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Theranos Secures $100M in New Funding from Fortress Capital

58 points by ourmandave 9y ago

Top19 9y ago
Are you kidding me?
- hindsightbias 9y ago
  All they need to do is rebrand as Therablockchain or something.
  - stevenj 9y ago
    Lol, thanks for the laugh. Merry Christmas.
    - sitepodmatt 9y ago
      Cue the ICO and worthless shitcoin
alistproducer2 9y ago
For certain people it appears the only way to fail is up.
atonse 9y ago
(“Famously inflated the capabilities of its devices”) Didn’t they just flat out lie?
corvallis 9y ago
How is this company still operational? Do serious people believe that they will have a functioning and profitable product in the future? Does Theranos still have salaried employees, and if so, what are they working on? The article mentions a "box that diagnoses diseases", which is a meaningless description. They've gone from "running on fumes" to ...what, exactly? I'm extremely puzzled.
- creaghpatr 9y ago
  They have $200M of cash on hand according to the article. Not defending them but you can do a lot with $200M including a full pivot and brand reboot.
  - corvallis 9y ago
    They pay rent on Page Mill Road and have multiple lawsuits pending, last I heard, so I'm wondering how far that cash would actually take them. Also, if Elizabeth Holmes insists on the same level of control without any biomedical credentials, how realistic is a reboot? I would very much like to know the reasoning that any funding providers would use to justify their support.
    - creaghpatr 9y ago
      I guess Fortress thinks they can get a return on the assets, whatever they are. Could be a power play too, if you look at Theranos board there are a surprising amount of political players which could be advantageous for the SoftBank-owned Fortress. Edit: looks like most of the original board members are gone post-scandal. But for reference here’s who was on it previously http://fortune.com/2015/10/15/theranos-board-leadership/ http://fortune.com/2015/10/15/theranos-board-leadership/
      - corvallis 9y ago
        Investment groups that buy troubled assets are beyond my scope of understanding, but is that what is happening here? It sounds like Theranos is purporting to have a functioning product/business plan in the near future. I work in medicine so my colleagues and I have been following this farce for several years. When so many advancements and biomedical research can benefit from such funding, why throw money at this fraudulent company? Edit: Many thanks to users hkmurakami and ukulele above for explanations/clarifications.
    - hkmurakami 9y ago
      They moved everyone to their Newark manufacturing office. (I was wondering why the lights were completely out at 7pm on a Wednesday this week). I've also seen an ad for subleasing the space relatively recently (Nov or so) so perhaps they have not found sublettors yet.
bhouston 9y ago
Fortress is weird: https://en.wikipedia.org/wiki/Fortress_Investment_Group https://en.wikipedia.org/wiki/Fortress_Investment_Group They have often bought distressed assets and also they did some weird things with regards to the Vancouver Olympics.
kayhi 9y ago
This is a pitch deck that I would love to see We’ve had some set backs, but are really excited to show you...
CalChris 9y ago
Fortress is selling itself (trying at least) to SoftBank [1]. Their stock price is down to 7.87 from 30.17 IPO [2]. Fortress hasn't been doing too well. They've never done well. [1] https://finance.yahoo.com/quote/FIG/ https://finance.yahoo.com/quote/FIG/ [2] https://www.institutionalinvestor.com/article/b1505p66vq06cy/the-fall-of-fortress https://www.institutionalinvestor.com/article/b1505p66vq06cy...
jarym 9y ago
We always assume these fund manager types are smart but history has shown they're often as dumb as the average joe public. A company with no product, casual relationship with the truth as far as its technical capability goes, tarnished reputation and totally unqualified CEO is worth $0
CptFribble 9y ago
I am astounded that anyone would touch Theranos with a 100-mile pole. Their claims about their super-special tech were deliberately misleading, taking advantage of the general public's lack of medlab knowledge. They never released details of their "miracle" tech, and even if their claims were true, Holmes' entire "vision" fundamentally misunderstood the lab business and the way data and decisions flow from patient to doctor. Maybe there's some savvy investing trick going on behind the scenes that I don't understand, but as a former medical lab professional everything about Theranos was giant red flags from the beginning.
- hkmurakami 9y ago
  Perhaps their assets are north of $100m and this debt is senior to all equity.
ukulele 9y ago
For everyone saying Fortress are idiots: this is a loan and the amount is conditional. That means 2 things: 1) If Theranos fails, Fortress can claim its assets. 2) The money is not released until certain milestones are met. So either Theranos misses the milestones, folds, and has Fortress take over its assets, OR Theranos meets the milestones and is actually a valuable business. Depending on the terms, Fortress could have easily structured this deal such that they win in either scenario. I would imagine that Theranos was desperate ("distressed"), so the terms are likely pretty onerous.
- hkmurakami 9y ago
  I saw that Fortress is getting warrants worth 4% of Theranos so I agree with your arrestment on both scenarios.
  - sjg007 9y ago
    Their building off of Page Mill is probably worth a lot.
    - CalChris 9y ago
      I'm certain they don't own 1701 Page Mill Rd and in fact, Stanford owned it previously. https://www.bizjournals.com/sanfrancisco/news/2017/01/04/kilroy-realty-krc-theranos-palo-alto-stanford.html https://www.bizjournals.com/sanfrancisco/news/2017/01/04/kil...
      - hkmurakami 9y ago
        That lot used to house the old WSJ office. Which I find poetic given that the journal was the one that broke the Theranos story.
    - tylerlh 9y ago
      Kilroy Realty purchased the property in January along with an adjacent property for $130m. Stanford owns the land and does long term ground leases.
mythrwy 9y ago
While the potential negative consequences for cheating fail to outweigh the potential benefits of cheating (depending on who the person is of course) cheating will continue to occur. I'd like to think there was a time when stunts like Theranos pulled earlier would have been career ending for the people involved but maybe that time never existed. It does suck for everyone else though. The implicit gain in scummy behavior is definitely a flaw in our system that hopefully gets patched up at some point.
reiinakano 9y ago
"Theranos, diagnose diseases with AI and Blockchain support"
cinquemb 9y ago
Great, we need to have more politically enabled companies like Theranos and hope that they continue to thrive. Hackers compromising their infrastructure from eastern europe/russia/china based IP, and releasing the genetic information they have could provide a great service to the public in the future.
solotronics 9y ago
pivot to Theranos Blockchain Biotech and get the party started again

