It hasn't been a good week for blood testing startup Theranos. A new report shows that the company is using its proprietary technology for only one test, a day after The Wall Street Journal published an article questioning Theranos' testing methods and sparking a vehement response from the firm.
Theranos stopped collecting tiny vials of blood drawn from finger pricks for all but one of its more than 200 tests after the agency paid the company an unannounced visit and found that "nanotainers" manufactured and used by the company to collect samples were unapproved medical devices, a person familiar with the matter told the WSJ.
In order to continue using them with a broader range of tests, Theranos must have the devices officially approved by the agency, the person added. FDA officials also told the Palo Alto, CA-based company that it will need to resubmit data for many of the blood tests it had already sought clearance for, as data submitted before and after the inspection could not verify many of the products' accuracy, according to the WSJ story.
Theranos' general counsel Heather King did not immediately respond to the newspaper's questions about the inspections. But King said that "Theranos has never been asked to stop using its finger stick technology" and that the company "remains deeply engaged with regulators, including FDA," she told the WSJ.
Theranos' characteristically elusive CEO Elizabeth Holmes also weighed in on the issue. In an interview with Bloomberg, Holmes said the company would limit its proprietary tech to a single test and will expand the technology to more products pending FDA clearance. Theranos' services are "accurate and reliable" and the company is in the process of "converting our entire lab infrastructure to one that is regulated by the FDA," Holmes said.
In July, Theranos scored FDA clearance for its herpes test, a win for the company as it sets out to challenge business models laid out by rivals such as Quest Diagnostics ($DGX) and LabCorp ($LH). The company wants to allow individuals to order tests without doctors' permission or insurance coverage, and offers its products at lower price points than competitors. For example, its herpes test runs at $9.07.
But the company, which is valued at around $9 billion, recently came under fire after a WSJ report showed a few potential problems with Theranos' proprietary testing device, Edison. Former employees said only a small fraction, or 15, of the company's tests were run on the product. And most tests were processed on machines from other companies including Siemens, according to the WSJ story.
Theranos struck back, issuing an immediate rebuttal calling the article "factually and scientifically erroneous and grounded in baseless assertions by inexperienced and disgruntled former employees and industry incumbents," the company said in a statement. Holmes also made an appearance on CNBC's "Mad Money," saying that she was "shocked" the WSJ would publish the article after the company sent thousands of documents refuting statements in the story.
"This is what happens when you work to change things, and first they think you're crazy, then they fight you and then all of a sudden you change the world," Holmes said on CNBC.
Still, the WSJ is not backing down under pressure. "The Wall Street Journal fully stands by John Carreyrou's article about Theranos, which was richly sourced and thoroughly researched," said Colleen Schwartz, a spokeswoman for the newspaper, as quoted by Bloomberg. How the battle plays out is anyone's best guess.
- read the WSJ story (sub. req.)
- here's the Bloomberg article
- get more from CNBC