Thursday, September 6, 2018

Theranos Is Shutting Down


Theranos goes out with barely a whisper. Once heralded as the revolutionary new way to conduct a biopsy to detect myriad diseases, all with one finger prick, the company is making preparations to shut its operations, consistent with a letter sent to shareholders.

“We are now out of your time,” David Taylor, the company’s chief executive, and general counsel informed investors in an email first reported on Tuesday by The Wall Street Journal, whose in-depth investigation unraveled the company’s claims. Mr. Taylor declined to comment further, saying the letter spoke for itself.

Theranos’s efforts are now focused on avoiding bankruptcy.

It’s in default under a credit agreement reached last year with Fortress Investment Group, Mr. Taylor told shareholders. the corporate is negotiating a settlement with Fortress, which might then own the company’s property and permit Theranos to distribute its remaining cash — some $5 million — to unsecured creditors.

“Because the company’s cash isn't nearly sufficient to pay all of the creditors fully, there will be no distribution to shareholders” under the plan, Mr. Taylor said within the letter.

The Theranos board is predicted to satisfy on Friday and therefore the process of dissolving the company is predicted to require six to 12 months.

Founded in 2003 by Elizabeth Holmes, a 19-year-old Stanford University dropout, Theranos promised to shake up the whole lab industry, making blood tests much easier and less expensive than traditional methods.

A charismatic executive who wore black turtlenecks and spoke passionately about giving people control over their health information, Ms. Holmes attracted high-profile investors and assembled a Who’s Who of directors, including two former secretaries of state and two former us senators. Gen. Jim Mattis, the present secretary of defense, also served on the board.

At its peak, the privately held company was valued at a lofty $9 billion, and Ms. Holmes was promoted together of the nation’s most successful female entrepreneurs.

But questions emerged about the accuracy of the company’s testing, and federal regulators barred Ms. Holmes from owning and operating a laboratory for 2 years in 2016.

In March, the Securities and Exchange Commission charged Ms. Holmes with widespread fraud, accusing her of exaggerating — even lying — about her technology.

In announcing the charges, the S.E.C. said that Theranos and Ms. Holmes agreed to a settlement.

Then in June, Ms. Holmes was indicted on criminal charges, and she or he has pleaded not guilty.

The company’s travails are the topic of a book by The Wall Street Journal reporter, John Carreyrou, called “Bad Blood: Secrets and Lies during a Silicon Valley Startup,” and a forthcoming movie.

Lawyers for the corporate and Ms. Holmes didn't answer requests for comment.

Ramesh Balwani, the company’s former president who continues to fight the civil and criminal charges against him issued a press release through a representative: “As an an investor who put many dollars of his own money and nearly seven years of his life into Theranos, Mr. Balwani was saddened to ascertain the letter from Theranos to investors yesterday.”


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