December 1, 2021 8:33 PM PST
Fortune CEO Alan Murray hosted a panel of diagnostics entrepreneurs at the Fortune Brainstorm Tech conference in Half Moon Bay, Calif, and quickly trotted out the elephant in the room: the on-going criminal fraud trial of Theranos founder Elizabeth Holmes and its possible chilling effect on the diagnostics industry.
Following extensive coverage by Fortune of Theranos’s early days and as the company failed to meet its lofty promises, Murray interviewed Holmes at the Fortune Global Forum in 2015. He showed a clip from the session on Wednesday in which Holmes would only say that the company needed “to do a better job of communicating” the science and the data behind its offerings. She admitted no wrongdoing.
A month after that interview, Murray wrote that Fortune contributed to “the hype” surrounding Theranos’s now-debunked claim that it could do comprehensive lab tests based on blood pulled from a single finger prick. Once valued at $9 billion, Theranos was shuttered in 2018 after the Centers for Medicare and Medicaid Services said its lab practices were deficient and could even pose immediate danger to patients’ health and safety. Later, federal prosecutors charged Holmes with fraud, saying that she misled investors, doctors, and patients about the company’s services. She’s pled not guilty.
With Fortune‘s mea culpa already offered up, Murray turned to the panelists—Bonnie Anderson, founder and executive chairwoman of Veracyte; Adam de la Zerda, founder and CEO of Visby Medical; Alec Ford, CEO of Karius; and Ashraf Hanna, CEO of Genalyte—to understand how the tarnished legacy of Holmes and Theranos is shaping companies that operate in the same diagnostic space.
Theranos has been “such a big story,” Murray said. “How has it affected your business? And what are the lessons your business needs to learn from it?”
The message across the board: “Evidence matters,” said Anderson. “Every patient on the other side of a test result could be you and the integrity of highly accurate results just couldn’t be overstated.”
Theranos has added layers of difficulty to running a diagnostic company, with some people “much more dubious of your data,” said Genalyte’s Hanna. His company has “resorted to shipping [their] machine out to third parties like the Mayo Clinic or Scripps [Clinic] and run it themselves and publish the results. We have to be more transparent.”
And developing diagnostics tools was already a challenge before Theranos.
“Diagnostics is hard enough. You have to first get the science right, the right way, submitted to the FDA or to whatever regulatory channels that are needed. And then only launch to patients once you know these things actually work,” said Visby’s de la Zerda.
The Theranos cloud may be shrouding the diagnostics field, but the panelists consider the episode an outlier in an industry that’s otherwise built on science and real evidence.
“I mean a lot of people look at the Elizabeth Holmes story as an allegory about Silicon Valley and the sort of fake-it-til-you-make-it mentality,” said Murray. “What I’m hearing from the four of you is that mentality has never been a part of the life sciences. You can’t do it.”
The response from all four: Absolutely not. Lives are at stake.