics

Theranos heavily rebuts the WSJ – but do we buy it?

Theranos just issued a lengthy rebuttal to the Wall Street Journal's recent exposé. But does it hold water?

By Meghana Keshavan on October 22, 2015

Theranos is going on the offense in its feud with the Wall Street Journal, which last week ripped the company’s diagnostics practices apart in a damning exposé. Theranos today published lengthy rebuttal, calling much of the WSJ piece “simply wrong.” Is it?

The Silicon Valley startup, valued at $9 billion, touts revolutionary diagnostic technology that requires just a few drops of blood to provide the same test results as a full vial of blood. But the WSJ piece says Theranos still relies on commercial lab technology for most of its testing, simply diluting the blood samples, and that its flagship device – Edison – may not be as accurate as it claims.

Theranos’ rebuttal leaves much to be desired.

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First off, Theranos relies on user testimonials as a mark of its accuracy – adding that it sent Carreyrou a selection of these reviews this past July. But customer service aside, can a typical user gauge the accuracy of a diagnostic?

The Theranos statement also points to the FDA clearance it received for its HSV-1 test, and that the lab – unlike many diagnostics companies – has CLIA certification. However, the regulatory clearance is for a single test – while the WSJ is speaking more broadly about the company’s product portfolio.

“The reporter did not ask a single question about Theranos’ FDA clearance or CLIA waiver,” the company writes, adding that Carreyrou didn’t quote a host of business partners that Theranos provided him as sources.

And just as it’s unwise to rely entirely on the user testimonials on a corporate site to gauge a product’s efficacy, it’s just bad journalism to lean on sources supplied by the subject of an investigative piece.

Theranos, in its response to the WSJ, calls into question journalist John Carreyrou’s reporting process and heavy reliance on anonymous sources. Theranos, for instance, discredits the knowledge base of the former employees cited in the article:

“It is apparent that these former employees did not understand Theranos’ technology; are unfamiliar with the processes currently employed by the company; and do not understand the regulatory framework that Theranos operates under,” the company writes. Furthermore, it calls out the “lab experts” cited in the article as potential competitors who otherwise shouldn’t have remained anonymous for simply stating fact.

Of course, it’s standard corporate M.O. to lash out at the reporter that lambasts a company – it’d be bad business to stay quiet and wait out a blow like this one.

“From his very first interactions with Theranos, the reporter made abundantly clear that he considered Theranos to be a target to be taken down, and not simply the subject of an objective news story,” the company says. “The articles that appeared last week are the inevitable product of that approach.”

Bill Maris, managing partner of Google Ventures, had a particularly damning interview with CNN Money in regards to Theranos’ legitimacy:

“In the life sciences space, you need MDs, you need PhDs,” Google Ventures’ managing partner Bill Maris told CNNMoney. “The board is government officials, not life sciences [professionals].”

Indeed, her board is made up primarily of people like former Secretary of State George P. Shultz and military leaders.

Maris, who largely invests in life sciences firms and has backed companies like 23andMe, added that Google Ventures looked at the company in 2013 for a possible investment. When one member of his team took a Theranos test — which is offered at Walgreens — it raised eyebrows. It didn’t take one vial of blood to process the test — it took 5.

“The experience was left wanting,” he said. He added that he doesn’t know who is at fault in the Theranos controversy, but he takes issue with putting patients in the middle.

Holmes took a hit at Maris on stage: “We have never met them and, in fact, they reached out to meet us and we said no … If he wants to just talk badly about us, he can just talk badly about us. This is a free country.”

“I don’t know what the truth is,” Maris told CNNMoney. “You expect failures, but you don’t expect failures because of fraud. Hopefully that’s not the case.”

Theranos has several other points of contention with the WSJ piece:

While the WSJ piece said only a handful of tests were conducted with blood drawn from a finger prick, Theranos says in December 2014 it offered more than 80 of its tests were performed this way as opposed to venous draws. Since, the company says it added “specialty and esoteric tests” to its product offerings – framing the resulting decrease in the proportion of finger-stick based tests.

“This transition was by choice – not by necessity,” Theranos writes.

Theranos also backs up the efficacy of its Edison device – saying that it has several other proprietary technologies in its laboratories. It stands behind the purity of its finger stick draws versus capillary blood – saying it has validation from the FDA.

“On October 8, Theranos offered to bring one of our devices to The Journal for demonstration purposes, to show the capabilities of Theranos’ technology so they could compare our results to any other lab of their choosing,” it writes. “We made this offer with no strings attached. The Journal declined.”

Read the entire rebuttal here.

Photo: TedMed