Elizabeth Holmes at Tech Crunch, September 2014.

September 8, 2014

"Elizabeth Holmes takes Theranos' blood test to tech movers, shakers."

Biotech SF / Bizjournals - by Ron Leuty.  Discussion of TechCrunch presentation.  Here. 

Summary - Not verbatim.

The women needs no introduction.

We'll have a first for TechCrunch, I will get blood drawn live, and you can see the Theranos process.

Someone will take my blood.

I'm not rolling up my sleeve, no one is tapping my veins.  This is a finger stick.  There is a warming packet wrapped around my finger first.

EH: I've had this done tens of thousands of times.

JS:  I understand you're squeamish about blood.

EH: It's the only thing I'm scared of.  I had to be pricked in front of clients, and investors.  I was it.  It's psychological 

The process we have, replaces traditional arm phlebotomy.  Nanotainers collect just a few drops.

JH:

It's done - quick and painless.

You were in "stealth" mode for 11 years.  How did nothing leak?  How did you retain talent?  While doing all this?

EH:
We had a lot to do, it's a big mission.   We wanted to build out the solution before we talked about ti.  We didn't have a website.   Clients were under non disclosure.  We didn't have to talk before it was finished.  So for ten years, no press release, nothing.  Last fall, we reached a point where we could make it infrastructure to individuals, clinicians, we began to talk.

But before that: Don't talk.

JS:
When you approached customers in stealth mode, 

[ Discussion that Nanotainers and blood draw is over.]

You're in stealth mode.  You're signing up customers.  How do they commit sight unseen?

EH:
Now, it's directly available as an alternative to big needles.

The approach we took was, have people try it out.

If it performs well, work with us.

Lots of work for pharmaceutical companies.  We built those relationships and deployed our systems there.  We built our infrastructure.

JS:
You've raised $400M on a $9B valuation.   Where is the cash?

EH:

We grow from cash from operations.

We generated cash from operations for pharma a year or two after I started the company.

We've built the business on that platform.

I've gotten away from the equity umbililcal cord, waiting for revenue.  Revenue is our primary foundation for growth, but we've a private company so we don't disclose that.

JS:
Well, you could talk a little...

The valuation is $9B?

EH:

Yes.

JS:
Companies have tilted at the windmill of driving down lab costs.  If I want testing for a panoply of possible paranoid ailments, what happens?

EH:

Sure.  Absolutely.

We've redeveloped the lab infrastructure from end to end.

One element is the tiny sample.

Another is the cost.

We've also opened Walgreens Wellness Centers, that a US national expansion.

When you come into our Wellness center, we scan their card and do real time eligibility for the lab on the front end.

So we can tell you your cost and your deductible right there.

JS:
How much is a typical test?  A normal array of blood work, cost all in?

EH:

We began pricing at 50% off Medicare, to change the cost curve.  We've begun to further reduce the rates, all the way down to 90% off Medicare.  

JS:

90% off?  What does that mean for someone in a minimum wage job, or minimum insurance?

EH:

Sed rate is $1.99.

JS:

Cool!

When you started off, that's the insurance and pricing.  On the back end, in the lab?  What happens to the miniscule amount of blood?

EH:

Once the price point is identified, even if they know the deductible, and they can decide on the cost now, not in three months, the Nanotainer has a bar code which tracks the sample.  They get to our lab.  We develop all the chemistry that would be run on traditional platform, so the test can be run with a tiny drop of blood.   We've also built out novel analytical systems, because tradiational instruemntws equire much larger tubes of blood.

And the data can be sent electronically to the MD and integrated into their EMR systems.

JS:
How about the military?  Applications there?

EH:

There's a huge opportunity to make the information decentralized, and it drives 70% of decisions, so make it accessible where it matters.  In the trauma context, close to real time data, to stabilize someone in the field, can make a difference in lives saved. 

And equally in rural and remote areas.   There's no central lab infrastructure, so we leap from over that lack with a decentralized structure, like cell phones in China.   If you can put the decentralized testing in place, we can decentralize care delivery.   

JS:
So you layer remote consultations on top of remote testing?  And provide health care globally to anyone who needs that.  Do you want to own that other piece, the remote healthcare consultation?

EH:
We've built in a great deal fo software.  Software will eat the world.  The communications piece is there.

We're a lab company, we make the lab data, but we can link into the care delivery systems.

JS:

Are you talking to people doing remote access consultation?

EH:
We're talking to people who are really struggling to provide healthcare in the rural areas, struggling because they don't have access to comprehensive lab data.  They can't provide the care that's needed.  Very important in the future.

JS:
You have the most accomplished board I've ever seen.  Former senators, admirals, David Boies JD, why stack the deck, even Kissinger?  What makes you collect these guys?

EH:

We've never thought about it as stacking the deck.    But we believe technology has an incredible role to play to enable resolution of policy issues.  In healthcare, to use technology like we are doing, in pricing, in Medicare and Medicaid, can is saving  Medicare and Medicaid hundreds of billions of dollars on an annual basis.   We want to leverage our country's ability in innovation to leverage healthcare change, with [board members] who know how leverage change in the world.

JS:
We've both seen China.  They have five year plans.  What is your five year plan?

EH:

Access for every person, no matter how much money, or where they live.  40-60% of people don't get tested because they are scared of needles or can't afford it.  It also means operating in the locations that are close to patients, where they live, where they get care, in US and in the world.

JS:
Do you start selling the technology? Licensing it out?  Or do you man and operate the center?

EH:

We operate these centers in Walgreens in the US.  OUS, will be a different model, we are looking at that.  We will be looking at local infrastructure OUS.  

JS:
Besides Walgreens?

EH:
We've announced relationships with hospital systems, changing the blood needed in the hospital setting.  And transfusions.   And they will be ACO's and need to save money and keep people out of the hospital.

JS:
What is the biggest obstacle?  What impacts scaling for you?  Worries?

EH:
As we build our company, having the right people is what it's all about.  If we have the right people, we can provide excellent service.  We have a long term mind set.  To realize this mission.  We care "person by person" is it a wonderful experience, and we can pace our growth to that.