Health

Theranos Gone for Good - Company Says It Will Disolve

Share
Blood-testing startup Theranos is now set to formally dissolve just weeks after its CEO Elizabeth Holmes was charged with criminal fraud for allegedly defrauding investors doctors and the public in a multi-million dollar scheme

Theranos was in default under its credit facility with Fortress Investment Group, Taylor said in the letter.

The biotech company, which was once valued at $9 billion, built its reputation on the claim that it had come up with a cheaper, more efficient alternative to traditional medical tests.

Theranos founder Elizabeth Holmes settled a shareholder lawsuit in July that was created to recover whatever can be salvaged from the firm, the Journal said.

Theranos, founded in 2003 by a then 19-year-old, wide-eyed Elizabeth Holmes, the Stanford drop-out who everyone believed could change the world. But that unraveled spectacularly under the scrutiny of Wall Street Journal investigative reporter John Carreyrou.

Holmes, who was once considered a wunderkind of Silicon Valley, and Balwani were charged with conspiracy to commit wire fraud and nine counts of wire fraud each.

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

Holmes had claimed that the company's technology could run comprehensive lab tests using just a few drops of blood - a pitch that appealed to Walgreens, which partnered with Theranos to offer the blood tests in its stores.

Its founder, Elizabeth Holmes, and her second-in-command are facing criminal charges on accusations that they defrauded investors, doctors and patients.

"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".

Investors bought what Holmes was selling and invested hundreds of millions of dollars in the company.

Holmes and Balwani in March were also charged by the Securities and Exchange Commission with "massive fraud".

Investors poured almost $1 billion into Theranos and three former U.S. cabinet secretaries, two former United States senators, a retired admiral and a retired Marine Corps general joined its board. At one time, Theranos was worth more than US$10 billion.

Share