member with even basic knowledge of blood science? And why hadn’t
a single venture capital firm with expertise in health care put money
into the company? For these observers, the story confirmed what
they’d quietly suspected.
There was a third group of people who didn’t know what to believe
given Theranos’s strong denials. In a press release it posted on its
website, the company called the story “factually and scientifically
erroneous and grounded in baseless assertions by inexperienced and
disgruntled former employees and industry incumbents.” It also let it
be known that Holmes would appear on Jim Cramer’s Mad Money
program that evening to rebut the allegations.
We knew that the battle was far from over and that Theranos and
Boies would be coming at us hard in the following days and weeks.
Whether my reporting stood up to their attacks would largely depend
on what actions, if any, regulators took. Rumors had been circulating
among former Theranos employees of an FDA inspection, but I hadn’t
been able to confirm it by the time we went to press. I had called my
source at the agency several times but hadn’t been able to reach him.
I decided to try him again that day before lunch. This time he picked
up the phone. On deep background, he confirmed to me that the FDA
had recently conducted a surprise inspection of Theranos’s facilities in
Newark and Palo Alto. Dealing a severe blow to the company, the
agency had declared its nanotainer an uncleared medical device and
forbidden it from continuing to use it, he said.
He explained that the FDA had targeted the little tube because, as a
medical device, it clearly fell under its jurisdiction and gave it the most
solid legal cover to take action against the company. But the
underlying reason for the inspection had been the poor clinical data
Theranos had submitted to the agency in an effort to get it to approve
its tests. When the inspectors had failed to find any better data on-site,
the decision had been made to shut down the company’s finger-stick
testing by taking away the nanotainer, he said. That wasn’t all: he said
the Centers for Medicare and Medicaid Services had also just launched
its own inspection of Theranos. He didn’t know whether it was still
ongoing but was sure it spelled more trouble for the company. Mike