Table of Contents
Erin Woo
Good morning from San Jose! Daniel Edlin is back on the stand. We’re still expecting former Pfizer diagnostics director Shane Weber next.
Erin Woo
We’re breaking for the day. I’ll be back tomorrow at 9 a.m. for more of Edlin’s cross-examination.
Erin Woo
Downey asks Edlin a series of questions around whether he ever took steps to put forward any claim he knew to be false. Edlin says repeatedly that he did not. “That information was reliant on information you had gotten from scientists in the company, correct?” “Yes.”
Erin Woo
Downey started by having Edlin confirm that he was not a tech expert — Edlin majored in public policy at Duke.
Erin Woo
And — defense changes the subject completely. We’re back to talking about Theranos’s technology as we begin cross-examination.
Erin Woo
With that, we’re through with direct and onto cross. Testimony is scheduled to end at 3 today, so Edlin will likely continue tomorrow.
Erin Woo
Edlin said he was in meetings where Balwani said he would defer to Holmes. “Generally, she was the C.E.O., so she had the final decision-making authority.” Edlin said he saw them disagree about “certain topics.” When they disagreed, Edlin says there wasn’t always a decision that was made. He saw times when Balwani would defer to Holmes but can’t recall the reverse.
Erin Woo
Back from break. Bostic is pivoting to what Edlin observed of Holmes and Balwani working together. Holmes and Balwani had offices next to each other with glass walls. They often ate lunch together and were in discussion together, he said, but nothing else stands out.
Erin Woo
We’re going through slides approved by Holmes and sent to the military for a 2012 burn study. After many claims, Bostic asks Edlin whether he knew at the time whether this was true or not. Edlin says repeatedly he didn’t know, but he had no reason to doubt it. One exception: One bullet read that most results could be obtained in less than 20 minutes, but Edlin testified that demo run times were usually longer than 20 minutes.
Erin Woo
In the doc: “Theranos has created a point-of-service laboratory infrastructure that generates real-time data from a finger-stick of blood or other micro-volumes of different sample types delivering higher quality data than previously possible.” Also: “Each Theranos device can run every test currently available through the traditional centralized or hospital laboratory infrastructure.” Edlin testifies: “I had no reason to believe it wasn’t true.”
Erin Woo
We are now looking at a document that was sent to Major Steven Cook. “Everything in this document was reviewed and approved by Elizabeth,” Edlin testifies. Holmes was highly involved in every discussion/email communication he had with the military, he says.
Erin Woo
Switching topics to Theranos’s interactions with the military. Edlin helped support Theranos’s military and D.O.D. relationships. “The end goal for these communications was to set up a research program that would compare Theranos testing to the testing available to the military.”
Erin Woo
Edlin testifies that he doesn’t remember Holmes asking him to take out language like this from investor binders, and says that he remembers presentations like this being sent to other investors as well.
Erin Woo
Under the heading “Same Tests, a Whole New Approach”: “The actionable information you need, 1/1000 the size of a typical blood draw.” This page also says “the highest levels of accuracy and precision.” Theranos’s attorney flagged this language in conjunction with the website.
Erin Woo
Included in a binder sent to Rupert Murdoch: “Theranos’s proprietary, patented technology runs comprehensive blood tests from a finger-stick and tests from micro-samples of other matrices, and generates significantly higher integrity data than currently possible.”
Erin Woo
Edlin testifies that he would prepare binders for investors. “Elizabeth asked to review them and once they were reviewed and approved … I would send them to investors,” he said.
Erin Woo
Bostic shows Edlin the purported Pfizer/Theranos study report, but Edlin doesn’t know who created it or put the logo there, he testified.
Erin Woo
The marketing on Theranos’s draft website included “a tiny drop is all it takes” and “highest level of accuracy.” In a four-page email, Theranos attorney Kate Beardsley raised accuracy questions about some of this marketing, in some cases asking for substantiation or suggesting changes (i.e., “full range” to “broad range,” “highest quality” to “high quality”).
Erin Woo
Edlin testifies that Holmes was “very involved and detail-oriented” in reviewing and approving Theranos’s marketing. “For the end product, and for what actually went onto the website, she did review that.”
Erin Woo
Dec. 27, 2015, email from Holmes regarding a “VIP guest”: “You can say we do run those assays, but were not able to run them on this sample, apparently due to a human error in sample handling.” However: We just saw an email from a Theranos scientist saying it was not human error. This email was in regards to a Forbes writer who planned on writing about his experience.
Erin Woo
Regarding those results: Bostic enters a Jan. 7 email from Tina Lin to Edlin, noting some issues with the results (some high, some low). “We have no sample for rerun since it was a short draw,” she wrote. Theranos began testing in wellness centers over a year ago, Bostic notes.
Erin Woo
Jumping ahead to the Murdoch investment. Jan. 6, 2015, from Holmes: “I [sic] would be an honor to have you be part of our company.” Jan. 7 from Murdoch: “Thanks, Elizabeth. Enjoyed every minute of it. Any blood results? See you soon, Rupert”
Erin Woo
Email from Edlin: “Unfortunately by the looks of the Thyroid panel results below it appears to have had major issues again.” Balwani: “To say this is deeply disappointing will be a gross under statement.” This was about a month before the public launch, Edlin testifies.
Erin Woo
We’ve spent the morning so far looking at different email chains in which Daniel Young instructed Edlin to change or remove abnormal test results from demo reports. Holmes has been included on many of these emails.
Erin Woo
The jury is seated, and Daniel Edlin is back on the stand. We’re starting again with a recap of Theranos demos. Last Friday, we discussed how they used the “demo app,” which shielded device failures from view, or the “null protocol,” which wouldn’t actually analyze the sample.
Erin Woo
Good morning! I’m in the courtroom in San Jose. We’re starting with Daniel Edlin, a former senior product manager at Theranos (and college buddy of Christian Holmes). Based on pretrial arguments, we’ll have former Pfizer diagnostics director Shane Weber next.
Erin Woo
With that, we’re breaking for the weekend. We’ll pick up with Edlin on Tuesday.
Erin Woo
We’re looking at an email chain between Edlin, Daniel Young, Michael Craig and others, preparing for a tech demonstration. They decide to go with the demo app, which “shields protocol failures from the client,” Craig wrote. If an error had taken place, it wouldn’t show on the screen that an error had taken place. It would say running or processing, Edlin said.
Erin Woo
Edlin conducted trainings for Walgreens staff and would give tours around Theranos. “In advance of the tour, there were some areas of the labs that were hidden by a partition” to conceal Theranos devices, Edlin testifies.
Erin Woo
Edlin was aware at the time of Theranos using modified third-party devices to run venous draws but did not know the third-party devices were used for fingerstick draws until 2016.
Erin Woo
Edlin worked on the “front-end customer experience” for the Walgreens partnership, including the store’s branding and marketing as well as software used by patients and technicians. Edlin testifies that he was familiar with the Edison machines (3.0 and 3.5), the MiniLab, and the Edison 4 series (the next-gen version of the Theranos devices). The next-gen versions were never used for clinical patient testing, he testifies.
Erin Woo
So far, Edlin has testified about Holmes’s work habits — she was in the office “all the time,” from early morning to late evening and on weekends — and about how information was kept siloed within Theranos, on instructions from Elizabeth, Christian and Sunny.
Erin Woo
Edlin was recruited to Theranos by Christian Holmes, who Edlin describes as “one of my closest friends.” He first met Elizabeth Holmes through Christian while Edlin and Christian were at Duke.
Erin Woo
Daniel Edlin, a former senior project manager at Theranos from 2011 to 2016 who worked directly with Holmes, is on the stand.
