Theranos, the Silicon Valley blood testing start-up, said on Wednesday it would close its laboratories and sack more than 40 per cent of its employees, as the company that promised to turn modern medicine upside down retreated following a year of damaging revelations.
Elizabeth Holmes, who founded Theranos in 2003 when she was 19 years old, used a short “open letter” to employees to announce the closure of the company’s labs and blood testing centres, resulting in the loss of 340 jobs.
“We are profoundly grateful to these team members, many of whom have devoted years to Theranos and our mission, for their commitment to our company and our guests,” Ms Holmes wrote in the letter.
When Theranos launched its blood-testing platform in 2013, the company won plaudits for its pledge to replace needles and venous draws with a tiny finger prick vial known as a “nanotainer”, which could purportedly generate accurate results from a few drops of blood.
Ms Holmes promised the nanotainer and the company’s proprietary blood testing machines would transform healthcare.
The tests would be so cheap and easy that consumers would have their blood tested every time they visited the drugstore or chemist, allowing them to uncover serious diseases such as cancer before it was too late, she said.
The promises generated suspicion in the medical community, but Theranos won many admirers among Silicon Valley investors who pumped hundreds of millions of dollars into the company and bestowed it with a peak valuation of $9bn.
Ms Holmes secured capital from the likes of Larry Ellison, the Oracle founder, and assembled a board of directors that read like a Who’s Who of the American establishment, with two former secretaries of state, Henry Kissinger and George Shultz.
However, this time last year it emerged the company had been experiencing serious problems with its patented technology, forcing it to conduct tests using machines that were widely available.
The revelations drew the attention of regulators and journalists.
The Financial Times reported that the director of the company’s main laboratory in California was a part-time dermatologist with no experience in the blood testing industry, while the company’s second facility in Arizona was run by someone without a medical degree.
Theranos also exaggerated its links with large pharmaceutical companies, claiming it had done internal blood testing for some of the world’s biggest drugmakers such as GlaxoSmithKline, which told the FT it could not “find any evidence that we’ve done business with them”.
Government inspectors swiftly concluded the company’s practices were putting patient lives at risk and banned Ms Holmes and another executive from the blood testing industry.
Walgreens, the US drugstore chain with which Theranos had a high-level partnership, responded by terminating their agreement in June, wiping out the majority of the company’s revenues.
The decision to shut the company’s facilities comes just two months after Ms Holmes tried to engineer a comeback by unveiling a new blood testing device, the miniLab, at a prestigious medical conference.
Ms Holmes’ appearance at the annual meeting of The American Association for Clinical Chemistry prompted a bout of infighting among the organisation’s members, some of whom levelled sharp criticism at the group’s president.
On Wednesday evening Ms Holmes said Theranos would “return our undivided attention to our miniLab platform”, and said the company still had “supporters and investors who believe deeply in our mission of affordable, less invasive lab testing”.
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