The controversy surrounding Theranos has continued well into May, with the resignation of COO and President Sunny Balwani. His exit comes after the SEC and the US attorney in San Francisco opened an investigation into allegations that the laboratory continued to use their patented “Edison” device, despite its known inaccuracy . They were also under pressure to prove the efficacy of the presumably “game changing” technology used in their Edison equipment.
Balwani has been close to the company’s founder, Elizabeth Holmes, and was hired as a top executive despite an absence of experience in science or medicine.
The Wall Street Journal reports that when Theranos employees expressed concern over the legality of the procedure testing process, Balwani reprimanded them. When probed about the reliability (or lack thereof) of their proprietary Edison equipment, Balwani chalked up instances of quality control failure to “the growing pains” that any startup would normally experience.
As Balwani made his exit, Theranos expanded its board by bringing on individuals with more relevant industry background, but the investigation was well underway at that point. Under Federal law, if Holmes and Theranos are found responsible, the lab would be forced to close and Holmes barred from working in blood-testing for no less than two years. Whether or not Theranos will actually face sanctions depends on the outcome of a decision that could be months in the making.
Most recently, Theranos has voided two years’ worth of blood test results, prompting a new problem for the embattled lab— a class action lawsuit.
Also worth noting is Theranos’s deteriorating relationship with Walgreens. The Pharmaceutical company struck a deal with Theranos in 2013, agreeing to bring Edison equipment to 40 of its health centers. However, Walgreens never bothered testing the equipment itself, and now could be held liable for their missteps. However, if sanctions are imposed on Theranos and Walgreens can further distance itself, the pharmacy chain may find itself protected from upcoming legal threats.