Theranos - scientific breakthrough or epic hoax?

A company on the brink of a scientific and medical breakthrough, or a hoax on an epic scale? Russ Swan considers the story of Theranos.

What follows is a tale of laboratory technology, a technological revolution, a precocious main protagonist, and billions of dollars. It is a riches-to-rags tale with elements of the Emperor’s new clothes, more than a bit of hubris, and a tragic twist involving a British scientist.

The story of Theranos and its founder, Elizabeth Holmes, is still playing out. This is what we know so far, and it is truly jaw dropping. It begins with a first year chemical engineering student at Stanford, spending a summer placement in Singapore assisting in the development of a protein microarray for a diagnostics test for Sars. On returning to California, Holmes (for it was she) quickly dropped out of college to set up her own firm to work on similar technologies.

That by itself is pretty remarkable. Not only did she recruit one of her university professors to the board, she also secured a handy million dollars of seed capital from a venture capitalist – who just happened to be a family friend. Holmes was 19 and unqualified, and had no specific breakthrough invention at this time. That came a couple of years later, in the form of a blood testing device named Edison. This was going to turn routine haematology on its head, exploiting the latest in microfluidic technologies to perform dozens of tests on tiny samples of blood drawn from a finger prick.

Edison meant patients would no longer provide test tube-sized samples of blood. It would draw a single microlitre into a miniscule container, perform the analysis there and then, and communicate wirelessly with a secure database. Over 200 different diagnostic tests from anaemia to cancer could be conducted on this one sample, at costs so low as to be almost trivial. Red blood cell count would be just $2.06, while white blood cell count a mere $1.73. Most of the tests on the shopping list came in under ten bucks. Low, low prices were (and still are, at the time of writing) detailed online as part of a stated mission to be transparent.

That transparency, however, did not extend to any proper explanation of the technology. Articles appeared in mainstream media, but nothing was peer-reviewed. Investors seemed so keen to get in on the ground floor of a disruptive new technology, perhaps swayed by the appeal of a charismatic young CEO, that such details as whether it actually worked were overlooked.

Millions flowed in. High-calibre people flowed in. Orders flowed in.

The company raised $700 million through various financing rounds, and was valued at $9 billion. It recruited big names to its board, including Henry Kissinger. Henry bloody Kissinger. It recruited some of the best brains in science, including in 2005 leading British biochemist Ian Gibbons. He produced no fewer than 23 patents for the company, with Holmes co-inventor on most of them. Significantly, pharmacy mega-chain Walgreens started rolling out ‘wellness centers’ in its outlets, offering a variety of tests on Theranos’s systems. Healthcare providers and insurance companies eyed the cost reductions and quickly joined the parade.

The absence of peer-reviewed articles should have been a warning. The growing clamour of complaints from former employees should have been noted. The paper trail of samples from patient to diagnosis could have been followed, which might have revealed that many tests were actually conducted on conventional lab instruments at the company’s facility in Newark, California, rather than any microfluidic chip. None of these things happened. Most tragically, the suicide of Dr Gibbons in 2013 – having told his wife that “nothing was working” in the lab – should have had the board of Theranos demanding to know the truth.

It came down to some diligent investigative reporting by the Wall St Journal to bring out the facts. Edison just doesn’t work as advertised. Accuracy is poor and results are woefully inconsistent. It’s easy to be clever now, but performing 200+ tests on a drop of blood sounds just a bit fanciful doesn’t it? Some liquids lend themselves to microfluidics, but blood isn’t one of them – at small scales the constituent solids simply get in the way. Perhaps that’s why Theranos packed its board with business and political leaders, rather than scientists and engineers.

The latest twist, last month, was that the Theranos lab in California has had its federal licences revoked, and Holmes has been legally barred from owning, operating, or managing any laboratory for at least two years. The 32 year-old’s personal fortune had been assessed at $4.5 billion in June, and reassessed in July as…zero.

I’m struggling to find the funny side of this story. I have little sympathy for the investors whose greed and gullibility led them to throw their money away, or for the customers like Walgreens who seem to have been seduced by the personality behind this purported revolution. Holmes seems to have been, shall we say, economical with the truth.

And in the meantime Mrs Gibbons is widowed and a countless number of people have made healthcare decisions that might as well have been taken after studying tea leaves.