the allegations.
We knew that the battle was far from over and that Theranos and Boies would be coming at us hard in the following days and weeks. Whether my reporting stood up to their attacks would largely depend on what actions, if any, regulators took. Rumors had been circulating among former Theranos employees of an FDA inspection, but I hadn’t been able to confirm it by the time we went to press. I had called my source at the agency several times but hadn’t been able to reach him.
I decided to try him again that day before lunch. This time he picked up the phone. On deep background, he confirmed to me that the FDA had recently conducted a surprise inspection of Theranos’s facilities in Newark and Palo Alto. Dealing a severe blow to the company, the agency had declared its nanotainer an uncleared medical device and forbidden it from continuing to use it, he said.
He explained that the FDA had targeted the little tube because, as a medical device, it clearly fell under its jurisdiction and gave it the most solid legal cover to take action against the company. But the underlying reason for the inspection had been the poor clinical data Theranos had submitted to the agency in an effort to get it to approve its tests. When the inspectors had failed to find any better data on-site, the decision had been made to shut down the company’s finger-stick testing by taking away the nanotainer, he said. That wasn’t all: he said the Centers for Medicare and Medicaid Services had also just launched its own inspection of Theranos. He didn’t know whether it was still ongoing but was sure it spelled more trouble for the company. Mike and I discussed these revelations and quickly went to work on a follow-up story for the next day’s paper.
A few hours later, I was standing over the shoulder of the page-one editor who was handling my new story when Holmes’s face appeared on a nearby TV tuned to CNBC. We took a break from the edit and turned up the volume. Dressed in her usual all-black attire and sporting a strained smile, she played the role of the visionary Silicon Valley innovator who was being smeared by entrenched interests trying to thwart progress. “This is what happens when you work to change things,” she said. “First they think you’re crazy, then they fight you, and then all of a sudden you change the world.” But, when Jim Cramer asked her about specific elements of the article, such as the company’s use of third-party analyzers for most of its tests, she turned defensive and gave evasive and misleading answers.
I had sent Heather King an email earlier in the day to let her know I was working on a second story and to request a Theranos comment about the things I was going to report. King hadn’t replied. I now knew why: toward the end of her interview with Cramer, Holmes dropped mention of the nanotainer withdrawal and spun it as a voluntary decision. She was trying to get ahead of my scoop.
We quickly published my follow-up piece online. Setting the record straight, it revealed that the FDA had forced the company to stop testing blood drawn from patients’ fingers and declared its nanotainer an “unapproved medical device.” The story made the front page of the paper’s print edition the next morning, providing more fuel to what was now a full-blown scandal.
* * *
—
HOLMES WASN’T IN Palo Alto the day our first story was published. She was attending a meeting of Harvard Medical School’s board of fellows. She did her CNBC interview that evening from Boston. It wasn’t until the next day that she flew back to California to address the growing crisis.
Theranos had issued a second press release that morning that amounted to what we in the news business call a “nondenial denial.” “We are disappointed to see that The Wall Street Journal still can’t get its facts straight,” it began, before going on to admit that the company had “temporarily” withdrawn its little blood tubes in what it portrayed as a proactive move to seek FDA clearance for their use.
In the late afternoon, an email went out to all company employees instructing them to gather in the cafeteria of the Page Mill Road building for a meeting. Holmes wasn’t her usual well-put-together self. Her hair was disheveled from her travels and she wore glasses instead of contact lenses. Standing