Theranos Hires Compliance, Quality Chiefs in Effort to Reform

  • Attorney Guggenheim joins struggling startup from McKesson
  • Wurtz leaves Thermo Fisher to oversee testing labs’ quality

Embattled blood-testing startup Theranos Inc. hired two executives to oversee regulatory, quality and compliance standards as the company seeks to reform itself after receiving heavy sanctions from U.S. regulators.

Dave Wurtz, who formerly worked at Thermo Fisher Scientific Inc., was named vice president, regulatory and quality, and will oversee standards for laboratories and device development. Daniel Guggenheim, who previously served as assistant general counsel at McKesson Corp., will be chief compliance officer, charged with making sure the startup follows federal and state health regulations, board member Fabrizio Bonanni said in a telephone interview.

“I want to have a quality program and a compliance program in place, I want to see FDA submissions going forward, I want to see the normal, serious work that needs to be done to effect the transformation of the company from an R&D startup to an operating company in the health-care field,” said Bonanni, a former Amgen Inc. executive who joined Theranos’s board in May.

“Being an operating company means you’re subject to all the laws, and you’re prepared to satisfy questions from every regulatory agency,” he said.

Oversight Committee

Bonanni also will lead a newly formed compliance and quality committee that will advise the board and executives. Bonanni said he has invited two outside experts to join the committee, declining to name the individuals because the positions hadn’t been finalized. “When they are named, they will be well known,” he said.

Theranos, based in Palo Alto, California, has been in hot water with health regulators. On July 7, the startup said the Centers for Medicare and Medicaid Services, which regulates clinical laboratories, had handed down sweeping sanctions, including the revocation of a key lab certificate, monetary penalties and cancellation of payments from federal health insurance programs for lab services. Theranos was given 60 days to appeal, and said it was working with the agency to resolve its issues. The sanctions were based on a CMS inspection of Theranos’s lab in Newark, California, where inspectors said they found failures so severe as to jeopardize patients’ health.

Bonanni declined to comment on any conversations between the board and its shareholders, or on what Theranos’s plans would be if the CMS sanctions were enforced. Elizabeth Holmes, the company’s founder, majority owner and chief executive officer, could be banned from managing the business for at least two years under the sanctions.

When asked how long it would take for Theranos to turn around its operations and have its new quality-control systems in place, Bonanni said “it will take forever -- it is a never-ending process. We will build a bunch of things first, then we will improve on them, then we’ll be inspected and we’ll get additional suggestions. You will only be as good as the last inspection was. You’ll never rest.”

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