Attorney predicts Theranos will not survive reduction in business services

By Deb Rogers | Oct 21, 2016

PHOENIX -- A California company that claimed it could diagnosis diseases without invasive testing likely will soon cease operating at least some of its business services.

PHOENIX -- A California company that claimed it could diagnosis diseases without invasive testing likely will soon cease operating at least some of its business services.

“I would think it would be a tough spot for them to operate right now, given what I know of their reputation,” Robert Carey, attorney with Hagens Berman Sobol Shapiro LLP in Phoenix, Arizona, told the Northern California Record.

Theranos CEO Elizabeth Holmes announced on Oct. 5 that the company, which is based in Palo Alto, California, is closing clinical labs and wellness centers, impacting 340 employees in Arizona, California and Pennsylvania.

“We will return our undivided attention to our miniLab platform. Our ultimate goal is to commercialize miniaturized, automated laboratories capable of small-volume sample testing, with an emphasis on vulnerable patient populations, including oncology, pediatrics and intensive care,” Holmes said in a statement.

Carey said he doubts that Theranos can recover, even with the layoffs and lab closings. The move leaves the company with only research and product development.

“I think it’s an interesting strategy. I don’t know where it’s going to go. They just seem to have lost credibility with me,” he said. “Starting over will be very hard to do.”

Theranos entered the medical scene in 2003, with Holmes claiming that the company had developed a test where diseases could be diagnosed from one drop of blood, instead of vials and a needle.

“I think it’s pretty clear that they didn’t have what they said they had,” Carey said. “You didn’t get what you were promised.”

Clients were told one pinprick could diagnosis diseases. But, Carey said, that didn’t happen.

“The bulk of their tests were done on conventional machines and in a conventional manner,” he said.

Theranos is facing a “spectrum” of problems including ones with the government, intellectual property and lawsuits, Carey said.

Arizona, he said, was unique in that direct testing was offered. Patients could go to a pharmacy and get a blood test without doctor’s orders.

“It’s a pretty good case and it’s going to have to get resolved,” he said.

Carey handles class-action lawsuits against different types of organizations and companies. He has served as lead counsel in cases such as the LifeLock sales and marketing litigation, Hyundai Motor America’s cases on sub-frame corrosion and airbag systems and the state of Arizona’s claim against McKesson Corp. for overcharging consumers buying prescription drugs.

Hagens Berman Sobol Shapiro LLP is also investigating Theranos for potential violations of securities laws.

Theranos officials and an attorney representing the company were not returned last week.

According to the Theranos website, Holmes left Stanford University's school of engineering in 2003 to build Theranos around her belief that access to health information is a basic human right.

Technological innovations at Theranos, the website said, have made it possible to quickly process a range of laboratory tests from smaller samples. Since opening its wellness centers in late 2013, Theranos has processed more than 6.1 million tests and worked with approximately 9,000 physicians.

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