فصل 22

La Mattanza

The early days of July 2015 brought two pieces of good news for Theranos. The first was that the FDA had approved the company’s proprietary finger-stick test for HSV-1, one of two strains of herpes virus. The second was that a new law Arizona had passed allowing its citizens to get their blood tested without a doctor’s order—a bill Theranos had practically written itself and heavily lobbied for—was about to go into effect.

The company celebrated these milestones by throwing a Fourth of July party at the new headquarters on Page Mill Road. The festivities started in the cafeteria with rousing speeches from Holmes and Balwani and then moved outside to the building’s courtyard, where an open bar, catered food, and techno music awaited employees.

Theranos touted the herpes test approval as proof that its technology worked, but I remained deeply skeptical. In laboratory parlance, the herpes test was a qualitative test. Such tests provided simple yes-or-no answers to the question of whether a person had a certain disease. They were technically much easier to get right than quantitative tests designed to measure the precise amount of an analyte in the blood. Most routine blood tests were quantitative ones.

I called a source of mine who was high up in the FDA’s medical-device division. He confirmed my thinking. The herpes test approval was a one-off clearance that was in no way a blanket endorsement of Theranos’s technology, he said. In fact, the clinical data the company had submitted to the agency for a number of its other finger-stick tests were poor and wouldn’t pass muster, he added. When in turn I told him about the things I had learned in the course of my reporting, ranging from Theranos’s practice of running diluted finger-stick samples on commercial analyzers to its gaming of proficiency testing and the questionable test results some doctors and patients had received, he sounded disturbed.

Part of the problem was that, three years after Holmes’s clash with the now-retired Lieutenant Colonel David Shoemaker, Theranos continued to operate in a regulatory no-man’s-land. By using its proprietary devices only within the walls of its own laboratory and not seeking to commercialize them, it was able to continue to avoid close FDA scrutiny. At the same time, it gave the appearance of cooperating with the agency by publicly supporting its drive to regulate laboratory-developed tests and voluntarily submitting some of its own LDTs, like the herpes test, to it for approval.

My source said it was hard for the agency to take any adverse action against a company that portrayed itself as the lab world’s biggest advocate of FDA regulation, especially one as politically connected as Theranos. At first, I thought he was referring to its board of directors, but that was the least of his concerns. He pointed out how chummy Holmes had gotten with the Obama administration. He had seen her at the launch of the president’s precision medicine initiative earlier in the year, one of several White House appearances she’d made in recent months. The latest had been a state dinner in honor of Japan’s prime minister, where she was photographed in a body-hugging black gown on the arm of her brother. Despite all this, his parting words made me think Theranos might not be able to fool the FDA much longer: “I’m very concerned about what they’re doing.”

—

OVER AT FORTUNE, Roger Parloff had a different take on the herpes test approval than I did. In an article he published on the magazine’s website, he wrote that it was “a strong endorsement of the integrity of” Theranos’s methods.

During a phone interview Holmes granted him for this second article, Parloff inquired about an Ebola test Theranos had in the works. George Shultz had made a passing mention of it at a conference a few months earlier. Given that an Ebola epidemic had been raging in West Africa for more than a year, Parloff thought a rapid finger-stick test to detect the deadly virus could be of great use to public health authorities and had been interested in writing about it. Holmes said she expected to obtain emergency-use authorization for the test shortly and invited him to come see a live demonstration of it at Boies Schiller’s Manhattan offices.

A few days later, Parloff arrived at the law firm and was greeted by Dan Edlin, one of Christian Holmes’s Duke fraternity brothers. Edlin showed him to a conference room where two black Theranos devices had been set up side by side (they were miniLabs, not Edisons). For reasons Parloff didn’t understand, Holmes had wanted the demo to include a potassium test too (no doubt because I had been asking tough questions about that particular test). So Edlin drew blood from Parloff’s finger twice. One machine would perform the Ebola test and the other the potassium test, he explained. Parloff wondered fleetingly why one of the devices couldn’t simultaneously perform both tests from a single blood sample but decided not to press the issue.

Parloff and Edlin made small talk while they waited for the test results. After about twenty-five minutes, the tests still hadn’t been completed. Edlin said it was because the devices had just been installed and needed to warm up. The tests’ progress was represented by the darkening edge of a circle on the devices’ digital screens, like app downloads on an iPhone. Inside the circle, a percentage number told the user how much of the test had been completed. Based on how slowly the edge of one of the circles was filling up, it looked to Parloff like it might take several more hours. He couldn’t wait around that long. He told Edlin he needed to head back to work.

After Parloff left, Kyle Logan, the young chemical engineer who had won an academic award at Stanford named after Channing Robertson, entered the conference room. He’d flown in with Edlin on the red-eye from San Francisco that morning and was there to provide technical support. Noticing that the miniLab running the potassium test was stuck at 70 percent completion, he took the cartridge out and rebooted the machine. He had a pretty good idea what had happened.

Balwani had tasked a Theranos software engineer named Michael Craig to write an application for the miniLab’s software that masked test malfunctions. When something went wrong inside the machine, the app kicked in and prevented an error message from appearing on the digital display. Instead, the screen showed the test’s progress slowing to a crawl.

This is exactly what had happened with Parloff’s potassium test. Luckily, enough of the test had occurred before the malfunction that Kyle was able to retrieve a result from the machine. The breakdown had happened while the device was running the test again on the control part of the sample. Normally, it would have been preferable to have the initial result confirmed by the control, but Daniel Young told Kyle over the phone that it was OK to do without it in this case.

In the absence of real validation data, Holmes used these demos to convince board members, prospective investors, and journalists that the miniLab was a finished, working product. Michael Craig’s app wasn’t the only subterfuge used to maintain the illusion. During demos at headquarters, employees would make a show of placing the finger-stick sample of a visiting VIP in the miniLab, wait until the visitor had left the room, and then take the sample out and bring it to a lab associate, who would run it on one of the modified commercial analyzers.

As for Parloff, he had no idea he’d been duped. That evening, he got an email from Theranos with a password-protected attachment containing his results. When he opened the attachment, he was happy to see that he’d tested negative for Ebola and that his potassium value was within the normal range.

—

BACK IN CALIFORNIA, Holmes and Balwani were laying the groundwork for a bigger show-and-tell. Holmes had invited Vice President Joe Biden to come visit Theranos’s Newark facility, which was now home to both Theranos’s clinical laboratory and its miniLab manufacturing operations.

It was an audacious move given that, since Alan Beam’s departure in December 2014, the lab had been operating without a real director. To keep this hidden, Balwani had recruited a dermatologist named Sunil Dhawan to replace Beam on the lab’s CLIA license. Although Dhawan had no degree or board certification in pathology, he technically met state and federal requirements because he was a medical doctor and had overseen a little lab affiliated with his dermatology practice that analyzed skin samples. The reality, however, was that he was unqualified to run a full-fledged clinical lab. Not that it mattered. Balwani only intended him to be a figurehead. Some lab employees in Newark never saw Dhawan in the building.

Not only was the lab leaderless but its morale was at rock bottom. Two months earlier, Balwani had terrorized its members after a scathing critique of Theranos appeared on Glassdoor, the website where current and former employees reviewed companies anonymously. Titled “A pile of PR lies,” it read in part:

Super high turnover rate means you’re never bored at work. Also good if you’re an introvert because each shift is short-staffed. Especially if you’re swing or graveyard. You essentially don’t exist to the company.

Why be bothered with lab coats and safety goggles? You don’t need to use PPE at all. Who cares if you catch something like HIV or Syphilis? This company sure doesn’t!

Brown nosing, or having a brown nose, will get you far.

How to make money at Theranos:

1. Lie to venture capitalists

2. Lie to doctors, patients, FDA, CDC, government. While also committing highly unethical and immoral (and possibly illegal) acts.

Negative Glassdoor reviews about the company weren’t unusual. Balwani made sure they were balanced out by a steady flow of fake positive reviews he ordered members of the HR department to write. But this particular one had sent him into a rage. After getting Glassdoor to remove it, he’d launched a witch hunt in Newark, conducting interrogations of employees he suspected of having written it. He was so mean to one of them, a woman named Brooke Bivens, that he made her cry. He never found the culprit.

More recently, Balwani had fired Lina Castro, a well-liked and respected member of the microbiology team. Lina’s sin had been to push the company to institute standard environmental health and safety protections in the lab. The morning after he fired her, Balwani had bragged to the remaining members of her team that he was worth billions and that he came to work every day because he wanted to. Everyone else should feel the same way, he said, implying that Castro had been too negative and not committed enough to the Theranos mission.

As had been the case in the old Facebook building in Palo Alto, the lab’s operations in Newark were divided between Jurassic Park and Normandy. The new Jurassic Park occupied a huge room with neon lights and vinyl flooring. Lab associates’ desks were clustered in one corner beneath a giant flat-screen monitor that displayed a constant stream of inspirational quotes and complimentary customer reviews. The commercial analyzers used to process regular venous samples dotted the rest of the space. Normandy occupied another room crammed with dozens of black-and-white Edisons and the Siemens machines Daniel Young and Sam Gong had hacked.

Holmes and Balwani wanted to impress the vice president with a vision of a cutting-edge, completely automated laboratory. So instead of showing him the actual lab, they created a fake one. They made the microbiology team vacate a third, smaller room, had it repainted, and lined its walls with rows of miniLabs stacked up on metal shelves. Since most of the miniLabs that had been built were in Palo Alto, they had to be transported back across the bay for the stunt. The members of the microbiology team weren’t sure why they were being moved at first, but they figured it out when a Secret Service advance team showed up a few days before Biden arrived.

The day of the visit, most members of the lab were instructed to stay home while a few local news photographers and television cameras were allowed into the building to ensure the event got some press. Holmes took the vice president on a tour of the facility and showed him the fake automated lab. Afterward, she hosted a roundtable about preventive health care on the premises with a half dozen industry executives, including the president of Stanford Hospital.

During the roundtable discussion, Biden called what he had just seen “the laboratory of the future.” He also praised Holmes for proactively cooperating with the FDA. “I know the FDA recently completed favorable reviews of your innovative device,” he said. “The fact that you’re voluntarily submitting all of your tests to the FDA demonstrates your confidence in what you’re doing.”

—

A FEW DAYS LATER, on July 28, I opened that morning’s edition of the Journal and nearly spit out my coffee: as I was leafing through the paper’s first section, I stumbled across an op-ed written by Elizabeth Holmes crowing about Theranos’s herpes-test approval and calling for all lab tests to be reviewed by the FDA. She’d been denying me an interview for months, her lawyers had been stonewalling and threatening my sources, and here she was using my own newspaper’s opinion pages to perpetuate the myth that she was regulators’ best friend.

Because of the firewall between the Journal’s news and editorial sides, Paul Gigot and his staff had no idea I was working on a big investigative piece about the company. So I couldn’t blame them for publishing whatever they saw fit. But I was annoyed. I suspected Holmes was trying to use the positive editorial-page coverage to make it more difficult for the paper to publish my investigation.

In the meantime, Alan Beam was coming under renewed pressure from Boies’s henchmen. They were threatening to report him for violations of HIPAA, the federal health privacy law, on the grounds that some of the emails he had forwarded to his Gmail account before resigning contained patient information. His new lawyer had to fend them off from London, where he was on vacation with his wife. Balwani was also beginning to harass some of the patients I had talked to, insisting that they get on the phone with him and giving them the third degree when they did.

I had filed a draft of my story a week earlier and decided to walk over to my editor’s office to see where he stood with his edit. Once he was done with it, the story would be sent to the paper’s page-one editor, who would assign it to someone on his team for a second, closer edit. Then the standards editor and the lawyers would comb through it line by line. It was a slow process that often took weeks and sometimes months. I wanted to speed it up. The longer we took to publish, the more time we gave Theranos to turn my sources.

Mike Siconolfi was his usual cheerful self when I popped my head into his office. He motioned for me to sit down. I told him I felt we should move faster. There was no telling what Theranos and Boies would try next. I pointed out Holmes’s op-ed and Biden’s ballyhooed visit to Theranos’s Newark facility a few days earlier.

Mike cautioned patience. This story was a bombshell and we needed to make sure it was bulletproof when we went to press with it, he said. Mike was of Italian American heritage and he loved using Italian metaphors. I had heard him tell the story of his ancestor Prince Siconulf, who ruled the region surrounding the Amalfi Coast in the ninth century, about ten times.

“Did I ever tell you about la mattanza?” he asked. Oh boy, here we go again, I thought.

He explained that la mattanza was an ancient Sicilian ritual in which fishermen waded into the Mediterranean Sea up to their waist with clubs and spears and then stood still for hours on end until the fish no longer noticed their presence. Eventually, when enough fish had gathered around them, someone gave an imperceptible signal and in a split second the scene went from preternatural quiet to gory bloodbath as the fishermen struck viciously at their unsuspecting quarry. What we were doing was the journalistic version of la mattanza, Mike said. We were patiently lying in wait until we were ready to publish and then, at some time of our choosing, we would strike. As he said this, he mimicked a Sicilian fisherman violently wielding his spear, which made me laugh.

I told him that I was on board with the mattanza approach as long as the story ran before Holmes’s appearance at the Journal’s annual technology conference in Laguna Beach in October. I had recently gotten wind that she was on the conference’s list of guest speakers and felt that it would put the paper in an impossible position if my article hadn’t been published by then. Mike agreed. The conference was two and a half months away. That gave us ample time, he said.