Blood-Testing Firm Theranos Will Formally Dissolve, Report Says


Blood-Testing Firm Theranos Will Formally Dissolve, Report Says

Taylor took over in June for Elizabeth Holmes, the founder of the company who is now facing criminal fraud charges.

The company aims to seek board and shareholder consent for the Fortress settlement and corporate dissolution later this week and proceed with the actions starting Monday, Taylor said. She was also banned from serving as an officer or director of a public company for 10 years.

In the wake of a high-profile scandal, the company will formally dissolve, according to an email to shareholders.

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. Thus, Theranos came into existence. They claimed to need a small finger prick of blood as opposed to vials most traditional blood tests require. The patch would consist of a blood collection vessel dubbed as the "nanotainer", and an analysis machine called the "Edison".

Theranos and its founder Elizabeth Holmes was once the darling of Silicon Valley.

The company pivoted to focus its resources on a different product area - clinical lab testing, including the ubiquitous blood test.

The downfall of Theranos started soon after that. But that unraveled spectacularly under the scrutiny of Wall Street Journal investigative reporter John Carreyrou. Theranos later had to void a million tests, and some patients reported ill effects from relying on inaccurate results of the testing, the Journal reported. This was followed by a Food and Drug Administration (FDA) report that claimed that the "nanotainer" was "not validated under actual or simulated use conditions". Just in October of 2015, Holmes was estimated to have net worth is $4.5 billion.

It said acting chief and general counsel David Taylor sent an email to shareholders explaining that it has no choice but to shut its doors due to complex terms of a deal with Fortress Investment Group which saved it from bankruptcy past year. In March, US securities regulators accused the youthful entrepreneur of an "elaborate, years-long fraud".

Late Tuesday, Theranos CEO David Taylor emailed investors to announce that the company is shutting down. The company says it has about $5 million remaining in cash.

Balwani issued a statement through a representative: "As an investor who put millions of dollars of his own money and almost seven years of his life into Theranos, Mr. Balwani was saddened to see the letter from Theranos to investors [Tuesday]". It perpetrated Silicon Valley's biggest fraud, and remains a cautionary tale for investors looking to pour their money on the "next great idea".