Theranos, The Trial of Elizabeth Holmes, ch. 13: a crescendo of ‘I don’t knows’ and ‘I don’t remembers’…and the defense rests! (updated)

December 8, 2021 | by

Elizabeth Holmes returned to the stand in her own defense today, continuing with cross-examination by the prosecution’s Robert Leach. From the coverage published so far of six hours of questioning, Holmes has done everything to deny key statements she made multiple times to writers and investors, just short of ‘taking the Fifth’ (Amendment, which is a Constitutional guard against self-incrimination). 

Starting with the now-infamous 2014 Fortune cover story authored by Roger Parloff, Holmes admitted to Leach that the claim of 200 tests using the equally infamous nanotainers was incorrect, but used what marketers call ‘weasel words’: “I believe that now.” Did she not believe that then? She then proceeded not to remember that she forwarded the article via email to investors on 12 June 2014. “I think I could have handled those communications differently.” 

More not knowing or remembering. Were Theranos labs being used on military medevacs, as witnesses from Walgreens and Safeway, among others, have testified? Was Walgreens told of difficulties with the Theranos labs? Did or didn’t she dismiss concerns raised by Erika Cheung and Tyler Shultz to John Carreyrou of the WSJ as coming from disgruntled employees? Did she present a 2015 revenue projection of nearly $1 billion to investors, especially as the internal estimate was much lower and there were no contracts with pharma companies? Did she listen to her lab directors about problems with the tests?

But regrets, she had a few. The WSJ investigation, for instance. And slapping pharma company logos on Theranos reports.

It all comes down to who the jury believes. The prosecution either will close today or tomorrow (Wednesday). The defense will return to wrap up, either with Holmes or with expert witnesses such as Mindy Mechanic and, possibly, others. The defense will return to the 3 Ds–diffusion, deflection, and diminished capacity. The luridly resonant theme of Sunny Balwani as an abusive Svengali, which led her to be not in control of herself even after he departed, will be the coda. The Guardian, CNBC

Wednesday Update. Boy, was your Editor wrong. The defense rested today (Wednesday).

  • Dr. Mindy Mechanic, the defense’ expert on relationship violence, will not be testifying about the nature of the Balwani-Holmes relationship. By not calling Dr. Mechanic, the prosecution cannot call their psychiatrists who also spoke with the defendants. For his part, Balwani has consistently defended himself from these charges of relationship abuse. The prosecution is also seeking to strike Holmes’ testimony of being sexually assaulted while a freshman at Stanford as now being irrelevant to the case, but it is hard for a jury to unhear it.
  • Holmes was, of course, the star witness in her own defense, joined in minor roles by paralegal Trent Middleton from Williams & Connolly, Holmes’ law firm, who summarized evidence in the case, then former Theranos board member Fabrizio Bonanni, who testified that Holmes attempted to remedy Theranos’ problems–but only after it came under regulatory scrutiny, which was late in the game. He had been offered the COO position but declined as ‘too old for that’.
  • Holmes returned in her final testimony to Balwani. Sunny, she said, was her most important advisor though she was, admittedly, the decision-maker. He was volatile. She “tried not to ignite” Balwani in emails and frequent texts. “Sunny would often blow off steam or vent through text,” Holmes said. “I was trying to be supportive.”
  • Returning to tugging on the heartstrings of the four women on the jury, she stated that breaking up with him was a ‘process’. He’d just show up at places she would go, like church and The Dish near Stanford. 
  • Holmes explicitly denied ever trying to mislead investors, Her own summary was restating her original ‘healthcare vision’ and the impact the company would make on healthcare.

Summaries by the prosecution and defense will be next up. Mercury News (partial paywall), CNBC

To be continued…

TTA’s earlier coverage: Chapter 12, Chapter 11, Chapter 10, Chapter 9, Chapter 8, Chapter 7, Chapter 6, Chapter 5, Chapter 4 (w/comment from Malcolm Fisk), Chapter 3, Chapter 2, Chapter 1

Theranos, The Trial of Elizabeth Holmes, ch. 12: all bucks stop with the CEO (updated)

December 2, 2021 | by

Tuesday was the last day this week of Elizabeth Holmes’ cross-examination by Federal prosecutors. Despite Monday’s excursion by the defense into how emotional and physical abuse by her live-in partner and corporate president could have warped her business judgment (a ‘me-too’ variation on the infamous Twinkie Defense relating to diminished capacity), and perhaps concealed from her the depth of Theranos’ problems, the cross-examination returned to the essentials. Who was the boss? Assistant US Attorney Robert Leach drew from her this: “Ultimately all roads led to the CEO?” “Yes,” she replied. “The buck stops with you.“ “I felt that.” 