58 points by ourmandave 9y ago

Top19 9y ago

Are you kidding me?

hindsightbias 9y ago
All they need to do is rebrand as Therablockchain or something.
- stevenj 9y ago
  Lol, thanks for the laugh. Merry Christmas.
  - sitepodmatt 9y ago
    Cue the ICO and worthless shitcoin

alistproducer2 9y ago

For certain people it appears the only way to fail is up.

atonse 9y ago

(“Famously inflated the capabilities of its devices”) Didn’t they just flat out lie?

corvallis 9y ago

How is this company still operational? Do serious people believe that they will have a functioning and profitable product in the future? Does Theranos still have salaried employees, and if so, what are they working on? The article mentions a "box that diagnoses diseases", which is a meaningless description. They've gone from "running on fumes" to ...what, exactly? I'm extremely puzzled.

creaghpatr 9y ago
They have $200M of cash on hand according to the article. Not defending them but you can do a lot with $200M including a full pivot and brand reboot.
- corvallis 9y ago
  They pay rent on Page Mill Road and have multiple lawsuits pending, last I heard, so I'm wondering how far that cash would actually take them. Also, if Elizabeth Holmes insists on the same level of control without any biomedical credentials, how realistic is a reboot? I would very much like to know the reasoning that any funding providers would use to justify their support.
  - creaghpatr 9y ago
    I guess Fortress thinks they can get a return on the assets, whatever they are. Could be a power play too, if you look at Theranos board there are a surprising amount of political players which could be advantageous for the SoftBank-owned Fortress. Edit: looks like most of the original board members are gone post-scandal. But for reference here’s who was on it previously http://fortune.com/2015/10/15/theranos-board-leadership/ http://fortune.com/2015/10/15/theranos-board-leadership/
    - corvallis 9y ago
      Investment groups that buy troubled assets are beyond my scope of understanding, but is that what is happening here? It sounds like Theranos is purporting to have a functioning product/business plan in the near future. I work in medicine so my colleagues and I have been following this farce for several years. When so many advancements and biomedical research can benefit from such funding, why throw money at this fraudulent company? Edit: Many thanks to users hkmurakami and ukulele above for explanations/clarifications.
  - hkmurakami 9y ago
    They moved everyone to their Newark manufacturing office. (I was wondering why the lights were completely out at 7pm on a Wednesday this week). I've also seen an ad for subleasing the space relatively recently (Nov or so) so perhaps they have not found sublettors yet.

