Embattled Theranos, Layoffs at Onyx And Other Events Shaped the Bay Area Biotech Community in 2015

December 31, 2015
By Alex Keown, BioSpace.com Breaking News Staff

SAN FRANCISCO – It’s been a tumultuous year for some biotech firms in the Bay Area, topped by the ongoing scandal surrounding blood testing company Theranos and its chief executive officer, Elizabeth Holmes.

The San Francisco Business Times outlined five key biotech events that shaped 2015 for the Bay Area and set up an exciting 2016 for the region.

Theranos

The Palo Alto-based blood testing firm and its CEO have been at the epicenter of negative press relating to its blood testing devices. The scrutiny of Holmes and her company was sparked by a scathing Wall Street Journal report alleging the company only performs 10 percent of its blood tests on its proprietary technology. Holmes, the world’s youngest female billionaire, and her company, Palo Alto-based Theranos are under fire after the Journal alleged the company only preforms 10 percent of its blood tests with the company’s proprietary technology and opts to perform the majority of its blood tests using technology acquired from other companies, including Siemens .

In 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.” Since the Journal’s report, other issues have arisen, placing Theranos and Holmes on a hot seat. The Wall Street Journal continues to highlight some of the concerns facing the company, providing “highlights and snags” the company has faced. Furthermore, a Washington Post report alleges the company was attempting to skirt federal law by asking a Department of Defense official to intervene in an inquiry by the U.S. Food and Drug Administration over its blood-testing kits.

InIn 2012, the Department of Defense raised concerns about Theranos' blood testing technology and notified the FDA. The Post reported Theranos CEO Elizabeth Holmes sought aid from Marine Gen. James Mattis, who now serves on the company board of directors, to “squelch those ‘inaccurate’ concerns” raised by the DOD official. Theranos told the Post the Department of Defense was interested in adapting the company’s blood tests for battlefield use in a pilot program that would not have required FDA approval. Additionally, the U.S. Food and Drug Administration called the company’s proprietary Nanotainer tubes an uncleared medical device in inspection reports released in October. Although the FDA’s documents are heavily redacted, federal regulators were critical of some of the practices its inspectors observed, including improper classification for its proprietary Nanotainer tubes used for blood specimens. 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 said it has “addressed or corrected all the observations at the time of, or within a week of the inspection.”

Onyx Pharmaceuticals, Inc.

Following its 2013 acquisition of Onyx Pharmaceuticals, Amgen terminated 300 Onyx employees in March, saying the cuts were part of a plan to consolidate oncology research between the two companies. The terminations came after Phase III clinical trials showed patients taking Kyprolis as part of their drug regimen lived approximately 18.7 months without their multiple myeloma worsening, which is about twice as long as patients taking Velcade, a popular treatment produced by Takeda Pharmaceuticals and Johnson & Johnson . In addition to the 300 San Francisco employees losing their jobs, Amgen announced it was closing Onyx’s 400,000 square-foot facility in San Francisco, a site that was leased through the next decade.

mfAR Institute

The organization received a $20 million grant from the Foundation for AIDS Research to develop a cure for the dread disease. In November, the institute launched a new research site at the University of California San Francisco to develop the scientific basis of a cure for HIV by the end of 2020.

California Institute for Regenerative Medicine

The stem cell research institute announced it intends to spin out “a collection of current academic projects to a company backed with $150 million in public and private cash,” the Times reported.

Depomed

The Bay Area company successfully fought off a hostile takeover attempt by Dublin-based Horizon Pharma . Depomed ’s board repeatedly rejected Horizon’s offers, saying the acquisition was “not in the best interest” of the company because it was growing quickly and had high expectations from its acquisition to the U.S. rights to Nucynta, a pain killer, it bought from Janssen Pharmaceuticals Inc., a unit of Johnson & Johnson (JNJ). In November, Depomed announced it had inked a deal for U.S. and Canadian rights to cebranopadol, a pain killer, with Grünenthal GmbH . The company plans to take the drug into a Phase III trial for chronic lower back pain (cLBP) and other pain indications by 2017.