Blood-testing startup Theranos is shutting down

Sep 08, 2018, 04:24
Blood-testing startup Theranos is shutting down

Theranos, the one-time Silicon Valley biotech star valued at more than $9 billion, has ultimately run out of money, employees and time. Both have denied the charges.

The announcement of the closure comes almost three months after Theranos founder Holmes and Chief Operating Officer Ramesh Balwani were charged with criminal fraud.

Theranos Inc, the once-celebrated Silicon Valley blood-testing firm, is about to dissolve itself months after top executives were indicted for defrauding investors, the Wall Street Journal reported on Wednesday.

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Elizabeth Holmes, founder of the embattled blood-testing company, was charged with fraud alongside Ramesh "Sunny" Balwani, the former chief operating officer of Theranos.

Investors bought what Holmes was selling and invested hundreds of millions of dollars in the company. "We are now out of time", Taylor wrote in the letter, a copy of which was published by the WSJ.

However, the rise of Theranos quickly unravelled after a Wall Street Journal article questioned the validity of its technology. USA pharmacy giant Walgreens showed interest in the company, partnering to offer the blood tests in itsstores. In 2015, Forbes declared Holmes to be the world's youngest self-made female billionaire - with a personal net worth of $4.5 billion. After years of scandal and failed attempts to sell the company, its cash dipped too low, according to a $65 million loan agreement with Fortress Investment Group, which is entitled to foreclose on the company's assets. The Journal reports that most of the company's employees - reported to be down to fewer than two dozen as of April, a drastic fall from a peak of 800 - worked their last day on August 31.

In March, Holmes reached a settlement with the Securities and Exchange Commission related to its fraud charges, which further damaged Theranos and helped lead to its demise. "For example, allegedly, Holmes and Balwani knew that the analyzer, in truth, had accuracy and reliability problems, performed a limited number of tests, was slower than some competing devices, and, in some respects, could not compete with existing, more conventional machines".

Walgreens ended its blood-testing partnership with the company, and the Department of Health and Human Services effectively banned Theranos in 2016 from doing any blood testing work at all. She eventually convinced her chemical engineering professor to join her, and he gave up his Stanford tenure to join her new company Theranos, which is an amalgam of the words "therapy" and "diagnosis".

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