Theranos' Emergency Authorization Bid for Zika Assay Raises Questions About Strategic Direction | GenomeWeb

Theranos' Emergency Authorization Bid for Zika Assay Raises Questions About Strategic Direction

NEW YORK (GenomeWeb) – Theranos announced last week that it is seeking emergency use authorization from the US Food and Drug Administration for a Zika virus test that would run on its upcoming miniLab platform. Unfortunately, the news comes at an inconvenient time for the company.

Next month, sanctions from the Centers for Medicare & Medicaid Services are slated to hit the company, revoking Theranos' CLIA certificate and barring it from operating a lab for two years. Theranos could appeal the sanctions but hasn't said it will, which raises questions as to why the firm would decide to launch a test at a time when its ability to operate a clinical testing lab is uncertain.

"Even a test that has received an FDA EUA needs a clinical lab with a valid CLIA license to report patient results," said Girish Putcha, who advises diagnostic firms on regulatory and reimbursement strategy.

In February, HHS Secretary Sylvia Burwell declared that the public health emergency involving the Zika virus justified emergency authorization of diagnostics to detect the virus and diagnose infections. There are currently no FDA cleared diagnostic tests for the detection of the Zika virus, but the agency has already performed expedited review and granted EUA to six tests developed by commercial firms and two CDC tests.

"Do we really need another one, unless it is meaningfully differentiated from existing tests in terms of analytical or clinical performance, turnaround time, or cost?" wondered Putcha, reflecting on Theranos' decision to seek similar authorization for its own Zika test. Putcha is also director of laboratory science at Medicare contractor Palmetto GBA, but did not speak to GenomeWeb in that capacity.

In granting EUA authorization during a public health emergency, the FDA considers the analytical and clinical validity of tests and weighs their benefits and risks, but with the aim of getting tests to market quickly.

If Theranos received emergency authorization for its Zika test, it would provide the company a chance to collect real-world data on the use of its test and platform and apply that information for regulatory clearance or approval. An Institute of Medicine workshop report following the 2009 H1N1 Influenza emergency noted that the EUA pathway could be a means for collecting evidence on unapproved drugs and tests that receive authorization, but it's not a substitute for randomized clinical trials. 

Even if Theranos is able to secure EUA for its Zika test, Putcha and other experts believe that the company's only option without a CLIA license may be to sell its testing technology and kits to other CLIA-certified labs to perform.

Such a strategy would make Theranos a competitor to established IVD providers, such as Luminex, Hologic, Focus Diagnostics, and others that received EUA from the FDA for their Zika assays in recent months.  

But again, Theranos' timing to enter the diagnostics space as a test distributor isn't ideal, since the company has a long way to go to build trust within the lab community. Meanwhile, companies like Hologic and Focus Diagnostics already have longstanding relationships with labs that will buy its instruments and assays. "Call me cynical, but in typical Theranos fashion, [they] picked something that will garner a lot of attention," Putcha said.

Theranos is planning on implementing the miniLab in a "distributed" model, but it is unclear how this aligns with its regulatory strategy. The company plans to place the miniLab instrument in the near-patient setting, but maintain its operation and analysis in a centralized clinical lab. This is enabled through the Theranos Virtual Analyzer, which remotely recognizes the barcode on a cartridge containing a sample that's inserted into the miniLab and communicates to the machine the protocols needed to process the sample and run specific tests. The TVA can in turn interpret digital images and test results that the miniLab remotely communicates back.

Theranos last year garnered 510(k) clearance to perform a herpes simplex 1 virus (HSV-1) test on an older version of its technology platform. The FDA subsequently granted a CLIA waiver allowing that test to be run in a decentralized setting, outside of traditional clinical labs. It is unclear whether Theranos plans to similarly seek a CLIA certificate of waiver for the Zika test. 

Theranos did not answer specific questions for this article, but stated that the Zika virus assay is under regulatory review and directed GenomeWeb to a presentation on its technology and tests that CEO Elizabeth Holmes made at the American Association for Clinical Chemistry's annual meeting August 1.

It’s a beautiful example of a way in which testing can be decentralized and distributed in many of these places where Zika is a … problem.

