Theranos Loses Another Partner as $350 Million Safeway Deal Flops
November 11, 2015
By Alex Keown, BioSpace.com Breaking News Staff
PALO Alto, Calif. -- Embattled blood-testing company Theranos took another hit this week after a $350 million deal with Safeway fell apart, the Wall Street Journal reported this morning.
The Journal, which previously posted a scathing report of Theranos’ blood-test methods, said the grocery chain spent $350 million to build clinics in more than 800 of its stores to offer the Theranos blood tests. However, those tests never began. Safeway executives told the Journal that Theranos missed deadlines for the blood-test rollouts and have also raised concern over the accuracy of the testing. The clinics are primarily used for flu shots and other vaccines, the Journal said.
In an online statement, Theranos, which has a value of about $9 billion, said the Journal’s report about the Safeway deal was “inaccurate, misleading and defamatory.”
“No amount of cynical and misleading news coverage will stop us from focusing on our mission and our goals. Theranos remains committed to bringing actionable, accessible and affordable health information to those who need it most. We are committed to sharing data with regulators and with leading medical and scientific institutions. In line with this commitment, we have publicly invited third parties to review, validate, and publish data on our technologies, including in peer-reviewed journals, and are actively engaged in doing so,” Theranos said on its website.
This is the second large chain store to halt a blood-test deal with Theranos. In October Walgreens announced it will hold off on expanding blood testing centers throughout its chain of stores until the California-based Theranos can answer allegations out the viability of its blood-testing systems, after the Wall Street Journal’s report raised questions about how accurate the blood-testing system is. There are currently 42 Walgreens stores that have Theranos blood testing centers, with most of them being located in Arizona. Walgreens had plans to roll out the blood centers to a large number of its 8,200 stores. However, that expansion is on hold after the Journal alleged the company only preforms 10 percent of its blood tests with the company’s proprietary technology and opts to perform the majority of its blood tests using technology acquired from other companies, including Siemens . In the article the Journal cited several former Theranos employees, as well as the medical records of patients who had used the Theranos blood test. According to the article, the former employees allege the company split testing between its own proprietary machines and technology acquired from other companies. The use of the two separate technologies yielded different results “when testing for vitamin D, two thyroid hormones and prostate cancer.”
After the Journal’s reports, Walgreens spokesperson Markeisha Marshall told USA Today that “plans to open more Theranos Wellness Centers are dependent upon both companies' ability to reach a mutually beneficial arrangement."
Theranos dismissed the allegations, saying they were “grounded in baseless assertions by inexperienced and disgruntled former employees and industry incumbents.” Theranos said the report also failed to take into account recent developments made in the company’s Edison technology.
In addition to the Wall Street Journal’s report, the U.S. Food and Drug Administration (FDA) called the company’s proprietary Nanotainer tubes an uncleared medical device in inspection reports released in October. Although the FDA’s documents are heavily redacted, federal regulators were critical of some of the practices its inspectors observed, including improper classification for its proprietary Nanotainer tubes used for blood specimens. The FDA said Theranos’ Nanotainer blood specimen tubes are not properly filed as a Class II medical device, but are instead being identified as a Class I medical exempt device. As a result, the FDA said Theranos is “currently shipping this uncleared medical device in interstate commerce between California, Arizona and Pennsylvania.”
In July, the FDA approved Theranos’ systems and test for herpes simplex 1 virus. The FDA clearance includes the use of Theranos’ Nanotainer Tubes for tests run by this method, which allow samples to be collected from just a few drops of blood from a virtually painless prick of a patient’s finger.