9 ms·

The FDA's notes from its visit to Theranos' labs don't look good

118 points by bpolania 11y ago

epistasis 11y ago
>It appears as if this isn't the first time Theranos has butted heads with FDA inspectors: "This document was provided as a follow-up to the failures in your design validation conducted in 2014," the FDA report says. $10 billion valuation, and this is the best they can do? It seems like silly season is going to end soon. This time there are a lot of solid businesses in the valley with solid revenue and solving real problems. Then there are the dilettantes and the scammers. All will be revealed as it becomes more difficult to raise money.
- venomsnake 11y ago
  While current interest rates are below zero effectively - the raising money will be as easy.
- ryporter 11y ago
  They may still actually have an real innovation (we need more evidence), but I do agree that this is a massive failure for such a valuable company. After the huge setback that 23AndMe suffered from their run-in with the FDA, every well-funded company under their jurisdiction should be triple-checking everything related to FDA compliance, since it poses such a grave, existential risk.
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  - a_bonobo 11y ago
    Interestingly, both 23andMe and Theranos just sat on the documents issued to them by the FDA, see https://news.ycombinator.com/item?id=10462936 https://news.ycombinator.com/item?id=10462936 Do both have the same guy working on FDA-approval?
    - adventured 11y ago
      It's the Uber aggressive approach - break the rules, try to get big faster than they can slow you down - applied to something directly ruled by a federal bureaucracy. That'll never turn out well. With the FDA you have to play the game the way they want you to or they'll instantly nuke your operation. The Uber approach only works if you're dealing with lots of little bureaucracies.
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itsoverjohnny 11y ago
Didn't anyone (really) check before putting money at a $10 Billion valuation??
- csours 11y ago
  While I was still at HP, they bought a company called Autonomy for 11B USD.[1][2] No one ever knew what they did. HP wrote off 9B USD in 2012. 1. https://en.wikipedia.org/wiki/HP_Autonomy https://en.wikipedia.org/wiki/HP_Autonomy 2. http://www.marketwatch.com/story/the-mysterious-case-of-hewlett-packards-autonomy-deal-2014-08-19 http://www.marketwatch.com/story/the-mysterious-case-of-hewl...
  - eitally 11y ago
    Autonomy did a lot of hand waving ... but at the end, they did a decent job specializing in electronic records management & e-discovery / litigation holds. Not nearly enough to justify the ludicrous price, but at the time HP was desperate for something to help them compete in any sort of "big data" market.
    - csours 11y ago
      I also question HP's decision to announce their entry in the cloud market via the Onion [1] 1. http://www.theonion.com/video/hp-offers-that-cloud-thing-everyone-is-talking-abo-28789 http://www.theonion.com/video/hp-offers-that-cloud-thing-eve...
iandanforth 11y ago
Document numbers? Release dates? This seems more like red tape and nitpicking rather than a substantive challenge to a technology. It's stories like these that guarantee I would never try to start a company in biotech or recommend a friend join one.
- hrq 11y ago
  TBH the FDA is the least of the various hurdles to get a great biotech going. The FDA has (surprise) largely been spot on. Theranos is just a fraud. If you are not risk tolerant that's fine, it's a reasonable position. But, there are plenty of people who are willing to actually get outside the anonymous video chat / messaging whatever echo chamber and make real inventions happen in the world that make a real difference to real people.
- jheriko 11y ago
  when you start a company your approach should be beyond reproach. red tape and nitpicking are things to welcome as part of a high quality bar - as annoying as they maybe - not to write off as inconvenient annoyances. when you have your shit together in the most basic ways, you simply won't have this level of problem.
  - judk 11y ago
    Name a successful startup that was beyond reproach.
    - jheriko 11y ago
      most people try this tbh. its common sense. its why you do things like register your company, pay your taxes, get legal advice. its exceptionally normal behaviour until recently it seems... we used to call people who didn't do this 'rogue traders' and the like. they were looked down on like scum instead of looked up to as role models.
- epistasis 11y ago
  Unit testing? Source control? Continuous integration? Code documentation? Seems like red tape and nitpicking rather than substantive coding. It's stories like that that guarantee that I would never try to start a company in software or recommend a friend join one. Just because standard practice seems unnecessary to you doesn't mean that it doesn't exist for good reasons. To anyone in biotech or familiar with what can go wrong with physical products, your complaints come across as ignorant.
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ryandrake 11y ago
Gushing press, create-a-celebrity CEO, A-list "1%-er" investors... Then, questionable product/technology? Time to grab the popcorn, this should be fun!
- TazeTSchnitzel 11y ago
  It would be amusing, except I'm worried the dodgy tech has ruined lives.
kzhahou 11y ago
The most surprising thing about this whole saga is the way two VCs openly spoke out against Theranos. Bill Maris from GVentures and Moritz from Sequoia. I can't remember the last time I saw a VC trash someone else's investment in public. So why now? I'll speculate that there's something so distasteful about Theranos --the wild mismatch between valuation, amount raised, and deliverables-- that these two investors felt that it threatened the ecosystem itself. Like they needed to distance Sand Hill Rd from this stinker before it taints the other (still unproven) unicorns. Or maybe it was something else, dunno. Anyone else notice it?
- InclinedPlane 11y ago
  I suspect this is going to turn out to be a huge spectacle. One of the downsides of so much VC cash available is that it's also a lot easier to build up a very expansive sham company which doesn't have much at its core.
  - bsder 11y ago
    Basically its going to be a big spotlight on how the VC community is a gated community who are all about playing the insider game.
  - aagha 11y ago
    I'm curious: What would be the benefit of doing this? Getting investment from VC's with the hope that it can be turned into something?