Novel claims

Theranos has been garnering the wrong kind of attention lately, amid increasing questions about the accuracy of its testing technologies. After an inspection of its Newark, California, lab last year, CMS identified compliance issues and decided in July to impose a number of penalties, including revoking its CLIA certificate, monetary fines, and suspending the lab's ability to receive Medicare and Medicaid payments for testing services. 

The company is currently not performing any tests in it is Newark lab, and has said it is rebuilding that lab "from scratch" as it works to resolve the issues that CMS identified. If the sanctions take effect, Theranos will have to stop providing testing not only in its Newark lab, but also in its Scottsdale, Arizona, lab.

Hoping to move past these controversies and the accuracy questions plaguing its older Edison technology, Theranos' Holmes attempted to open a new chapter for her company at the AACC annual meeting. There, before thousands of lab professionals she presented a new miniaturized lab platform, dubbed miniLab, that can perform a range of assays closer to the point of care. 

If Theranos is able to achieve EUA for the Zika virus assay, it could be the first demonstration of the miniLab's capabilities in the field. "It’s a beautiful example of a way in which testing can be decentralized and distributed in many of these places where Zika is a … problem [and there are] limitations in the context of being able to do testing in really rural areas," Holmes said at the AACC meeting after she discussed Theranos' miniLab-based testing framework and presented data on a number of assays run on the platform.

However, for many in the lab industry Holmes’ presentation raised even more questions, not just about the capabilities and advantages of the technology compared to available methods, but also the company's business strategy to bring the miniLab and Zika virus assay to market.  

The miniLab, according to Holmes, is capable of processing and analyzing a single sample — small volumes of capillary or venous blood — across a number of assays. To do this, Theranos said it has miniaturized and integrated into the miniLab a spectrophotometer used in clinical chemistry analysis, a luminometer and fluorometer for immunochemistry testing, a cytometer for hematology and immunology assays, and a fluorescence-based isothermal amplification detector for molecular biology testing. Additionally, Theranos claims it has put in place miniaturized processing modules, such as a centrifuge system, cartridges, a material handling robot, and a thermocycler.

Many of the experts GenomeWeb spoke to noted that while the components of Theranos' miniLab may not be novel, its attempt to miniaturize these components into a box nearly 18 inches tall, 13.5 inches wide, and 22 inches deep is notable.

"If one attempted to put in all the testing methodologies being offered on the Theranos claimed platform into a regular lab, it would easily take up a few thousand feet of space," Rama Gullapalli, assistant professor at the University of New Mexico's pathology department, told GenomeWeb. "Many of these instruments for each of the modalities … are quite massive."

If what Theranos presented at the meeting "works flawlessly" then it would be an effective point-of-care system, "but that is the rub," he said. "We do not know what the miniaturization of these detection schemes is doing to the accuracy of the testing process."

If there is a highly automated instrument, its benefit/risk profile would be different from a point-of-care device.

EUA Data

FDA's goal in reviewing tests through the EUA pathway is to increase the capacity for Zika virus testing in an expedited fashion. As such, the requirements for manufacturers seeking EUA are "somewhat fewer" than what is required for 510(k) and premarket approval, Stephen Lovell at FDA's device division said during a briefing at AACC's annual meeting. But the agency still reviews analytical and clinical sensitivity and specificity data on a minimum of 50 positive specimens and between 50 and 100 negative specimens, paying special attention to cross-reactivity data.

For molecular assays, the FDA provides manufacturers reference materials for blind testing, including RNA from two current Zika virus strains in human plasma and three controls. Test makers also have the benefit of "draft review templates" that they can use to start the review process early in the development cycle of the test, and over time submit all the data necessary for EUA through interactions with FDA reviewers. "The template gives manufacturers an idea of how close or far away they are in the process," Lovell said. Once the template is completely filled out, it serves as the EUA submission.

In granting EUA, FDA weighs the totality of scientific evidence on the potential benefits and risks of each device independently, Lovell said. "For instance, if there is a highly automated instrument, its benefit/risk profile would be different from a point-of-care device," he said. "A pregnant woman wants to be sure that her Zika test result is correct, and that data that validates the performance of the device are critical."

