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Theranos CEO Elizabeth Holmes Banned From Owning a Lab (engadget.com)
An anonymous reader quotes a report from Engadget: The Wall Street Journal reports U.S. regulators have devised to ban the owners and operators of Theranos from running a lab for two years. That includes CEO and founder Elizabeth Holmes, as confirmed by a press release issued tonight. The Centers for Medicare and Medicaid Services (CMS) revoked the lab's Clinical Laboratory Improvement Amendments (CLIA) certificate and imposed a civil money penalty for an unspecified amount. The ban does not take effect for 60 days, however Theranos says it will not do any testing at the Newark, CA lab CMS investigated, and instead will serve customers from its lab in Arizona. Elizabeth Holmes wrote: "We accept full responsibility for the issues at our laboratory in Newark, California, and have already worked to undertake comprehensive remedial actions. Those actions include shutting down and subsequently rebuilding the Newark lab from the ground up, rebuilding quality systems, adding highly experienced leadership, personnel and experts, and implementing enhanced quality and training procedures. While we are disappointed by CMS' decision, we take these matters very seriously and are committed to fully resolving all outstanding issues with CMS and to demonstrating our dedication to the highest standards of quality and compliance."
But this is a problem I believe the markets and courts actually could handle.
Time is what keeps everything from happening all at once.
" While we are disappointed by CMS' decision,..."
If she had any sense of ethics, she would be grateful the CMS is doing its job of protecting the public from dishonest people like her. Why isn't she in jail for falsifying test results and endangering people's lives?
She's not sorry she did it, only that she got caught. Typically psychopathic behavior, Sadly she'll probably be successful someday, lying, cheating, and using people on her way up.
she'd be in prison, banned from ever using a computers.
Holmes is persona non-grata right now. She raised the money she did through family connections; her parents were both highly placed bureaucrats who knew top level folks which is why her Board was made up of politicians and why she still retained a majority stake despite all the funding. Her first real round of money came from Tim Draper of Draper Fischer Jurveston, who is a personal friend of her parents and the scuttlebutt says helped her next round of funding too, which included people like the Larry J Ellison Trust (around $20-$30M). Her big round of $400M was a mix of private equity money and Blue Cross Blue Shield Ventures, so insurance firms hoping her cheap tests would make testing more affordable; only BCBS Ventures has any real experience investing in biotech and even them it's from an insurance angle, not from an angle of real science.
However, she will not work in biotech again. The interesting thing is that all of her investors were not typical biotech investors, and the real biotech VC funds such as Lateral Ventures, Flagship, Polaris, Domain, New Leaf, funds that have experience investing in real science that creates real medical products, they all turned her down thinking she was a fraud. Miss Holmes got lucky when she got Theranos going as there was a wave of money entering biotech from non-traditional sources, mostly tech entrepreneurs looking for new places to put their money and thinking biotech was the next hot thing. Many of these investors dumped money into ideas that sounded great because they were neat technology, but unlike in software in biotech having the best tech does not guarantee you success, you also need to pass both the regulatory and the insurance reimbursement hurdles and those hurdles require a level of design sophistication and validation most in tech aren't used to. The result was many of these typical tech investors and entrepreneurs dumped a ton of money into ideas that had no chance of success based purely on charisma of the leader and the gee-whiz factor of the technology without truly understanding what they were getting into. The easy money from 2011-2015 for biotech from non-traditional sources is gone completely now, leaving the traditional investors standing and those guys won't touch her; reputation in biotech matters way too much and they won't want her anywhere near their companies.
No, Holmes is finished in Biotech. What I suspect is she will be on the Board of Theranos while a new CEO steps in, who will find the company a giant mess and essentially either wind it down or find some buyer to make the shareholders come out ok. Most of her shareholders likely hold preferred equity to Miss Holmes' common, meaning they get to divide up the money before she does and I doubt anything will be left over. Meanwhile she'll lay low for a few years and let the next big crisis make Theranos fade from memory, then she'll end up a partner and some venture fund investing in companies and make her essentially the next Ellen Pao.
What would she need to own a lab for? She never did any research to begin with?
Holmes is 100% pure corporate CEO/Board-member. She has connections, extraordinary bullshitting abilities, and is tied in to god knows how many VC and Silicon valley based "ventures". She doesn't need a lab, or scientists, or engineers. She hires the people who hire them.
Holmes will be back with a bio-med big-data startup within 3 years. Bookmark this post.
She's an interesting example of how far you can get with money, influence and a positive approach, in the absence of any real understanding of the details of the business you're in.
Maybe she can use the time off to finish college.