It’s not easy to be the leader of a company trying to commercialize a ground-breaking new medical diagnostic technology. It’s even more difficult if you are a young woman (according to a brand new S&P Capital IQ report – S&P 500 companies are still 96% male CEO dominant) with almost no business experience. That, however, is exactly what Elizabeth Holmes of Theranos is trying to do, and she has managed to build the valuation of her still-private firm to around $9 billion to date.
Although the launch of Theranos 12 years ago was well-received, and the company has grown steadily over the last decade and change, serious questions about Theranos new blood-testing technology have emerged recently, and Holmes has found herself having to defend the company from a raft of criticism from various quarters.
In an interview with Bloomberg this week, Holmes said she simply wasn’t prepared for how eager people would be to attack her. “Until what happened in the last four weeks, I didn’t understand what it means to be a woman in this space,” she commented. “Every article starting with, ‘A young woman.’ Right? Someone came up to me the other day, and they were like, ‘I have never read an article about Mark Zuckerberg that starts with ‘A young man.’?”
That said, Holmes claims that they have decided to change their approach to the current controversy surround the firm. Holmes says the new plan is less talk and more action to back up the company’s claims. “What we need to do now is focus on the technology and focus on the science and the data and put that out there,” she asserts. “Because that speaks for itself.”
The promise of Theranos
According to Holmes, when Theranos’ new “Edison” is fully operational, anyone can have access to a great deal of information about their health and risk of disease anytime they want without a prescription or lengthy wait. The new technology can accomplish this with a mere finger prick’s worth of blood, much less than traditional blood tests, and supposedly at a much lower cost.
It costs $2.67 for a Theranos glucose test and all of its prices are posted online, which other lab firms do not do. Holmes claims the new testing technology can perform accurate lab tests at less than Medicare reimbursement rates, which would mean huge cost savings to the health care system. Based on an in-house analysis, Holmes claims $2.2 billion could be saved each year in Arizona alone. Note that the firm already has a presence in 40 Walgreens pharmacies in Arizona
Recent criticism of Theranos
Theranos had faced little criticism until mid-October when the Wall Street Journal’s John Carreyrou published an in-depth investigation of the firm. As reported by ValueWalk, the WSJ sources claimed as of the end of 2014, Theranos wasn’t using its own technology to analyze the large majority of the tests it was performing commercially. Moreover, ex-employees claimed Theranos cheated on routine proficiency tests, which are used as data by federal regulators determine if a lab test is accurate.
A number of other critical articles were published over the next few weeks. Sources noted that some previously signed Theranos partners, including AmeriHealth Caritas and Intermountain Healthcare, had not begun using the technology to date. It was not inaccurate to describe the situation as a media feeding frenzy.
Keep “tweaking” technology until it works as promised
Bloomberg also recently interviewed several of Theranos technical advisers to get their perspectives on the new blood test technology. Dr. Waldo Concepcion, the chief of clinical transplantation surgery at Stanford University Medical Center, was the most candid in saying the tests’ accuracy isn’t perfect yet. Despite the problems, he says he’s seen enough data to be “encouraged” that the technology is feasible. Concepcion notes the first step is, “Does it work?”. “And if it does not work, can we tweak it until it does work?”
But the biggest question is – how exactly is Holmes “fighting back”?