Given all the questions surrounding Theranos' older Edison technology, AACC meeting attendees were eager to see data backing up the company's claims, particularly that it could perform many common lab tests from a finger prick's worth of blood. Capillary blood is not validated for the majority of routinely performed blood tests. At least one study has shown substantial variability in blood components measured in capillary blood compared to venous blood, and that as many as six to nine drops of blood from a finger prick may be needed for results consistent with those from venipuncture. 

For the Zika assay, however, Holmes presented clinical data on venous and capillary samples. The Zika test requires 75 microliters of plasma or serum, and takes real-time measurements every minute for 35 minutes to detect an inflection point in fluorescent signaling, Holmes explained.

Using venous serum, Theranos' Zika test had 95.6 percent negative agreement and 100 percent positive agreement with a US Centers for Disease Control RT-PCR assay and the Altona Diagnostics RealStar assay in a study of 180 healthy, febrile, and symptomatic patients from the US, Dominican Republic, and Colombia. The test had a limit of detection of 480 copies/mL with venous samples.

Using capillary whole blood, Theranos' Zika test had 100 percent negative agreement and 98 percent positive agreement with the CDC and Altona tests in a study analyzing samples from 77 healthy US patients and 30 symptomatic patients from the Dominican Republic. The limit of detection using capillary blood was 320 copies/mL.

"Our Zika assay on the miniLab is the only Zika test we know of that uses capillary blood, including for nucleic acid amplification," Holmes said at the AACC meeting. "These results are also part of the EUA submission that has been sent to the FDA."

Experts GenomeWeb spoke to said the data presented by Holmes seemed reasonable, but they still had reservations about other aspects of Theranos' testing technology, such as the amplification method for the Zika assay, which involves a PCR-based preamplification step followed by isothermal amplification. According to Holmes, the goal is to do a bulk preamplification across different pathogens and do individual amplification through isothermal.

Isothermal amplification is a newer method that lab scientists are exploring as a quicker and lower-cost alternative to standard PCR amplification. But Gullapalli of the University of New Mexico noted concerns about the quantitative aspects of isothermal amplification of DNA. "It has mostly been used for non-quantitative yes or no kind of answers, and mainly in the research domain," he told GenomeWeb.

This may not be an issue with the Zika assay, Gullapalli explained, but the use of isothermal amplification gives him pause about the ability of the platform to do quantitative assessments (i.e. viral load monitoring) with other viruses.

A few companies such as Quidel, Rheonix and Meridian Bioscience are developing isothermal based testing for infectious diseases. The FDA in June cleared Meridian Bioscience's illumigene Mycoplasma Direct pneumoniae test, which involves isothermal DNA amplification, and the company has said it is developing a test for Zika.

[A]lthough Theranos could sell FDA-cleared or approved IVD kits, the company cannot be involved in the testing itself without an active CLIA license.

'Centralized oversight'

It is also unclear exactly how Theranos plans to implement the hub-and-spoke model that it is proposing for the miniLab under current regulations.

As Holmes told the audience at the AACC meeting, "the TVA facilitates two-way communication with the miniLab," and enables distributed sample processing "while maintaining centralized oversight of test, replicate, and control data in a clinical laboratory in which the TVA is running."

Eric Schadt , director of the Icahn Institute for Genomics and Multiscale Biology at Mount Sinai, was intrigued by the interpretation-in-the-cloud capabilities that Holmes seemed to be suggesting with the TVA. "While there are other existing technologies that are similarly automated and integrated … they have not effectively tackled this type of more extensive processing of the data in a cloud-based model that can maximize interpretation for clinical decision making," Schadt told GenomeWeb. "That could be a big deal, a big differentiator."

But without a CLIA license, Theranos may not be involved at all in any part of the testing process, said lab experts, even with EUA authorization for its Zika test and even if the test interpretation is done through the TVA.

"In my personal view, although Theranos could sell FDA-cleared or approved IVD kits, the company cannot be involved in the testing itself without an active CLIA license," said Roger Klein, medical director of molecular pathology at Cleveland Clinic. "I think a strong case can be made that the prohibited owners, operators, and laboratory directors [at Theranos] cannot be involved with clinical laboratory testing, including storage, interpretation, and patient reporting of clinical laboratory data or information."