    - radicalbyte 11y ago
      Pump and dump before it goes bang.
    - InclinedPlane 11y ago
      The VC game in Silicon Valley isn't about investment, it's about playing the lotto. You dump money into as many companies that have even a small degree of promise, you blow them up to the point where you can find out whether or not they have market traction, and then you collect your winnings from the tiny fraction that hit it big. Not only is it vastly disadvantageous to not have your fingers in as many pies as possible but the VCs with the most money are precisely the ones who have been playing this game already and hit it big with google, facebook, instagram, etc. Investing in 9 sham companies that fold and 1 unicorn that pays out at 10:1 or 100:1 is more lucrative than investing in 10 companies with modest, but reliable RoI's. Peter Thiel's Facebook investment paid off at 2000:1, Accel's facebook investment paid off at 800:1, Andy Bechtolsheim's google investment paid off at 17000:1, Andreessen Horowitz made 300:1 off of instagram. If you've got a good enough pitch you can get as much money as you want.
aresant 11y ago
The lack of factual scrutiny for such potentially life-changing technology is a shame on both ends of this story. I mean there are 2 Theranos centers smack in the middle of SV (Palo Alto and Redwood City) - the WSJ's exposé centered largely on actually trying the tech and finding others with disparate results - where were the SV / SF / Oak proper journalists on either end of this story actually scrutinizing a $10b monster? "Watching the media build up and tear down Theranos feels the same with the sign bit flipped. Little data, and lots of hyperbole, both times." c/o Sam Altman's twitter and he's spot on. (1) https://twitter.com/sama/status/655492875073884160 https://twitter.com/sama/status/655492875073884160
- annnnd 11y ago
  I don't have much experience with FDA, but it looks like they are arguing with technicalities. They are not saying that product is not working, just that it isn't approved by them (for this purpose, if Theranos website is to be believed [0] - "The Nanotainer™ and our devices have already been cleared by FDA for use with our HSV-1 test"). It looks like this could be solved very quickly if all parties were interested. I am quite sure that Theranos has made some powerful enemies, many of whom probably have some influence within FDA... [0] https://www.theranos.com/news/posts/statement-from-theranos-2 https://www.theranos.com/news/posts/statement-from-theranos-...
  - davak 11y ago
    I assuming hsv-1 was approved and successful because it's a pcr test requiring very little blood already. Most of the other tests require much more volume. It sounds like these tests were the ones that were supposed to be revolutionary but were not successful.
    - hga 11y ago
      Yeah, a PCR test can use a tiny sample, and and with a modicum of care it's not going to be subject to cross contamination in taking the sample (you do have to watch out for back-end contamination). But I can see how things like lipid panels would have contamination problems with finger-stick draws, although they say they use a combination of those and "venous blood draws using smaller needles and smaller tubes", which doesn't strike me as a big selling point. In my experience, pain is associated with not hitting the vein right the first time, and once you hit the vein, you might as well draw more than enough for the planned tests and any followup tests ordered once the first results come in.
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akhilcacharya 11y ago
How do you even get funded without a process that is fully tested? Was this a failure of due diligence? I don't understand.
- venomsnake 11y ago
  Lets try it - I come with you with proof of concept nuclear fusion device that is just below break even energywise and claim that with proper engineering I can get it to 20 EROEI. Will you fund me? It was enough for her to have some innovation that could plausibly work.
- deleted 11y ago
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- jbigelow76 11y ago
  How do you even get funded without a process that is fully tested? A fully tested process? Surely you jest. Hell, you don't even need to have an idea to get funded[1]. [1]http://old.ycombinator.com/noidea.html http://old.ycombinator.com/noidea.html
  - Jack000 11y ago
    Since this is no longer an option I assume that experiment didn't go well. I wonder what ideas came out of that group, a post mortem would be interesting.
    - mcintyre1994 11y ago
      This would definitely be interesting. There's a UK accelerator, Entrepreneur First [0] which takes people pre-team and pre-idea. I'm not sure if they have any exits yet, but YC occasionally fund their alumni. [0] http://www.joinef.com http://www.joinef.com
peteretep 11y ago
I'm sceptical generally of Theranos, but none of this feels in the least bit like a smoking gun. Wouldn't you expect feedback like that for a truly revolutionary product? There's no claim of fraud, there's no claim their technology doesn't work, just complaints about technicalities. Am I wrong?
- rayiner 11y ago
  The government doesn't give you "feedback." Also, out of the five observations, only the last one is a "technicality." The process documentation and design specification and validation issues are not optional. Not just in medicine, but in any engineering field where lives are on the line. E.g. > Observation 1: "Design validation did not ensure the device conforms to defined user needs and intended uses." You don't build a bridge without defining the maximum carrying load you intend to use it for, or validating that it will carry that load. Getting lucky and having the bridge not fall down (at first) doesn't ameliorate that process defect. P.S. I haven't been following the Theranos story closely. I am taking the fine article at face value.
  - peteretep 11y ago
    > The government doesn't give you "feedback." http://www.fda.gov/ICECI/Inspections/ucm256377.htm http://www.fda.gov/ICECI/Inspections/ucm256377.htm > when an investigator(s) has observed any conditions > that in their judgement may constitute violations Sure sounds like feedback to me. > The process documentation and design specification > and validation issues are not optional No, but they can be iterated on. > I am taking the fine article at face value The "fine article" presents small snippets of a heavily redacted article. There's not that much value to take...
ageyfman 11y ago
