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Safeway Seeks to Dissolve Secret $350 Million Deal With Beleaguered Blood Startup Theranos The partnership, code-named project 'T-Rex,' called for Theranos blood test facilities to be built in 800 Safeway stores nationwide.

By Geoff Weiss

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.

ceiling

The Theranos walls keep tumbling down.

Yet another exposé by Wall Street Journal reporter John Carreyrou last night revealed that the beleaguered blood test startup is severing ties with California-based supermarket chain Safeway. The two had inked a deal roughly five years ago codenamed project "T-Rex," in which Safeway paid $350 million to build Theranos-anchored blood test clinics in more than 800 of its doors nationwide.

But today, as misgivings about Theranos' technology -- which purports to perform a full range of blood tests with a mere finger prick -- have reached a fever pitch, both parties are looking to dissolve the partnership, the Journal reports. As blood tests never began and the project has been inactive for more than a year, the clinics are currently being used for flu shots and other travel-related vaccines.

Related: Out For Blood: Theranos Orchestrates Bold PR Coup in the Face of Damning Allegations

While Theranos inked a partnership with Walgreens in 2013 (this partnership has also been put on pause until Theranos resolves its issues, Walgreens has said), the Safeway deal precedes this agreement as the blood startup's exclusive supermarket partner. Safeway also reportedly invested $10 million in Theranos.

On its website, Theranos called the Journal story "inaccurate, misleading and defamatory," adding that, "No amount of cynical and misleading news coverage will stop us from focusing on our mission and our goals."

There were reportedly warning signs at the outset of the deal, current and former Safeway executives told the Journal. When Theranos came to its headquarters to do blood tests on employees, for instance, one received a frighteningly high result that suggested the executive had prostate cancer. A retest by a traditional lab showed nothing abnormal.

Related: Theranos Founder Says the Company Will 'Absolutely' Get FDA Approval

Geoff Weiss

Former Staff Writer

Geoff Weiss is a former staff writer at Entrepreneur.com.

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