Erin Woo
After a break, we’re back in session. There may be more disruptions coming up to the trial schedule: A juror’s mother-in-law passed away suddenly and she may have to travel to the Midwest, and a friend of Davila’s is critically ill.
Erin Woo
Redirect is done, and we are back to re-cross. After some back and forth on Dhawan’s assumptions that Theranos employees were doing their jobs, Dhawan has been excused.
Erin Woo
The government is asking about Lynette Sawyer. Dhawan says he didn’t meet Sawyer and doesn’t know whether she went into the lab or saw the Edison. In general, the government is working to show that Wade’s line of questioning relied on assumptions.
Erin Woo
We’re through cross and into redirect. Wade’s cross-examination stayed on the same theme: that Theranos had plenty of qualified employees, and Dhawan’s minimal presence in the lab wasn’t a concern.
Erin Woo
Wade is pointing out that Dhawan, as a part-time employee, delegated his responsibilities to different full-time Theranos employees. “No one was pretending you were there every day,” Wade continued. “You were there as needed, right?”
Erin Woo
Lance Wade is starting with discussion of Dr. Lynette Sawyer, who also served as a part-time lab director during this time. Dr. Sawyer did not come up during direct yesterday — Wade seems to be arguing that Dhawan didn’t do much because Sawyer was handling more of it.
Erin Woo
After a juror overslept, we are finally starting testimony in “Our Holmes Matter” in San Jose. We’re starting again with Dr. Sunil Dhawan, who became lab director after Adam Rosendorff left.
Erin Griffith
Motion to compel is denied, Parloff is not required to turn over his notes. Judge said it doesn’t even have to get into the issue of reporter’s privilege because the defense hasn’t made a strong enough case for it. “It’s a fishing expedition.”
Erin Woo
We’re wrapping for the day. I’ll be back in the courthouse at 9 a.m. tomorrow when the trial resumes.
Erin Griffith
Parloff counsel David Korzenik: “The trial is not about Mr. Parloff’s state of mind. It’s not a libel case against his subsequent article in which he corrected his first.” “He can only testify as to what Ms Holmes told him.”
Erin Woo
Wade is asking about Dhawan’s interactions with Holmes and Balwani. Wade says that Balwani was running the laboratory from an operational standpoint. Dhawan says he can’t comment on that, but his assumption was that he was.
Erin Woo
With 15 minutes to go today, we’re starting in on cross-examination. Wade (who spent days on the stand cross-examining Rosendorff) is starts by establishing that Dhawan is a highly trained professional.
Erin Woo
Dhawan says he doesn’t recall ever asking questions or asking a report to be changed. He also signed a document about reporting of critical values without ever seeing a critical value.
Erin Woo
Rosendorff had signed the documents before Dhawan did. “It gave me some reassurance that there had been some supervision before my time of arrival,” Dhawan testified. Dhawan signed the validation for the Edison without ever seeing it run anything.
Erin Griffith
Also, “We want to show the information he was pointed to. It doesn’t matter if it turns out to be correct or incorrect.”
Erin Griffith
Onto the Parloff matter. Cline says the Holmes camp wants to Parloff’s reporting notes in order to show that Parloff “was colored by bias — a desire to blame any errors he made in his initial article on Ms. Holmes rather than” his own errors. Wow.
Erin Griffith
The magistrate judge grants motion for the exclusion. “He’s testifying as to secondary things. He’s reporting and testifying about something someone else said or did that he covered. He really is akin to an expert witness who has collected information from many sources.” Carreyrou is now allowed to be in the courtroom.
Erin Woo
The Q.C. manager, Langly Gee, introduced himself to Dhawan in August 2015. He wanted Dhawan there for the CMS audit on 9/22/15. Dhawan said he was there for the audit. Before that, he said he signed “whatever was sent to me.”
Erin Woo
Dhawan did not go to Theranos every day. He went to Theranos twice. He didn’t interact with patients, physicians or Theranos lab employees. He never dealt with Q.C. He thinks he worked 5-10 total hours from November 2014 to June 2015. For this, Dhawan was getting paid $5,000 a month.
Erin Griffith
Cline: “I understand this is a hardship for Mr. Carreyrou. He’s not the only one suffering a hardship. Ms. Holmes’s father is a witness. We may call him. He’s having to miss the trial of his daughter.”
Erin Griffith
Prosecution notes that it already brought a motion to block any arguments that there was coordination between the government and Carreyrou. Says there is no evidence of that and that Judge Davila already agreed to block such arguments.
Erin Griffith
Will the Holmes camp call Carreyrou as a witness? Holmes lawyer John Cline: “I can’t tell you at this point who we’re going to call as witnesses. We may. We may not put on a case. We may call Ms. Holmes. … I can certainly tell you we may call him.”
Erin Woo
As expected, we are now calling Dr. Sunil Dhawan, a dermatologist who became Theranos’s lab director after Rosendorff left. After several days on Theranos’s partnerships with other companies (Safeway, Walgreens), we’re now back to internal Theranos workings.
Erin Woo
After brief re-cross from Downey, Jhaveri is excused.
Erin Griffith
He adds that any subpoena issued to Carreyrou would be in bad faith or harassing. One example: “Ms. Holmes leading her employees in a chant that says F You, Carreyrou. Obviously I’m abbreviating that.”
Erin Griffith
Carreyrou lawyer: “We believe he’s being singled out because of his prior reporting and because of the animus Ms. Holmes has for him.” Lawyer also says it’s a matter of First Amendment rights.
Erin Woo
Schenk is up for redirect. He notes that the patient experience surveys were before they got their test results, so if they, for example, were told they were not pregnant but were in fact pregnant, that would affect their experience but wouldn’t be counted in survey results.
Erin Griffith
Judge: “I’ve not been following Mr. Carreyrou’s podcast, but as I understand it he’s been able to report on what’s going on and comment on what’s going on.” Judge asks what’s the problem?
Erin Griffith
On the Carreyrou matter, the magistrate judge suggested that he be categorized as an expert witness, “a pragmatic solution,” he said. Holmes side said (understandably?) that that doesn’t make a lot of sense.
Erin Griffith
Defense has tried to compel Parloff to release his notes. Some of them (old emails) no longer exist. But others would involve forcing him to turn over notes and sourcing, etc. He already provided some recordings of interviews to both sides but is fighting the subpoena for notes.
Erin Griffith
They’re also going to be dealing with the motions involving Roger Parloff, who wrote a Fortune cover story that is literally being discussed in trial at this moment.
Erin Griffith
While testimony is happening, there is also a separate Zoom hearing now with a magistrate judge, Nathanael Cousins, over whether the journalist John Carreyrou will be allowed in the courtroom.
Erin Woo
Looking at a January 2015 patient experience survey summary. Patients rated the overall experience as 4.81/5 — more support for Downey’s line of argument here.
Erin Woo
In general, Downey seems to be taking a very reasonable, friendly tone with this cross-examination (in contrast, for example, with the way Wade started off cross with Rosendorff two weeks ago). Main points: opening stores is hard, but patients were happy.
Erin Woo
Downey is really trying to highlight patient satisfaction to show that the partnership was a success. Jhaveri pushes back, saying that patient experience was one important factor, but so was cost of build-out, venous draw percentages, etc. Jhaveri does concede that he doesn’t remember getting negative feedback about the tests being done in venous draw form.
Erin Woo
Other documents showed that Walgreens didn’t include venous draw percentages among “key program risks” and that Jhaveri told Walgreens colleagues not to discuss future market expansion plans outside California and Arizona.
Erin Woo
Downey highlights documents that make the case that the partnership was doing better than the government painted it as. We saw a set of Walgreens/Theranos meeting minutes saying that patient experience surveys were “off the charts.”
Erin Woo
Downey establishes that Jhaveri had very little contact w Holmes; Jhaveri says he met with her “two or three times at most.” (His main point of contact was Balwani.)
