Back to all memosReal deck · named companyPublished 2026-09-09

Theranos

This memo was written from the 2006 deck and the sources available then. Nothing that happened later was used.

Backed by 3 independent sourcesSee the sources

Verdict

PASS

Confidence · High · nothing here reopens it

Technology unverified, math broken, customers unnamed.

Six deals across five unnamed companies in validation phase ^† cannot be verified, the $50M per-trial revenue figure is arithmetically inconsistent with the deck's own $7,500 per-patient fee ^†, and the FDA regulatory pathway is entirely absent from a deck pitching a diagnostic device for use in regulated clinical trials ^†.

The technology may be real, but this deck provides no evidence that it is.

What would change it

Independent peer-reviewed analytical validation of the ABCS platform, a disclosed FDA clearance filing with a timeline, and at least one named pharma sponsor with a signed contract would reopen this as an Invest.

How it scored

4 grades

Unicorn opportunityB5/10

The Phase IV monitoring market is large and underserved, but the deck's $39B TAM is overstated by 2-3x on its own arithmetic (derived), and the realistic monitoring-services slice is not established.

Capital efficiencyC+4/10

The $30M raise ^† funds manufacturing scale-up and sales force expansion with no disclosed allocation, no runway calculation, and no milestone map, making it impossible to assess whether the capital reaches the next defensible milestone.

Team velocityB5/10

The senior operating team carries genuine domain credentials, Howard Bailey's CFO track record, Diane Parks's Genentech relationships, Ian Gibbons's immunoassay development depth ^†, but the company has been operating since 2003 and has not disclosed a single shipped product, cleared regulatory filing, or signed contract.

Moat durabilityC3/10

The claimed moat, on-chip chemiluminescence, integrated informatics, and assay development speed ^†, is entirely contingent on the technology performing as claimed, and no independent validation exists to confirm it does.

Top risks

Core technology claims are unverified and potentially fraudulent High
The deck asserts chemiluminescent immunoassay accuracy 'comparable to gold standards' from 5-10µL blood samples ^†, but provides zero peer-reviewed validation, no named clinical study, and no independent lab confirmation. A diagnostic platform sold to pharma sponsors for patient safety decisions requires published analytical validation data. Its absence is not a gap, it is the central question.
FDA regulatory pathway is entirely undisclosed High
The deck never mentions 510(k), PMA, CLIA certification, or any FDA clearance pathway ^†. A point-of-care diagnostic device used in Phase IV clinical trials requires regulatory clearance before commercial deployment. No clearance status, no timeline, and no regulatory counsel are disclosed.
Revenue math does not reconcile, the $50M per-trial figure is arithmetically unsupported High
At $7,500 per patient per four-month cycle ^†, a 2,000-patient trial generates $15M per cycle, not the $50M per-trial figure the deck uses to construct the $39B TAM ^†. The TAM is therefore overstated by at least 2-3x on the deck's own inputs (derived).

Flags

7 flags

Critical Slide 14 states average Theranos revenue per trial is $50M, but this figure is not derived from the stated $7,500 per-patient fee and patient count ranges (2,000-10,000 patients per trial); the math does not reconcile.
Critical Slide 2 states immediate goal is to become the standard for improving efficacy and risk/benefit and safety profile of every therapy, but deck does not address regulatory approval pathway, clinical validation requirements, or FDA clearance status for the diagnostic platform.
Material Slide 3 projects $120M-$300M revenue in next 1.5 years from 6 current deals plus 15 pipeline deals, but slide 3 also states existing deals alone project $120M-$1.5Bn in revenue; the two ranges overlap but are not reconciled.
Material Deck claims 70% gross margins (slide 16) but does not disclose cost of goods sold, manufacturing costs, or cartridge/reader production economics to substantiate the margin claim.

The full analysisThe evidence behind the verdict. Open it when a deal is worth a closer look.