The prosecution was highly effective in drawing out of her how Holmes controlled the company, and despite her claims of not knowing its finances, she knew what to say to round up funding. This countered the emotional drama of the prior day around ‘Svengali’ Balwani’s abuse and controlling actions. Holmes confirmed that she was the New Elizabeth in her hands-on role in altering pharma company reports, marketing materials, investor presentations, knowing their financials–and trying to kill unfavorable stories:

  • She added logos to Theranos’ pharma reports about partnerships with Pfizer and Schering-Plough to make it appear that the documents came from them. Add to these an altered analysis that came from GlaxoSmithKline (GSK), where Holmes admitted adding a logo but couldn’t recall deleting the conclusion “finger prick/blood draw procedure was difficult (needed larger lancet and better syringe system).”
  • She hired lawyers to review the Theranos website for claims at the time of the Walgreens launch in 2013. The language drew quite the critical eye for its language in their report to her. Our Readers will recognize these walk-backs on superiority claims: replacing “highest quality” with “high quality,” “highest levels of accuracy” with “high levels of accuracy,” and “more precise” to “precise.” Claims made needed to be substantiated. It’s not clear from the articles whether these were made.
  • Where walk-backs on these claims were most certainly not made were the investor presentations, including not disclosing that most testing was done on third-party machines, leaving the impression that Theranos labs were capable of running 1,000 tests.
  • Texts between Balwani and Holmes confirmed she knew that Theranos was in critical financial shape throughout 2013, burning through funding like tinder. 2014 was ‘fake till you make it’ time with sunny (sic) revenue projections–convincing to PFM Management and the DeVos family office, kicking in funds totaling close to $200 million, and then a cascade of funds following them. All of whom should have known better, admittedly.

In 2015, Holmes went directly to one of her investors, Rupert Murdoch, CEO of News Corporation and owner of the Wall Street Journal, to have John Carreyrou’s investigative reports killed. To Murdoch’s great credit, not only did the stories run, but also Carreyrou was legally defended against the mad-dog attorneys of Boies Schiller snapping at his heels. Boies Schiller also harassed and tracked former employees-turned-whistleblowers Erika Cheung and Tyler Shultz. Holmes also approved hiring the killer ‘oppo’ research of Fusion GPS. The latter became infamous a year later in sourcing and promoting now-debunked ‘evidence’ of Russian ties to then-candidate Donald Trump.

To counter the rising tide of negative news, Holmes went on CNBC’s ‘Mad Money’, hosted by, in this Editor’s opinion, the ever-credulous, often unhinged, and in recent years de trop Jim Cramer, and bald-face lied that “Every test we run on our laboratory can run on our proprietary devices.”–when only 12 did, not even the 15 Carreyrou documented.

It isn’t known yet whether Holmes will return to the stand next week for more cross-examination or a rebuttal by the defense. What is most likely is that the defense will continue with the themes of diffusion and deflection, creating cognitive dissonance in the jurors’ minds that while Holmes acted in control and committed fraudulent acts, Balwani had so thoroughly emotionally abused her that she was not in control of herself even after he departed. Look for expert testimony from Mindy Mechanic, an expert on intimate partner violence and abuse, to show that words of ‘love’ in 500-odd texts isn’t love at all. (Cue ‘What’s Love Got To Do With It’)

The Verge, CNBC, Yahoo Finance, Ars Technica

Updated: Theranos junkies (Judge Davila’s pronunciation of which is the subject of an entire Mercury News article) may want to follow John Carreyrou’s podcast, epically titled Bad Blood: The Final Chapter. He’s up to 11 episodes and close to 11 hours, so if you think your Editor is focused on this…it’s a deep dive indeed from the reporter who found that Theranos should have been spelled with an F for Fake. The link here is to the ThreeUncannyFour player, but Sony Media has made it available on other podcast platforms such as Spotify.