Erin Woo
Back from break. Downey is starting cross with questions about how opening stores is a difficult job.
Erin Woo
After reading the texts, the government finished its direct examination of Jhaveri. We’ll pick up with cross after the break.
Erin Woo
Here’s the full document with 36 pages of texts: https://www.documentcloud.org/documents/21081045-holmes-balwani-texts
Erin Woo
Text messages between Holmes and Balwani about Walgreens! Jhaveri and Schenk are, for whatever reason, taking turns doing a live reading. (Jhaveri is Balwani; Schenk is Holmes. This does indeed feel kind of like high school English class.)
Erin Woo
In 2015, venous draw percentages never went down enough to expand beyond 40 stores in Arizona and one in Palo Alto. Balwani’s explanation for the percentages never changed. Then, in late 2015, Jhaveri testifies, he read a negative article about Theranos. Walgreens stopped offering Theranos tests in 2016.
Erin Woo
General theme of Jhaveri’s testimony thus far: Theranos wasn’t hitting its targets regarding venous draw percentages, but Jhaveri was willing to keep working with them. But, the government notes: What Jhaveri didn’t know was that Theranos was not doing testing on its own devices.
Erin Woo
8/15/2014 email from Jhaveri, where he wrote that “we have made unbelievable progress in the short 5 months.” Jhaveri still believed that Theranos was doing testing on its own devices, he testifies. In the same email, Jhaveri wrote that he wants to focus on improving patient experience and “venous percent in the 10% range.” At that point, it was still around 40%.
Erin Woo
Now looking at revised goals from August for the Theranos partnership. For F.Y. 2015, they were now aiming for 200 stores instead of 500, based on the results of the pilot. The venous draw percentages and the cost of the buildout were two reasons for the reduced goals, Jhaveri testifies.
Erin Woo
In June 2014, Jhaveri still thought that Theranos was doing its testing on Theranos devices. He did not know that Theranos was testing patients’ blood on modified third-party devices. And no one, including Balwani, was satisfied with the venous draw percentages.
Erin Woo
When Theranos did a finger stick draw, Walgreens thought that blood was being tested on a Theranos device. Walgreens did not know it was being tested on a modified commercial device, Jhaveri testifies.
Erin Woo
Walgreens agreed that some, more complex tests might always require venous draws, but those tests were supposed to be less common. A slide attributes the “higher number of venous draws so far” to “learning process around ordering patterns for Arizona,” not tech problems.
Erin Woo
The percentage of finger stick draws was “very important,” Jhaveri testifies. “That was the Theranos technology that we had signed a partnership on. … That was the actual magic that was so intriguing to us.”
Erin Woo
Patients could receive traditional lab work via venous or finger stick test. Traditionally, labs would do venous draws. Theranos, as we know, promised to do the same tests on a small amount of blood through a finger stick, which Jhaveri calls “extraordinary.”
Erin Woo
At the time, Theranos was in one store in Palo Alto and two in Arizona. They were tracking customers’ wait time and experience level. They were also tracking some lab measures, including proportions of venous vs. finger stick tests.
Erin Woo
Jhaveri was working to “operationalize” the Theranos partnership — expanding the partnership from the three stores it was in at the time. This included construction, design, layout, training, customer experience.
Erin Woo
In early 2014, he became divisional vice president of health care services, and the Theranos partnership became part of his responsibilities at this time.
Erin Woo
He re-engaged with the Theranos team at the end of 2013. At that point, he was still working on the new pharmacy design and wanted to figure out how the Theranos partnership would fit into the experience/construction of the store.
Erin Woo
He first heard of Theranos in 2010, when he was leading a project to redesign Walgreens pharmacies to be more customer-centric. He met Holmes and Balwani when he gave them a short tour of a Walgreens store.
Erin Woo
Jhaveri worked at Walgreens for 29 years (1989-2018). He’s a registered pharmacist with an MBA in organizational management.
Erin Woo
We’re done with direct examination. On cross (which takes approximately one minute), the defense establishes that Amenta didn’t have special knowledge of the wire transfers beyond knowing that they occurred. And we are now done with Amenta and onto Jhaveri.
Erin Woo
Prosecutor John Bostic is taking Amenta through federal wire transfers sent to Theranos, presumably to show that wire transfers were made.
Erin Woo
Jurors have filed in. Amenta is on the stand.
Erin Woo
Back in the courtroom for a special Thursday edition of the Elizabeth Holmes trial! Today’s expected witnesses: Robert Amenta, deputy chief investigator at the Federal Reserve Bank of New York; Nimesh Jhaveri, a former Walgreens executive; and Dr. Sunil Dhawan, a former Theranos lab director.
Erin Griffith
That’s it for today. There will be trial tomorrow and one of the witnesses will be Nimesh Jhaveri, former head of health care services at Walgreens.
Erin Griffith
The next witness is Robert Amenta, deputy chief investigator at the New York Federal Reserve. We just walked through an explanation of what the Fed does. U.S. Attorney John Bostic: “So it’s a bank for banks.”
Erin Griffith
In 2015, after the WSJ Theranos expose, Miquelon wrote an email to Holmes: “You are in my thoughts, hang in there. The haters are everywhere but your contribution to the world cannot be bottled up.”
Erin Griffith
Defense makes the case that Walgreens entered into its agreement with Theranos knowing it did not have F.D.A. approval. Walgreens had the right to terminate the partnership if Theranos did not get F.D.A. approval by the end of 2010. (It did not, and Walgreens did not terminate.)
Erin Griffith
On diligence, Miquelon says: “I would define diligence as unfolding over a couple of years — diligence continues and that’s one reason why you have a revised agreement and addendums to that.”
Erin Griffith
Downy made the point that many of the promises Holmes made about Theranos’s technology were made when the company planned to put machines in stores. Idea being that those promises are irrelevant because Theranos decided not to put machines in stores, but test in its own lab.
Erin Griffith
On cross-exam, Holmes lawyer Kevin Downey is building up how big of a deal this effort was to Walgreens. Miquelon said Walgreens hired a firm to come up with a list of 180 start-ups working on lab development, which the company evaluated.
Erin Griffith
The fee hinged on the partnership hitting certain milestones, but in August 2013, Holmes emailed Walgreens asking to accelerate the payment and send the money sooner.
Erin Griffith
WOW this might be public info but I wasn’t aware of it. Walgreens paid a $100 million “innovation fee” to Theranos for the privilege of partnering with them. The actual investment in equity only came in the form of a $40 million convertible note.
Erin Griffith
🩸 After a two-hour delay caused by jurors raising issues about their questionnaires being made public, testimony in the Elizabeth Holmes trial (or, per the judge, “Our Holmes Matter”) is beginning with Wade Miquelon, former C.F.O. of Walgreens.
Erin Griffith
Miquelon describes the art of credibility trading — in an email selling Theranos to his colleagues he notes Larry Ellison’s endorsement. The prosecutors also make the point that Theranos was seven years along — pre-empting the “just a young start-up” defense.
Erin Griffith
We’ve seen several documents from pharma companies endorsing or validating Theranos’s technology. I believe these are the same ones we saw in the opening arguments, which were a pretty big smoking gun. The testimony hasn’t yet discussed whether they were falsified.
Erin Griffith
Miquelon offers a very familiar story by now: He was excited by the promise of Theranos’s technology. Lots of cheap tests on a finger stick of blood. We also know by now that witnesses must be very specific about the claims Holmes made because defense will pick them apart.
Erin Griffith
The next witness is the former Walgreens C.F.O. Wade Miquelon (now C.E.O. of Jo-Ann Stores).
