Policy, Diagnostics

Is this the beginning of the end for Theranos?

CMS wants to revoke a lab license for Theranos in California and ban Theranos owners, including Elizabeth Holmes, and its president Sunny Balwani from running any lab for two years or more.

holmes_theranosing1The news that the Centers for Medicare and Medicaid have proposed revoking Theranos’ California lab license and banning the company’s owners, including Elizabeth Holmes, and its president Sunny Balwani from running a lab for two years or more, marks what could be a final chapter in the long running saga of the diagnostics company.

The Wall Street Journal article referenced a March 18 letter to Theranos from CMS that it viewed but had not yet been made public. It noted that if the company failed to respond to the letter within 10 days or if the response was not to the regulator’s liking, sanctions would be imposed.

For its part, Theranos spokeswoman Brooke Buchanan said in the article that the government hasn’t yet imposed sanctions on the company’s lab in Newark, California. “Due to the comprehensive nature of the corrective measures we’ve taken over the past several months, which has been affirmed by several experts, we are hopeful that CMS won’t impose sanctions.” She said if they do, the company will work with CMS to address “all of their concerns.”

This is how some people are interpreting the latest news:

Wired cited Joshua Rauh, professor at Stanford Graduate School of Business:

“If the regulators revoke some approval they had given, the company is going to go into emergency mode.”

It theorized that the owners would likely sell off its intellectual property and research. “The technology might not be profitable right now, but it could be quite valuable to the right buyer.”

From Vox:

“This whole episode should be a cautionary tale: If a secretive tech company is claiming to revolutionize an entire industry with technology that still hasn’t been validated, be skeptical.”

At least one rival sensed an opportunity with the bad news. At least that’s the rationale of blood testing competitor Seventh Sense BioSystems, which emailed a pitch with a subject line: “The company that will succeed where Theranos has failed.”

Guys, full marks for optimism but if Theranos has taught us anything, it’s this: having a wiz at the helm of your business is no guarantee of success and cocky declarations are a risky game in life sciences.

There were also some assessments of media coverage:

https://twitter.com/RobertWHoward/status/720374494561329152

Photo: Flickr user Joe Penniston