Controversial blood-testing company Theranos is being sued by one of its biggest investors over its "lies and misstatements."
Partner Fund Management of San Francisco has sued the company in its corporate home of Delaware, claiming that the company engaged in securities fraud by providing false information about its technology in order to secure investment.
Theranos' CEO Elizabeth Holmes, who has a controlling stake in the company, repeatedly claimed that her proprietary technology would enable a large range of tests to be carried out with a single drop of blood, leading to a $9bn valuation of the company. In reality, the technology was unreliable, resulting in the tests being stopped, the company using traditional testing methods, and hundreds of thousands of test results being invalidated.
On top of the company's other woes, federal regulators shut down one of its two testing facilities, and a criminal investigation is being carried out into whether investors and regulators were misled by the company.
Partner Fund Management wants to recoup the $96m it invested in the company and is also seeking damages and costs. Theranos said the lawsuit was "without merit" and promised to fight it. ®