Theranos CEO Elizabeth Holmes. Photo: Fortune Global Forum/Flickr, CC BY NC ND 2.0
- Experts said Theranos’s meteoric rise and spectacular fall should be a reminder to investors to ensure that technologists’ claims are backed by real science.
- The case also highlighted the importance of “validating early research through peer-review processes”, scientists said.
- Others also said Silicon Valley’s ‘fake it till you make it’ attitude doesn’t fit in the health-tech sector, where the lives of patients are at stake.
New Delhi: As Theranos’s Icarus tale drew to a close with the conviction of founder Elizabeth Homles for duping investors, scientists and biotech entrepreneurs have important advice for future innovators: a) be open to peer-review, and b) Silicon Valley’s ‘fake it till you make it’ attitude doesn’t work when lives are at stake.
Theranos claimed to have developed a revolutionary medical device that could detect a multitude of diseases and conditions from a few drops of blood. After cracks in the story emerged, she was brought to trial and a jury convicted Holmes – who was CEO throughout the company’s turbulent 15-year history – on January 3, on two counts of wire fraud and two counts of conspiracy to commit fraud.
The 37-year-old was acquitted on four other counts, of fraud and conspiracy, based on allegations that she deceived patients who paid for Theranos blood tests.
Reacting to Theranos’s meteoric rise and spectacular fall, David Stein, the CEO of Babson Diagnostics, said the story is a cautionary tale to investors – “a reminder to pay closer attention and ensure that technologists’ claims are backed by real science”.
Writing for STAT, Stein also said Theranos’s “transgressions cast a shadow over biomedical innovation, especially in the diagnostic and blood testing space”. He said the health care technology community must now regain the trust of the public. For this, he suggested, it must stand by three principles: caring for patients first and foremost; leading with science; ensuring transparency and understanding.
Stein also said that though there is a drive to innovate and commercialise new healthcare products, “everything must be grounded in science”. He wrote: “Even in this turbocharged environment, it is possible to innovate with rigour and integrity, bridging deep scientific knowledge and the know-how of the tech ecosystem.”
The case will likely shape the way biotech entrepreneurs approach investors, say researchers who spoke to Nature News — and highlight the importance of “validating early research through peer-review processes”.
In one article, Nature said that while the Theranos scandal has “provided salacious fodder for books, movies and podcasts”, the more important story is that the company has become a “cautionary tale for blood diagnostics companies and scientists with entrepreneurial interests”.
Scientists that the journal spoke to said they hoped that executives at biotech start-up firms will henceforth “share their data early on, and participate in some kind of peer-review process”.
“It’s a great teaching moment,” said Eleftherios Diamandis, who was the first scientist to call out Theranos for its exaggerated claims in 2015. “It’s an example of how a supposedly huge company with a $9-billion valuation went down the drain because of a series of mistakes.”
Paul Yager, a diagnostics developer and researcher at the University of Washington in Seattle, told Nature that there was a “fundamental flaw” in the idea that a drop of blood could be enough to perform 200 tests, as had Theranos claimed, “because there just aren’t enough molecules there”.
Also read: The Understated Role of the FDA in Allowing Theranos Tests to Enter the Market
Other experts said that if Holmes had been open to peer-review, the problems with the technology could “have been spotted before she defrauded investors”. This is part of science’s “self-correction” process, Yager said.
He added that some of the problems might also have been avoided if Holmes had a scientific background. The process required to get a degree in sciences “tends to instil in students the importance of vetting and publishing experiments”, Yager said. “You learn that you have to line up your ducks and have credible data.”
Meanwhile, scientists also expect biotech companies to face more scrutiny. “We are definitely going to see more pressure to produce technologies the right way,” said James Nichols, a professor of pathology, microbiology, and immunology. He told Nature that Holmes “held Theranos’s technology as proprietary, didn’t publish it and didn’t want to share it with the community”.
With Holmes’s conviction, biotech entrepreneurs will be more cautious and honest in their approach to investors, Nature said.
“This is probably the biggest story in laboratory medicine, and it ended in disaster,” said Diamandis. “The question is: what can we learn about it so that it doesn’t happen again?”
News agency Associated Press reported that the trial also laid bare the “pitfalls of a swaggering strategy” used by many Silicon Valley entrepreneurs conveying a boundless optimism regardless of whether it’s warranted, a.k.a. ‘fake it till you make it’.
Holmes’s conviction might “lower the wattage at least temporarily” on the brash promises and bold exaggerations that have become a routine part of the tech industry’s “innovation hustle”, it said.
The trial’s outcome will send a message to CEOs that there are consequences in overstepping the bounds, Ellen Kreitzberg, a Santa Clara University law professor who attended the trial, predicted. But she added that “greed will keep hyperbole alive in Silicon Valley”.
During her testimony, Holmes insisted she never stopped believing that Theranos was on the verge of refining its technology. Instead, she blamed Sunny Balwani, the president of Theranos and her former romantic partner.
Holmes testified that Balwani let her down by failing to fix laboratory problems and alleged that he had turned her into his pawn through a long-running pattern of abuse even as exerted control over her diet, sleeping habits and friendships.