Theranos under scrutiny: Does its much-hyped blood-test technology work?

The company says WSJ's story is 'factually and scientifically erroneous'

Theranos has said it is revolutionizing the blood testing industry—but an investigation by John Carreyrou for the Wall Street Journal calls into question the usability and accuracy of the company's flagship technology.

The start-up, valued at $9 billion, was founded in 2003 by Elizabeth Holmes, a then-19-year-old entrepreneur and Stanford University drop-out. The Silicon Valley firm says it has developed a proprietary technology—a testing machine called Edison—that can quickly and cheaply deliver blood test results using only a few drops of blood drawn from a finger prick. Holmes has said that will lead to more patients getting tested and earlier diagnoses, thereby saving lives.

Edison blood tests

Theranos says it offers more than 240 tests overall—more than 150 of which cost less than $10—and has performed millions of tests since it began offering them to the public in late 2013. But, Carreyrou writes, it had not publicly disclosed that most of those tests results have been done using traditional machines.

While the company had acknowledged that it used traditional machines for "certain esoteric and less commonly ordered tests," one former senior employee told Carreyrou that by the end of 2014, the company was only using the Edison system—"the lynchpin of its strategy"—for 15 tests.

How Theranos says the technology works

And the Journal reported on Wednesday that Theranos has stopped using its proprietary method for all but a test for herpes, which has received clearance from FDA. According to the Journal, FDA told Theranos during a recent unannounced inspection that it considers the "nanotainers" the company uses to collect the tiny vials of blood to be unapproved medical devices.

Theranos has asked the agency for clearance on nearly 130 of its proprietary tests. The company says its decision to only use its proprietary technology for one test is voluntary, and that it will offer more tests using the method when they have been cleared by FDA.

Further accuracy questions

Meanwhile, the Journal reports that Theranos has not been submitting test results from Edison machines when sending samples to federal regulators for required accuracy checks.

Originally, according to emails obtained by the Journal, the company split its proficiency testing samples between those from Edison machines and those from traditional machines. Employees found that the equipment types gave different results for the same tests, which led some to believe that the Edison results were inaccurate.

When Theranos President and COO Sunny Balwani was made aware of the results, he said the "samples should have never run on Edisons to begin with." And former employees said lab personnel were told to only report results for the accuracy checks from traditional machines, which they feared violated federal rules, considering Theranos regularly used Edison machines for certain tests.

How one hospital is sticking it to excess blood tests

The former employees also cited concerns about Theranos conducting about 60 tests on traditional machines using diluted samples, with small amounts of blood. Timothy Hamill, vice chair of the University of California-San Francisco's department of laboratory medicine, told the Journal that using diluted samples often is "poor laboratory practice" because it "introduces more potential for error."

Meanwhile, Carreyrou also cites several clinicians who expressed concerns about the accuracy of the company's tests. Some physicians said patients received alarming test results from Theranos, only to be retested days later and receive normal results.

Theranos reaction

Theranos in a statement said that the Journal story "is factually and scientifically erroneous and grounded in baseless assertions by inexperienced and disgruntled former employees and industry incumbents."

The company also said that it "presented the facts to this reporter to prove the accuracy and reliability of its tests and to directly refute these false allegations, including more than 1,000 pages of statements and documents," but that the Journal did not mention them.

In an interview with CNBC, Holmes said that the company is able to run every test offered in its labs "on our proprietary devices." She also questioned the reliability of the former employees cited in the Journal article (Carreyrou, Wall Street Journal, 10/15 [1]; Carreyrou, Wall Street Journal, 10/15 [2]; Chen/Tracer, Bloomberg Business, 10/15; Rappleye, Becker's Hospital Review, 10/15; Belluz, Vox, 10/15; Groden, Fortune, 10/15; Friedman/Loria, Business Insider, 10/15; Theranos website, accessed 10/15).

Next in the Daily Briefing

Around the nation: County cancels school for 1,150 kids—and blames the ACA

Read now