seen.
One thing is certain: the chances that people would have died from missed diagnoses or wrong medical treatments would have risen exponentially if the company had expanded its blood-testing services to Walgreens’s 8,134 other U.S. stores as it was on the cusp of doing when Pathology Blawg’s Adam Clapper reached out to me.
Epilogue
In the days after my first Journal article, Holmes defiantly asserted that she would publish clinical data from her blood-testing system to disprove my reporting. “Data is a powerful thing because it speaks for itself,” she said on October 26, 2015, at a conference hosted by the Cleveland Clinic. Two years and three months later, she finally delivered on that pledge: in January 2018, Theranos published a paper about the miniLab in the peer-reviewed scientific journal Bioengineering and Translational Medicine. The paper described the device’s components and inner workings and included some data purporting to show that it held its own when compared with FDA-approved machines. But there was one major catch: the blood Theranos had used in its study was drawn the old-fashioned way, with a needle in the arm. Holmes’s original premise—fast and accurate test results from just a drop or two pricked from a finger—was nowhere to be found in the paper.
A close read revealed other significant shortcomings. For one thing, the paper included data for only a few blood tests. And results for two of those tests, HDL cholesterol and LDL cholesterol, diverged from the FDA-approved machines by a margin that Theranos itself acknowledged “exceeds recommended limits.” The company also conceded that it had run the assays one at a time, belying Holmes’s previous claim that her technology could do dozens of tests simultaneously on one tiny blood sample. Last but not least, the tests performed had required different configurations of the miniLab because Theranos hadn’t yet figured out how to fit all the components into one box. All of this was a far cry from the revolutionary breakthrough Holmes had touted when Theranos launched its tests in Walgreens stores in the fall of 2013.
Holmes’s name was listed among the paper’s coauthors but Balwani’s was not. After their breakup and his departure from the company in the spring of 2016, Balwani seemed to have dropped off the face of the earth. Holmes had moved out of the 6,555-square-foot house he owned in Atherton (acquired for $9 million in 2013 through a limited liability company), and it wasn’t clear if he continued to live there. For a time, there was speculation among former Theranos employees that he had fled the country to elude federal investigators.
Those rumors were put to rest on the morning of March 6, 2017, when Tyler Shultz entered a conference room at the offices of Gibson, Dunn & Crutcher on Mission Street in San Francisco. Standing among the half dozen lawyers present to take his deposition in the Partner Fund litigation was the familiar diminutive figure with the angry scowl who had terrorized Theranos employees. Balwani was a named defendant in the lawsuit, so his presence was unusual and seemed to have but one purpose: to intimidate the witness. If that was indeed the goal, it didn’t work. Over the next eight and a half hours, Tyler focused on giving truthful answers to the questions he was asked and blocked out the silent presence of his irascible former boss at the other end of the conference table. Seven weeks later, Theranos settled the case for $43 million on the eve of Balwani’s own deposition. (Soon after, it settled the Walgreens lawsuit for more than $25 million.)
By late 2017, Theranos was running on fumes, having burned through most of the $900 million it raised from investors, much of it on legal expenses. Several rounds of layoffs had reduced the size of its workforce to fewer than 130 employees from a high of 800 in 2015. To save on rent, the company had moved all its remaining staff to the Newark facility across San Francisco Bay. The specter of a bankruptcy filing loomed. But a few days before Christmas, Holmes announced that she had secured a $100 million loan from a private-equity firm. The financial lifeline came with strict conditions: the loan was collateralized by Theranos’s patent portfolio and the company would have to meet certain product and operational milestones to get the money.
Less than three months later, the walls began closing in again: on March 14, 2018, the Securities and Exchange Commission charged Theranos, Holmes, and Balwani with conducting “an elaborate,