In September Elizabeth Holmes, the young CEO of Theranos, allowed or encouraged an interview with Joseph Rago of the Wall Street Journal. Holmes founded Theranos, a laboratory diagnostics company, in 2003. Since that time, little information about the company has been released to the press by its staffers and investors. In fact, the lid has been sealed from all prying eyes. This secretive stance has been either (1) an attempt to avoid the release of information to competitors or (2) a clever ploy to build intrigue and fascination with the company's ultimate products and services.
On the surface their plan is simple: commercialize a technology for rapidly carrying out biochemical assays based upon minute samples of blood. Conceptually, that's nothing new; that's what point-of-care diagnostics is all about. Here's what is new:
- A tiny finger-stick sample (volume unspecified)
- An extensive analyte menu (hundreds of assays)
- Claimed better analytical performance
- Two-hour turnaround time
- Published test prices lower than generally reimbursed amounts
- A planned relationship with Walgreens to carry out testing at drugstore outlets
The game-changing feature (sorry about that) is this concept of "retail" in vitro diagnostics, something very different from the status quo and a clear potential threat to the existing providers of lab services and products and driver of a potentially new relationship between patient and healthcare provider.
I'm also struck by the leadership of this company: Ms. Holmes is 29 years old (not that there's anything wrong with that), and her board of directors includes Henry Kissinger, George Shultz, Sam Nunn and retired four-star general James Mattis. What's with the diplomats and DOD types? And where is the business acumen?
The intended business model of Theranos is certainly not clear. For example, it's important to recognize and adapt to the logistics of getting from patient sample to reported result. And what about the huge installed base of analytical systems currently in place within hospital and commercial labs? Will that installed base suddenly have zero value? What will be its replacement cost? Can Walgreens afford the investment? Then there's the criticality of molecular diagnostics. Can Theranos run those complex assays?
This is a very intriguing story. Maybe it will turn out to be all sizzle and no steak - the big-lab firms had better hope so. Or maybe it's the real deal and societal healthcare costs are in for a welcome reduction.
You can read the WSJ piece here and read the sparse Theranos self-description at their web site. Let's see what the IVD-savvy blogosphere has to say about this mystery.
