Another one bites the dust

Another one bites the dust

Thanks to a loyal reader of Diabetic Investor we came across news that Echo Therapeutics has suspended operations. According to a story on the Philadelphia Business Journal website; “Echo Therapeutics Inc. has suspended its product development, research, manufacturing and clinical programs and operations to “conserve its liquidity and capital resources.”

Echo is just the most recent in a very long line of companies who have attempted and failed to develop … wait for it ….  a wireless and needle-free continuous glucose monitoring system.  Like so many others Echo raised millions duping investors into believing they found the “Holy Grail” of diabetes devices. That they solved problems that others could not and they would be the first company to successfully commercialize a wireless, non-invasive continuous glucose monitoring system.

Truth be told the word duped might be a little strong here as many of the investors willingly participated in this fraud.  Hence the reason why we continue to see scams like Echo flourishing for as long as there investors are willing to fund them they will continue to exist. Having been around these scams for almost 20 years Diabetic Investor is no longer shocked or surprised that some very smart people do some very dumb things. That in spite of mountains of evidence which is readily available by doing a simple Google search, investors continue to ignore the facts and fall for the hype.

We’ve said it before and we’ll say it again when it comes to non-invasive glucose, conventional or continuous, this arena is the poster child for that famous statement; Companies can steal more money with a good PowerPoint presentation than they could with a gun.

Now before everyone says this is it, that investors will finally learn their lesson, and that smart people will stop doing dumb things think again. Heck it wouldn’t even surprise Diabetic Investor if the folks who perpetrated this fraud, wait a little while reformulate Echo under a different name and do it all over again. Think this can’t happen think again as the non-invasive landscape is littered with companies and/or people who done exactly that.

In fact Diabetic Investor suspects the situation will get worse and not better. As we have been writing the diabetes device space has some big name newcomers coming to play in the playground. Cash rich companies like Apple, Google, Samsung and Facebook just to name a few.  Companies that garner major headlines when they work on things like contact lenses that measure glucose. News items like these and rumors about what and when Apple will doing in glucose just provide fuel to the fire for these non-invasive criminals. That they will use this information to dupe more uniformed investors out of millions as these investors won’t see the scam only their lust for more money.

To make matters worse legitimate companies with solid respectable management, yes there are a few, have to compete with the charlatans when they need funding.  Like so many scams it’s the well run companies who tell potential investors the truth, that the road ahead is filled with twists and turns that when it’s all said and done the technology which looks promising today may never make it to market; who are hurt the most. The truth is not what investors want to hear as the truth is an investment in any of these companies is a very risky one and there is a high probability of failure.

The scam artists in this space do what they do best by twisting the facts, shading the truth and ultimately promising investors that they will be rich beyond their wildest expectations. We’re sure these scams have been updated to include the wink and nod that Apple or Google will come along with their huge cash hordes and buy this sham of a company.

We wish we could see a reason for optimism here, that investors would learn from the past and stop funding these sham companies. Sadly this likely won’t happen. When it comes to this quest to develop a non-invasive monitor, conventional or continuous, investors will continue to ignore the facts and buy into the hype.  That legitimate companies in this space will needlessly suffer as they must compete with these scam artists.

We’d like to believe that at some point in the future people will learn to do their homework before they invest. Investors in this space would be wise to remember that if something sounds too good to be true it likely is too good to be true.