‘Astonishing.’ Partner of Theranos’ Elizabeth Holmes launches startup

She is serving an 11-year prison sentence for misleading investors and is barred from participating in federal health programs for 90 years. But Elizabeth Holmes’ dream of a diagnostic testing revolution is once again the talk of health care.

The emergence of Haemanthus, a company formed by Holmes’ partner, Billy Evans, triggered a mix of shock, anger, and rueful skepticism on Monday, as one of health care’s most infamous frauds morphed into a new form, with fresh capital behind it.

“I wish there were a way to short a stock before a company even exists,” said Geoffrey Baird, chair of laboratory medicine and pathology at the University of Washington in Seattle.

Life science veterans have their doubts, too. Alex Dickinson, a former Illumina executive, described news of Haemanthus’ existence as “super kooky” in a LinkedIn post.

Haemanthus is still in stealth mode, and details about its underlying technology are scant, according to The New York Times and NPR, which first disclosed the company’s plans. Still, a prototype of the device bears a striking resemblance to the boxy blood testing machines that made Theranos the hottest name in diagnostics — until the company collapsed amid withering media coverage, fraud allegations, and eventually Holmes’ conviction in 2022.

Haemanthus mixes in a few new elements to the pitch. It is starting with pet testing, and its device, which employs artificial intelligence, uses a laser to analyze blood, urine, and saliva samples. But it largely makes the same promise as Theranos — that it will transform diagnostic testing by quickly and painlessly detecting a wide array of health conditions.

“It’s kind of astonishing to see someone so close to that previous debacle trying to launch something so similar,” said Vikas Saini, president of the Lown Institute, a nonpartisan think tank that often spotlights waste in the U.S. health care system. “I guess people are always striving in this country.”

Saini said the hubris it takes to pursue such a venture is endemic to an industry where innumerable biological targets are opportunities for commodification by startups that need only convince investors of a product’s surface plausibility, and profit-potential, to strike it big. 

The financial system that surrounds health care isn’t built to weed out those companies, he said. It’s built to enable them.

“VCs put up their risk capital. They lose nine out of 10, or 19 out of 20. But that one in 20 is a 20X (return) or a 50X — and that keeps the merry-go-round running,” Saini said. “Products get released before they are fully vetted. It’s almost inherent in the structure of our system.”

For its part, Haemanthus is asking the public to suspend judgment. 

“Yes, our CEO, Billy Evans, is Elizabeth Holmes’ partner. Skepticism is rational. We must clear a higher bar,” the company said in a lengthy thread on X. It added: “This is not Theranos 2.0. Our approach is fundamentally different. We use light to read the complete molecular story in biological fluids, seeing patterns current tests can’t detect.” 

Evans, 33, is the heir to a Southern California hotel fortune — his family founded Evans Hotels in the San Diego area. He met Holmes while she was under investigation for fraud and has two children with the disgraced Theranos founder. Evans previously worked for Luminar Technologies, which develops sensors for use in autonomous vehicles. Some employees of Haemanthus also previously worked for Luminar.

Evans holds a bachelor’s in economics from the Massachusetts Institute of Technology according to his LinkedIn profile, which states that he’s currently employed at a “Not So Stealth Startup.”

Not everyone STAT spoke with was sharply critical of Evans’s new venture. D.A. Wallach, a former singer turned biotech investor, said he’s generally supportive of outsiders jumping into the life sciences given his own unorthodox background, adding that diagnostic companies have long been underfunded.

“My job as an entrepreneur, as an investor, is to be a champion and celebrator of people who are willing to take really big personal risks to try and move health care forward,” he said. “I have to be generally supportive of anyone doing that, particularly someone who’s got such a steep hill to climb.”

Wallach said he met Evans once six years ago at a Fourth of July party in Malibu, Calif. Their conversation, which Wallach described as pleasant, revolved around the hotels Evans’ family owned in San Diego. Diagnostics didn’t come up. 

Holmes was at that party, too, but it wasn’t until later that Wallach realized he’d also spoken with her. He noted that it’s unclear what if any role she has with the new company, adding that his own venture capital firm, Time BioVentures, would be highly unlikely to invest in any company in which Holmes is involved. Still, Wallach added, “to what extent her husband ought to suffer as a result of her sins, I can’t say.”

The Securities and Exchange Commission in 2018 banned Holmes from serving as the officer or director of a public company for 10 years, though Haemanthus is privately held. 

Despite his misgivings with the permissive financial environment, and its vulnerability to abuse, Saini said he believes Haemanthus will get the scrutiny it deserves.

“I don’t think it’s likely this guy is going to get funded, or this is going to go anywhere,” he said. “That it leaked out so quickly tells you that on some level there are checks and balances.”

During Theranos’ heyday, Holmes attracted big-name backers such as media mogul Rupert Murdoch and Oracle co-founder Larry Ellison. But it is not clear who would invest in this new venture given Holmes’ notorious fall from grace.

During her nearly four-month criminal trial, Holmes insisted she did not commit any crimes, even as she was accused of deceiving investors and trying to cover it up. A federal appeals court recently upheld her conviction.  Holmes is currently serving time in a federal prison in Bryan, Texas.

This renewed interest in blood testing may not be so surprising given that Holmes has made no secret of her determination to get back into the game.

 In her first interview from prison earlier this year, she told People magazine, “There is not a day I have not continued to work on my research and inventions. I remain completely committed to my dream of making affordable healthcare solutions available to everyone.”