Theranos, the troubled healthcare startup (it feels faintly ridiculous to use that term for a company valued at $9 billion), is now at something of a crossroads with the regulatory agencies upon whose approval its entire business model ultimately depends. Following months of apparent obfuscation and stonewalling about how (and how well) its disruptive blood testing technology works, a scathing Wall Street Journal article exposed a degree of potential fraud and deceit surrounding this much lauded technology, that nobody outside Theranos could have imagined (especially since most of the lauding was coming from the company’s own PR machine).
Despite the clamor for Theranos to release for peer review, some of the findings and data it has generated in the course of developing its blood-testing technology that it claims can replace the use of hypodermic needles with a simple finger prick, the technology is still largely a black box to outsiders. Investors and industry observers want to know if the technology’s potential squares with the company’s stratospheric valuation, but more importantly – regulatory agencies, healthcare providers and their patients need to know if the medical diagnostic tests that use this technology, actually work and are accurate and reliable.
There’s a great deal more than money at stake here.
This week’s regulatory call for Theranos could literally make or break the company depending upon which way it goes. Failure to be in regulatory compliance could bring with it, a host of new problems for the struggling company including crippling fines and the inability to operate until such time as it can demonstrate that it has addressed the problems raised by the regulatory agencies. Most damaging of all however, this would be yet another huge blow to its already strained credibility with investors and healthcare provider partners, some of whom have already withdrawn or suspended their relationships with Theranos over doubts about the efficacy and accuracy of its blood tests. Beyond the problems that this could create for Theranos itself, many industry observers fear the effects that it could have on the entire sector if a contagion of doubt and panic were to grip investors and financiers, potentially stemming the flow of biotechnology venture funding and capital.
© The Digital Biologist