After years of damning headlines, federal investigations, lawsuits, fines, infighting and desperate attempts to save the furniture, Elizabeth Holme’s Theranos has officially dissolved.
What remained of the company has been treading water for years, with more than 80 companies reportedly declining to throw out a liferaft. A solemn email to investors on Wednesday confirmed it has drowned.
The biotechnology start-up promised to revolutionise medicine with a pinprick blood test that could diagnose a whole range of diseases. The breakthrough technology was too good for investors to pass up, and far too good for the world not to believe.
That was until a 2015 Wall Street Journal story, when the first cracks in the story started to appear. Pretty soon the illusion of world-changing technology was replaced with reports of fraud, deception, bullying, intimidation and cover-up because the company’s miracle technology didn’t really work. The company was hacking rival company’s machines, faking test results and relying on traditional and more time consuming blood test methods.
‘OUT OF TIME’
Despite the fact the disgraced former CEO, now 34, has already paid half a million dollars in fines to the Securities and Exchange Commission and is facing the prospect of serious jail time, Theranos hadn’t given up hope of saving itself — until now.
On Wednesday, the company’s lawyer and replacement CEO, David Taylor, wrote in an email to shareholders that Theranos is formally dissolving, noting that the company has no choice but to shut down due to the conditions of a last-minute loan it received as a final lifeline.
The deal gave Theranos one final hit of cash and in exchange the investment firm that loaned the money received the right to “foreclose upon, and to sell or take ownership of” Theranos’s assets and intellectual property if the company’s cash levels got below a certain amount.
Theranos reached out to more than 80 potential buyers to shore up its cash, but none were interested.
According to a copy of the email published by the Wall Street Journal, the company’s investment banking partner “reached out on our behalf to over 80 potential sale counter-parties — from large healthcare companies to niche, IP-focused buyers — and we executed NDAs with 17 of those parties,” Mr Taylor wrote.
“Unfortunately, none of those leads has materialised into a transaction. We are now out of time.”
HOW ELIZABETH HOLMES FOOLED THE WORLD
At its height Theranos was valued at nearly $US10 billion ($A14 billion) and Elizabeth Holmes was a darling of industry.
It took the better part of a decade for the fraud perpetrated by Theranos to be uncovered, in large part because Ms Holmes was able to cultivate relationships with some of the world’s most powerful, influential and wealthy people.
Along with the bold vision, this was why investors — including Larry Ellison who is one of the richest people in the world — handed over a total of $US700 million ($A970 million) to her for a product which never really worked.
Other high-profile investors included Australian media mogul (and owner of news.com.au) Rupert Murdoch, former US Education Secretary Betsy DeVos, the founders of Walmart and the owner of the New England Patriots.
Elizabeth Holmes suckered in former US President Barack Obama, his Vice President Joe Biden and other top Democrats and Republicans.
She planted a string of high-ranking United States military officials and political powerbrokers on the Theranos board including Henry Kissinger, George Shultz, Donald Trump’s now Secretary of Defence, General Jim Mattis and Bill Clinton’s former Secretary of Defence, William Perry.
Sure it was weird that none of them had medical expertise, but who is going to argue with those guys when they went to bat for her?
John Carreyrou, the journalist who wrote the initial article that exposed the company’s deceit back in October 2015, has since written an astonishing book detailing what was going on inside the company during the years it evaded regulators, lied to investors and scrambled to cover their tracks.
On a recent podcast he spoke of how she was able to entice powerful men to keep the charade going.
“This is sort of a controversial topic now amid the #MeToo movement but it’s undeniable that her marks, again and again, were older men,” he said.
“She wowed them. I don’t necessarily think that it was a sexual thing by any means … I think it was a combination of her intelligence, a combination of her charisma, her bold vision, her energy, all of that in one package.”
Perhaps the most incredible thing about her downfall, is her denial of it. She has never admitted wrongdoing or apologised to the patients whose health she risked. And according to Carreyrou, astonishingly she is cooking up new business plans.
“She is now telling people she is going to start a new company,” he said.
In June, Ms Holmes and her former chief operating officer and former lover, Ramesh Balwani, were charged with two counts conspiracy to commit wire fraud and nine counts of wire fraud.
If convicted, they could face prison sentences which would keep them behind bars for the rest of their lives, and total fines of $3.69 million each.