Observation 5: "Documents were not reviewed and not approved by designated individual(s) prior to issuance." this one is the most damning. FDA gave them the opportunity to correct this, and they sat on it for a year. The culture of move fast and break things is fine for consumer products, but the cavalier attitude with people's lives is overstepping.
- eitally 11y ago
  I'm tempted to argue that the SV model of tech startups essentially prohibits the creation of any functional biotech or medical device company. The compliance and process parts require real industry experience senior expertise, and time. like you said, a cavalier attitude is completely inappropriate and will never pass scrutiny. I worked for a medical device manufacturer for about 15 years. 21 CFR 11, and the test & quality tracking requirements, make it extremely hard to pivot quickly.
  - calgoo 11y ago
    You can still develop the tech without those experts. However, if you ever want to apply it to humans, you got to follow the rules.
  - seehafer 11y ago
    Certainly the pivot-constantly, push-code-daily mentality is not translatable to medical technology. That said, biotech & device companies could stand to be a hell of a lot more agile. Compliance is necessary but it isn't a complete impediment to moving quickly.
  - ska 11y ago
    Pivoting doesn't make a lot of sense in this space. However it is entirely possible to be agile and (relatively) fast in this space - not by breaking rules but by designing the process to be light where it can, detailed where it must. And then paying attention to how it is working and improving it constantly. You can probably cut time to market in half relative to industry averages this way, which is nothing to sneeze at.
thrownaway2424 11y ago
Are the participants in Theranos' 2014 private equity sale even publicly known? The list could be a source of amusement for many. Most amusing outcome would be if DFJ, Ellison, et al exited in that round.
suprgeek 11y ago
What is alarming and missing from the BI story is that there were two documents issued by the FDA - one which covers the issues mentioned (more of pre-market and conduct) the second one listed here: http://www.fda.gov/ucm/groups/fdagov-public/@fdagov-afda-orgs/documents/document/ucm469395.pdf http://www.fda.gov/ucm/groups/fdagov-public/@fdagov-afda-org... is equally damming. This one deals with the requisite post-market aspects (surveillance, complaint remediation, etc). For a Medical Tech. start-up to fail on post-market surveillance is in-excusable. Move Fast & Break Things should not apply to people's health and medications. There is something very wrong when a company with that much cash fails BOTH in pre & post market situations.
- eitally 11y ago
  Absolutely agree. Any established CRO or pharma treats surveillance and [especially] post-marketing product safety & adverse event reporting as mission critical activities. The kind where, if you don't do it properly and follow the rules, you get shut down. (My wife has worked in this area for the past ˜15 years, in both clinical & post-marketing environments. It's serious business.)
- stephengillie 11y ago
  For those of us who are not doctors, but play one on the internet: https://en.m.wikipedia.org/wiki/Postmarketing_surveillance https://en.m.wikipedia.org/wiki/Postmarketing_surveillance
- Alex3917 11y ago
  A large percentage of companies don't do their post-market surveillance, and the FDA has never even once revoked approval because of it. The whole FDA approval process is basically a scam.
  - refurb 11y ago
    Uhhh... that's not correct at all.[1] Are you confusing it with post-marketing commitments to run additional clinical trials? That's not the same thing as post-marketing surveillance. [1]http://www.fiercepharma.com/story/roche-overlooks-80000-adverse-reaction-complaints/2012-06-21 http://www.fiercepharma.com/story/roche-overlooks-80000-adve...
rokhayakebe 11y ago
1) Can we have a document from other visits to similar labs for comparison. 2) What does the $10B valuation people keep referring to has to do with anything? If they do not meet requirements should they be valued less? This does not make sense. If you do not meet standards for xyz, you shouldn't be allowed to perfom xyz. The feedback should not be around the valuation. 3) The same press that are knocking Theranos are the same press that were calling it disruptive. If anyone is to be blamed it should be them, and the government agencies that allowed testing.
- eitally 11y ago
  I think you hit the nail on the head. The point is that at that valuation, with that much investor money coming in, there's no excuse for them not to have met the minimum barrier to entry in the area they chose, which is essentially compliance with federal regulations.
- achow 11y ago
  For discussion sake I’m going to throw this out - The $10B valuation is the ONLY issue here. We know that for all the test except one, Theranos uses usual diagnostic devices (from Siemens etc.) like any other diagnostic lab. So it will be something like ~99.9% of their tests are done on traditional devices. So we can safely assume that those tests are as reliable as those from other labs. So if they are same as any other legacy industry for 99.9% of the time, then why such a big valuation? They should be valued same as their nearest rival (which I’m sure is a giant compared to Theranos), and if adjusted for the fact that whether Theranos is going to upset them without any secret sauce (and with fewer resources) then the valuation should be near to $0.
  - sakai 11y ago
    Well, the troubling thread here is that that may not be posssible using the amount of blood Theranos collects. Then the question becomes not only why is their valuation so high (which the public doesn't need to care too much about) but "how well do these traditional tests work with Theranos samples?" That the answer could be "not very well" (and we haven't heard otherwise) is what's most troubling to me.
transfire 11y ago
is that the same FDA involved in this: http://science.slashdot.org/story/15/10/27/037234/the-popular-over-the-counter-cold-medicine-that-science-says-doesnt-work http://science.slashdot.org/story/15/10/27/037234/the-popula... ? And this: http://www.cbsnews.com/news/fda-corruption-letter-authenticated-lawyers-start-your-engines/ http://www.cbsnews.com/news/fda-corruption-letter-authentica... And this: http://seattleorganicrestaurants.com/vegan-whole-food/institutional-corruption-of-pharmaceuticals-how-FDA-cannot-be-trusted-with-public-safety.php http://seattleorganicrestaurants.com/vegan-whole-food/instit... And this: http://ceramics.org/ceramic-tech-today/biomaterials/gsk-drops-ball-with-puzzling-us-release-of-sensodyne-repair-protect-sans-45s5-glass http://ceramics.org/ceramic-tech-today/biomaterials/gsk-drop... And this: https://reason.com/blog/2013/11/25/fda-shuts-down-23andme-outrageously-bann https://reason.com/blog/2013/11/25/fda-shuts-down-23andme-ou... Why anyone's first inclination would be to trust the FDA is beyond me. In fact, this whole story has a fishy Denmark smell to it. Why for instance is all dissenting opinion being down voted?
