Bad Blood

(Axel Boer) #1

drugmakers and had listened uncomfortably as she promised them the
moon. When the drugmakers’ executives asked if the Theranos system
could be customized to suit their needs, Elizabeth would always
answer, “Absolutely.”


Soon after he started, Todd began asking Susan a lot of questions
about the revenues Elizabeth was projecting from her deals with the
drugmakers. She kept a spreadsheet with detailed revenue forecasts.
The numbers were big, in the tens of millions of dollars for each deal.
Susan told Todd that, based on what she knew, they were vastly
overinflated.


Moreover, no significant revenues would materialize unless
Theranos proved to each partner that its blood system worked. To that
effect, each deal provided for an initial tryout, a so-called validation
phase. Some companies, like the British drugmaker AstraZeneca,
weren’t willing to pay more than $100,000 for the validation phase,
and all could walk away if they weren’t happy with the results.


The 2007 study in Tennessee was the validation phase of the Pfizer
contract. Its objective was to prove that Theranos could help Pfizer
gauge cancer patients’ response to drugs by measuring the blood
concentration of three proteins the body produces in excess when
tumors grow. If Theranos failed to establish any correlation between
the patients’ protein levels and the drugs, Pfizer could end their
partnership and any revenue forecast Elizabeth had extrapolated from
the deal would turn out to be fiction.


Susan also shared with Todd that she had never seen any validation
data. And when she went on demonstrations with Elizabeth, the
devices often malfunctioned. A case in point was the one they’d just
conducted at Novartis. After the first Novartis demo in late 2006
during which Tim Kemp had beamed a fabricated result from
California to Switzerland, Elizabeth had continued to court the
drugmaker and had arranged a second visit to its headquarters in
January 2008.


The night before that second meeting, Susan and Elizabeth had
pricked their fingers for two hours in a hotel in Zurich to try to
establish some consistency in the test results they were getting, to no

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