Six years ago, the media announced Elizabeth Holmes as the next Steve Jobs or Bill Gates. Now, the former CEO of shuttered blood-testing startup Theranos is on trial for 12 counts of conspiracy to commit fraud and wire fraud. But the company’s collapse and its controversial founder’s allegations did not cause much self-inquiry in Silicon Valley. At the same time, it is not clear if Washington has made the necessary changes to ensure that a company like Theranos does not again market flawed tests to the public.
Theranos’ ultimate goal, a printer-sized machine that required only one drop of blood and could test hundreds of blood in pharmacies across the country, was always high. But in 2018, federal prosecutors filed charges against Holmes for deliberately misleading investors and conducting faulty tests of patients’ blood samples for his own financial success. Holmes’ lawyers insisted that Stan, a year-old Stanford dropout, truly believed in his company but made a “mistake” in his otherwise noble mission to test blood quickly, cheaply. His legal team is also expected to argue, when CEO, Holmes was abused by his former partner and former Theranos chief operating officer Ramesh “Sunny” Balwani, whose separate trial is set to begin next year.
“This is a case of fraud, lying and fraud for money,” Assistant U.S. Attorney Robert Leach said in his inaugural statement Wednesday. “It’s a crime on the main street, and it’s a crime in Silicon Valley.”
While there are many risks for Holmes, who faces up to 20 years in prison, Silicon Valley does not seem to be embarrassed by the trial or concerned about its consequences. Theranos, though inspired by its culture, was not supported by major venture capital firms in the technology industry. Meanwhile, a regulatory loophole that allows companies like Theranos to allow patients to run its tests on patients has not been closed, and amid the epidemic, the FDA is concerned that some approved diagnostic tests are being used with “limited assurances” that they work.
Since 2015, funding for private biotech companies in the United States has nearly tripled, from $ 10.6 billion to .2 27.2 billion, according to data from private market tracker Pitchbook. And almost two years into the Covid-1 pandemic epidemic, investment in the introduction of medical technology has increased even more. Starting mRNA-based therapeutics at Biotech and Moderena, where CEO Stephen Bansell was once criticized for his confidentiality and control methods, successful Covid-1 vaccines have added to the excitement for biotech companies.
“First, hope becomes eternal,” Lawton Burns, a professor of health care management at Wharton, told the record. “VC has a lot of money on the land, and they have to park it somewhere. And some traditional theatrical places where they parked it – for example, Big Tech – got involved, so they had to find another place to park.
According to the Wall Street Journal, in the funding conversation, Theranos is not a major topic nowadays. While some investors – especially those with no healthcare experience – are paying close attention to the data, there is no indication that Theranos is investing in companies that fund companies or that those companies are moving toward sharing research. For example, Theranos notoriously hid his data and machines, referring to “commercial privacy”, a practice that critics say the company uses to cover up fraud and disguise chaotic science. But a study has revealed European Journal of Clinical Investigation Most healthcare companies valued at more than 1 1 billion as of 2017 are not publishing peer-reviewed research, according to researchers from Stanford.
Walgreens has invested more than 140 1,140 million in Theranos and in 2013, the companies announced that they would form a “long-term partnership” to bring Theranos tests to Walgreens Pharmacy. Like individual investors, the company saw a promising opportunity in Theranos and an opportunity to step up against its competitors. But without bringing Theranos machines to its store and fully testing the technology that worked, Walgreens eventually gave the company credibility. Some might say that the complications of the companies put patients at risk who used Theranos blood tests in their stores. Walgreens declined to comment on whether he changed his mind.
Some see Holmes’ trial as a day of judgment for Silicon Valley culture and its reckless tendencies. (The phrases “move fast and break things” and “duplicate it until it’s made” are the sum of these feelings.) But there are some Silicon Valley leaders. Push In the back Against the notion that Theranos represents their values. Veteran investor Paul Graham, for example, has criticized the media for calling Theranos “Silicon Valley characteristic.” He said In a tweet That “people like Elizabeth Holmes are actually rarer there than in the rest of the business world or in politics.”