What would move each grade

GradeDetail

Unicorn opportunity

The market problem is genuine and the post-Vioxx regulatory environment creates real demand for proactive monitoring infrastructure ^[1]. A corrected TAM of $13B-$20B (derived) is still a large market, and the per-patient recurring fee model scales without proportional COGS growth once readers are deployed. What holds this to a 5 rather than a 7 is the absence of any evidence that the market concentrates on one winner: central lab CROs are entrenched, Abbott and Biosite have the scale to enter if the market develops, and Theranos has no disclosed IP, no FDA clearance, and no named customer to anchor a winner-take-most argument. A 7 or 8 becomes available when independent validation is published and at least one named pharma sponsor is on record, because the informatics switching cost argument becomes real at that point.

Capital efficiency

The use of funds is described in one sentence: rapid scaling of production and manufacturing infrastructure and sales force expansion ^†. No line-item budget, no headcount plan, and no runway calculation are disclosed. The category norm for a pre-revenue diagnostic hardware company at Series B includes significant capital requirements for manufacturing tooling, regulatory affairs, and clinical validation, none of which are costed here. The 70% stated gross margin ^† is consistent with Biosite's 71% at scale ^[2], which suggests the model is capital-efficient once at volume, but the path to volume requires FDA clearance and at least one signed contract, neither of which is funded in a disclosed way. A 4 reflects a workable but undisclosed capital plan; a 6 becomes available when a 24-month budget with milestone anchors is provided.

Sources

4 cited

† founder-stated, from the pitch deck · numbered sources: 3 independent

The research runs on the day the memo is written, so a source can be published after the deck.

†
Pitch deck, 2006Founder-stated · figures self-reported by the company, not independently verified
1.
AMA Journal of Ethics · Reputation, Gatekeeping, and the Politics of Post-Marketing Drug RegulationCited for FDA post-marketing surveillance structural constraints and reform pressure as of 2006Published 2006-06
2.
SEC · 2 documents cited together
1. a.
  SEC · BIOSITE INC - Form 10-K - FY2005Cited for Biosite FY2005 revenues ($287.7M), operating countries, product portfolio, and business modelPublished 2006
2. b.
  SEC · BIOSITE INC - Form 10-Q - FY2005Cited for Abbott i-STAT BNP test announced as forthcoming as of 2005; competitive context for POC cardiac diagnosticsPublished 2005
3.
BioSpace · Biosite Incorporated Announces 2005 Annual And Fourth Quarter ResultsCited for Biosite FY2005 gross margin on product sales (71%) as POC diagnostic benchmarkPublished 2006-02-10

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Competitor	What it does	Strength	Gap	Funding or scale
Biosite IncorporatedIncumbent	Biosite ships a portfolio of point-of-care immunoassay diagnostic tests, anchored by the Triage BNP Test for heart failure diagnosis, sold primarily to urgent care hospitals ^[2]. Its business model is cartridge-based, with direct sales to approximately 5,400 US urgent care hospitals and international distribution in France, Germany, Belgium, Luxembourg, the UK, Italy, and the Netherlands ^[2]. Biosite's platform is FDA-cleared and CLIA-categorized; its products are in production and deployed to customers.	FDA-cleared, commercially deployed cartridge-based POC immunoassay platform with 71% gross margin on product sales in FY2005 and a validated clinical evidence base ^[2].	Focused on urgent care hospital diagnostics, not pharmaceutical trial monitoring or real-time PK/PD dose adjustment; no informatics layer for trial-sponsor reporting.	Public company (Nasdaq: BSTE); $287.7M total revenues FY2005, 17% year-over-year growth ^[2].
Abbott Laboratories (i-STAT)Incumbent	Abbott ships the i-STAT point-of-care system, a handheld cartridge-based analyzer providing bedside blood chemistry and cardiac biomarker results in urgent and intensive care settings ^[2]. Abbott announced plans to add a BNP test to the i-STAT platform as of 2005 ^[2]. Abbott is a global diagnostics leader with approximately 70,000 customers in more than 100 countries. The source does not state whether the i-STAT BNP test was live or still forthcoming as of mid-2006.	Global scale, established hospital relationships, broad cartridge menu, and FDA clearance across multiple i-STAT assays already in production.	Designed for urgent care clinical settings, not pharmaceutical trial monitoring; no informatics layer for sponsor-facing PK/PD reporting or dose-adjustment alerts.	Public company (NYSE: ABT); global diagnostics leader with ~70,000 customers in 100+ countries.
Central laboratory CROs (Covance, PPD, Quintiles)Incumbent	Contract research organizations providing centralized laboratory services for clinical trial monitoring. These firms process blood samples collected at trial sites and return results on timelines measured in days, not minutes. They are the incumbent workflow Theranos is positioning against. No single CRO is named in the deck; the category represents the status quo against which Theranos claims a 20-30% cost advantage and a speed advantage ^†. The source does not state individual CRO revenues for 2006.	Established regulatory relationships, validated assay menus, existing contracts with major pharma sponsors, and CLIA-certified laboratory infrastructure already in production.	Results turnaround measured in days; no real-time dose-adjustment capability; cannot monitor patients outside clinical sites; higher per-test cost than Theranos claims.	Not found

