The dramatic fall from grace of Elizabeth Holmes has lessons for everyone, from investors to CEOs, commercial partners to the media social or the Silicon Valley hype machine, which is always looking for a new unicorn company and breakout star.
The important lesson for pharmaceutical companies, particularly medical affairs, is simple and powerful: Your advisory boards matter a lot.
Big names, little relevant expertise
These five words are the essence of Theranos board. Quick glance reveals (former) politicians (George Shultz and William Perry, Sam Nunn and Henry Kissinger, Bill Frist), high ranking military personnel (Gary Roughead and James Mattis) as well as corporate leaders with no healthcare experience (Richard Kovacevich/banking, Riley Bechtel/engineering, construction).
There was also William Foege, who was the ex-director of the U.S. Centers for Disease Control and Prevention. Bill Frist is an M.D. He was a specialist in cardiac transplants and switched to politics before joining Theranos board. Holmes was 19 years old and dropped out of college. Sunny Balwani, Theranos' COO, was an IT professional with training and experience.
Big names are attractive and can lend credibility but you still need domain expertise in your advisory boards. Advisors with real experience on the ground will have the ability to offer real boots-on-the ground expertise because they've experienced it every day.
Foege was the only person who knew anything about diagnostic testing, its technologies, the challenges it presented, and even biology. This is evident in Mattis' testimony at the Holmes trial.
According to The Washington Post, he said that he believed we were doing it using Theranos gear. Holmes and his senior leadership team believed that the technology worked. Holmes confirmed this. He probably could not do much more because he had no experience in this field.
The board and its members needed to insist earlier that they needed people who could look under the hood and examine every aspect of the system. This expertise, if it were real, would make any other diagnostic testing system seem like child's play.
Fortune magazine described Theranos' 2016 addition as a "startlingly qualified medical board". It was, however, too late.
Leçons learned from advisory boards
This is the first lesson from this mess: Big names are great for credibility and attention, but you still need domain expertise in your advisory boards. Advisors who have lived the experience every day can offer real boots-on-the ground expertise.
Although advisory boards in bio-pharmaceutical companies don't usually include secretaries of defense or state, there are risks associated with having a limited number of international key opinion leaders on the board. They might not have the time or resources to look into data and detail. They may be invited to speak at the most prestigious conferences and they might know everyone in the therapeutic field. However, they do not usually see patients.
These big names are essential for advisory boards to make strategic decisions. However, advisory boards also require members who can dig deep, answer pertinent medical questions, and identify unmet medical requirements of different patient groups. Companies need a diverse and highly functioning advisory board to help them in their early stages.
Even a highly qualified board may not be able turn the tide once things go wrong.
Job Description: Rebel with a Cause
Lesson No. Lesson 2 is about the fascinating case of Foege, the only expert on the board. Foege was a loyal Theranos supporter and was the longest-tenured Theranos official (except Holmes), when Theranos' house of cards collapsed.
This example illustrates how experts and people can get caught up in the hype. It is a good idea to have some rebels on your board. Experts, often rising stars, are people who challenge conventions, question the status quo, thoroughly vet data, and aren't afraid to disagree with luminaries.
It is easy to say that you want to improve patient outcomes. This is one of the most difficult advisory board positions. Experts might not recommend those who question established methods. These critical members might not be satisfied with the traditional methods of creating boards by asking for their recommendations.
Medical affairs and commercial teams in life sciences companies are left with the difficult task of finding independent experts using different approaches.
As an indicator of potential experts, scientific publications can be used. A journal's number of publications, its impact factor, and the actual work published can all help to identify outstanding talent.
Social media is an important and growing source of information. It is important to understand the communication and target audience of healthcare providers, including patients and colleagues. This helps professionals in their early years. Companies should also consider other factors such as awards, participation in guideline committees, international collaborations, and active membership in medical societies.
These emerging experts can be a pain in your neck once you have them onboarded. But if it means that you don't go down the wrong road, then that pain is well worth the effort.
The good, bad and ugly
The third lesson is indirect. It takes a lot of energy, time, money, and sleepless nights to put together an advisory board. Use it to its full potential.
Theranos did not do this. Their board was not designed to provide oversight or ask difficult questions. Its purpose was to raise funds, incite awe, squash doubts, and shut down criticism through the power of its members' reputation. It succeeded until it failed.
While criticism is not always pleasant, it is necessary. Therefore, the goal must be to encourage openness and encourage hard questions, data vetting, fact-checking, and constructive criticism.
The advisory board allows for open discussion among experts. Theranos's example illustrates this: If you don't address issues in your circle of trusted advisors, you may end up having them discussed in public or in a court.
Your advisory board matters a lot
Success is dependent on the board, regardless of whether it's the success or failure of a company or a drug development program. Boards of any size need to be diverse, have high-quality members, are engaged, collaborative, and don't mind asking uncomfortable questions.
Because lives and health are at risk, the burden on boards working in life science is particularly heavy. Although we may never know if patients died due to Theranos misdiagnoses or not, it is clear that many people suffered emotional trauma, were misdiagnosed with serious conditions, and had to undergo unnecessary procedures.
The board bears the responsibility for vetting, questioning, and fact-checking. The company bears the responsibility of creating a board capable of doing so, taking that responsibility seriously, and making it possible by creating an environment that encourages trust and openness as well as listening to their input and feedback.
Theranos clearly shows the potential consequences of not doing so.
