FB’s private valuation had doubled to $50b in 6 months. ‘Angry Birds’ showed an app could be a business. Low interest rates made hedge funds consider private startups.
Walgreens
Dr. J - Walgreens Innovation. Theranos tests could boost revenues. Walgreens agrees to prepurchase $50m of cartridges and loan Theranos $25m.
Walgreens: we can’t risk a scenario where CVS has a deal with them in 6 months and it ends up being real.
Theranos' Claims and Holes
Commercially ready lab w/ devices can do 192 blood tests:
- Half of those tests couldn’t even be done with Edison’s chemiluminescent immunoassays.
- Theranos never showed the lab nor sent the results of the vitamin D test!
Perform laboratory-developed tests (less regulated):
- Theranos unwilling to a 50-patient trial with Stanford Hospital.
Validated over the last 7 years by 10/15 largest pharma companies:
- No one in the pharma companies could verify.
Johns Hopkins University’s Medical School had reviewed Theranos’s tech:
- JHU’s letter had a disclaimer that it doesn’t signify an endorsement.
In Comes Safeway
Burd, CEO, motivated to cut medical costs. Renda, EVP, watched her cancer-fighting husband’s daily blood draws.
Safeway agreed to loan Theranos $30m and redesign stores to accomodate Theranos clinics.
Safeway would have exclusivity in supermarkets, while Walgreens would have it in drugstores.
And that’s how Elizabeth secured $55m for Theranos. Talk about bringing home the bacon without Masayoshi Son’s help!
It’s interesting that these concerns were raised within Walgreen by junior employees. FOMO is one helluva drug.