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Comment by achow | Hacker News Reader

For discussion sake I’m going to throw this out - The $10B valuation is the ONLY issue here.

We know that for all the test except one, Theranos uses usual diagnostic devices (from Siemens etc.) like any other diagnostic lab. So it will be something like ~99.9% of their tests are done on traditional devices. So we can safely assume that those tests are as reliable as those from other labs.

So if they are same as any other legacy industry for 99.9% of the time, then why such a big valuation?

They should be valued same as their nearest rival (which I’m sure is a giant compared to Theranos), and if adjusted for the fact that whether Theranos is going to upset them without any secret sauce (and with fewer resources) then the valuation should be near to $0.

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Well, the troubling thread here is that that may not be posssible using the amount of blood Theranos collects. Then the question becomes not only why is their valuation so high (which the public doesn't need to care too much about) but "how well do these traditional tests work with Theranos samples?"

That the answer could be "not very well" (and we haven't heard otherwise) is what's most troubling to me.

Well, the troubling thread here is that that may not be posssible using the amount of blood Theranos collects.

It's say it's worse. I followed up on the general impression they were proposing to do this all with fingersticks, e.g. this citation from Wikipedia's introductory paragraph published in 2013: http://www.wsj.com/news/articles/SB1000142412788732412300457...

Based on my general knowledge of biology and medicine, I'd expect there would be a whole bunch of things you can't test that way due to general contamination from all the normal cells and their membranes that get punctured in a finger stick. Lipid panels, for example. In fact, the large venous draws normally taken, at least for the first tube, could be in part to swamp the contamination that comes from getting the needle into the vein in the first place.

Per other discussions, they're now using their own technology only for HSV-1 tests, which are PCR based and therefore require only a tiny sample, and the above sort of contamination would not be an issue.

Agree, and to your point I have read and watched most of the latest interviews given by Holmes. In no place she claims that Theranos is using blood collected in nanotainers (non-venous blood or finger prick blood) for assay (component detection) using traditional diagnostic equipments.

Theranos uses non-venous blood for their proprietary tests (currently only 1 test) and rest 99.9% (figuratively speaking) tests uses venous blood in traditional diagnostic equipment.

Back to the same question - If almost all of their tests are done using traditional equipments, then why $9B valuation?

Seem overvalued. But valuations are on future value. So if they could get their test through the mill, what would they be worth? Multiply by your estimate of their chances. Probably << $9B

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