To be continued…

TTA’s earlier coverage: Chapter 11, Chapter 10, Chapter 9, Chapter 8, Chapter 7, Chapter 6, Chapter 5, Chapter 4 (w/comment from Malcolm Fisk), Chapter 3, Chapter 2, Chapter 1

 

Theranos, The Trial of Elizabeth Holmes: ch. 1

October 1, 2021 | by

“The company believed more about PR and fundraising than about patient care”, from Tuesday’s testimony by former lab director Adam Rosendorff, could be the prosecution’s strategy in the proverbial nutshell. Mr. Rosendorff, who quit in November 2014 after a long struggle to get Ms. Holmes and Theranos management to address persistent problems in patient lab results and to implement a legally required verification process, was a witness for the prosecution. The defense tried to paint his testimony in cross-examination as inconsistent and self-serving in accounts of Ms. Holmes’ state in hearing concerns about three particular blood tests, the launch date of public blood tests, proficiency tests versus ‘precision tests’, when the California Department of Public Health audited the lab, and exactly why he quit Theranos 18 months after hire. The questioning twice grew so heated that District Circuit Court Judge Edward Davila deemed it inappropriately argumentative. One example from Lance Wade to Mr. Rosendorff was that supervising quality control tests and making sure laws were followed was “why you get the big bucks, right?” “Not as big bucks as you get paid,” Mr. Rosendorff replied. Mr. Rosendorff did get caught up in an email trail and on narrowing the proficiency testing to FDA-approved devices versus the Edison labs. The cross and the bickering went on into Friday and probably will resume on Tuesday next week (@doratki).

Also on Tuesday was brief testimony from Celgene manager Victoria Sung, who drew a picture of more Theranos fabrications around how pharmaceutical companies (Celgene owned by Bristol Myers-Squibb) had not  “comprehensively validated” Theranos technology. 2012 results showed that Theranos labs performed “out of range” versus standard tests, and other tests were not run. Last week, Theranos employee Surekha Gangakhedkar in her testimony stated that she did not think GSK’s report validated Theranos’ tests. Mercury News, The Verge

Today, John Carreyrou, who broke la scandale Theranos in The Wall Street Journal and authored the book Bad Blood, filed a motion to stop being barred from court. Cleverly, La Holmes’ defense put him on the witness list but not subpoenaed him. Being on the witness list, however, means he cannot attend any part of the trial or publicly discuss his testimony, if given, without permission from Judge Davila. “Placing Carreyrou on the witness list was done in bad faith and was designed to harass him,” the motion claimed, calling his placement on the list “a cynical ruse” that violates the First Amendment. Also cited in the motion were the company chant about him and various text messages between Ms. Holmes and Sunny Balwani. Mercury News  Mr. Carreyrou and six years before the Theranos mast, interviewed in The Verge in an interview that diverges fascinatingly into the psychiatric drives of the players….

And earlier in September (Wednesday 22nd), General James Mattis, Ret. testified about how he initially wanted to pilot the Theranos labs on ships and remote locations, where space and swiftness are at a premium. The Verge article does take liberties in the psychology between the two (bachelor general, young female CEO), including his joining the board after retirement, sticking around despite his growing doubts until he was named secretary of defense in 2016. The defense drew out that he was confused about his compensation package ($150,000 per year plus a stock option purchase).

The Mercury News (which has a minimum of free articles before the paywall goes up, the WSJ (paywalled), local TV KRON4, The Verge, and CNBC have been covering the past weeks of the trial. Dorothy Atkins of @Law360 is also tweeting in real time on it (@doratki).

To be continued….

The Theranos Story, ch. 59: there’s life left in the corporate corpse–patents! And no trial date in sight.

April 25, 2019 | by

You can get blood out of this. Really! The US Patent and Trademark Office (USPTO) awarded five–count ’em, five!–patents to Theranos in March and April. All of them were filed between 2015 and 2016, when the whispers of fraud were getting louder, as were the legal threats.