- neuronic 11y ago
  Because some people understand why the FDA shut down 23andme and approve of this decision. Maybe if you would have linked the official statements of both organizations rather than a "reason.com" blog link with opinionated bullshitting, then your point might stand some scrutiny. This and the fact that things have now shifted [1] because even if that doesn't fill your sensational hunger, no, the FDA is not on a crazy trip to stop personal genomics. [1] http://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm435003.htm http://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/uc...
  - transfire 11y ago
    "Because some people understand why the FDA shut down 23andme" Oh, do you? How about you explain it then.
ekianjo 11y ago
Nothing drastic in such observations, unless you have never seen FDA reports. The FDA usually issues a lot of observations and calls for corrective actions - this happens even with large and experienced pharma companies.
- seehafer 11y ago
  I disagree. Device/diagnostic companies get 483's all the time. What's telling is the scope of these observations. Theranos is failing on most counts of the quality system regulations. Judging by the observations they don't even have a corrective action (CAPA) process. That's a huge red flag.
  - ekianjo 11y ago
    > Judging by the observations they don't even have a corrective action (CAPA) process. That's a huge red flag. Well if they want to hire folks out there there's a huge amount of capable people ready to be poached from other companies.
    - hga 11y ago
      I can't imagine many people being willing to move to Theranos today, as long as their current job isn't totally awful. Reputation is very important in this field; heck, if I saw a resume with someone coming on board at this period, I'd be asking them some hard questions about why they did it.
    - VLM 11y ago
      http://www.slate.com/articles/business/moneybox/2014/07/employment_rates_for_stem_ph_d_s_it_s_a_stagnant_job_market_for_young_scientists.html http://www.slate.com/articles/business/moneybox/2014/07/empl... I would theorize there's no shortage of biochemists or lab techs. The graphs seem to show a gradual increase in unemployment and a gradual decrease in employment for life sciences PHD grads. 2010 was a crossover year where afterwards less than 1 in 5 grads will get a job but more than 1 in 5 will be unemployed. This doesn't count underemployment; a biochem PHD working as a waitress is technically employed. If only the upper 20th percentile of the grads currently get jobs, lowering one companies standards to accept the 21st percentile of grads is still pretty far along the right side of the bell curve... they'll do fine. Regardless of the details, its hard to describe a market where 80% don't have industry jobs as being limited by the labor pool.
madaxe_again 11y ago
Holmes and her crew are scanners and fabricators - and while I'd love to say they'll get their comeuppance, they're now wealthy enough to buy their way out of anything. It's junk science, has been since day zero. Her father's USAID connections make me think there's more going on here, and that they failing could embarass elements in government.
- judk 11y ago
  Also the fact that the CEO/"founder" hasonly one year of college as relevant experience. She appears to be a pop star persona: a face to send to interviews to look cool in PR, fronting for the business machine in the back. And of course there was never any tech, just hopes they ride a hype was into winning Quest's contracts.
littletimmy 11y ago
Can someone point out to me what exactly it is that Theranos does? My understanding was that this company administers innovative ultra-small volume blood testing. Now they say that only works for the HSV-1 test (that nobody wants, and by some accounts already existed), and for the rest of the 240 tests they use normal lab procedure. What is the great innovation here? What is it that this company has been doing for 10 years? Why is it worth $10B?
- TazeTSchnitzel 11y ago
  It's not just these small vials of blood. They also make their own "revolutionary" testing equipment, which they used for dozens of tests. Except it turns out their equipment was giving quite badly inaccurate results, so they quietly switched to conventional machines. Ditto for the small blood vials.
  - littletimmy 11y ago
    So it's a flop, basically? That's a pity. They should just come clean; people will respect them for it.
    - TazeTSchnitzel 11y ago
      It would be the honest thing to do, but I doubt it's the ideal for investors.
rayiner 11y ago
I hope the industry doesn't draw the wrong lessons from Theranos. Compliance isn't hard--the expertise is out there. But the process must be followed and that might mean moving more slowly. Which is okay because your competitors have to move more slowly too. What's interesting about Theranos is the hints that the technology may not be ready for prime time yet either. In which case moving more slowly, and taking that into account in the funding stages, is not just a reality of compliance but a reality of engineering. This stuff is hard, MVPs aren't enough, and successful ventures are going to take longer to yield a salable product than in other fields.
redwood 11y ago
I'm so cynical that I don't trust the FDA to not be looking out for established medical industry players. I'm not saying conspiratorial that this is all BS but rather that I'm surprised there isn't some more skepticism considering disruption of industries this big and regulated will never go easily. I understand that folks believe the cult of disruption has blinded everyone in this case and think that may well be true. still these issues highlighted by the FDA sounds to me like any scrappy startup which has to cut some corners. some of you will claim the sky is falling but I don't buy it. if there's nothing to their tech then they will indeed collapse but these papers are not enough to make that clear
apetresc 11y ago
I don't understand the intricacies of FDA approval so I might be confusing things here, but why is Theranos' front page currently claiming "Theranos Receives FDA Clearance"?

