Time's up for Theranos: Blood-testing company to dissolve

Henrietta Brewer
September 8, 2018

Theranos hit its commercial peak in 2013-14, amassing a $10 billion (£7.7 billion) valuation.

The company will seek to pay unsecured creditors its remaining cash in coming months, the Journal said, citing a shareholder email.

Enjoying this story? Subscribe to FierceBiotech! Founded in 2003 by then teenage Stanford dropout Elizabeth Holmes, Theranos grew into a $9 billion firm based on its promise of a blood test requiring only a finger prick, rather than a vial of blood.

Elizabeth Holmes, the founder of the scandal-plagued company, was indicted by federal prosecutors in June for allegedly defrauding investors, doctors and the public in a multi-million dollar scheme. "Despite our careful cash management, we are in default under the Fortress credit facility", Taylor wrote. But in 2015, the company's value plunged after news outlets began reporting that its technology wasn't as advertised.

In the email to shareholders, sent Tuesday, Theranos General Counsel and Chief Executive Officer David Taylor said the company is trying to negotiate a settlement with Fortress that would give the NY private-equity firm ownership of the company's patents but leave its remaining cash-estimated at about $5 million-for distribution to other unsecured creditors.

In March, the Securities and Exchange Commission announced that it had reached a settlement with Holmes over its accusations that she and former Theranos President Ramesh "Sunny" Balwani engaged in "massive fraud" worth $700 million.

Taylor's email appears to herald the final stages of Theranos, which was once one of Silicon Valley's most lauded startups, drawing investments from Oracle (ORCL) founder Larry Ellison and media mogul Rupert Murdoch. Most of the company's employees worked their last days on the previous Friday, August 31, with CEO David Taylor and a few support staff remaining on payroll for a few more days. Inc Magazine described Holmes "as the world's youngest female self-made billionaire, she's stumbled into this rarefied position and is beginning to own it".

Lawyers for the company did not respond to requests for comment.

It accused them of orchestrating an "elaborate, years-long fraud in which they exaggerated or made false statements about the company's technology, business, and financial performance". Holmes settled with the SEC by agreeing to pay $500,000 in fines and penalties, while Balwani is fighting the charges.

The big-name investors who poured money into Theranos will get nothing.

Other reports by iNewsToday