Theranos under fire: 10 things to know about the story everyone's talking about

Has Theranos overstated its achievements?

It faces assertions that it's done so: The Wall Street Journal published an intensive report today detailing alleged inconsistencies between the blood test startup's claims and its actual operations.

The Palo Alto, Calif.-based company, founded in 2003 by Stanford-dropout Elizabeth Holmes, has garnered quite a bit of attention since it jumped into the ring in 2013 with other blood-testing giants, Quest Diagnostics and Laboratory Corp. of America Holdings. Theranos offers blood tests that draw a tiny amount of blood and promise fast results at a lower cost to the consumer. Since its launch, Theranos has raised more than $400 million from investors and is now valued at $9 billion.

Here is a breakdown of WSJ's reporting and Theranos' response.

Claims made by The Wall Street Journal

1. What WSJ calls the "linchpin of its strategy," the Edison blood test, accounts for only a fraction of Theranos' testing, according to WSJ. Theranos' website says it offers more than 240 blood tests with a finger prick's worth of blood, according to the report. However, the Edison device used for the finger prick tests was used for just 15 types of tests in December 2014, four former employees told WSJ.

Theranos disputes the assertion that Edison can handle just 15 types of tests, but it declined to specify how many it handles. The company's outside lawyer told WSJ not all of Theranos' tests are performed using Edison, as it is still transitioning, according to the report.

The WSJ says, by the end of 2014, the company conducted 190 of its blood tests on traditional machines from companies like Siemens AG, which require traditional blood draws with needles, according to WSJ.

2. The company dilutes samples for 60 tests. According to the report, the company does three types of tests. Fifteen are run on the Edison system, 130 are run on traditional machines with traditional-sized blood samples and an additional 60 tests are done on traditional machines with Edison-sized blood samples. However, the microsamples must be diluted to hit liquid volume requirements to run on the traditional machines, one former senior employee told WSJ.

According to the report, dilution increases the margin of error and most labs only use this method in "narrow circumstances." Timothy Hamill, MD, vice chairman of the University of California, San Francisco's department of laboratory medicine, told WSJ this was a "poor laboratory practice."

3. Theranos changed its website during the reporting of the article for "marketing accuracy." WSJ said the company removed the language from its website that said. "Many of our tests require only a few drops of blood" and removed other language about how many micro-vials are used for testing.

4. The report suggests the company gamed CMS proficiency testing. While the company has submitted more than 120 of its tests for FDA clearance (one has been cleared so far), its practices in CMS' proficiency testing raise some questions. Theranos split its PT samples between Edison machines and traditional machines, which produced different results. When an employee asked which results should be reported to the government, the company's president and COO, Sunny Balwani, said in an email that the "samples should have never run on Edisons to begin with," according to the report. In March 2014, a Theranos employee reported to New York state's public health lab that the company may have manipulated the PT process.

5. WSJ reports the results of Theranos tests are not incredibly accurate. Theranos confirmed the Edison device produced results for tests that were different from those found on traditional equipment according to the report. Former employees told WSJ the finger-prick method can be inaccurate because tissue and cell fluid can interfere with the sample. Many sources, including a Walgreens nurse and several physicians, told WSJ they saw abnormal results with the tests that were later not found using hospital-based testing.

Sources of the information

6. Ms. Holmes declined interview requests from the WSJ for more than five months in the reporting of the article. WSJ reported the company said she was available for comment last week, but her schedule did not allow it in time for publication. Instead, the reporter spoke with the company's outside lawyer, Mr. Boies, as well as Heather King, the company's general counsel.

7. The reporter also spoke with a number of former employees, physicians, nurses and the widow of the British biochemist Ian Gibbons, who helped Ms. Holmes develop 23 patents for the company before his death. The former employees were senior lab employees and the nurses and physicians worked at facilities that had used Theranos testing.

Theranos' response

8. Theranos issued a firmly worded response Thursday morning. It reads, "Today's Wall Street Journal story about Theranos is factually and scientifically erroneous and grounded in baseless assertions by inexperienced and disgruntled former employees and industry incumbents."

9. It says the sources used in the article are not reliable. The statement reads, "The sources relied on in the article today were never in a position to understand Theranos' technology and know nothing about the processes currently employed by the company. We are disappointed that, in an effort to make its story more dramatic, this reporter relied only on the views of four 'anonymous' disgruntled former employees, competitors and their allies, instead of reaching out to many of the scientific, healthcare and business leaders who have actually seen, tested, used and examined our breakthrough technologies."

10. Theranos claims WSJ chose to ignore several opportunities for facts and to experience the technology firsthand. The statement says it provided the reporter with facts that directly refuted the allegations made in the article, but WSJ chose to publish it without mention of these facts. Theranos also claims WSJ declined a demonstration of the tests at their offices, according to the statement.


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