118 points by bpolania 11y ago

>It appears as if this isn't the first time Theranos has butted heads with FDA inspectors: "This document was provided as a follow-up to the failures in your design validation conducted in 2014," the FDA report says. $10 billion valuation, and this is the best they can do? It seems like silly season is going to end soon. This time there are a lot of solid businesses in the valley with solid revenue and solving real problems. Then there are the dilettantes and the scammers. All will be revealed as it becomes more difficult to raise money.

venomsnake 11y ago
While current interest rates are below zero effectively - the raising money will be as easy.
ryporter 11y ago
They may still actually have an real innovation (we need more evidence), but I do agree that this is a massive failure for such a valuable company. After the huge setback that 23AndMe suffered from their run-in with the FDA, every well-funded company under their jurisdiction should be triple-checking everything related to FDA compliance, since it poses such a grave, existential risk.
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- a_bonobo 11y ago
  Interestingly, both 23andMe and Theranos just sat on the documents issued to them by the FDA, see https://news.ycombinator.com/item?id=10462936 https://news.ycombinator.com/item?id=10462936 Do both have the same guy working on FDA-approval?
  - adventured 11y ago
    It's the Uber aggressive approach - break the rules, try to get big faster than they can slow you down - applied to something directly ruled by a federal bureaucracy. That'll never turn out well. With the FDA you have to play the game the way they want you to or they'll instantly nuke your operation. The Uber approach only works if you're dealing with lots of little bureaucracies.

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itsoverjohnny 11y ago

Didn't anyone (really) check before putting money at a $10 Billion valuation??

csours 11y ago
While I was still at HP, they bought a company called Autonomy for 11B USD.[1][2] No one ever knew what they did. HP wrote off 9B USD in 2012. 1. https://en.wikipedia.org/wiki/HP_Autonomy https://en.wikipedia.org/wiki/HP_Autonomy 2. http://www.marketwatch.com/story/the-mysterious-case-of-hewlett-packards-autonomy-deal-2014-08-19 http://www.marketwatch.com/story/the-mysterious-case-of-hewl...
- eitally 11y ago
  Autonomy did a lot of hand waving ... but at the end, they did a decent job specializing in electronic records management & e-discovery / litigation holds. Not nearly enough to justify the ludicrous price, but at the time HP was desperate for something to help them compete in any sort of "big data" market.
  - csours 11y ago
    I also question HP's decision to announce their entry in the cloud market via the Onion [1] 1. http://www.theonion.com/video/hp-offers-that-cloud-thing-everyone-is-talking-abo-28789 http://www.theonion.com/video/hp-offers-that-cloud-thing-eve...

iandanforth 11y ago

Document numbers? Release dates? This seems more like red tape and nitpicking rather than a substantive challenge to a technology. It's stories like these that guarantee I would never try to start a company in biotech or recommend a friend join one.

hrq 11y ago
TBH the FDA is the least of the various hurdles to get a great biotech going. The FDA has (surprise) largely been spot on. Theranos is just a fraud. If you are not risk tolerant that's fine, it's a reasonable position. But, there are plenty of people who are willing to actually get outside the anonymous video chat / messaging whatever echo chamber and make real inventions happen in the world that make a real difference to real people.
jheriko 11y ago
when you start a company your approach should be beyond reproach. red tape and nitpicking are things to welcome as part of a high quality bar - as annoying as they maybe - not to write off as inconvenient annoyances. when you have your shit together in the most basic ways, you simply won't have this level of problem.
- judk 11y ago
  Name a successful startup that was beyond reproach.
  - jheriko 11y ago
    most people try this tbh. its common sense. its why you do things like register your company, pay your taxes, get legal advice. its exceptionally normal behaviour until recently it seems... we used to call people who didn't do this 'rogue traders' and the like. they were looked down on like scum instead of looked up to as role models.
epistasis 11y ago
Unit testing? Source control? Continuous integration? Code documentation? Seems like red tape and nitpicking rather than substantive coding. It's stories like that that guarantee that I would never try to start a company in software or recommend a friend join one. Just because standard practice seems unnecessary to you doesn't mean that it doesn't exist for good reasons. To anyone in biotech or familiar with what can go wrong with physical products, your complaints come across as ignorant.

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ryandrake 11y ago

Gushing press, create-a-celebrity CEO, A-list "1%-er" investors... Then, questionable product/technology? Time to grab the popcorn, this should be fun!

TazeTSchnitzel 11y ago
It would be amusing, except I'm worried the dodgy tech has ruined lives.

kzhahou 11y ago

The most surprising thing about this whole saga is the way two VCs openly spoke out against Theranos. Bill Maris from GVentures and Moritz from Sequoia. I can't remember the last time I saw a VC trash someone else's investment in public. So why now? I'll speculate that there's something so distasteful about Theranos --the wild mismatch between valuation, amount raised, and deliverables-- that these two investors felt that it threatened the ecosystem itself. Like they needed to distance Sand Hill Rd from this stinker before it taints the other (still unproven) unicorns. Or maybe it was something else, dunno. Anyone else notice it?

