In Wake of Controversies, Theranos to Shake Up its Board of Directors

October 29, 2015
By Alex Keown, BioSpace.com Breaking News Staff

PALO ALTO, Calif. – As Theranos continues its ground game to restore its image after several scathing reports about the legitimacy of its blood testing methods, the company is shaking up the size of its board of directors by eliminating members including Henry Kissenger and George Schultz, the New York Times reported this morning.

Additionally, the Times reported the Theranos board will issue a statement in support of company founder and chief executive officer Elizabeth Holmes, the youngest self-made billionaire. The statement, cited by The Times, says: "We stand wholeheartedly behind the management, achievements, vision and commitment of this company."

Theranos has been under fire over its finger-prick blood tests, which the company says could be used to perform a variety of medical tests and be conducted cheaper and faster. In addition to its testing methods, some have criticized Theranos’ board for a lack of members with an expertise in medical testing and included retired political and military representatives. The Times reported Theranos has reduced its board of directors from 12 to five members and renamed it the board of governors. Those former board members such as Kissenger and Schultz will now serve on a “board of counselors” to provide advice to the board.

The members of the Theranos board of governors now include Holmes, Sunny Balwani the company’s chief operating officer; Riley Bechtel a construction executive; James Mattis, a retired Marine Corps general and David Boies, the company’s legal adviser, the Times reported.

This week the U.S. Food and Drug Administration (FDA) called Theranos’ proprietary Nanotainer tubes an uncleared medical device in inspection reports released Tuesday night. The FDA said Theranos’ Nanotainer blood specimen tubes are not properly filed as a Class II medical device, but are instead being identified as a Class I medical exempt device. As a result, the FDA said Theranos is “currently shipping this uncleared medical device in interstate commerce between California, Arizona and Pennsylvania.” Theranos, a $9 billion company, received inspections from the FDA between Aug. 25 and Sept. 16 of this year. Following the visits, federal regulators provided the company with Form 483s, which notifies the company of any problems investigators may have found. In total, the FDA listed 13 different concerns.

On its website, Theranos published a response to FDA reports, saying the company has for several years been transitioning from CLIA laboratory guidelines to FDA guidelines. Theranos said it sought FDA guidance for its lab structure and has been working closely with regulators for clearance.

In July, the FDA approved Theranos’ systems and test for herpes simplex 1 virus. The FDA clearance includes the use of Theranos’ Nanotainer Tubes for tests run by this method, which allow samples to be collected from just a few drops of blood from a virtually painless prick of a patient’s finger.

In addition to the FDA’s reports, Holmes and Theranos have been under fire since a Wall Street Journal report alleged the company only performs 10 percent of its blood tests on its proprietary technology and opts to perform the majority of its blood tests using technology acquired from other companies, including Siemens . In the article the Journal cited several former Theranos employees, as well as the medical records of patients who had used the Theranos blood test. According to the article, the former employees allege the company split testing between its own proprietary Edison machines and technology acquired from other companies. The use of the two separate technologies yielded different results “when testing for vitamin D, two thyroid hormones and prostate cancer.”

Theranos dismissed the allegations, saying they were “grounded in baseless assertions by inexperienced and disgruntled former employees and industry incumbents.” Theranos said the report also failed to take into account recent developments made in the company’s Edison technology.