bhouston 9y ago

Fortress is weird: https://en.wikipedia.org/wiki/Fortress_Investment_Group https://en.wikipedia.org/wiki/Fortress_Investment_Group They have often bought distressed assets and also they did some weird things with regards to the Vancouver Olympics.

kayhi 9y ago

This is a pitch deck that I would love to see We’ve had some set backs, but are really excited to show you...

CalChris 9y ago

Fortress is selling itself (trying at least) to SoftBank [1]. Their stock price is down to 7.87 from 30.17 IPO [2]. Fortress hasn't been doing too well. They've never done well. [1] https://finance.yahoo.com/quote/FIG/ https://finance.yahoo.com/quote/FIG/ [2] https://www.institutionalinvestor.com/article/b1505p66vq06cy/the-fall-of-fortress https://www.institutionalinvestor.com/article/b1505p66vq06cy...

jarym 9y ago

We always assume these fund manager types are smart but history has shown they're often as dumb as the average joe public. A company with no product, casual relationship with the truth as far as its technical capability goes, tarnished reputation and totally unqualified CEO is worth $0

CptFribble 9y ago

I am astounded that anyone would touch Theranos with a 100-mile pole. Their claims about their super-special tech were deliberately misleading, taking advantage of the general public's lack of medlab knowledge. They never released details of their "miracle" tech, and even if their claims were true, Holmes' entire "vision" fundamentally misunderstood the lab business and the way data and decisions flow from patient to doctor. Maybe there's some savvy investing trick going on behind the scenes that I don't understand, but as a former medical lab professional everything about Theranos was giant red flags from the beginning.

hkmurakami 9y ago
Perhaps their assets are north of $100m and this debt is senior to all equity.

ukulele 9y ago

For everyone saying Fortress are idiots: this is a loan and the amount is conditional. That means 2 things: 1) If Theranos fails, Fortress can claim its assets. 2) The money is not released until certain milestones are met. So either Theranos misses the milestones, folds, and has Fortress take over its assets, OR Theranos meets the milestones and is actually a valuable business. Depending on the terms, Fortress could have easily structured this deal such that they win in either scenario. I would imagine that Theranos was desperate ("distressed"), so the terms are likely pretty onerous.

hkmurakami 9y ago
I saw that Fortress is getting warrants worth 4% of Theranos so I agree with your arrestment on both scenarios.
- sjg007 9y ago
  Their building off of Page Mill is probably worth a lot.
  - CalChris 9y ago
    I'm certain they don't own 1701 Page Mill Rd and in fact, Stanford owned it previously. https://www.bizjournals.com/sanfrancisco/news/2017/01/04/kilroy-realty-krc-theranos-palo-alto-stanford.html https://www.bizjournals.com/sanfrancisco/news/2017/01/04/kil...
    - hkmurakami 9y ago
      That lot used to house the old WSJ office. Which I find poetic given that the journal was the one that broke the Theranos story.
  - tylerlh 9y ago
    Kilroy Realty purchased the property in January along with an adjacent property for $130m. Stanford owns the land and does long term ground leases.

mythrwy 9y ago

While the potential negative consequences for cheating fail to outweigh the potential benefits of cheating (depending on who the person is of course) cheating will continue to occur. I'd like to think there was a time when stunts like Theranos pulled earlier would have been career ending for the people involved but maybe that time never existed. It does suck for everyone else though. The implicit gain in scummy behavior is definitely a flaw in our system that hopefully gets patched up at some point.

reiinakano 9y ago

"Theranos, diagnose diseases with AI and Blockchain support"

cinquemb 9y ago

Great, we need to have more politically enabled companies like Theranos and hope that they continue to thrive. Hackers compromising their infrastructure from eastern europe/russia/china based IP, and releasing the genetic information they have could provide a great service to the public in the future.

solotronics 9y ago

pivot to Theranos Blockchain Biotech and get the party started again