InclinedPlane 11y ago
I suspect this is going to turn out to be a huge spectacle. One of the downsides of so much VC cash available is that it's also a lot easier to build up a very expansive sham company which doesn't have much at its core.
- bsder 11y ago
  Basically its going to be a big spotlight on how the VC community is a gated community who are all about playing the insider game.
- aagha 11y ago
  I'm curious: What would be the benefit of doing this? Getting investment from VC's with the hope that it can be turned into something?
  - radicalbyte 11y ago
    Pump and dump before it goes bang.
  - InclinedPlane 11y ago
    The VC game in Silicon Valley isn't about investment, it's about playing the lotto. You dump money into as many companies that have even a small degree of promise, you blow them up to the point where you can find out whether or not they have market traction, and then you collect your winnings from the tiny fraction that hit it big. Not only is it vastly disadvantageous to not have your fingers in as many pies as possible but the VCs with the most money are precisely the ones who have been playing this game already and hit it big with google, facebook, instagram, etc. Investing in 9 sham companies that fold and 1 unicorn that pays out at 10:1 or 100:1 is more lucrative than investing in 10 companies with modest, but reliable RoI's. Peter Thiel's Facebook investment paid off at 2000:1, Accel's facebook investment paid off at 800:1, Andy Bechtolsheim's google investment paid off at 17000:1, Andreessen Horowitz made 300:1 off of instagram. If you've got a good enough pitch you can get as much money as you want.

aresant 11y ago

The lack of factual scrutiny for such potentially life-changing technology is a shame on both ends of this story. I mean there are 2 Theranos centers smack in the middle of SV (Palo Alto and Redwood City) - the WSJ's exposé centered largely on actually trying the tech and finding others with disparate results - where were the SV / SF / Oak proper journalists on either end of this story actually scrutinizing a $10b monster? "Watching the media build up and tear down Theranos feels the same with the sign bit flipped. Little data, and lots of hyperbole, both times." c/o Sam Altman's twitter and he's spot on. (1) https://twitter.com/sama/status/655492875073884160 https://twitter.com/sama/status/655492875073884160

annnnd 11y ago
I don't have much experience with FDA, but it looks like they are arguing with technicalities. They are not saying that product is not working, just that it isn't approved by them (for this purpose, if Theranos website is to be believed [0] - "The Nanotainer™ and our devices have already been cleared by FDA for use with our HSV-1 test"). It looks like this could be solved very quickly if all parties were interested. I am quite sure that Theranos has made some powerful enemies, many of whom probably have some influence within FDA... [0] https://www.theranos.com/news/posts/statement-from-theranos-2 https://www.theranos.com/news/posts/statement-from-theranos-...
- davak 11y ago
  I assuming hsv-1 was approved and successful because it's a pcr test requiring very little blood already. Most of the other tests require much more volume. It sounds like these tests were the ones that were supposed to be revolutionary but were not successful.
  - hga 11y ago
    Yeah, a PCR test can use a tiny sample, and and with a modicum of care it's not going to be subject to cross contamination in taking the sample (you do have to watch out for back-end contamination). But I can see how things like lipid panels would have contamination problems with finger-stick draws, although they say they use a combination of those and "venous blood draws using smaller needles and smaller tubes", which doesn't strike me as a big selling point. In my experience, pain is associated with not hitting the vein right the first time, and once you hit the vein, you might as well draw more than enough for the planned tests and any followup tests ordered once the first results come in.

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akhilcacharya 11y ago

How do you even get funded without a process that is fully tested? Was this a failure of due diligence? I don't understand.

venomsnake 11y ago
Lets try it - I come with you with proof of concept nuclear fusion device that is just below break even energywise and claim that with proper engineering I can get it to 20 EROEI. Will you fund me? It was enough for her to have some innovation that could plausibly work.
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jbigelow76 11y ago
How do you even get funded without a process that is fully tested? A fully tested process? Surely you jest. Hell, you don't even need to have an idea to get funded[1]. [1]http://old.ycombinator.com/noidea.html http://old.ycombinator.com/noidea.html
- Jack000 11y ago
  Since this is no longer an option I assume that experiment didn't go well. I wonder what ideas came out of that group, a post mortem would be interesting.
  - mcintyre1994 11y ago
    This would definitely be interesting. There's a UK accelerator, Entrepreneur First [0] which takes people pre-team and pre-idea. I'm not sure if they have any exits yet, but YC occasionally fund their alumni. [0] http://www.joinef.com http://www.joinef.com

peteretep 11y ago

I'm sceptical generally of Theranos, but none of this feels in the least bit like a smoking gun. Wouldn't you expect feedback like that for a truly revolutionary product? There's no claim of fraud, there's no claim their technology doesn't work, just complaints about technicalities. Am I wrong?

rayiner 11y ago
The government doesn't give you "feedback." Also, out of the five observations, only the last one is a "technicality." The process documentation and design specification and validation issues are not optional. Not just in medicine, but in any engineering field where lives are on the line. E.g. > Observation 1: "Design validation did not ensure the device conforms to defined user needs and intended uses." You don't build a bridge without defining the maximum carrying load you intend to use it for, or validating that it will carry that load. Getting lucky and having the bridge not fall down (at first) doesn't ameliorate that process defect. P.S. I haven't been following the Theranos story closely. I am taking the fine article at face value.
- peteretep 11y ago
  > The government doesn't give you "feedback." http://www.fda.gov/ICECI/Inspections/ucm256377.htm http://www.fda.gov/ICECI/Inspections/ucm256377.htm > when an investigator(s) has observed any conditions > that in their judgement may constitute violations Sure sounds like feedback to me. > The process documentation and design specification > and validation issues are not optional No, but they can be iterated on. > I am taking the fine article at face value The "fine article" presents small snippets of a heavily redacted article. There's not that much value to take...

ageyfman 11y ago

Observation 5: "Documents were not reviewed and not approved by designated individual(s) prior to issuance." this one is the most damning. FDA gave them the opportunity to correct this, and they sat on it for a year. The culture of move fast and break things is fine for consumer products, but the cavalier attitude with people's lives is overstepping.