The five patents are:

1. Systems, devices, and methods for bodily fluid sample collection, transport, and handling
2. Systems, devices, and methods for bodily fluid sample transport
3. Systems and methods for sample preparation using sonication
4. Systems and methods for sample preparation using sonication (cell disruption)
5. Rapid measurement of formed blood component sedimentation rate from small sample volumes

The CB Insights Research article has the details on what they cover, including patent application illustrations. It’s not stated, but looking back to TTA’s many articles, in this Editor’s judgment, the heir to these patents cannot be Elizabeth Holmes or her many investors now feeling the lint in their pockets, but the company holding the last note, the $65 million (not $100 million) loan from Fortress Investment Group LLC, part of Japan’s SoftBank Group [TTA 28 Dec 17]–collateralized by the portfolio of over 70 patents. Hat tip to HISTalk 19 April

If you hunger for a deep dive into the design of Theranos’ blood analyzers that never really worked, and can appreciate that the miniLab was what “one expert in laboratory medicine called “theater … not science”, this Design World article is for you: Schadenfreude for Theranos — and satisfaction in how engineering doesn’t lie

Meanwhile, back in the US District Court in San Jose, California, we learn that the trial of Ms. Holmes (now engaged to William “Billy” Evans, a 27-year-old heir to the Evans Hotel Group, which has three West Coast resort properties and who is also a techie) and former Theranos president Ramesh ‘Sunny’ Balwani has been delayed indefinitely. Originally reported to be summer entertainment with a start date of 8 July, the judge set the next status conference for the case for 1 July, but refused to set a trial date, which means that the trial may not begin till next year. According to the San Jose Mercury News, the defense is seeking materials from the FDA and CMS, which are, according to defense lawyer, lawyer Kevin Downey, are “in many instances exculpatory.”

Ms. Holmes’ lawyers are also seeking information on the communications between John Carreyrou of the Wall Street Journal, the FDA, and CMS. In a motion filed last week, they accused Mr. Carreyrou under the guise of investigative journalism of “exerting influence on the regulatory process in a way that appears to have warped the agencies’ focus on the company and possibly biased the agencies’ findings against it.” Stat

The bubbly Ms. Holmes and Not-So-Sunny Balwani are facing Federal charges of two counts of conspiracy to commit wire fraud and nine counts of wire fraud. They each face a maximum of 20 years in prison and up to $2.7 million in fines.

The Theranos Story, ch. 57: was it Silicon Valley and Startup Culture bad practices pushed to the max?

October 4, 2018 | by
[grow_thumb image=”https://telecareaware.com/wp-content/uploads/2018/07/Rock-1-crop-2.jpg” thumb_width=”125″ /]Theranos is now formally in California insolvency proceedings (note on their website). Creditors may have enough awarded to them to go down to the local pizzeria to buy a slice or two. Hard lessons indeed for creditors and shareholders. But aside from the drama yet to come in the trial of Elizabeth Holmes and Sunny now Shady Balwani, a/k/a the Silicon Valley Trial of the Century, are there any further lessons to be learned?

For those of us who have not been closely following The Theranos Story, David Shaywitz’s kind-of-review of John Carreyrou’s Bad Blood coupled with a thought piece in Forbes is especially appealing. Even if you’ve been tracking it closely like your Editor, it’s a good read. He posits that in three key areas, Theranos exhibited Startup Culture and Silicon Valley Ethics (or lack thereof) at the very extreme in these areas:

  • Secrecy: extreme compartmentalization, siloing, stratification, and rigid definition of roles that prevent information sharing. No outsiders in, or peer-reviewed research out.
  • Promises, promises, promises: a rosy picture to the point of delusion that masks real flaws
  • I Want To Believe: for various personal reasons, investors, press, and supports need to believe

Secrecy can and should work for companies in keeping proprietary information and competitive advantage intact. All startup and early-stage companies have to paint a positive picture in the midst of pitched struggle. The glass is always half full not empty even when the bank account is, but when the old ‘fake it till you make it’ becomes too strong, papering over the truth is the thing and the institutional absence of tough self-scrutiny (or a professional kicker-of-holes) prevents companies from fixing obvious problems–you get a delusional organization like Theranos edging gradually, then very quickly, into outright fraud. Finally, Theranos’ supporters had their own reasons for wanting to believe the technology worked. 