Erin Griffith
Burd draws the line at revenue and profitability. “If you’re hitting strong revenue dollars relative to size and you’re making money, I would say you’re on your way.” (If they had asked me, I would have defined a start-up as a private venture-capital backed company.)
Erin Griffith
On redirect we discuss the definition of a start-up, rebutting defense’s claim that Theranos was just a tiny upstart dealing with a big bad corporation. “Do you differentiate between a start-up that is 7-10 years old vs one that is just starting out of a garage?”
Erin Griffith
Downey trying to make the case that Safeway’s stock had had a big drop between prior to Burd leaving. He does not take that bait. “In 20 years, that happens frequently.”
Erin Griffith
We go back and forth over the Theranos lab set up as a test on Safeway’s corporate campus. Burd was frustrated that it was supposed to have a “box,” one of Theranos’s blood analyzers, but for “secrecy” reasons, didn’t get one. Eventually it was shut down.
Erin Griffith
Downey has grilled Burd on the legal details of their partnership that gave Safeway exclusivity rights, paybacks, etc. on whether there was ever a hard deadline given for the launch.
Erin Griffith
A lot of focus on the diligence that Safeway did on Theranos and its technology. Burd spoke with various doctors and lab directors at Johns Hopkins, who said they had not had the Theranos machines long enough to validate them. “The box was taken back by Theranos.”
Erin Griffith
Kevin Downey, Holmes’s lawyer, is now cross-examining Burd. Building up all his experience, expertise, sophistication, etc., to compare with Holmes and Theranos. “You knew at the time that she was a very young entrepreneur. … And you knew the company was a start-up?”
Erin Griffith
Just email after email from Burd to Holmes expressing disappointment. “We are so good together when we collaborate, but I have never been more frustrated. I want to help, but you are making it difficult.”
Erin Griffith
Burd emailed Holmes: “I can recall getting discouraged once is (sic) the last 61 years. That said I am getting close to my second event.” Do C.E.O.s always email each other this way?
Erin Griffith
Burd emailed Holmes complaining about delays on launching Theranos tests inside Safeway stores. “I feel like a jogger running in place waiting for the stop light to turn green.” Another email has the subject line “Becoming Discouraged.”
Erin Griffith
Burd emailed Holmes in 2012 expressing concerns about a Theranos lab on Safeway’s campus. “I am genuinely concerned that Safeway’s lab reputation gets worse by the day.” He warned that if the problems continued for the soft launch, “both our brands will be at risk.”
Erin Griffith
The judge called the case “Our Holmes Matter” which I’m going to start using. Steve Burd, the former C.E.O. of Safeway, is back on the stand for direct examination.
Erin Griffith
🩸 In court again for U.S. vs. Holmes.
Erin Griffith
Thus concludes the Theranos trial action for the week. The trial is on recess on Friday, will be back on Tuesday.
Erin Griffith
He continues: “I’ve had the privilege of meeting four U.S. presidents. When the president is in the room — let me tell you, the president owns the room. No one talks unless spoken to. Her style was warm, it was friendly. It wasn’t dictatorial.”
Erin Griffith
Burd is highly complimentary of Holmes. “Not all C.E.O.s are alike. She would rise to the top of the pile in terms of vision, in terms of command of the information, clearly in terms of delivery. She was always decisive.” “Whenever she was talking she owned the room.”
Erin Griffith
Safeway initially negotiated an $85 million partnership with Theranos, including investing $30 million to install labs in its stores, which he said turned out to be a low estimate. The deal was negotiated directly with Holmes with no lawyers, which Burd found was unusual.
Erin Griffith
Now discussing convertible equity notes! Isn’t this is so much more fun than chemiluminescence and assays. 📈
Erin Griffith
Ooooooooh I think we just got our first mention of EBITDA in the trial, I can see the thrill of learning about accounting on the faces of these jurors.
Erin Griffith
For some reason he is talking about a strain of watermelon called a Pureheart that has a very small rind that Safeway sold exclusively for a year. 🍉
Erin Griffith
Rosendorff’s testimony is finally over. Steve Burd, the C.E.O. of Safeway for 20 years until 2013, is now testifying. When he heard about Theranos he was “immediately interested in meeting Theranos, particularly the founder.” “It was a fascinating concept.”
Erin Griffith
Defense counsel Wade is almost giddy to argue that prosecution asked Dr. Rosendorff to compare issues at Theranos to other labs he worked at. Defense should be allowed to bring up other investigations at labs the Rosendorff later worked at, he says.
Judge Davila says no, that would be a separate “mini trial.” He adds, “I think it may actually enhance the damage you’re seeking to avoid but, hey, it’s your case.”
Erin Griffith
Regarding the accusation that he stole trade secrets by emailing himself files, prosecution asks, “Based on what you know about Theranos’s methods, would you have wanted other labs to use those methods?” “No.”
Erin Griffith
For the last hour we’ve been hearing redirect on Dr. Rosendorff. For those counting, this is Day 6 of his testimony. The reason he left Theranos: “It was about patient care and my integrity as a physician.”
Erin Griffith
Now the alternate has similar concerns, saying English is not her first language and is concerned she “could make a mistake in something.” “It’s her future.” The judge does not seem to be having this one.
Erin Griffith
The juror said she doesn’t believe in punishment and has been increasingly haunted by the thought of having a role in sending someone to jail. Not surprisingly, prosecution was in favor of dismissing her.
Erin Griffith
I’m starting to feel like an Oompa Loompa watching the jurors drop out from the sidelines here, maybe the press corps will put together a little song and dance.
Erin Griffith
💉 U.S. v. Holmes, Day 12 of ~2384972: We have dismissed a juror who says her views as a Buddhist will make it impossible for her to vote to convict. Three of five alternates remain. Later today Steven Burd, the former C.E.O. of Safeway, will testify.
Erin Griffith
QC failure, immulite reagents, clia lab, advia, HCG, PSC, assays, vacutainers, nanotainers, we are nearing the end of Day 5 of Dr. Rosendorff’s testimony and so very deep in the blood testing weeds please send help
Erin Griffith
Judge Davila now says that defense has had four days to challenge Rosendorff’s testimony and says “You have challenged his confidence.” Allows defense to question about Rosendorff’s work post-Theranos, says to “probe lightly” to avoid liability or impeding his future career.
Erin Griffith
Interesting style of questioning asking the witness “You don’t recall those times when you lied and again and again?” “…No sir?”
Erin Griffith
Rosendorff sent himself a bunch of internal Theranos emails before he left. Wade accuses him of stealing trade secrets and violating HIPAA with patient data.
Erin Griffith
Wade continues to drive at the point that Dr. Rosendorff left Theranos for more money and the reason he expressed concerns about its lab results and asked to be removed from its Clia lab was to start his new job sooner.
Erin Griffith
Now Wade is trying to use Rosendorff’s resignation email — the fakest email any employee ever writes — against him. “You wrote that it was a ‘tremendous experience’ and you ‘appreciated the opportunity to work with so many talented individuals’” Gotcha!
Erin Griffith
Wade is trying to make a big deal about how Dr. Rosendorff’s next job after Theranos paid him more. Dr. Rosendorff is not having it. “I wanted to join a reputable company whose mission I believed in.”
Erin Griffith
Defense shows a résumé Rosendorff was sending around and points out that he said he did great work at Theranos. Rosendorff: “I don’t know if you’ve ever tried to apply for a job but it doesn’t serve you” to discuss “fraudulent activity.” Defense strikes his answer.
Erin Griffith
Dr. Rosendorff was also looking at other jobs before Theranos ever launched. Defense: “You essentially had a foot out the door the whole time?” “On occasion I would look at what other jobs were available.”
Erin Griffith
Back from a break. Defense asking Dr. Rosendorff about his departure from Theranos. Defense points out that Rosendorff was considering filing a qui tam lawsuit against Theranos, to alert the government of wrongdoing (and get a percent of the money recovered).