Competitor

What it does

Strength

Gap

Funding or scale

Biosite IncorporatedIncumbent

Biosite ships a portfolio of point-of-care immunoassay diagnostic tests, anchored by the Triage BNP Test for heart failure diagnosis, sold primarily to urgent care hospitals ^[2]. Its business model is cartridge-based, with direct sales to approximately 5,400 US urgent care hospitals and international distribution in France, Germany, Belgium, Luxembourg, the UK, Italy, and the Netherlands ^[2]. Biosite's platform is FDA-cleared and CLIA-categorized; its products are in production and deployed to customers.

FDA-cleared, commercially deployed cartridge-based POC immunoassay platform with 71% gross margin on product sales in FY2005 and a validated clinical evidence base ^[2].

Focused on urgent care hospital diagnostics, not pharmaceutical trial monitoring or real-time PK/PD dose adjustment; no informatics layer for trial-sponsor reporting.

Public company (Nasdaq: BSTE); $287.7M total revenues FY2005, 17% year-over-year growth ^[2].

Abbott Laboratories (i-STAT)Incumbent

Abbott ships the i-STAT point-of-care system, a handheld cartridge-based analyzer providing bedside blood chemistry and cardiac biomarker results in urgent and intensive care settings ^[2]. Abbott announced plans to add a BNP test to the i-STAT platform as of 2005 ^[2]. Abbott is a global diagnostics leader with approximately 70,000 customers in more than 100 countries. The source does not state whether the i-STAT BNP test was live or still forthcoming as of mid-2006.

Global scale, established hospital relationships, broad cartridge menu, and FDA clearance across multiple i-STAT assays already in production.

Designed for urgent care clinical settings, not pharmaceutical trial monitoring; no informatics layer for sponsor-facing PK/PD reporting or dose-adjustment alerts.

Public company (NYSE: ABT); global diagnostics leader with ~70,000 customers in 100+ countries.

Central laboratory CROs (Covance, PPD, Quintiles)Incumbent

Contract research organizations providing centralized laboratory services for clinical trial monitoring. These firms process blood samples collected at trial sites and return results on timelines measured in days, not minutes. They are the incumbent workflow Theranos is positioning against. No single CRO is named in the deck; the category represents the status quo against which Theranos claims a 20-30% cost advantage and a speed advantage ^†. The source does not state individual CRO revenues for 2006.

Established regulatory relationships, validated assay menus, existing contracts with major pharma sponsors, and CLIA-certified laboratory infrastructure already in production.

Results turnaround measured in days; no real-time dose-adjustment capability; cannot monitor patients outside clinical sites; higher per-test cost than Theranos claims.

Not found

Theranos

How it scored

Top risks

Flags

What would move each grade

Sources

A real memo on a company you already know.

Open questions

The case

Market

Competitors

Team

Other risks

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Behind the flags

What the deck doesn’t say