Theranos Prepares a Comeback

Two weeks ahead of its presentation to the American Association for Clinical Chemistry’s annual convention in Philadelphia, struggling tech start-up Theranos is apparently coordinating a PR campaign to salvage its tattered reputation and to stay in the blood-testing business.

Theranos announced the hiring of two executives, one each to oversee regulatory compliance and quality control. The announcement came on the heels of a published opinion piece by William Foerge, a trained MD and former head of the Centers for Disease Control and Prevention who joined the company’s  newly created Scientific and Medical Advisory Board or SMAB in April. These two moves would suggest that Theranos is girding for the fight of its life.

In his Op-Ed, Foerge threw the full weight of his professional reputation behind Theranos. “In my opinion, the very foundation of Theranos’ inventions – and its hundreds of patents – is credible.”  Foerge further wrote, “Based on my experience, I believe that Theranos can collect, transport and test small samples, including finger-stick, with clinical integrity.”

Foerge’s Op-Ed, which leverages his expertise and professional credentials, like the appointment of quality control and compliance executives, is standard operating procedure for a company managing a crisis. It will be followed by a presentation of science on August 1, which is a much riskier, but potentially more effective move to repair its brand.

The high-anticipated presentation on August 1 to the American Association for Clinical Chemistry promises to deliver what critics have been clamoring for: data from its blood test methodology that details how Theranos’ test machines, called Edison, can diagnose up to 200 diseases and ailments based on only a few droplets of blood captured from a finger prick for a fraction of the cost of conventional blood tests that rely on larger samples drawn intravenously in the presence of nurses. It will be delivered by Founder and CEO Elizabeth Holmes, once a media and wall street darling whose personal reputation now is at stake.

This will be the first time the company has presented its top-secret research to the scientific community. Although the materials will not be peer-reviewed in advance (none of Theranos’ research has been published in peer-review scientific journals), it presents a significant milestone in the company’s journey to becoming more transparent. This is a move in the right direction.

But the journey to authenticity will be a long and rocky one.

Until now, the company has been able to get away with being vague about how its blood tests work. Elizabeth Holmes, a Stanford dropout who was only 19 at the time of Theranos’ founding, achieves an iconic level of fame, gracing magazine covers as the subject of fawning stories about her audacity and success in raising funding from investors.

That all changed last fall, when the Wall Street Journal published a piece last fall that was critical of the high-flying startup. Meanwhile, the Centers for Medicare and Medicaid Services issued a scathing report, calling into question practices that present “immediate jeopardy to patient health and safety.”

The CMS subsequently called for the suspension of Holmes from the industry for two years, a ban that would begin at the end of August pending any appeals the company may file. It’s license to operate a lab in California has also been revoked. In the meantime, the SEC has launched its own investigation into whether investors have been misled.

There is no doubt that skeptics, emboldened by the steady stream of gotcha headlines over the last year, will rake through Holmes’ presentation with a fine-toothed comb. Whereas Theranos and Holmes got a free pass early on from the media which was eager to tout the next “Steve Jobs” and hail the rise of another Silicon Valley hero, that media goodwill is severely eroded. Any attempt to dodge tough questions at the CMS forum will do irreparable harm to an already damaged brand. On the other hand, full disclosure presented earnestly with humility where necessarily could signal a turnaround for Theranos’ reputation.

Next week, Holmes and Theranos are playing catch-up. The CMS presentation will be an opportunity to re-engage and re-energize its audience. This is not the time to sell her personal brand, nor make promises about Theranos’ future. Rather, Holmes is well advised to be humbled by the discovery of missteps and to own mistakes made under her watch. It’s time to prove that Theranos’ media-made reputation is not a sideshow, but an earnest effort to revolutionize the blood testing industry and make the world a better place.

 

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