Theranos struggles to shake off doubts after FDA setback

Theranos, the company which aims to revolutionise blood testing, has hit back at media reports about a major setback following a US FDA intervention.

The company's vision is to revolutionise the taking of blood for tests, replacing needles with pin-prick samples taken from a finger, and creating faster and cheaper diagnostics for a wide range of diseases.

This has made it one of the most highly-regarded US medical technology start-ups, but a Wall Street Journal (WSJ) report last week portrayed a far less promising picture.

On 15 October, the WSJ published news that the FDA had ordered the firm to stop using its Nanotainer tube – the proprietary miniature vial developed to collect blood for the tests, and a core part of its 'disruptive' technology.

The newspaper says Theranos is now having to operate more like a traditional lab, using the conventional needles to take blood from patients' arms.

The FDA made an unannounced site visit to Theranos because of concerns about data the firm had voluntarily submitted in an effort to win approval for its proprietary testing system.

The regulator is understood to consider the Nanotainers an unapproved medical device in all but one use – in July its test for herpes simplex was cleared. However this clearance does not apply to the many other tests the company is developing – potentially a major setback for Theranos' expansion plans.

The WSJ also relayed revelations from former employees, alleging that the firm's lab testing instrument Edison was not being used to screen samples, as the company has implied.

The Palo Alto-based company has hit back at the many allegations contained in the report, saying it was "factually and scientifically erroneous and grounded in baseless assertions by inexperienced and disgruntled former employees and industry incumbents".

Theranos also states that it has proactively sought FDA appraisal of its processes and tests, which, it says, makes it a leader in its field.

The firm says it has submitted almost 130 pre-submissions to the FDA for tests run on its proprietary systems.

Despite this spirited rebuttal, the company doesn't appear to be denying that the use of Nanotainers has been suspended, or clear up the allegations relating to the Edison technology.

Market analysts have estimated the company to be worth as much as $9 billion, but its business plan now looks less robust. The company remains privately held, with no immediate plans for a market flotation, with commentators claiming the firm remains overly secretive about its technology.

Watch Theranos CEO Elizabeth Holmes respond to the WSJ article on CNBC's Mad Money.