However, based on Klein's reading of the regulations, he saw room for Theranos to potentially argue that by using the distributed testing model via the combination of the miniLab and TVA, it is not operating a laboratory as defined by CLIA. The CLIA statute defines a clinical lab as: 

"a facility for the biological, microbiological, serological, chemical, immuno-hematological, hematological, biophysical, cytological, pathological, or other examination of materials derived from the human body for the purpose of providing information for the diagnosis, prevention, or treatment of any disease or impairment of, or the assessment of the health of, human beings."

The regulations also state that an entity only collecting specimens but not performing testing doesn't need a CLIA certificate. As such, if Theranos were to sell its MiniLab to a CLIA lab to perform testing, but housed the TVA internally, it could try to argue that it is not a lab as defined by CLIA, but Klein doesn't think this strategy will be successful. 

Federal lab regulations under CLIA address activities that are carried out in the post-analytical phase of testing, he noted, such as reporting of results, quality assessment of post-analytic systems, and lab director responsibilities. Although "distributed testing" models are increasingly employed in the setting of next-generation sequencing, where analytical and bioinformatics portions of a test may be performed at different facilities, Klein pointed out that the College of American Pathologists (which accredits labs) has issued a checklist stating that all portions of the NGS testing process have to be performed at a CLIA-certified lab.

In a similar fashion, Klein believes that by operating the TVA, Theranos would be providing "information" as part of a total test process overseen under CLIA. "Even if Theranos itself were not considered to be a laboratory under the statute, CMS arguably could prohibit the actual laboratories that purchased the [miniLab] from permitting Theranos to perform any aspect of the regulated, total test process, in this case data storage, interpretation, and reporting," said Klein, who is a member of several CAP working groups and participates in panels and committees working on laboratory and molecular testing issues and standards.

At first blush, MiniLab appears to be a poor man's Edison until and unless they show that it can do everything that it appears Edison could not.

Lingering doubts

Holmes' AACC presentation suggested to experts GenomeWeb spoke to that Theranos is opening up about how its technology works but they felt the company still had a distance to go in establishing trust in its technologies, which will be critical before it can place its miniLab in hospitals and at other labs.

Schadt, like others in the life sciences community closely following Theranos' story, was disappointed that the company didn't discuss its older Edison technology — especially since in an effort to address the lab compliance issues identified by CMS, the company had to void two years' worth of test results and send corrected reports to doctors.

Holmes presented "nothing on whether the accuracy they were showing on the miniLab instrument was similar or equivalent to the previous technology that was actually used in practice," Schadt said. "So, I guess they kind of punted on that and indicated they were just looking to the future, not the past. Although, I think they do owe some explanation to patients who were tested."

Schadt led a study comparing lab measures performed by Theranos from finger prick blood draws against testing performed by Quest and Laboratory Corporation of America using traditional blood draws. The study showed that although most of the results between labs agreed, Theranos reported abnormal test levels 1.6 times more often than Quest and LabCorp, particularly for lymphocytes and certain lipid levels. Theranos has criticized this study and noted that out-of-range results don't necessarily mean that the results are wrong. 

Holmes acknowledged at the AACC meeting that there are lots of questions about Theranos' previous technology, and that she would address them "in the appropriate forum." Her aim, she said, was to introduce the miniLab to the lab community, and begin a scientific exchange about Theranos' technologies that would include peer-reviewed publications and third-party evaluations.

"They seem to be launching miniLab because they can't launch Edison," Putcha said. "At first blush, MiniLab appears to be a poor man's Edison until and unless they show that it can do everything that it appears Edison could not."

Still, focusing just on the new miniLab, it was unclear to Putcha what was truly unique, particularly in the context of the Zika test. So, far, Theranos has highlighted that its test can detect certain lineages of the Zika virus that other assays cannot, and can analyze capillary blood.

"Even if they could perform the test, my question is why?" he posited, wondering whether there was a cost or turnaround time advantage compared to other tests.

"It could be that they are trying to establish their credibility," he said. "It's certainly not as sexy a story."

Madeleine Johnson provided additional reporting for this story. 

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