Theranos president Balwani quits amid board revamp
13 May 2016
Theranos Inc said on Wednesday that Sunny Balwani, its president and chief operations officer, is leaving the company. The firm will also add three new board members as part of a restructuring.
Theranos has positioned itself as a provider of cheaper, more efficient alternatives to traditional medical tests. It had been valued at more than $9 billion on claims that it can process dozens of lab tests with just a few drops of blood.
But in October, a scathing report in The Wall Street Journal called much of its technology and testing methods into question, prompting wider scrutiny that has put founder Elizabeth Holmes on the hot seat.
Multiple federal and state regulators, including the Securities and Exchange Commission and the US Attorney's Office in San Francisco, are investigating the company's practices.
In March, another regulator, the Centers for Medicare and Medicaid Service, proposed banning Holmes and Balwani from the laboratory business for two years after Theranos allegedly failed to fix problems at its California facility. Theranos says that's a "worst case scenario".
Theranos has in the past been criticized over the makeup of its board, which included people like Henry Kissinger, but few medical experts. In response, the company added six new board members in April.
The new board members announced on Wednesday include Fabrizio Bonanni, a former executive vice president of biotech firm Amgen. The other two are former CDC director William Foege and former Wells Fargo chief executive Richard Kovacevich.
The departure of Sunny Balwani from the embattled Silicon Valley firm comes as Theranos also is attempting to persuade the Centers for Medicare and Medicaid Services, the federal agency that oversees clinical labs, not to shut down its northern California laboratory.
Closure of the lab would result in Holmes and Balwani being barred from the blood-testing business for at least two years, under federal regulations.
Balwani joined Theranos as its No 2 executive in 2009, five years after Holmes founded the company after dropping out of Stanford University as a 19-year-old sophomore.
"I am deeply grateful for the opportunity to contribute to Theranos' mission to make healthcare accessible through its technology and products," Balwani said in a statement. "I will continue to be the company's biggest advocate and look forward to seeing Theranos' innovations reach the world."
Theranos spokeswoman Brooke Buchanan said Balwani isn't being blamed for the company's regulatory problems. Rather, she said, his departure is merely part of a broader reorganisation that will see the company appoint a new chief medical officer, to whom its labs will report, a new head of research and a new operating chief. The company is actively recruiting for those positions. Depending on the new COO's profile and qualifications, he or she could take on both the operating chief and head of research roles, she added.
Theranos declined to make Balwani available for comment.
Since launching Theranos in 2003, Holmes has set out to revolutionise the blood-testing industry. Before the company made changes to its website earlier this year, the website cited "breakthrough advancements" that made it possible to run "the full range" of lab tests on a few drops of blood pricked from a finger.
In October, The Wall Street Journal reported that Theranos did the vast majority of more than 200 tests it offered to consumers on traditional lab machines purchased from other companies.
The Journal also reported that some former employees doubted the accuracy of a small number of tests run on the devices Theranos invented, code-named Edison.
Theranos has declined to say how many tests or which ones it runs on commercial machines. The company has said its technology has the capability to handle a broad range of tests.