He goes on to state that the fraud that Theranos perpetrated was not only financial and in harm to health, but also in the hope that change is possible in healthcare delivery, we can challenge the way it’s always been done and win, and that technology can be empowering.

Will we, as a result, in Mr. Shaywitz’s words, take the ‘hit to hope’ to heart and become ‘excessively chastened and overcautious”? This Editor tends to be on the overcautious side when it comes to technologies such as IoT and AI because the potential for hacking and bad use is proven despite the hype, but far less so in challenging incumbents–even it it resembles tilting at windmills till they buy you.   

Will l’affaire Theranos change the Silicon Valley and Startup Culture for the better? Here is my ‘hit to hope’–that this excessively aggressive, conformist, borderline irresponsible, and secretive culture could change. This Editor doubts it’s even entered their leaders’ ‘deep’ thoughts, despite this best-selling book.

A more typical review of ‘Bad Blood’ is by Eric Topol, MD (!) in Nature–who certainly borrowed ‘The Theranos Story’ from this series of articles!

The Theranos Story, ch. 52: How Elizabeth Holmes became ‘healthcare’s most reviled’–HISTalk’s review of ‘Bad Blood’

July 5, 2018 | by
[grow_thumb image=”https://telecareaware.com/wp-content/uploads/2018/07/holmes-barbie-doll-1.jpg” thumb_width=”125″ /]A Must Read, even if you don’t have time for the book. During the brief Independence Day holiday, this Editor caught up with HISTalk’s review of John Carreyrou’s ‘Bad Blood’, his evisceration of the Fraud That Was Theranos and The Utter Fraud That Is Elizabeth Holmes. Even if you’ve read the book, it’s both a lively recounting of how the scam developed and the willingness–nay, eagerness!–of supposedly savvy people and companies to be duped. The reviewer also reveals that Mr. Carreyrou wasn’t the first to raise questions about Theranos after raves in the press and kudos from the prestigious likes of Eric Topol. Mr. Carreyrou’s first article was in October 2015 [TTA 16 Oct 15] whereas Kevin Loria wrote the first exposé in Business Insider on 25 April 15 which raised all the fundamental questions which Theranos spun, hyped, or otherwise ignored–and Mr. Carreyrou eventually answered. (Our blow by blow, from him and other sources, is here.)

The review also picks out from the book the scabrous bits of Ms. Holmes’ delusions; her makeover to become the blond Aryan female Steve Jobs mit Margaret Keane-ish waif eyes–something she took far too literally; the affair between her and Sunny Balwani, certainly in violation of the usual ethics–and her Hitler in the Bunker, April ’45 behavior as Theranos collapsed around her. 

The review concludes by telling the healthcare community something we need said plainly, often, and written in 50-foot letters:

Theranos is a good reminder to healthcare dabblers. Your customer is the patient, not your investors or partners. You can’t just throw product at the wall and see what sticks when your technology is used to diagnose, treat, or manage disease. Your inevitable mistakes could kill someone. Your startup hubris isn’t welcome here and it will be recalled with great glee when you slink away with tail between legs. Have your self-proclaimed innovation and disruption reviewed by someone who knows what they’re talking about before trotting out your hockey-stick growth chart. And investors, company board members, and government officials, you might be the only thing standing between a patient in need and glitzy, profitable technology that might kill them even as a high-powered founder and an army of lawyers try to make you look the other way.

In other words, what you (the innovator, the investor) is holding is not a patient’s watch, it could be his heart, lungs, or pancreas. (Musical interlude: ‘Be Careful, It’s My Heart’)

The Theranos Effect is real in terms of investment in small companies out there on the ‘bleeding edge’. The cooling is mostly salutory, and we’ve been seeing it since late last year (see here). But…will we remember after it wears off, after the fines are collected, the prison time is served?

The Theranos Story, ch. 50: DOJ indicts Holmes, Balwani for fraud (updated)

June 16, 2018 | by
[grow_thumb image=”https://telecareaware.com/wp-content/uploads/2016/11/jacobs-well-texas-woe1.jpg” thumb_width=”150″ /]The other shoe drops into this bottomless well. If Elizabeth Holmes and Sunny Balwani thought that the March SEC action [TTA 15 Mar] would be it, they were misinformed. Today, the Department of Justice, US Attorney’s Office for the Northern District of California, charged them with two counts of conspiracy to commit wire fraud and nine counts of wire fraud. According to CNBC, they were arraigned in US District Court in San Jose Friday morning. Both were released on $500,000 bond each and ordered to surrender their passports. Holmes’ parents appeared with her in court.

