(Bloomberg) -- Theranos Inc. agreed to settle an early investor’s claims that the embattled blood-testing firm misrepresented its performance and technology in order to raise more than $96 million in funding.
Partner Management Fund LP will drop two lawsuits related to the startup’s fumbling of blood tests, Theranos officials said Monday in an emailed statement. Terms of the accord weren’t released.
The settlement clears the way for Theranos to push ahead with a plan to offer additional preferred shares to investors who agree not to sue in the wake of scandals involving the Palo Alto, California-based company’s blood-testing capabilities.
The deal “allows our tender offer to go forward and enables us to return our focus where it belongs, which is on executing our business plans,” David Taylor, Theranos’s general counsel, said in the statement.
Officials of San Francisco-based Partner Management couldn’t immediately comment on the settlement. The hedge fund has more than $5 billion under management and has invested in other pharma and biotech companies.
The pact comes as Theranos seeks to resolve suits tied to doubts about the validity of the company’s blood-testing technology. Theranos agreed last month to pay more than $4.8 million to settle the Arizona attorney general’s consumer-fraud claims over botched tests. The company also has agreed to a two-year ban on operating blood-testing laboratories to end a U.S. regulatory probe.
Partner Management accused Theranos in a Delaware Chancery Court lawsuit of lying about its blood-testing capabilities in order to line up financing. The fund agreed to invest $96.1 million in the startup, according to court filings. It was seeking to recoup its investment plus additional damages.
The hedge fund later filed a separate suit in Delaware challenging Theranos’s offer to swap additional preferred shares for investors’ rights to sue over the testing scandal. Partners officials said a lawyer for Theranos threatened to have the company file for bankruptcy protection if the fund didn’t agree to the swap.
Theranos still faces other suits, including claims from ex-partner Walgreens Boots Alliance Inc. that Theranos misled it about the state of its technology when providing blood testing in some of its Arizona stores.
The cases are Partner Investments LP v. Theranos Inc., CA 12816, Delaware Chancery Court, and Partner Investments LP v. Theranos Inc., CA 2017-0262, Delaware Chancery Court (Wilmington).