A $9 billion healthcare start-up and a darling of Silicon Valley has admitted that it barely uses its own technology when conducting the blood tests it has promised to revolutionise.
Theranos has claimed that its Edison system, which uses a pin-prick to draw a few drops of blood into a tiny vial, will replace traditional testing, which requires larger vials to be filled with blood from veins. However, Elizabeth Holmes, the founder and chief executive of Theranos, said yesterday that the company used the Edison system for only one of more than 240 different blood tests that the company offers, with the rest done on standard laboratory equipment. The company tests blood for calcium, glucose and sodium levels, among many other things.
The admission is a serious blow for Ms Holmes, who at 31 is the youngest self-made female billionaire in the world, according to Fortune.
With a valuation of $9 billion based on investments totalling $400 million, Theranos is one of the world’s biggest start-ups, worth more than Spotify and DJI, the Chinese drone manufacturer. Ms Holmes owns about half of Theranos.
She revealed last year that she had started Theranos partly because of her fear of needles. She founded the company in 2003, aged 19, while at Stanford University, and dropped out the following year. She worked with her chemical engineering professor to file a series of patents as they built up the business.
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Her concession yesterday came after a report in The Wall Street Journal claimed that 15 of the tests conducted by Theranos used the Edison system. The report also cast doubt on the accuracy of Edison test results, citing evidence from four anonymous ex-employees and internal company emails.
Theranos claimed that the report was “factually and scientifically erroneous” and “grounded in baseless assertions by inexperienced and disgruntled former employees and industry incumbents”.
However, yesterday Bloomberg published an interview with Ms Holmes in which she accepted that Theranos conducted only one test using the Edison system. She said that this was because the company was “converting our entire lab infrastructure to one that is regulated by the [US Food and Drug Administration]”, and added: “Every time you do something innovative, people want to knock you down because they built you up. They say it’s crazy, it could never be done, and eventually you change the world.”
It also emerged yesterday that Theranos had altered marketing information on its website between July and the publication of the WSJ’s investigation. Statements that “many of our tests require only a few drops of blood”, that “all” of the company’s tests require smaller samples than traditional labs and that “usually only three tiny micro-vials [are required] instead of the usual six or more large ones”, were removed. Heather King, general counsel of Theranos, said that the changes had been made for “marketing accuracy”.