Erin Griffith
Defense counsel Wade reads from a deposition in which Rosendorff appears to contradict his testimony about the frequency of problems at Theranos labs. “Problems come up in labs — every lab in America, probably every lab in the world — is not going to perfect, correct?” “Yes”
Erin Griffith
Binder hijinks. While flipping through all the various emails Rosendorff asks someone to help him with the binder because “it’s just opened up and it’s just [hand wave motion] pages everywhere.”
Erin Griffith
In the meantime Roger Parloff has filed a declaration opposing defense’s push to compel him to turn over his notes in reporting the 2014 Fortune cover story about Holmes and Theranos. He already provided both sides recordings of his on-record interviews with Holmes and Balwani.
Erin Griffith
Rosendorff takes off his glasses and rubs his eyes as Wade cycles through various forms showing his signoff on assay validation from 2013.
Erin Griffith
The intended takeaway from the line of questioning, as far as I can tell, is that some tests at Theranos at some point did work and that when there were problems, many people at Theranos tried to fix them.
Erin Griffith
Lance Wade, defense counsel, has resumed his aggressive questioning of Dr. Rosendorff, getting deeply into the weeds on his role in setting Theranos’s lab policies and QC testing with various emails.
Erin Griffith
Judge Davila responds with a light dig against defense: “A couple of blue suits sitting next to them in a judge’s chambers, what could be intimidating about that?” 👔
Erin Griffith
A media coalition (including NYT) has argued to unseal the juror questionnaires since we had little visibility into the final selection process. The judge plans to privately question each juror about what they might want to redact and defense says they want to be there, to which the judge responds that that would be unnecessarily intimidating. Defense disagrees.
Erin Griffith
Judge Davila said a journalist contacted a doctor who contacted the court clerk to point out that one of the defense’s exhibits included a patient’s real name, which is a HIPAA violation.
Erin Griffith
Holmes is here of course with Billy Evans, her mom and an older man I can’t ID. Before the jury arrives, the lawyers are arguing about whether they can discuss problems at companies that Dr. Rosendorff worked for after Theranos.
Erin Griffith
🩸 Back in the courtroom for U.S. v. Holmes. 🩸 The clerk is checking courtroom tickets after a few book clubs showed up last week. Cross-examination of ex-lab director Adam Rosendorff continues.
Erin Woo
With that, we’re breaking for the weekend. Court will resume on Tuesday.
Erin Woo
The government asks how long Wade is going to take with cross-examination, given that they have out-of-state witnesses they want to call next. Wade says he expects it’ll take all day Tuesday. (As a reminder, the public does not typically get information on what witnesses are coming next.)
Erin Woo
7/19/14 email from Rosendorff to Balwani defending Theranos’s tests in response to physician complaints. “I was emphatic with Dr. Chen about our rigorous validation and quality process,” Rosendorff wrote. He testifies that he believed this at the time.
Erin Woo
With five minutes left before we’re scheduled to break for the weekend, we are now discussing customer service. Rosendorff notes that by the time complaints were escalated to him, they were usually serious issues.
Erin Woo
Wade really hammering home this point on outlier removal (which makes sense — this is something that came up a lot in previous testimony as an example of Theranos manipulating results).
Erin Woo
Wade is pressing Rosendorff to say he approved of this. “I thought it was unusual,” Rosendorff said. After reminding Rosendorff of what he said in his deposition, Rosendorff concedes that he approved it.
Erin Woo
Now onto something called the “six tip policy,” where there are six results from one sample. Two results can be discarded, and you average the other four. Young developed this process. Rosendorff says there was no formal SOP about outlier detection.
Erin Woo
6/4/14 email from Young, saying that they’re holding the results of a study after speaking with Rosendorff — presumably supporting Wade’s line that Rosendorff is now in the loop.
Erin Woo
In a 6/4/14 email from Rosendorff, he wrote a HCG plan for Balwani and Young which said HCG should switch to vacutainer draws and run on immulite. Wade notes that Rosendorff is “in the loop now.”
Erin Woo
Young replies that he updated Adam over the weekend and agrees that “they should be running all decisions by Adam.”
Erin Woo
Looking at 6/3/14 email from Balwani to Young: “Adam came by my office EXTREMELY frustrated that as a lab director he is not being kept in the loop.” “This information has to go through him. … Can you guys please touch base with Adam so he is in the loop,” Balwani adds.
Erin Woo
Wade asks if Rosendorff stands by his testimony that he didn’t meet with Holmes about HCG in this time period. Rosendorff says yes.
Erin Woo
5/30/14: email from Holmes’s assistant where she writes that “Elizabeth has asked me to coordinate a CLIA meeting for this afternoon at 4 p.m.”
Erin Woo
Now seeing Holmes’ calendar for 5/29/14, where she has “meeting with Adam Rosendorff” listed. Rosendorff had testified that he had not met with Holmes.
Erin Woo
We’re now building a timeline being shown to the jury about HCG issues, including various emails and exhibits.
Erin Woo
Wade had Rosendorff confirm that he testified Holmes was less concerned than he was about the HCG issues. Then, he showed a 4:45 p.m. email forwarded from Balwani to Holmes about HCG issues. Holmes responded six minutes later, asking, “How did that happen?” Wade then moves on.
Erin Woo
We’re back from break and switching gears to talk about HCG, the pregnancy test.
Erin Woo
On 10/15/14, Balwani offers another meeting, but Rosendorff’s response indicates that he doesn’t need the other meeting.
Erin Woo
Wade now discussing how Daniel Young sent a draft Q.C. policy ahead of the meeting, even though that was Rosendorff’s responsibility. Wade also notes that there were no restrictions on what Rosendorff could discuss during the meeting.
Erin Woo
Wade is also trying to show that Theranos DID take Rosendorff’s concerns seriously. On 10/9/14, Balwani emailed Rosendorff, setting up a meeting to discuss his concerns. Balwani tried to set it up for the next day, but Rosendorff asked for it to be delayed.
Erin Woo
In today’s cross-examination, Wade seems to be trying to poke holes in Rosendorff’s credibility — pointing out times when he was slow to respond to doctors, and noting that there was an AAP in place for proficiency testing, contrary to the impression given in previous testimony.
Erin Woo
Wade asks if anything was going on to make Rosendorff slow to respond. Rosendorff: “I was becoming frustrated at my inability to explain discrepant results.” Wade presses him that he just needed to call the doctor back.
Erin Woo
We’re now seeing another email from a doctor saying he’s waiting for a callback from Rosendorff. Wade makes the point that this is the second time a week had passed before returning a doctor’s call. Rosendorff says he had already spoken with him and didn’t realize another call was needed.
Erin Woo
Email from Rosendorff after talking to the doctor: The doctor is “puzzled” about the results, but “the MD is extremely positive and excited about Theranos and wants us to ‘crush Quest Diagnostics.’”
Erin Woo
There’s a 10/10/14 email from a customer service rep to Christian Holmes about a patient who redid her labs at Stanford and got very different results.
Christian responds to say they’ll repeat the tests and loop Rosendorff in. Rosendorff was looped in as instructed, but now there’s a followup email to Rosendorff! A week had gone by, and he hadn’t returned the phone call about the patient.
Erin Woo
So far this morning, Wade’s cross has consisted of going through email chains discussing proficiency testing, seemingly to establish that Theranos did have a rigorous proficiency testing protocol in place.
Erin Woo
We’re starting off with proficiency testing. Wade gets Rosendorff to agree that he did write a standard operating policy for an alternative assessment protocol for proficiency testing.
Erin Woo
Court is in session for the fourth (!!) day of testimony by the former Theranos lab director Adam Rosendorff. (This is the longest any witness has been on the stand thus far.)
