The Theranos Story, ch. 48: down to 24 employees in a last ditch before bankruptcy

click to enlargeThe ground is next. Theranos is down to its last two dozen employees or less, in a bid to buy a few more months of time before bankruptcy, according to a breaking report in the Wall Street Journal.

The announcement was made by Elizabeth Holmes Tuesday to approximately 125 remaining employees at its downscale Newark, California headquarters. (This Editor wonders if she wore a black turtleneck.) Interestingly, Ms. Holmes remains CEO after settling civil charges with the Securities and Exchange Commission (SEC) while a criminal investigation continues out of the US Attorney’s office in San Francisco. 

The WSJ article from the estimable John Carreyrou (who deserves an old-school Pulitzer Prize for his investigative reporting) recaps Theranos’ fall for those who need it. But…there’s more. Theranos received only $65 million of $100 million promised in their last (ditch) funding from Fortress Investment Group late last year, revealed by Ms. Holmes in an investor email this past Tuesday. The remainder is contingent on Theranos achieving an FDA Zika blood test approval using their miniLab. She stated that this test is still having problems and appealed to investors for yet more funding. The layoffs were designed to keep their cash reserve over $3 million until the end of July, below which Fortress is entitled to seize Theranos’ assets and liquidate them. This, as we have previously noted, is Fortress’ specialty–as now fan dancing is Ms. Holmes’.

According to Mr. Carreyrou’s sources, Ms. Holmes is still living large in basic black. “Until Tuesday, Ms. Holmes still had two personal assistants and two security guards who drove her around in a black Cadillac Escalade SUV, according to the people familiar with the matter.” This Editor wonders what happened after Tuesday. Public transit? A used car for a few thousand?

Theranos and the $900 million in lost investment may have also put a wet blanket on 2017 health tech funding, based on what we’ve learned in Rock Health’s report [TTA 5 Apr]. Other companies with real advances and promise may be paying the price for Theranos’ hype and fakery.

Our 47 past chapters and other Theranos mentions are for your perusal in our pages here

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