Theranos the US biotech start-up is to be dissolved after bad-blood tests exposed.
Theranos was set up in Silicon Valley in 2004 by 19-year-old founder Elizabeth Holmes who was considered as a young trailblazer in the biotech industry. She was a student at Stanford University when she imagined the idea for the firm’s Edison “finger-prick” technology to test the blood of patients using just a few drops, removing the need for large hypodermic needles and eliminating a phobia for many.
Somehow, despite the companies many claims on the efficacy of the tests being utterly bogus, they managed to receive billions from big-name investors and patented the product for worldwide use.
Theranos used persuasive advertising and solicitation to encourage medical professionals and their patients to use their blood testing laboratory services despite knowing the company could not produce accurate and reliable results consistently, prosecutors had said.
In June this year, Holmes and former Theranos President Ramesh “Sunny” Balwani were indicted on charges that they engaged in schemes to defraud and deliberately mislead investors, doctors and patients. The company employed over 800 staff members most of whom have now been laid off.
In an email to investors, Theranos’s CEO David Taylor wrote that the company would fold as part of its agreement with Fortress Investment Group, which provided it with a last-minute loan in late 2017 to save it from bankruptcy on the condition that it had the legal right to foreclose and take ownership of its assets should balance fall below an agreed amount.
In addition to Fortress, the deceitful company owes around $60 million to unsecured creditors, but, being broke means they have no money to pay them all and there will be no distributions to shareholders.
At its height, Theranos was valued at $9bn (£7bn) making Holmes the youngest self-made female billionaire. They even managed to convince the giant pharma chain Walgreens to roll out in-store “wellness centres” across the US, where their phoney product could be demonstrated. Walgreens has since ended its blood-testing partnership with the company, and in 2016 the Department of Health and Human Services in effect banned Theranos from doing any blood-testing work.
If convicted of their crimes, Holmes and Balwani could face life in prison and total fines of $2.75m each. The Securities and Exchange Commission (SEC) brought civil fraud charges against the two in March. Holmes settled with the SEC, agreeing to pay a measly $500,000 in fines and penalties. Balwani is fighting the charges.