Last blood: why the empire of Elizabeth Holmes fell

Not too long ago, the story of 32-year-old founder of Theranos was like a fairy tale: investors brough her money, the journalists called her Steve Jobs in a skirt, and she promised a revolution in medicine. However, Forbes reduced Holmes's wealth to zero last week. What led to this?
08.06.2016
Forbes
Origin source
Climbing Elizabeth Holmes has long been like a fairy tale. 32-year-old entrepreneur has promised that her company Theranos once and for all will turn blood analysis system, which doctors around the world enjoy decades. The business press and Silicon Valley overnight liked 'Steve Jobs in a skirt. " It is this carefully cultivated image of Holmes, dressed in a black turtleneck and slacks, and dreaming aloud about how its technology can help heal hundreds of thousands of people.

Now, two years after Holmes came out of the laboratories in the world, facing tale ends. Last week, the American Forbes resets its state, reaching $ 4.5 billion, which essentially reflects valuation Theranos, where Holmes owns half.

Thus, the youngest woman billionaire, made his fortune on its own - it is so preferred to talk about her media - could soon be left with nothing.

The fall of the empire, Elizabeth Holmes seems now even more rapid than the unexpected rise. Even in 2013, few people had heard about the company Theranos. Meanwhile, asince its founding took place at that time for 10 years. These years, according to Holmes, went to the development of innovative technology (the company has registered 23 patents), which allows a single drop of blood to get ten times more information than conventional assays using a syringe.

The main claims are now voiced by journalists and investors concluded that Theranos was unable to provide evidence of the effectiveness of its methods, despite promises. Moreover, because of the proceedings c Office for the Supervision of Quality Food and Drug Administration (Food and Drug Administration, FDA) the company had to temporarily abandon their know-how - blood tests without a syringe.

The idea still sounds good. This allowed including Theranos summer 2014 to raise about $ 400 million from venture investors, despite the fact that the technology was kept secret. Theranos officially stated that it was possible only to improve classical analysis techniques.

The only skeptics at the time were competing companies and some experts from the scientific community: "If this technologyI'm so good, why not concentrate on the manufacture of instruments and not to sell them to companies that already have their own infrastructure work with patients? "doubtful and that the company did not publish research results in scientific journals. Links to commercial secrets are not satisfied.

Despite this, bloggers and business magazines have loved Holmes and offered Theranos unicorn status - so called companies that can blow up its market, following the example of Google or Uber. At conferences and in an interview Holmes told me that she wants to help people and save lives, like her father, who worked at the US Agency for International Development.

"Even as a child my father inspired pictures from different points of the world, where he helped children. I wanted to do the same, "- says Holmes.

Respectable companies Holmes, who dropped out of Stanford for the business, adding the board of directors, which included former senators and ministers, including the legendary Henry Kissinger.

In spite of the secrecy of the new technology, since 2014and the company managed to conclude several deals with clinics and laboratories. The biggest of them was an agreement with Walgreens network whereby Theranos able to open about 50 small blood collection centers in partner stores. All it seemed to be going according to plan. Last summer, the FDA approved the first of even more than two hundred tests (on the herpes virus) by Holmes technology.

However, a few months later criticism of Holmes began to sound more confident. The first bomb released the newspaper Wall Street Journal. According to former employees of the company, which quoted the newspaper, most of the tests that the company offered to patients were not made through its own device called Edison, which should work with microscopic amounts of blood, but with the help of Siemens quite traditional equipment. To get the right amount of blood for a test, it had to be diluted.

According to the authors, Holmes over five months, refused to give him an interview, and the company's lawyer could not specify what proportion of test Theranos spends on its own innovation onborudovaniya, citing trade secrets. But the main reproach journalists was the fact that the words of former employees, the company tried to keep silent about the inaccurate results of a blood test, which became apparent during the comparative tests of its own and third-party equipment.

After a couple of weeks with accusations acted as the FDA, which conducted its own test laboratory. Despite the fact that last summer's management allowed Theranos blood test for herpes patients, this time to the inspectors found 14 violations formal. Thus, the company has ignored the complaints of customers, including doctors, functionality. regulators also questioned according to the specs of one of the company's devices (name hidden in the published version of the document).

Elizabeth Holmes had to go on the defensive. In just a few days the company has changed the structure of the Board of Directors: left such "heavyweights" as Kissinger, and medical experts have come true.

Founder Theranos certainly promised all to understand, to present to the public all the necessary information and prove Thuits technology and devices work.

However, public opinion has already unfolded. How Holmes looked darling of the business public in the last two years, so strong barrage of criticism is now hit for the company. In January of this year, the US Office of CMS (its functions include regulation of laboratories) stated that check in a California laboratory revealed violations that endanger the patient's health. In March of this same agency has suspended nearly Holmes to work in the field of blood analysis of unresolved violations. Cherry on the cake was the investigation of the US Securities Commission (SEC), which is followed by medical authorities wondered whether Holmes has not introduced misleading investors about the new miracle of technology.

Since then, the former darling of the press is silent. In a recent interview with NBC television station in April, before the SEC investigation, 32-year-old Holmes acknowledged his own guilt: "I feel broken due to the fact that we could not see any problems in our lab right away." Holmes also said she has no doubts,that the company will be able to survive, and the same mistakes will not happen again. However, since the public and investors have not seen anything that would strengthen her words. And if trust is not returned, the chance of survival is less.

In the meantime, according to new calculations of Forbes American, Theranos market price is only $ 800 million instead of the former $ 9 billion. The majority of these funds belong to the investors. In the case of liquidation of the company they will get all the money, Holmes also runs the risk of being left with nothing.

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