Erin Woo
There is no redirect, and Sung has been dismissed. Court is on recess until Friday.
Erin Woo
The defense ended on the contract between Celgene and Theranos. Cline said that all of the “success milestones” were achieved, and payments were made, although Sung said she didn’t have direct knowledge of the payment.
Erin Woo
John Cline is doing the cross-examination for the defense. He’s starting by going back through the chronology we covered in direct.
Erin Woo
And now we’re onto cross! This was a very fast direct examination.
Erin Woo
Sung did not tell anyone that Celgene had comprehensively validated Theranos’s technology.
Erin Woo
4/2/12 email from Sung to Daniel Edlin, with Holmes and Young copied. “We thought it would be great to keep her in the loop and aware of ongoing activities,” Sung said. The email says Celgene “had decided to simply wait until your next-gen machines are ready and then deploy them”
Erin Woo
In more bad news for Theranos, mean concentration profiles were not consistent between Theranos and QPS, and concentration variability was higher with Theranos than with QPS method. Once again, Sung confirms that concentration variability is undesirable.
Erin Woo
We’re looking at a scatter plot showing the range where Theranos tests should fall. Most of them … do not fall within this range. 67% of samples had >25% difference in serum concentration between Theranos and QPS method. “It’s not good news” for Theranos, Sung said.
Erin Woo
Theranos whole blood data showed more fluctuations, which Sung said was undesirable.
Erin Woo
Theranos also had higher variability. Government asked if that was good or bad. Sung chuckled and replied: “Bad.”
Erin Woo
14.1% of Theranos samples didn’t have usable results, compared to less than 2% for QPS.
Erin Woo
We can see a comparison between Theranos and QPS assays. Theranos only used .25mL of blood compared to 2mL for QPS. Theranos also used whole blood rather than serum, which Sung said was “very nice.”
Erin Woo
7/20/10 email from Sung to Holmes saying they weren’t able to validate Theranos’s tests. The results were “close” in some cases but not good enough.
Erin Woo
She had visited Theranos and thinks she met Holmes while she was there. She saw a Theranos device while she was there and said it looked like an oven. The idea you could do something so small and efficient on site was a “great idea,” she thought at the time.
Erin Woo
Celgene entered into an arrangement with Theranos. Her understanding was that Theranos was developing a platform to analyze the endpoints. She thought they could do it efficiently with a very small amount of blood, which would be a “huge advantage.”
Erin Woo
We’re starting her testimony in 2009, when she worked on a drug called ACE-011 being developed for treatment of anemia and bone loss. Her role was to suggest proteins in the blood to measure that would suggest whether the drug was working (e.g., hormones).
Erin Woo
Dr. Sung got a Ph.D at Georgetown and then did a postdoc at Stanford before going into industry. She worked in various biotech firms, including Celgene, which was later bought by Bristol Myers Squibb. She’ll be testifying about her work at Celgene.
Erin Woo
We’re back in session. The government is calling Dr. Victoria Sung. (Rosendorff will pick up on Friday.)
Erin Woo
After a long discussion of an email chain about proficiency testing, Rosendorff is done with testimony for today. (He has a conflict this afternoon.) We are going to take a 20 minute break and then pick up with a different witness for the rest of the afternoon.
Erin Woo
Now looking at a document from the American Proficiency Institute that gives “Acceptable” scores to all of the proficiency tests.
Erin Woo
Looking now at an email from Rosendorff: “We are continually doing proficiency testing.” Rosendorff testifies to clarify that this was predicate testing.
Erin Woo
After looking at his 2016 testimony (in the binders!), Rosendorff says he still doesn’t remember telling the government that. “I assume the record is correct,” he says.
Erin Woo
We’re now back to where we started yesterday, discussing Rosendorff’s contact with the government. Wade asks Rosendorff if he remembers telling the government that Theranos machines used alternative assessment proficiency to measure accuracy. Rosendorff says no.
Erin Woo
Rosendorff previously testified there was no formal proficiency testing processes in place. After Wade challenges him, Rosendorff clarifies: There was proficiency testing for predicate testing (commercial tests), but not for Theranos tests
Erin Woo
Looking at a quality systems presentation for 2014 from Langly Gee, Theranos’s quality control manager. Wade is showing failure rates for Edison quality control tests. “Something’s not squaring up,” Rosendorff says — these failure rates are lower than he thought they were.
Erin Woo
Wade is continuing on this line of questioning, noting that Rosendorff testified about concerns in June 2014 but signed validation reports in Aug. and Sept. 2014.
Erin Woo
Rosendorff testifies that he would not have continued signing validation reports for Theranos’s blood testing device, the Edison, if he thought it was unreliable.
Erin Woo
We’re back from break! And on to another Edison validation report.
Erin Woo
We’re going through a Sept. 2013 validation report on the Edison for TSH, a thyroid test. This document, with Rosendorff’s signature, validates the test for patient use. Wade is walking Rosendorff page by page through the report.
Erin Woo
Rosendorff testifies that he never told the CLIA team to stop using the Edison test altogether, but did on some specific tests.
Erin Woo
Wade is now noting that Rosendorff was among the highest-paid employees at Theranos. Rosendorff says that he thought he should have been paid more, given Theranos’s problems, but this is stricken from the record.
Erin Woo
Rosendorff says he had concerns about QC. Wade says he was paid to have concerns. “That’s why you get paid the big bucks.” Rosendorff replies: “Not as big bucks as you get paid.” Cue the biggest laugh of the trial so far.
Erin Woo
Wade is making a point he’s made before, that quality control samples aren’t patient samples — noting that “nothing bad happens” to patients if a QC test fails.
Erin Woo
We are now on to a mid-Jan 2014 email from Rosendorff to the CLIA lab team asking them to refer to very detailed quality-control policies.
Erin Woo
Balwani’s response: “I spoke with the teams today and they are all going to put in long hours and do whatever it takes to get this done tomorrow.” Rosendorff testifies: “I had many many battles with Sunny about what was needed versus what he was prepared to allow.”
Erin Woo
Rosendorff added: “I do feel that it was very difficult to get answers from Daniel’s team.” In a later email, Rosendorff doubles down on needing the specificity studies: “No they are required. Very important in fact.”
Erin Woo
From the email chain. Balwani: “As we know, we take these issues with seriousness. Why didn’t you raise these before to me when I was asking for any issues for months?” Rosendorff: “My apologies for the late feedback regarding our readiness …”
Erin Woo
Notable frustration from Rosendorff after he tries to make a point and Wade cuts him off: “I’m just reading emails and saying, yes, that’s what’s happening here.”
Erin Woo
We’re now onto discussion of the Walgreens launch. In a 11/10/13 email to Balwani, Rosendorff flagged issues that needed to be addressed before the Walgreens launch. Wade is walking him through the email chain with Balwani, point by point.
Erin Woo
After many questions establishing that Rosendorff did not hide Normandy lab from the inspectors, Wade notes that the inspection found “minor deficiencies.” Rosendorff says that Holmes and Balwani were upset that there were deficiencies and that a clean report would have been “ideal.”
Erin Woo
Wade is trying to make the point that this was to preserve trade secrets. Rosendorff says this doesn’t make sense, asking who would pin trade secrets to a bulletin board.
Erin Woo
We’re looking again at the email from Elizabeth Holmes about walking the auditors through the lab. We’re now seeing the response: “All of the bulletin boards from the lobby to HR were covered with paper so the inspector could not view any of the drawings or items on the boards.”
Erin Woo
Wade is starting by asking questions about the Dec. 2013 CA Dept. of Public Health audit that we discussed yesterday. Wade’s going through a document listing preparations for the audit as he tries to establish that Rosendorff had responsibility here.