Many of these critics point to the financing behind Theranos and the structure of its board as proof that the company has moved away from the Silvio Valley Silicon Valley model. Typically, venture capital firms spend a significant amount of time, research and expertise before investing in a company and require some evidence of initial concepts such as research results. More specifically, healthcare organizations often hire significant healthcare veterans to serve on their boards.
Theranos did not work that way. Of the company The 12-member board was particularly light on medical and technology experts. The board has, for some reason, included prominent national security leaders, including former Secretary of Defense James Mattis and former Secretary of State Henry Kissinger. Several of the company’s major investors also had little medical experience, including former education secretary Betty Davos, Rupert Murdoch and members of the Walton family owned by Walmart.
Overall, Theranos was primarily motivated by investments from strong individuals and family friends, not many venture capital funds, several of which actually offered the opportunity to invest in the company.
“It was about rich people, families, people who basically don’t spend every waking hour thinking about business models and problems and progress in healthcare.” Brian Roberts, a partner at venture capital firm Wenrock, who focuses on healthcare investments, told Recode. “According to the Venture Investment Community at the original initial stage, I think there has been zero impact.”
But even if Theranos isn’t run and financed like the Silicon Valley Company, Holmes certainly wanted to emulate the “don’t make it fake you” mentality that is often associated with the technology industry. It is this approach that prosecutors now allege caused multiple frauds, and he had the support of some prominent technology leaders before falling out of favor.
Oracle co-founder Larry Ellison, who invested in the company, encouraged Holmes to ignore the protesters, for example. Theranos, which is located in Palo Alto, welcomes active participation with Silicon Valley, sat down for an interview at the Holmes Technology Conference and even made a black turtle in his daily uniform as a clear attempt to imitate Steve Jobs.
“He’s still a child of this culture in my eyes,” John Carrero, a former Wall Street Journal reporter who first exposed the problems with Theranos’ machines, recently told the Washington Post. “He has researched this myth of a talented founder who can look around.”
Despite Holmes’s settlement with the SEC and his and Balwani’s court cases, interest in innovative diagnostic testing and technology is only growing, thanks to the epidemic. Companies have rushed to meet the epidemic demand through new Covid-1 tests, some of which have made their way to the pharmacy shelves in less than two years since the epidemic began.
Health pioneers rushed to create their own Covid-1 tests and sell them directly to consumers in the early days of the epidemic. And while the Food and Drug Administration (FDA) took some time to allow testing, especially in-house kits, the agency told Record that it has now approved more than 400 emergency uses for the Covid-1 tests. Among healthcare investments as a whole, the diagnostics and biopharmaceutical sectors have shown the biggest growth since 201, according to Silicon Valley Bank, a commercial bank often used by startups.
Heather Bowerman, founder and CEO of DotLab, said: “Before the epidemic, there was a lot of reluctance to raise funds for diagnostics because much of the company’s success depends on whether the compensation is successfully obtained from financiers or insurance companies.” Working on blood tests to diagnose endometriosis. “Now, there is more appetite for diagnostic fields as a whole.”
This does not mean that the FDA is still concerned about the lack of supervision for laboratory-enhanced testing, which is testing for biological samples that are designed and manufactured in a single lab. Again, the fallacy of the lab-developed tests that Theranos and other companies took advantage of still exists. In the latest fall, the company found that 82 of the 125 requests for emergency use approval lab-enhanced Covid-1 tests had problems with their design or validation process. Most of this was eventually fixed, but some were not approved.
“We, from the 1990s onwards, have long been concerned that a significant number of approved laboratory-enhanced tests (LDTs) are being used, with limited assurances to work on the tests,” FDA spokeswoman Lauren-Jay McCarthy told Riccod. “Our experience with experiments developed by labs for Covid-1 for highlights the need for diagnostic reform.”
But despite calls for FDA change, it remains unclear to what extent the agency has the power to oversee such tests.
We will not get a verdict in the Holmes case for quite some time, as the trial is expected to last at least 13 weeks. But even if Holmes is convicted, it’s not clear how well we’re setting up to stop making the next faulty diagnostic tool to patients, especially as the epidemic continues.