If found guilty, both Ms. Holmes and Mr. Balwani face up to 20 years in prison, plus $250,000 in fines and clawing back of investor funds. 

“Wire fraud” in US law is fraud that is enabled and takes place over phone lines or involves electronic communications. By appearing online, making phone calls, emailing materials such as marketing materials, statements to the media, financial statements, models, and other information, Ms. Holmes and Mr. Balwani defrauded potential investors. Patients and doctors were defrauded by ads and other types of solicitations to use Theranos’ blood testing services at Walgreens, despite the fact that they knew the test results were unreliable.

Both Ms. Holmes and Mr. Balwani will have plenty of time to explain their sincere belief that their test devices and methods would be validated with time…but they had to, in Silicon Valley parlance, fake it till they made it. Indictments of this type take about two years to conclude, especially if they are big (as a formerly $9 bn valued company is) and tangled. Ms. Holmes will undoubtedly release statements on how she is being martyred like Saint Joan, how this doesn’t happen to men in Silicon Valley, and that they are allowed to fail but she can’t. Perhaps she was under the spell of the 19 years-her-senior Svengali Balwani. (Minus the Jobsian black turtlenecks, one anticipates her next choice of wardrobe. Sackcloth tied with a rope? Chain mail?)

Expect the doors to shut soon. Fortress Investment Group, which loaned Theranos $65 million (of a reported $100 million) in December 2017, was reportedly coming for the assets (as they are wont to do) by the end of July, according to the Wall Street Journal and other sources. 

Ms. Holmes is–finally–removed as CEO. Theranos announced that David Taylor, the company’s general counsel, has been appointed CEO as well as general counsel, while Ms. Holmes will remain as founder and board chair. None of this is reflected on their website. In fact, Mr. Taylor is nowhere to be found on the website’s leadership page. 

The estimable John Carreyrou, who broke the story in the WSJ and is the author of Bad Blood [TTA 13 June], on The Street’s Technically Speaking podcast at 06:00 shared this insight on how Theranos got away with bad tests. While both FDA and CMS highly regulate lab testing and the machines that perform them, neither actively police “lab-developed tests, which refer to tests fashioned with their own methods and devices” for blood testing. Basically, according to Mr. Carreyrou, Holmes and Balwani, our Bonnie and Clyde, “drove a truck right thru that loophole and took advantage of it.” Far beyond B&C, $1 bn of investors’ money is the Federal Reserve of banks.

On the indictment: WSJ, CNBC. The Northern District release on the indictment is here. Another essay by Mr. Carreyrou published 18 May is available to those who can get past the paywall. Hat tip to Bill Oravecz of WTO Consultants.

Updated: For additional coverage of what’s next in the legal vein for Holmes and Balwani, see the NY Times on potential defense strategies for the duo, including that they truly believed what they were saying to investors was true and they were bamboozled like everyone else, ‘materiality’–that investors didn’t use the statements as a basis for investing, and ‘prove it’. Will they take a plea deal? Stay tuned. 

The Theranos Story, ch. 34: It’s a conspiracy! It’s a vendetta!

January 20, 2017 | by
[grow_thumb image=”https://telecareaware.com/wp-content/uploads/2016/11/jacobs-well-texas-woe1.jpg” thumb_width=”150″ /]Updated Well, that is what one of her major investors says, and he would know! Just when we thought that a week would go by with not a peep about Theranos, we get three. Peeps, that is.

First, the Conspiracy Theory. This is being propounded by early Theranos investor Tim Draper of Silicon Valley VC Draper Fisher Jurvetson. It was all John Carreyrou’s ‘strange vendetta’ against her, to wit: “Elizabeth is the victim of a witch hunt.” The Wall Street Journal reporter set off a cascade of press coverage that compelled, nay, forced Federal regulators (FDA, CMS, SEC, DOJ) and state counterparts to go after Theranos and CEO Elizabeth Holmes. Mr Draper bluntly accused Mr Carreyrou of doing it for money; “the guy is getting $4 million to continue this charade”, referring to the advance on his book proposal “Bad Blood”. The most nauseating part of the Ars Technica interview is this mock-libertarian rejoinder from Mr Draper: “It’s the press creating a series of events that negatively impact technology, progress and our economy.”

