Theranos, the controversial blood-testing startup, finally shuts down
The blood-testing company Theranos, once hailed as a life-saving medical revolution, is to shut down amid claims its executives have conducted years of fraudulent business. CEO David Taylor confirmed that the firm will dissolve after efforts to pay creditors – to whom they owe $60 million (£46.4 million) – with its remaining supply of cash.
A letter to Theranos shareholders was picked up by The Wall Street Journal, revealing Taylor’s lament that “[w]e are now finally out of time”. The firm’s CEO details sustained efforts to sell the company to a spectrum of businesses, “from large healthcare companies to niche, IP-focused buyers”, a feat which resulted in 17 NDAs. Endeavours ultimately proved fruitless, with Taylor confirming that “none of those leads […] materialised into a transaction”.
As such, the firm “intends to enter into an assignment for the benefit of creditors”. After this process, the company – which holds about $5 million (£3.9 million) in remaining cash – intends to dissolve.
Theranos was founded and helmed by then-19-year-old Stanford dropout Elizabeth Holmes in 2003 promising the development of blood tests requiring only tiny amounts of blood (1/100 – 1/1000 the norm). Its hope was to save people from painful, drawn out and invasive medical procedures, as well as promising to do it more economically, and with less susceptibility to human error.
Theranos hit its commercial peak in 2013-14, amassing a $10 billion (£7.7 billion) valuation. US pharmacy giant Walgreens showed interest in the company, partnering to offer the blood tests in itsstores. Holmes garnered abundant media praise, with The New Yorker lauding her “One Woman Drive to Revolutionise Medical Testing”.
However, the rise of Theranos quickly unravelled after a Wall Street Journal article questioned the validity of its technology. Cue a slew of lawsuits, commercial challenges and investigations from investors and medical regulators alike, with titans like the US Securities and Exchange Commission (SEC) and Centers for Medicare and Medicaid Services (CMS) wading in on the action against Theranos. This all stacked up against Holmes seeing her dubbed one of the “World’s Most Disappointing Leaders” by Forbes.
Holmes was succeeded as CEO by Taylor in June this year, after the former was indicted with nine counts of wire fraud and two counts of conspiracy to commit wire fraud by a US grand jury. Theranos operations formally ceased on 31 August 2018, with Taylor and a few support staff lingering on the payroll for several days after.
The current liquidation process could mean it takes 6 to 12 months for creditors to receive Theranos’ remaining cash. As for Holmes, her failed legacy remains confined to the annals of biotech history.