Published: Sat, September 08, 2018
Health Care | By Belinda Paul

News Controversial Silicon Valley health tech firm 'dissolves'

News Controversial Silicon Valley health tech firm 'dissolves'

Theranos founder Elizabeth Holmes, who started the company when she was 19, was celebrated as a rising Silicon Valley star until it became clear that numerous claims about the company's supposedly revolutionary blood test were bogus.

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.

Elizabeth Holmes, founder of the embattled blood-testing company, was charged with fraud alongside Ramesh "Sunny" Balwani, the former chief operating officer of Theranos.

Holmes founded the company in 2003 to develop technology that she claimed was able to conduct clinical tests on small amounts of blood.

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

Investors lost nearly $1 billion in the company, The Journal reported.

Over the next few months, Theranos will pay investors back out of existing cash, according to a Time report.

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. It may take up to a year to have everything settled, but the company's employees worked for the last time on August 31.

She carefully crafted her image as well, often wearing black turtleneck sweaters that led some in Silicon Valley to describe her as "the next Steve Jobs", a reference to the Apple founder. A notoriously secretive company, Theranos shared very little about its blood-testing machine, nicknamed Edison, with the public or medical community. Walgreens ended its relationship with Theranos in 2016. Balwani is fighting the charges.

There are many outstanding questions surrounding Theranos, not least the outcome of Ms Holmes and Mr Balwani's forthcoming fraud trial, as well as whether the remaining patents being acquired by Fortress will turn out to have any lasting value. She eventually convinced her chemical engineering professor to join her, and he gave up his Stanford tenure to join her new company Theranos, which is an amalgam of the words "therapy" and "diagnosis".

What happened? How did Theranos's investors and believers get it so wrong?

FOX Business' Brittany De Lea contributed to this article.

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