Theranos – A recipe for disaster?

slippery

A lot has been said and written about Theranos. My goal in this blog post is not to reinvent the wheel but to guide the reader toward meaningful and relevant web content about this story.

Like everybody else I was fascinated by the rise of Elizabeth Holmes without questioning the technology itself. Why? First, at that time, it was not one of the company I was considering for analysis (and investment opportunity) and, second, because sometimes technical words and concepts are difficult to understand and you do not have the time to dig further.

Needless to say that my interest grew stronger when I saw that the company and its technology as well as its founder were under scrutiny… As I’m very curious I tried to understand.

My first objective was to find the timeline of the events. Interestingly, the fall started in October (2015) like the majority of stock market crashes… Autumn may be the season for distrust or maybe mistrust… (in this case for good reasons!).

Beyond what has been shown and written in the media, it is key to understand the path that led the company in this situation and the potential mistakes made so far. It seems that more experience on board could have helped and maybe avoided misdirection.

Management errors could have doomed the company but the most problematic issue may well be the reputation: not only the company’s one but also the ones of all the other diagnostic start-ups in US and Europe. Investors will be much more skeptical. On the other hand, it also shows that due diligence and analysis (not only financial but mostly technical and scientific) must be done before investing in order to limit and frame the risk.

The media obviously played a significant role in pushing, developing and supporting the hype behind Theranos. The reality of media pressure and the underlying celebrity fame are far from innocent.

Another point, which should have made us raised a red flag, is the fact that none of the big names in biotech investing took a single share of Theranos capital. Well-known investors are generally an excellent benchmark even if they are not immune to failure.

This story is really amazing and I will update this blog post each time I have relevant material to make it easy to follow the case.

So, stay tuned!

 

Relevant sources and articles:

The rise and fall of Theranos – A cartoon history – July 2016

Theranos Doomsday Clock – MedCityNews – February 2016

What Theranos and Elizabeth Holmes Have Always Misunderstood – INC – April 2016

Theranos debacle may scare investors away from diagnostic technology – STAT – April 2016

Theranos’ Lab Problems Go Way Deeper Than Its Secret Tech – Wired – April 2016

The secret culprit in the Theranos mess – Vanity Fair – May 2016

The Theranos Scandal Is Just The Beginning – Fast Company – May 2016

Theranos’ Voided Tests Could Make It a Magnet for Lawsuits – Wired – May 2016

 

Image Source

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s