eitally 11y ago
I'm tempted to argue that the SV model of tech startups essentially prohibits the creation of any functional biotech or medical device company. The compliance and process parts require real industry experience senior expertise, and time. like you said, a cavalier attitude is completely inappropriate and will never pass scrutiny. I worked for a medical device manufacturer for about 15 years. 21 CFR 11, and the test & quality tracking requirements, make it extremely hard to pivot quickly.
- calgoo 11y ago
  You can still develop the tech without those experts. However, if you ever want to apply it to humans, you got to follow the rules.
- seehafer 11y ago
  Certainly the pivot-constantly, push-code-daily mentality is not translatable to medical technology. That said, biotech & device companies could stand to be a hell of a lot more agile. Compliance is necessary but it isn't a complete impediment to moving quickly.
- ska 11y ago
  Pivoting doesn't make a lot of sense in this space. However it is entirely possible to be agile and (relatively) fast in this space - not by breaking rules but by designing the process to be light where it can, detailed where it must. And then paying attention to how it is working and improving it constantly. You can probably cut time to market in half relative to industry averages this way, which is nothing to sneeze at.

thrownaway2424 11y ago

Are the participants in Theranos' 2014 private equity sale even publicly known? The list could be a source of amusement for many. Most amusing outcome would be if DFJ, Ellison, et al exited in that round.

suprgeek 11y ago

What is alarming and missing from the BI story is that there were two documents issued by the FDA - one which covers the issues mentioned (more of pre-market and conduct) the second one listed here: http://www.fda.gov/ucm/groups/fdagov-public/@fdagov-afda-orgs/documents/document/ucm469395.pdf http://www.fda.gov/ucm/groups/fdagov-public/@fdagov-afda-org... is equally damming. This one deals with the requisite post-market aspects (surveillance, complaint remediation, etc). For a Medical Tech. start-up to fail on post-market surveillance is in-excusable. Move Fast & Break Things should not apply to people's health and medications. There is something very wrong when a company with that much cash fails BOTH in pre & post market situations.

eitally 11y ago
Absolutely agree. Any established CRO or pharma treats surveillance and [especially] post-marketing product safety & adverse event reporting as mission critical activities. The kind where, if you don't do it properly and follow the rules, you get shut down. (My wife has worked in this area for the past ˜15 years, in both clinical & post-marketing environments. It's serious business.)
stephengillie 11y ago
For those of us who are not doctors, but play one on the internet: https://en.m.wikipedia.org/wiki/Postmarketing_surveillance https://en.m.wikipedia.org/wiki/Postmarketing_surveillance
Alex3917 11y ago
A large percentage of companies don't do their post-market surveillance, and the FDA has never even once revoked approval because of it. The whole FDA approval process is basically a scam.
- refurb 11y ago
  Uhhh... that's not correct at all.[1] Are you confusing it with post-marketing commitments to run additional clinical trials? That's not the same thing as post-marketing surveillance. [1]http://www.fiercepharma.com/story/roche-overlooks-80000-adverse-reaction-complaints/2012-06-21 http://www.fiercepharma.com/story/roche-overlooks-80000-adve...

rokhayakebe 11y ago

1) Can we have a document from other visits to similar labs for comparison. 2) What does the $10B valuation people keep referring to has to do with anything? If they do not meet requirements should they be valued less? This does not make sense. If you do not meet standards for xyz, you shouldn't be allowed to perfom xyz. The feedback should not be around the valuation. 3) The same press that are knocking Theranos are the same press that were calling it disruptive. If anyone is to be blamed it should be them, and the government agencies that allowed testing.

eitally 11y ago
I think you hit the nail on the head. The point is that at that valuation, with that much investor money coming in, there's no excuse for them not to have met the minimum barrier to entry in the area they chose, which is essentially compliance with federal regulations.
achow 11y ago
For discussion sake I’m going to throw this out - The $10B valuation is the ONLY issue here. We know that for all the test except one, Theranos uses usual diagnostic devices (from Siemens etc.) like any other diagnostic lab. So it will be something like ~99.9% of their tests are done on traditional devices. So we can safely assume that those tests are as reliable as those from other labs. So if they are same as any other legacy industry for 99.9% of the time, then why such a big valuation? They should be valued same as their nearest rival (which I’m sure is a giant compared to Theranos), and if adjusted for the fact that whether Theranos is going to upset them without any secret sauce (and with fewer resources) then the valuation should be near to $0.
- sakai 11y ago
  Well, the troubling thread here is that that may not be posssible using the amount of blood Theranos collects. Then the question becomes not only why is their valuation so high (which the public doesn't need to care too much about) but "how well do these traditional tests work with Theranos samples?" That the answer could be "not very well" (and we haven't heard otherwise) is what's most troubling to me.

transfire 11y ago

is that the same FDA involved in this: http://science.slashdot.org/story/15/10/27/037234/the-popular-over-the-counter-cold-medicine-that-science-says-doesnt-work http://science.slashdot.org/story/15/10/27/037234/the-popula... ? And this: http://www.cbsnews.com/news/fda-corruption-letter-authenticated-lawyers-start-your-engines/ http://www.cbsnews.com/news/fda-corruption-letter-authentica... And this: http://seattleorganicrestaurants.com/vegan-whole-food/institutional-corruption-of-pharmaceuticals-how-FDA-cannot-be-trusted-with-public-safety.php http://seattleorganicrestaurants.com/vegan-whole-food/instit... And this: http://ceramics.org/ceramic-tech-today/biomaterials/gsk-drops-ball-with-puzzling-us-release-of-sensodyne-repair-protect-sans-45s5-glass http://ceramics.org/ceramic-tech-today/biomaterials/gsk-drop... And this: https://reason.com/blog/2013/11/25/fda-shuts-down-23andme-outrageously-bann https://reason.com/blog/2013/11/25/fda-shuts-down-23andme-ou... Why anyone's first inclination would be to trust the FDA is beyond me. In fact, this whole story has a fishy Denmark smell to it. Why for instance is all dissenting opinion being down voted?

