Embattled startup Theranos Inc. will close its blood-testing labs and fire about 340 workers, shifting its focus to an experimental technology following months of run-ins with regulators and questions about whether its existing products work.
The Palo Alto, Calif.-based company also has a new executive team who will work on obtaining regulatory approvals, partnerships and pursuing publications in scientific journals, Chief Executive Officer Elizabeth Holmes said in a statement posted Wednesday on the company’s website. Holmes will remain as CEO, said a representative for the company.
Once lauded as a potentially revolutionary startup in the medical testing field, Theranos has been plagued by questions about the accuracy and viability of its technology. The shift announced Wednesday may allow Holmes to keep running the company despite being banned from the clinical lab industry. Theranos was sanctioned in July after U.S. inspectors found failures so severe as to jeopardize patients’ health at a lab in Newark, Calif. Theranos has appealed those sanctions.
Theranos will now focus on miniLab, a 95-pound diagnostic tool that can fit on a tabletop. The company caused a stir in August when scientists and researchers gathered in Philadelphia to hear a scientific presentation on Theranos’s controversial blood-testing technology -- and instead got a product launch for the miniLab.
“We will return our undivided attention to our miniLab platform,” Holmes said in the statement Wednesday. “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.”
Later in August, Theranos withdrew its submission for emergency clearance of a diagnostic blood test for the Zika virus after regulators found problems with how the blood-testing startup gathered patient data. While a Zika test wouldn’t help to spare the company from the sanctions, clearance by the FDA would have helped Theranos regain some credibility in the eyes of skeptical consumers and physicians.
It’s been a stunning fall from grace for a company that at one time commanded a $9 billion private valuation. Holmes had been profiled as a wunderkind after dropping out of Stanford University to found Theranos, promising to revolutionize the blood-testing industry -- dominated by Quest Diagnostics Inc. and Laboratory Corp of America Holdings -- with cheap, less-painful tests that could be run on what the company said was a breakthrough analysis technology.
The company has said it will appeal the sanctions imposed by the Centers for Medicare and Medicaid Services, which oversees lab testing in the U.S. Holmes is the majority owner of the venture capital-backed company and the chairman of its board.
By Caroline Chen