So it was all a mistake, an illusion–there was nothing significantly wrong with the Edison Lab, or Theranos’ business practices! (Hat tip to Bill Oravecz of Stone Health Innovations)

Mr Draper perhaps did not consider that Mr Carreyrou’s reporting blew up the $100 million investment of the WSJ‘s owner, Rupert Murdoch (Ch. 27), not just DFJ’s. And Safeway, Walgreens, Larry Ellison, Cox Enterprises, Bechtel Group….

Second, the belated reporting of deficiencies at the Scottsdale lab found by CMS (Centers for Medicare and Medicaid Services) on 29 September. According to the Wall Street Journal report (co-authored by Mr Carreyrou), “Theranos responded to the inspection findings in Arizona with a plan to correct its lab deficiencies, but the lab regulator in November rejected the plan and proposed sanctions for the Arizona lab as well.”  This preceded the closing of all labs and the ‘refocusing’ of Theranos on the miniLab. Their general counsel stated, “After months of careful consideration, and prior to CMS’s unannounced inspection in Arizona, Theranos decided to close its laboratories.” Usually, these CMS reports are issued after 90 days. Theranos is appealing the sanctions arising from the California lab inspection with an administrative law judge, which include lab license revocation and a two-year ban on Ms Holmes from blood-testing operations.

Third, Theranos announced an eight-person Technology Advisory Board (TAB) to be led by Dr. Channing Robertson and Howie Rosen. The academics, executives, and entrepreneurs will be charged with “reviewing specific Theranos technology initiatives associated with product development, design and deployment” as well as four other mandates. Analogies concerning horses, roads and the status of barn doors come to mind. Release.

And finally another Theranos Washington connection, besides new SecDef and ‘Warrior Monk’ James Mattis, now an alumnus. It seems that the vetting of Betsy DeVos, nominee for Secretary of the Department of Education, uncovered that she has an investment in Theranos of more than $1 million. However, the Office of Government Ethics also reported her whopping earnings of less than $201. Since others like Rupert Murdoch, Bechtel, Walgreens, Cox, and others ponied up $50 to $100 million, hers is a mere bag of shells by comparison. MedCityNews, who has dubbed it the ‘As Theranos Turns’ soap opera. Hat tip to Bill Oravecz of Stone Health Innovations.

See here for the 33 previous TTA chapters in this Continuing, Consistently Amazing Saga, including Arizona’s lawyering up for a prospective Theranos lawsuit (Ch. 33) the firing of 155 remaining staff (Ch. 32), the resignation of now-DOD Secretary General Mattis from the BOD (Ch. 31), and Theranos’ annus horribilis (Ch. 30).

Rock Health announces its Top 50 in digital health (US)

December 6, 2016 | by

This Editor observes that digital health is at the state of maturity (so to speak) where entities assemble a Top 50 list and host a dinner to pass out awards. Rock Health, Fenwick & West, Goldman Sachs and Square 1 Bank cast a wide net from investment to startups in their just-released list. (Of course there will be a glitzy dinner, soon, at the kickoff of the JP Morgan Healthcare Conference, 9 – 12 January 2017 in San Francisco. Want an invite?)

Of great delight is an award to John Carreyrou of the Wall Street Journal as Reporter of the Year for his investigative work on Theranos. Other highlights are Validic (clinical/wellness data integrator) as Fastest Growing Company, Evolent Health for Best Performing IPO and BSX Technologies‘ LVL hydration monitor as Crowdfunding Hero (having raised $1.1 million when goal was $50,000). Rock Health website

What is increasingly curious to this Editor is that digital health companies, in nearly all cases, aren’t crossing borders and oceans. Every one seems to stick and be unique to its own country of origin, creatures of their own unique petri dish.

Also in other Rock Health news, having evolved a position as a venture fund/business support provider, they have added to their list of prominent partners kidney care and medical group operator DaVita. Rock Health release.