How to Burst bubbles

From time to time in most industries, the traditional approach is challenged by upstarts. Often backed by entrepreneurs and investors, these firms promise to harness new technology, reverse it, and revolutionize it. Some succeed and some do not, and there are areas in which the challenge for newcomers is proving harder than others. One of these is health care, and the events of the past week demonstrate both difficulties and opportunities.

Theranos and 23andMe are two medical-technology companies that originated in Silicon Valley. Both have made headlines recently. Their stories may sound similar. But the differences offer an important lesson for health disruptors: This industry can change, not as quickly as entrepreneurs and their investors might hope, and only if those offering change back up their claims. can also submit data to

Theranos in Palo Alto, California, promises to upgrade the drug with a device that can perform hundreds of clinical tests on a few drops of blood. 23andMe in Mountain View, Calif., sells genetic testing directly to consumers. Both are led by charismatic female founders: Elizabeth Holmes at Theranos and Anne Wojcicki at 23andMe.

Both want to revolutionize the health care industry and argue that patients should have access to their data. He has strong support from Silicon Valley investors, and was quickly promoted: a US$9 billion valuation for Theranos, and lavish parties for 23andme with the media tycoon.

But both have seen their bubbles burst. On October 16, The Wall Street Journal reported that Theranos technology was not working as billed, and that the firm was using conventional machines to perform most of its testing. The company disputes some of the claims in the article. Holmes says the company is now in a “period of stagnation” due to scrutiny from US regulators.

The 23andMe bubble burst in November 2013, when the US Food and Drug Administration (FDA) banned the inclusion of clinically relevant results in the company’s consumer genetic tests. On October 21, however, 23andMe resumed consumer genetic tests, which give a limited amount of medical information, with FDA approval. The new tests provide information on 36 diseases, including a client’s status as a ‘carrier’ of genetic predispositions that can cause the disease if passed on to their children.

Theranos can learn a lot from how 23andMe returned to the good qualities of regulators. 23andMe has always been quite open about its science; It publishes research papers in peer-reviewed journals and collaborates with scientists. In contrast, Theranos has remained silent about its data. In addition to detailed data for a herpesvirus test approved by the FDA in July, the company only published overall test performance, not primary data, on its website.

23andMe says coming back from its initial mistakes with the FDA was a difficult process — it required hiring staff with expertise in health regulation and compiling detailed dossiers of data to prove that its trial ads work. The company has previously been slow to respond to requests from the FDA — and that consternation has been part of the reason for the agency’s eventual breakdown.

These experiences do not mean that health care cannot be disrupted. Indeed, 23andMe is the first company to receive FDA approval for selling health-related genetic testing to consumers without a prescription. This is a real change.

Still, the new tests provide less information and at a higher cost than before. With few exceptions, carrier tests say nothing about the health of the person tested, and they are primarily for rare diseases—far higher than the risk-prediction scores previously offered by the company for cancer and Alzheimer’s disease. more. And the new test package costs US$199, up from $99 before the ban.

23andMe has established itself as a more traditional pharmaceutical firm. In March, it hired former Genentech executive Richard Sklar to head the drug-development arm. If you can’t beat them, join them.

From time to time, new health care firms are forced to realize that it doesn’t help anyone to stay secretive with the data. Even if it turns out that Theranos technology doesn’t work as well as advertised, the company would hardly be the first to find itself in that situation.

Theranos was forced to deal with loopholes before releasing more information. Instead, it is trying to heal itself from a regulatory and public relations hole. This is not an insurmountable situation, as 23andMe knows. The challenge now for Theranos is to show us the data.

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