Erin Woo
Court is in session for another day of the Elizabeth Holmes trial! We’re continuing with the cross-examination of former Theranos lab director Adam Rosendorff, which defense attorney Lance Wade expects to take all day.
Erin Woo
Rosendorff asked for a bathroom break, and we are instead ending for the day! Will pick back up at 9 a.m. Pacific Time tomorrow.
Erin Woo
Important content: The custom-built laboratory information system was named Super Mario. (Other fun names: Jurassic Park = the lab with all of the standard machines, Normandy = the lab with Theranos machines.)
Erin Woo
Cross examination has been much slower and calmer now that we’re back from break. Less pressing Rosendorff to answer specific questions and more jokes.
Erin Woo
Wade is holding up a copy of the book and talking about the importance of its PR and marketing efforts, as well as its secrecy.
Erin Woo
Rosendorff read Walter Isaacson’s Steve Jobs biography and liked the excitement of Silicon Valley, which helped lead him to Theranos. (That Steve Jobs biography was a favorite of Holmes’s, too.)
Erin Woo
We’re back from break! And we’ve taken a big step back in time — now looking at the resume Rosendorff sent Theranos when he applied in 2013.
Erin Woo
We’re now going back and forth on who was involved in the R&D process. Rosendorff says he was not aware at the time if Holmes was involved with R&D. Per the master validation plan, Rosendorff had to sign off on each assay before it can go into validation.
Erin Woo
We’re going through what tests were offered during the friends and family launch. The only tests run through 9/28/13 were two that did not run on the Edison, Rosendorff confirms. The first Edison-based test, TSH, a measure of thyroid function, was run 10/17/2013.
Erin Woo
Wade also keeps having Rosendorff read his own testimony, silently, to himself. That’s happening again now.
Erin Woo
In the email, Balwani writes, “We feel confident we can handle ~30 samples/day from this location at this point. And it has been 2 months since we have been out in WAG [Walgreens]. It’s time to go live.” Wade now trying to make the point that they had not previously been live.
Erin Woo
Found it! We are now looking at an 11/7/13 email from Balwani to Rosendorff about opening their Palo Alto/Uni Ave location to the public on the coming Monday. It had previously only been open to friends/family.
Erin Woo
We are now, once again, trying to find the correct pages in the MANY binders the defense gave Rosendorff.
Erin Woo
Wade is now saying that Rosendorff testified earlier to a grand testimony that it was a “limited friends and family” but didn’t do so on Friday.
Erin Woo
We are now on to the commercial launch. In an email that we saw in direct, Rose Edmonds (a development scientist) says that none of the assays are completely thru validation testing. Rosendorff had testified this is significant because they were just a week from launch.
Erin Woo
Wade gave a hypothetical where Rosendorff had rotten food in his office, and subordinates complain to Balwani. Rosendorff continued to seem confused, and Wade is now moving on.
Erin Woo
We are now … asking about company hierarchy? (Rosendorff reported directly to Balwani, and Young was also above him.) “Are there ever circumstances where it’s appropriate for senior management to have discussions about a subordinate?” Wade asks. Rosendorff seems confused.
Erin Woo
Rosendorff also served as Theranos’s clinical consultant. Holmes wouldn’t qualify for this either.
Erin Woo
Wade is asking about Holmes’s education. Famously, she dropped out of Stanford. “Based on your understanding of her background, would she be qualified to be a CLIA supervisor or lab director? Rosendorff: “No, definitely not.”
Erin Woo
Wade says, and Rosendorff concedes, that ultimately it was Rosendorff’s responsibility if the tests failed and his responsibility to enforce quality control policies and proficiency tests.
Erin Woo
Rosendorff is agreeing with Wade’s questioning that Holmes never told him to report an inaccurate result, and that Holmes never directed him not to pause or discontinue tests he thought were inaccurate.
Erin Woo
Wade: “Did you ever use a test on patients that you believed was inaccurate or unreliable?” Rosendorff: “No.” Did he ever provide results that he believed to be unreliable? “No.”
Erin Woo
Wade: “Did you faithfully dispatch your legal obligations as lab director at Theranos?” Rosendorff: “Yes, I did.” Wade: “Did you offer lab tests that you knew at the time were inaccurate or unreliable?” Rosendorff: “No … I ordered the laboratory to cease testing.”
Erin Woo
Two themes of cross thus far: Wade seems to be trying to prove that Rosendorff worked with the government in shaping his testimony, and is hammering home that Rosendorff was legally and ethically responsible for the lab.
Erin Woo
Rosendorff confirms that he was familiar with the regulations. Wade is now asking a series of questions about Rosendorff’s obligations: “You are required to…?” Rosendorff says these are his obligations, but “I received pushback from management.”
Erin Woo
Wade is now holding up a stack of papers (maybe an inch thick?) and asking if Rosendorff knew all of those regulations, presumably the stack of papers he’s holding. Davila, the judge: “You’re asking to admit the entirety of this document? It’s how many pages? 122?” It’s admitted.
Erin Woo
We’re into Rosendorff’s time at Theranos! Wade asked him if being the CLIA lab director meant he was legally responsible for what happened in the lab, and Rosendorff said yes.
Erin Woo
Wade is continuing to try to pick apart the prosecution’s case, noting that they didn’t go in chronological order through the documents. He still hasn’t really asked about Rosendorff’s actual experiences at Theranos.
Erin Woo
Wade is arguing that Rosendorff’s testimony in direct doesn’t match what he testified in 2019. Earlier, he just said he wasn’t satisfied with management’s response to proficiency testing. His testimony on Friday was more detailed.
Erin Woo
We’re now into questioning about the testimony itself. Wade is asking Rosendorff about his reasons for leaving Theranos. Wade asks if Rosendorff discussed that question/answer with the government. Rosendorff says yes.
Erin Woo
Wade presses him on whether he told the government what he was going to testify.
Rosendorff says no.
Erin Woo
Wade is now asking about how Rosendorff was prepared to testify by the government. Rosendorff: “I was always instructed by the government to be truthful.” Wade asked: “Did they tell you to give that answer?” Rosendorff: “No.”
Erin Woo
Wade is going through a list of people and asking Rosendorff if he’s met each of them. His tone is far more aggressive than with previous witnesses.
Erin Woo
We’re starting with cross-examination. Lance Wade, Holmes’s lawyer, is starting by grilling Rosendorff on how many times he’s met with the government.
Erin Woo
And, with that, his direct testimony has wrapped. We’ll pick up with cross-examination after a 30-min. break.
Erin Woo
Ultimately, Rosendorff said, he left after “endless meetings and conversations, very careful study of medical literature, late nights … great efforts on my part to improve the quality of testing at Theranos.”
Erin Woo
Rosendorff testified about why he spoke with then-WSJ reporter John Carreyrou: said he felt a “moral and ethical” obligation to alert the public.
Erin Woo
Bostic pointed out the line “We will execute this year.” When did Theranos start testing? he asked. Rosendorff responds: 2013.
Erin Woo
More texts from Holmes/Balwani! Holmes: “This year is our year. We can never forget this tiger.” Balwani: “I know, I am focused on it. We will execute this year.” Holmes: “I know. I’m focused on it too. And for our kids never forget who we are.”
Erin Woo
On Rosendorff’s last day, he says Balwani offered a handshake, and he declined. Balwani gave him exit paperwork to sign. Balwani said he would be prepared to keep him on, but Rosendorff said it wasn’t worth the risk to his reputation.
Erin Woo
Holmes forwarded it to Balwani: “We need to respond to him now and cut him Monday.” Rosendorff had already accepted a job offer at another lab and was planning on leaving — interpreted this as them trying to fire him right before he left.
