Theranos COO Abruptly Resigns, Company Adds New Board Members

Theranos COO Abruptly Resigns, Company Adds New Board Members May 18, 2016 (Last Updated: 5:41am PT)
By Alex Keown, Breaking News Staff

PALO ALTO, Calif. – Sunny Balwani, president and chief operations officer of embattled Theranos resigned his role with the company weeks after he and founder Elizabeth Holmes learned the company faced a possible federally-mandated two-year suspension from the blood testing industry over failures to address deficiencies at its lab facilities in California.

Brooke Buchanan, vice president of communications for Theranos, said Balwani’s departure has been planned for some time as the company shifts into a restructuring plan where the company will have “focuses on both the R&D and clinical lab.” She said Balwanis will continue to continue to support Theranos leadership as it searches for new candidates for executive roles.

“I am deeply grateful for the opportunity to contribute to Theranos’ mission to make healthcare accessible through its technology and products,” Balwani said in a statement. “I will continue to be the company’s biggest advocate and look forward to seeing Theranos’ innovations reach the world.”

Balwani’s exit from Theranos is the biggest leadership change at the company since the company has been embroiled in controversy following a series of scathing articles from the Wall Street Journal and other news outlets.

Theranos also said it was undertaking a restructuring of its organizational leadership with dedicated corporate divisions for technology and clinical operations. In another move, Theranos added three new members to its board of directors with a wealth of scientific experience. A lack of scientific leadership on its board is another criticism Theranos has faced over the years, as several members were more suited to the halls of Congress than a laboratory. Theranos added Fabrizio Bonanni, a former senior executive at Amgen in charge of quality and compliance; William H. Foege, an epidemiologist and former director of the Centers for Disease Control and Prevention; and Richard M. Kovacevich, a former chief executive officer of Wells Fargo & Co. Foege and Kovacevich previously served on Theranos’ Board of Directors before joining its Board of Counselors, an advisory group. Foege also serves on the company’s scientific and medical advisory board. The appointment of. Bonanni and the other board members comes a month after Theranos expanded its scientific and medical advisory board.

Bonanni is expected to work in a special capacity with management as it builds on its operations and quality systems infrastructure, Theranos said. Bonanni said he believes Theranos is poised to “make an indelible impact in health care” with its blood-testing products. He said he was looking forward to contributing to the future of the company.

“We are proud to have the opportunity to work with Dr. Bonanni as we build and scale best-in-class operations throughout our company,” said Elizabeth Holmes, Theranos’ chief executive officer. “Dr. Bonanni’s leadership and guidance in operations, quality and compliance is exceptional, and we are fortunate to add his experience to our team both on the board and to work with us internally.”

Theranos is still facing addressing concerns over its California lab raised by the U.S. Centers for Medicare and Medicaid Services. In a lightly redacted 45-page letter dated March 18 over those concerns, the CMMS repeatedly used the bold-texted phrase “The laboratory’s allegation of compliance is not credible and the evidence of correction is not acceptable.” The phrase is used to indicate how Theranos’ addressing of issues that fail to meet federal Clinical Laboratory Improvement Amendments (CLIA) guidelines. While many of the errors could be considered minor, the overwhelming number is concerning—something CMMS investigators noted in their letter.

“In general, we find that the statements made in the allegation of compliance and evidence of correction: 1) failed to adequately address the deficient practice cited; 2) are incomplete and failed to meet the criteria of acceptable evidence of correction; 3) do not ensure sustained compliance; and 4) show a lack of understanding of the CLIA requirements,” the letter said.

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