Theranos to close labs, wellness centers, focus on ‘minilab’

Embattled blood-testing start-up Theranos is closing its labs and wellness centers, chief executive Elizabeth Holmes announced on Wednesday - which means the ''approximately'' 340 employees running them are out of a job.

''After many months spent assessing our strengths and addressing our weaknesses, we have moved to structure our company around the model best aligned with our core values and mission,'' Holmes wrote.

The closures would impact about 340 workers in Arizona, California and Pennsylvania, "many of whom have devoted years to Theranos and our mission," Holmes said. Reuters reported that this was a 44 per cent staffing cut, with the company employing about 790 full-time workers.

The company pivoted away from working on its closely held ''nanotainer'' technology to a ''miniLab'' in August. The boxy device - unveiled at the American Association for Clinical Chemistry conference - collects small samples of blood and urine and then uploads them to a centralized system for further analysis.

And it's a far cry from what the company, once valued at $9 billion, set out to do. According to several experts, it might not be very innovative, either. Although Theranos didn't want its new device referred to as a ''lab on a chip'', that's essentially what these experts said the miniLab was. And that has been done before.

The new device hinges largely on approval from the US Food and Drug Administration - something Holmes said she'd hoped to fast-track under the emergency use authorization (EUA) for Zika detectors. That plan didn't go so well, however. The FDA denied Theranos approval after finding the company failed to use proper patient safety protocols (See: Another setback for Theranos as it does rethink on Zika test). 

The miniLab may not be the world-changing plan Theranos set out for and will still need to overcome a few regulatory obstacles, but it may have been the only safe option for the company's survival.

Theranos would now focus its "undivided attention" on its miniLab platform, Holmes said, adding, "Our ultimate goal is to commercialize miniaturized, automated laboratories capable of small-volume sample testing, with an emphasis on vulnerable patient populations, including oncology, pediatrics, and intensive care."

Theranos' miniLab is a self-contained laboratory that allows a robot to run a number of tests on samples. The miniLab contains different modules that allow it to conduct a series of tasks that traditionally would require multiple, separate machines.

Holmes said in August that the miniLab was "invented consistent with our core design philosophy of minimising the number of steps, especially pre-analytical steps, that have to be performed manually."

The move appears to be a dramatic downsizing of Holmes' ambitions to offer hassle-free blood-testing direct to the public - an ambition driven in some part by Holmes' own childhood fear of blood tests.

It comes a year after an investigation by Wall Street Journal reporter John Carreyrou first raised doubts about the start-up's technology, which is based on a machine called Edison (Theranos under increasing regulatory fire).

Holmes had promised that Edison could conduct blood tests on just a drop of blood, compared to the technology of competitors that required tubes of blood to do so.

This was followed by shocking revelations over the past year involving faulty test results and improperly trained workers. The company is now facing numerous lawsuits, was forced to shut down its California lab facility, lost its main partner Walgreens and was subject to a Congressional inquiry. Finally in July regulators banned Holmes from stepping foot in her own labs.

Sanctions were announced by the Centers for Medicare and Medicaid Services after the company's blood testing methods were found to be lacking in accuracy. Among other things, the sanctions prohibited Holmes herself from owning, operating, or directing a lab, and removed the possibility of funding from Medicare/Medicaid systems. This would greatly complicate and limit the labs and testing side of the business.

Theranos announced in August that it was appealing the sanctions, but that doesn't seem to have panned out yet - although the CMS has not enforced them on the timeline set out in July.

The company says it will ''return our undivided attention to our miniLab platform'', which commentators said seems like a good idea.