Erin Woo
Nov. 2014 email to Rosendorff asking for a redraw. Rosendorff forwarded this to Holmes/Balwani, and Balwani said the rep “jumped the gun” asking for a redraw. Adam forwarded this to Elizabeth: “I find Sunny’s response offensive and disingenuous. He should apologize.”
Erin Woo
Gov’t trying to make the point that Holmes/Balwani are actively courting investments even as Rosendorff raises concerns about crucial problems in the lab.
Erin Woo
We’re now looking at Nov. 2014 texts between Balwani and Holmes, talking about investments from Alice Walton and Rupert Murdoch. Balwani: “They are not investing in our company, they are investing in our destiny.”
Erin Woo
“…how fundamental it is to all of us for you or any other employee never to do anything you’re not completely confident in.” Rosendorff says he disagrees with this, and we’ve seen emails showing that he raised concerns.
Erin Woo
Holmes’s response (pt. 1): “How sad and disappointing to see this from you. Outside of the fact you’ve never emailed me on any concerns you allude to there before but now email this, you know from every conversation we’ve ever had together …”
Erin Woo
Now looking at Nov. 14 emails from Rosendorff. “I feel really uncomfortable with what is happening right now in this company. Is there any way you can get Spencer back on the CLIA [Clinical Laboratory Improvement Amendments] license and take me off? I am feeling pressured to vouch for results that I cannot be confident in.”
Erin Woo
Christian forwarded the email to Elizabeth, writing: “His response to this was to do a vacutainer redraw & I ended the conversation at that point.” A vacutainer draw is a non-Theranos retest.
Erin Woo
He continued: “Further 100% honesty and transparency to the patient is essential. “My first duty is not to Theranos, but to the patient as per my Hippocratic oath “primum non nocere.” “I never said I wouldn’t talk to the MD.”
Erin Woo
In an email to Christian, Rosendorff doubled down. “This is not a question of interpreting results — this is a question of the reliability and accuracy of the result.” “The most constructive thing at this point is to offer reliable and robust assays, not to spin.”
Erin Woo
Nov. email from Rosendorff about the patient call to Christian: “If you’re asking me to defend these values then the answer is no.” He was refusing to defend the accuracy of the result, Rosendorff testifies.
Erin Woo
Emails like this contributed to a “crescendo” of issues, Rosendorff testifies, leading to his resignation in Nov. 2014.
Erin Woo
Looking at an email from a medical assistant concerned that HDL and LDL (cholesterol) readings are not adding up. That raises concerns about the accuracy of the test, Rosendorff testifies.
Erin Woo
In a follow-up email from Holmes: “Kerry please delineate this based on what we did with the NY inspector recently and send that out.” No one was allowed to enter or exit the Normandy lab during the visit, Rosendorff said. Those directions came from Balwani.
Erin Woo
1/26/13 email from Holmes about the upcoming audit from the California Dept. of Public Health: “Let me know if the path for walking the auditors in and downstairs has been cemented so we avoid areas that cannot be accessed, and what that path is.”
Erin Woo
Christian forwarded the message to Daniel Young and cc’d Elizabeth. In a later email to Elizabeth and Daniel, Christian wrote that Rosendorff already approved the redraw. “Need to discuss messaging for my call with this doc, with regard to reason for the redraw,” Christian wrote.
Erin Woo
Now looking at an email to Christian Holmes to approve a redraw, despite his not having a position in the clinical lab or a medical/science background. Rosendorff says he wasn’t aware Christian was involved in approving redraws.
Erin Woo
Now onto discussing transparency. “I felt a conflict between the messaging that the company wanted me to provide … and my duty as a physician” to accurately report results when talking with doctors, Rosendorff says.
Erin Woo
In an email chain about the proficiency testing samples, Balwani wrote that Theranos’s validation has been “excellent in the past” and that “it is these PT samples that are off.” Rosendorff testifies that he disagrees.
Erin Woo
There was no formal proficiency testing process at Theranos, Rosendorff says. He says he raised these concerns at a mid-2014 meeting to people including Holmes, Theranos’s president, Ramesh Balwani, and the VP Daniel Young. He felt like they gave “lip service” to this issue, and there was no progress made before he left in November.
Erin Woo
Rosendorff’s reaction to situations like this: “Every time we got a physician complaint, every time our QC would fail, every time we had a spate of anomalous results, it raised great concerns to me about the accuracy of the testing process.”
Erin Woo
We’re looking at an email from someone who has been on coumadin, a blood thinner medication, for 13 years. After switching to Theranos testing, her results came back low, and she increased her dose as a result. “I have not felt ‘right’ since the one increased dose,” she wrote.
Erin Woo
I’m back in the courtroom for another day of the Elizabeth Holmes trial! We’re starting with the end of former lab director Adam Rosendorff’s direct testimony.
Erin Woo
With that, we’re going to break for the weekend. I’ll be in the courthouse Tuesday, Wednesday and Friday next week — see you on Tuesday!
Erin Woo
For the past hour, Rosendorff has testified about problems w various tests, incl. the potassium, chloride and sodium tests. In a 10/27/14 email, he wrote: “I am not sure of the clinical value of a sodium assay, in which the only time we can report it is when it is not critical”
Erin Woo
We’re now getting into Rosendorff’s decision to leave. He forwarded work emails with issues of concern to his Gmail account in 2014, testifying that “I wanted to protect myself.” He also says he started looking for another job in mid-2013, shortly after joining Theranos.
Erin Woo
Today’s theme seems to be a) Rosendorff was concerned about faulty tests, b) Rosendorff recommended the company stop using those tests and c) Holmes/Balwani were aware but declined to change course.
Erin Woo
We’re now on issues with Theranos’s HDL (cholesterol) tests. Rosendorff says he “suspected” Theranos’ HDL was no longer working as of Feb. 2014 and suggested reverting to FDA-approved devices, but received pushback from Balwani, Holmes and Theranos VP Daniel Young.
Erin Woo
We’ve now seen two email chains including Holmes/Balwani about complaints/issues that Rosendorff wasn’t included on. Rosendorff says he “absolutely” should have been included on the emails.
Erin Woo
Rosendorff is testifying about issues with the hCG tests, which detect pregnancy. In June 2014, Christian Holmes wrote to Elizabeth: “Just fyi-hCG right now causing some serious issues and patient complaints.”
Erin Woo
We’re comparing Rosendorff’s time at the University of Pittsburgh to his time at Theranos. At Theranos, complaints about test results were “much more frequent,” and he “felt pressured to defend the company’s results to physicians,” he said.
Erin Woo
Theranos devices failed so frequently that it raised questions about the accuracy of the results, Rosendorff testifies. Performance of Theranos assays was worse than non-Theranos analyzers.
Erin Woo
Rosendorff is now discussing quality control. As we learned in Cheung’s testimony, quality control happened once a day, and machines would be recalibrated if they failed. This was a frequent discussion topic at Theranos, he testifies.
Erin Woo
Rosendorff had a meeting w Holmes where he expressed his concerns. She was very nervous and was not her usual composed self, he said: She was trembling, knee was shaking, she was very upset.
Erin Woo
In an email to Holmes, Rosendorff wrote that “A few more weeks to sort through these medical and logistical issues, and getting the proper level of training and staffing would help us tremendously.”nd staffing would help us tremendously.”
Erin Woo
An email from Rose Edmonds from 9 days before the launch says “none of our assays are completely through validation including clinical sample testing with fingerstick.” Under CLIA law, the tests need to be validated properly before they can be used for patient care.
Erin Woo
Leading up to Sept 2013 commercial launch, there was “a lot of anxiety” about the appropriateness of using modified tests for patient care. The general mood of the company was “very optimistic,” but some were questioning why Theranos wasn’t using its own devices.
Erin Woo
The downstairs Theranos lab, which contained the Theranos Edison devices, was called Normandy, