Year in Review
ary, the Centers for Medicare
and Medicaid Services released
a scathing inspection report,
prompting Walgreens to terminate its three-year partnership
with the company and shutter
all Theranos lab-testing services at its retail locations.
In June, Forbes cut Holmes’
net worth to zero, based on
the assumption that Theranos
was worth roughly $800 million—the estimated value of
its investment capital. Then in
October, the embattled company laid off 340 people (about 43
percent of its staff) as it pulled the plug on its clinical labs and
Theranos Wellness centers in California, Arizona, and Texas.
Holmes’dream was officially dead.
Rather than mourn, however, Holmes set her sights on a new
goal: Developing the miniLab, a 95-pound, tabletop-sized diag-
nostic tool designed to reduce the cost and improve the acces-
sibility of blood tests.“Our ultimate goal is to commercialize min-
iaturized, automated laboratories capable of small-volume sample
testing, with an emphasis on vulnerable patient populations, in-
cluding oncology, pediatrics, and intensive care,” Holmes wrote in
an Oct. 5 blog post on the company’s website.“We have a new ex-
ecutive team leading our work toward obtaining FDA clearances,
building commercial partnerships, and pursuing publications in
scientific journals. We are fortunate to have supporters and inves-
tors who believe deeply in our mission of affordable, less invasive
lab testing, and to have the runway to realize our vision.”
Theranos’new vision is not quite ready for takeoff, though. Less
than a week after announcing the pivot plan, a major hedge fund
investor sued the company and Holmes for “knowingly and re-
peatedly” lying to attract $96 million in financing. An Oct. 10 letter
to investors from San Francisco, Calif.-based Partner Fund Man-
agement LP accused Theranos and its CEO/founder of engaging in
securities fraud and other violations by inducing the hedge fund to
invest in the startup, according to the Journal and Forbes.
“Among other things, Theranos and its principals knowingly
and repeatedly lied that they had developed proprietary technologies that worked, were on the cusp of receiving all necessary
regulatory clearances, and approvals, and concealed the truth
about the commercial viability of their technologies and methods,” Forbes reported, quoting the letter.
Theranos, in turn, denied the charges, and countered with its
own claims: “The suit is without merit, the assertions are baseless,
and the plaintiff is engaging in revisionist history,” the company
said in an official statement. “Most of the company statements the
plaintiff has cited in its suit were made after the time the plaintiff
invested, and could not possibly have been the original basis for in-
vestment. This wholesale reliance on post-investment statements,
therefore, negates the claim that the plaintiff was misled.”
PFM’s lawsuit, filed un-
der seal in Delaware Chancery
Court, seeks to recoup the firm’s
investment plus damages and
costs associated with the claim,
the Journal noted.
Although it remains em-
phatic about its innocence,
As Forbes’Matthew Herper opined when Theranos announced
its pivot: “The wax on this company’s wings has melted, and it is
not clear when Theranos will hit the ground.”
Prepare for impact.
Read more: http://bit.ly/yir1605
The Tax Man Leaveth
The day went largely unnoticed. There were no formal celebrations
marking the moment, no proclamations immortalizing the date, and
no special gatherings acknowledging the occasion. The day, in fact,
was no different than any other that week. Except that it was a Monday. The start of a new workweek. The beginning of a new month.
Monday, Feb. 1 was also the start of a new era for the medtech
industry: It was the final medical device excise tax payment deadline.
For two years, anyway. Or perhaps, ever.
Long a thorn in the industry’s side, the 2.3 percent medical device
tax was suspended late last year through 2017 as part of a compromise $1.8 trillion spending package that prevented a government
shutdown. The suspension capped a long, hard-fought repeal effort by MDMA, the Advanced Medical Technology Association, and
other lobbying groups that opposed the levy for its chilling effect on
innovation and R&D, as well as its drain on corporate finances. The
fight triggered at least five showdowns in the U.S. House of Representatives, two of which featured stand-alone repeal measures, and
two involved inclusions in a jobs package and a reconciliation vote.
Sired in 2010 to help fund expanded U.S. healthcare coverage
under the Affordable Care Act (ACA), the device tax imposed a
2.3 percent levy on the medical supply sales. It applied broadly to
a range of products, including pacemakers, artificial joints, surgical gloves, and dental instruments.
The levy raised $913 million in the first half of 2013, or roughly
75 percent of the expected amount. Regulators expected as many
as 15,000 tax-associated filings, but only 5,107 medical device tax
forms were actually filed, government statistics show.
In June, Forbes cut Theranos
CEO Elizabeth Holmes’ net
worth from an estimated
$4.5 billion to 0.