The dream that just won’t die

The dream that just won’t die

This morning Echo Therapeutics (NASDAQ:ECTE) announced they have re-established their operational and strategic partnership with Medical Technologies Innovation Asia (MTIA), Ltd., Hong Kong, and has initiated the technology transfer process. According to a company issued press release; “The partnership agreement includes a licensing and technology transfer under which MTIA will manufacture Echo’s proprietary skin permeation and analyte measurement technology. Echo granted MTIA rights to develop, manufacture, market, and distribute Echo’s technology on an exclusive basis for the Chinese market, including the Peoples’ Republic of China, Hong Kong, Macau and Taiwan.”

Now just in case anyone has forgotten what Echo does this same press release notes; “Echo Therapeutics is developing its Symphony® CGM System as a non-invasive, wireless, continuous glucose monitoring system.” Yes Echo is one of the many companies seeking the Holy Grail of glucose monitoring a non-invasive continuous glucose monitoring system.

This is the same company which back in September laid off 70% of their workforce, whose accounting firm resigned back in December the same month they appointed a new CFO.

Honestly Diabetic Investor isn’t all that surprised that Echo remains afloat as the non-invasive glucose monitoring space has a well-documented history of companies once given up for dead only to rise from the ashes. As we have said many times as long as there are investors willing to fund these companies, investors who are foolish enough to buy into the belief that non-invasive glucose monitoring is the path to riches company’s like Echo will remain alive even when their technology just doesn’t work.

To gain a full understanding of just how widely held this belief is, that non-invasive glucose monitoring is the Holy Grail consider that Google, one of the most respected tech companies has also fallen into this trap with their way cool contact lenses which measure glucose levels. Or consider that GE, yes the company that brings good things to light invested $8 million into C8 Medisensors, another company that had a way cool non-invasive continuous glucose monitoring system and another company that is now way dead. Or remember that Fovioptics, Inc., went down this same path and then did something unheard of as they gave investors their money back as they found out what almost every company finds out in this space, the technology which looks so great just doesn’t work.

The non-invasive story typically goes something like this, a company latches onto a technology that theoretically looks like it can work. Understanding that diabetes is a huge and growing disease state and that the BGM market is multi-billion market the company comes up with a slick presentation which they use to raise capital. Operations begin and the initial results look encouraging so much so they raise even more capital. More work is done and invariably they hit a snag but nothing more capital won’t solve. This cycle continues to repeat itself until it becomes impossible to raise more capital. The company gets shut down only to remerge later under a different name and the cycle begins all over again.

Diabetic Investor has seen this over and over in the past 20 years and suspects it will go on long after we cease publishing, which we hope is not anytime soon.

One just might think that the investors who continually fund these companies would eventually wise up. That they would do their due diligence and at minimum wait until the company proves themselves before investing. Sadly this is not the case and even crazier as noted above some very well-known well respected companies have fallen into this trap. So don’t be surprised when this happen again as for as night follows day this will happen again.

Wacky for sure but the nature of the beast.