SAN FRANCISCO — A reported $350 million deal that would have put Theranos finger-prick blood-testing facilities in Safeway grocery stores has unraveled, according to a report in The Wall Street Journal.

Theranos, the $9 billion Silicon Valley biotech startup that wants to revolutionize blood testing, had a very public partnership with Walgreen’s stores, 41 of which have Theranos Wellness Centers in Arizona. Walgreen’s recently announced that it was putting its plans to expand to other locations on hold. But a deal for Theranos kiosks in the national grocery chain was unknown until Journal reporter John Carreyrou broke the news Tuesday, citing anonymous Safeway executives. The deal, which dates back to 2011, was code-named “T-Rex” and was vigorously promoted by Safeway’s now retired CEO Steven Burd.

The article says $350 million was spent by Safeway to outfit 800 of its stores with Theranos centers, which promised to run myriad blood tests off mere droplets of blood collected through finger pricks and deposited in the company’s small nanotainers. But the facilities never opened, and instead are now used to administer vaccines.

The deal went off course due to a combination of factors that included delays of Theranos blood-testing machines, which in turn required blood tests to be run off-site, much like traditional testing through companies such as LabCorp and Quest Diagnostics. In addition, the article states that on some occasions blood tests administered by Theranos to Safeway executives came back with alarming results. One executive’s Theranos tests indicated he might have cancer; retesting through traditional methods — with vials of blood extracted from veins in the arm — came back negative.

At this point, Carreyrou writes, “Theranos’ (CEO Elizabeth) Holmes stopped interacting with Safeway executives and delegated the handling of the relationship to Theranos’s president and chief operating officer, Sunny Balwani, according to the former Safeway executives.” Carreyrou is the author of a Journal investigation last month that cited unnamed former Theranos employees who cast doubt on the efficacy and reliability of the company’s secretive technology. Walgreens put its expansion plans on hold shortly after the piece appeared.

Theranos has vociferously denied all the Journal‘s allegations, pointing out that it has been cooperating with Food and Drug Administration officials to make sure its tech and procedures are approved by the agency. The FDA has given its blessing to both Theranos’ finger stick method as well as its tests for the herpes simplex 1 virus. Documents released last month also show the FDA has issued complaints against the company, which ranged from disorganization with regard to customer complaints to, more significantly, issues with the company’s nanotainer.

Holmes has appeared at a number of public conferences since the article appeared, standing by her company’s technology and vowing to cooperate with public officials and become more transparent with some of its data.

In responding to this latest salvo from the Journal, Theranos posted a statement on its website Tuesday saying it was “disappointed to see yet another inaccurate WSJ article entirely relying on anonymous sources,” adding that the information is “misleading and defamatory. … We are committed to sharing data with regulators and with leading medical and scientific institutions. In line with this commitment, we have publicly invited third parties to review, validate, and publish data on our technologies, including in peer-reviewed journals, and are actively engaged in doing so.”

Follow USA TODAY tech reporter Marco della Cava on Twitter: @marcodellacava

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