Theranos, the one-time Silicon Valley biotech star valued at more than $9 billion, has ultimately run out of money, employees and time. It will formally disband in the coming months, according to an email to shareholders obtained by the Wall Street Journal.
Vaulted by failed promises for its simple and comprehensive finger-stick blood test technology, the decision to dissolve the company comes after former CEO Elizabeth Holmes and ex-COO Ramesh “Sunny” Balwani were indicted in June on federal criminal charges of wire fraud and conspiracy.
The company will be liquidated over the next six to 12 months, and plans to dole out its estimated $5 million in remaining cash to its unsecured creditors, according to the email sent out by Theranos General Counsel and CEO David Taylor.
Many of the high-profile investors who backed the company—including media mogul Rupert Murdoch; the Waltons, of Walmart fame; the Cox family behind the Atlanta media company; and Education Secretary Betsy DeVos and her family, all of whom made investments of more than $100 million—will get nothing.
Theranos had been searching for a potential buyer for months, said the WSJ, courting more than 80 suitors with over a dozen entering more formal discussions and deliberations, before coming up empty. This past April, the company laid off most of its employees to hold off bankruptcy. Most of the remaining two dozen workers were let go Aug. 31, with just Taylor and a few support staff left manning their posts.
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According to the WSJ, which first investigated Theranos’ business practices and claims beginning in October 2015, the company is set to evaporate after breaching a deal related to a $65 million loan it received last year from Fortress Investment Group to develop a Zika virus assay—which is entitled to foreclose on the company and its assets if its cash dropped too far.
In the email to shareholders, Taylor said Theranos is currently aiming to settle with Fortress, by trading ownership of its patents for being allowed to keep its remaining $5 million, slated for distribution.