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Life Science Startup Nightmares

Small Stefania Longo on July 14, 2021

Life Science Startup Nightmares

Creating a startup is no easy feat, especially when young entrepreneurs lack the guidance and knowledge to successfully direct their initial business idea to fruition. The age-old saying, “fake it till you make it” can be applied to many aspects of one’s life. However, this concept can only take a startup so far, until the lack of proper infrastructure and expertise cause the business to come crumbling down. Read on to learn about a few examples of life science startups that took “fake it till you make it” to a whole new level.


Theranos
Elizabeth Holmes, Stanford dropout and former CEO of Theranos can now add con-artist to her long list of accolades. It has now been 17 years since Holmes first embarked on her mission to create a blood-testing technology with the ability to run a myriad of blood tests from just a single drop of blood. By sheer power of her persuasion and innovative ideas, Holmes managed to get major investors to support her business venture and even secured partnerships with major retailers like Walgreens and Safeway. At a valuation of $9 billion, Theranos was making headlines for its new technology aptly named the miniLab.1 With this new technology, a single prick of a finger would be sufficient to run a diverse range of laboratory tests. 1

The venture soon came crumbling down, however, when investors and partners realized that the miniLab was not fully reliable. It turns out Theranos was not being fully transparent and honest in communicating the validity of its technology, losing valuable partners like Walgreens and Safeway as a result.1 By 2018, Holmes and her business partner Sunny Balwani were charged with massive fraud by the SEC and wire fraud by the Department of Justice.1 Soon after, Holmes stepped down as CEO of Theranos, and the company officially closed its doors for good.

To learn more about the Theranos case:
Podcast: The Dropout
Documentary: The Inventor: Out for Blood in Silicon Valley
Article: Business Insider

Donor 9623
What started out as a typical case of a young college dropout looking to make some extra money quickly turned into one of the biggest blunders to hit the sperm donation industry. Chris Aggeles was just 23 years old when he first decided to donate his sperm for cash in 2000.2 He soon realized that this industry could provide him with the steady income that he desperately needed at the time. It did not take long for Aggeles to become one of the most highly demanded donors at Xytex Corp. After all, who wouldn’t want a man who spoke 4 languages, had an IQ of 160, a bachelor’s degree, master’s degree and is working on a PhD in Neuroscience Engineering to father their children?2

Thirty-six children later, Aggeles would soon come to terms with the consequences that his highly falsified profile would bring about. In 2014, Xytex ran into a major dilemma that they unintentionally created by releasing Aggeles’ name and email to a few of the families that he had donated to.3 Naturally, these families looked him up and were horrified to discover that the father of their children not only falsified the previously mentioned accomplishments, but also left out major pieces of information from his profile such as his schizophrenia diagnosis and criminal record.2 Not only did Xytex fail to complete duediligence in proving the validity of the information provided by Aggeles, but they also breached Aggeles’ privacy by releasing his personal information to families.

To learn more about Donor 9623:
Podcast: Donor 9623
Articles: The Atlantic, Atlanta Magazine

Body-Broker Nightmare
One eerie day in 2014, an FBI raid turned macabre when agents walked into what appeared to be a recreation of Dr. Frankenstein’s laboratory. The Biological Resource Center, or BRC, located in Phoenix, Arizona, was a business that facilitated the donation of bodies to science. This raid was part of a nationwide criminal investigation, and what the FBI found was disturbing to say the least: 10 tons of frozen human remains — which consisted of 281 heads — 241 shoulders, 337 legs and 97 spines.4 Among these bizarre findings was a small woman’s head that was sewn onto a larger man’s body and subsequently hung up onto a wall.4 Scarred by the events of that day, one of the agents involved in the raid soon retired after suffering from PTSD during the experience.5

There are approximately 33 individuals that are suing this company for the mishandling of their family members’ bodies.4 According to some family members, BRC was misleading and unclear when communicating exactly how the bodies of their beloved would be used.5 Stephen Gore, owner and founder, pleaded guilty to fraud based on the sales of contaminated body parts, and the company soon went out of business.5 When health departments are not enforcing body brokers to be licensed and inspected, issues like this can easily go unnoticed until they snowball into a much larger ethical dilemma.

To learn more about the Body-Broker Nightmare:
Articles: Reuters Investigates, IFLScience


Though not all startup failures are this extreme, a common thread that runs through all of these cases is that the founders lacked the proper internal processes and procedures necessary to avoid such ethical disasters. While compliance can be seen by many startups as one more hurdle to jump or something that’s only necessary once they’ve grown or become successful, if deployed correctly, it can ensure that the business being created is built for long term success not short term failure.

Scientist.com recognized this challenge early on and has led the way in developing viable compliance solutions, deployable in a marketplace environment, which are available to start-ups all the way through to multinational pharmaceutical companies. These solutions bring compliance into the heart of their relationships with third party providers.

Our award-winning COMPLi® functionality enables us to create customized solutions to address the risks each client faces. This in turn permits an individual researcher to source any and all services in full compliance with their company’s internal policies and procedures and external regulations, without impacting delivery timelines, confidence, or quality.

Adhered to correctly, compliance can be a tool that empowers research through increased confidence, better quality and faster delivery of services. To find out more about how Scientist.com can digitally transform your organization’s compliance processes contact us today at compliance@scientist.com.


Sources:
1 PFLANZER, L. April 2019. The rise and fall of Theranos, the blood-testing startup that went from Silicon Valley darling to facing fraud charges [online] Business Insider. Available from: https://www.businessinsider.com/the-history-of-silicon-valley-unicorn-theranos-and-ceo-elizabeth-holmes-2018-5?utm_source=copy-link&utm_medium=referral&utm_content=topbar [Accessed 13 July 2021].

2 VAN DUSEN, C. February 2018. A Georgia sperm bank, a troubled donor, and the secretive business of babymaking [online] Atlanta Magazine. Available from: https://www.atlantamagazine.com/great-reads/georgia-sperm-bank-troubled-donor-secretive-business-babymaking/ [Accessed 13 July 2021].

3 ZHANG, S. September 2020. One Sperm Donor. 36 Children. A Mess of Lawsuits. [online] The Atlantic. Available from: https://www.theatlantic.com/science/archive/2020/09/sperm-donor-identity-mental-health/616081/ [Accessed 13 July 2021].

4 HALE, T. July 2019. FBI Finds Horrific Frankenstein-Like Experiments At Body Donation Facility In Arizona [online] IFLScience. Available from: https://www.iflscience.com/health-and-medicine/fbi-finds-horrific-frankensteinlike-experiments-at-body-donation-facility-in-arizona/ [Accessed 13 July 2021].

5 GROW, B., LEVINSON, R., & SHIFFMAN, J. December 2017. A business where human bodies were butchered, packaged and sold [online] Reuters Investigates. Available from: https://www.reuters.com/investigates/special-report/usa-bodies-business/ [Accessed 13 July 2021].