neuronic 11y ago
Because some people understand why the FDA shut down 23andme and approve of this decision. Maybe if you would have linked the official statements of both organizations rather than a "reason.com" blog link with opinionated bullshitting, then your point might stand some scrutiny. This and the fact that things have now shifted [1] because even if that doesn't fill your sensational hunger, no, the FDA is not on a crazy trip to stop personal genomics. [1] http://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm435003.htm http://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/uc...
- transfire 11y ago
  "Because some people understand why the FDA shut down 23andme" Oh, do you? How about you explain it then.

ekianjo 11y ago

Nothing drastic in such observations, unless you have never seen FDA reports. The FDA usually issues a lot of observations and calls for corrective actions - this happens even with large and experienced pharma companies.

seehafer 11y ago
I disagree. Device/diagnostic companies get 483's all the time. What's telling is the scope of these observations. Theranos is failing on most counts of the quality system regulations. Judging by the observations they don't even have a corrective action (CAPA) process. That's a huge red flag.
- ekianjo 11y ago
  > Judging by the observations they don't even have a corrective action (CAPA) process. That's a huge red flag. Well if they want to hire folks out there there's a huge amount of capable people ready to be poached from other companies.
  - hga 11y ago
    I can't imagine many people being willing to move to Theranos today, as long as their current job isn't totally awful. Reputation is very important in this field; heck, if I saw a resume with someone coming on board at this period, I'd be asking them some hard questions about why they did it.
  - VLM 11y ago
    http://www.slate.com/articles/business/moneybox/2014/07/employment_rates_for_stem_ph_d_s_it_s_a_stagnant_job_market_for_young_scientists.html http://www.slate.com/articles/business/moneybox/2014/07/empl... I would theorize there's no shortage of biochemists or lab techs. The graphs seem to show a gradual increase in unemployment and a gradual decrease in employment for life sciences PHD grads. 2010 was a crossover year where afterwards less than 1 in 5 grads will get a job but more than 1 in 5 will be unemployed. This doesn't count underemployment; a biochem PHD working as a waitress is technically employed. If only the upper 20th percentile of the grads currently get jobs, lowering one companies standards to accept the 21st percentile of grads is still pretty far along the right side of the bell curve... they'll do fine. Regardless of the details, its hard to describe a market where 80% don't have industry jobs as being limited by the labor pool.

madaxe_again 11y ago

Holmes and her crew are scanners and fabricators - and while I'd love to say they'll get their comeuppance, they're now wealthy enough to buy their way out of anything. It's junk science, has been since day zero. Her father's USAID connections make me think there's more going on here, and that they failing could embarass elements in government.

judk 11y ago
Also the fact that the CEO/"founder" hasonly one year of college as relevant experience. She appears to be a pop star persona: a face to send to interviews to look cool in PR, fronting for the business machine in the back. And of course there was never any tech, just hopes they ride a hype was into winning Quest's contracts.

littletimmy 11y ago

Can someone point out to me what exactly it is that Theranos does? My understanding was that this company administers innovative ultra-small volume blood testing. Now they say that only works for the HSV-1 test (that nobody wants, and by some accounts already existed), and for the rest of the 240 tests they use normal lab procedure. What is the great innovation here? What is it that this company has been doing for 10 years? Why is it worth $10B?

TazeTSchnitzel 11y ago
It's not just these small vials of blood. They also make their own "revolutionary" testing equipment, which they used for dozens of tests. Except it turns out their equipment was giving quite badly inaccurate results, so they quietly switched to conventional machines. Ditto for the small blood vials.
- littletimmy 11y ago
  So it's a flop, basically? That's a pity. They should just come clean; people will respect them for it.
  - TazeTSchnitzel 11y ago
    It would be the honest thing to do, but I doubt it's the ideal for investors.

rayiner 11y ago

I hope the industry doesn't draw the wrong lessons from Theranos. Compliance isn't hard--the expertise is out there. But the process must be followed and that might mean moving more slowly. Which is okay because your competitors have to move more slowly too. What's interesting about Theranos is the hints that the technology may not be ready for prime time yet either. In which case moving more slowly, and taking that into account in the funding stages, is not just a reality of compliance but a reality of engineering. This stuff is hard, MVPs aren't enough, and successful ventures are going to take longer to yield a salable product than in other fields.

redwood 11y ago

I'm so cynical that I don't trust the FDA to not be looking out for established medical industry players. I'm not saying conspiratorial that this is all BS but rather that I'm surprised there isn't some more skepticism considering disruption of industries this big and regulated will never go easily. I understand that folks believe the cult of disruption has blinded everyone in this case and think that may well be true. still these issues highlighted by the FDA sounds to me like any scrappy startup which has to cut some corners. some of you will claim the sky is falling but I don't buy it. if there's nothing to their tech then they will indeed collapse but these papers are not enough to make that clear

apetresc 11y ago

I don't understand the intricacies of FDA approval so I might be confusing things here, but why is Theranos' front page currently claiming "Theranos Receives FDA Clearance"?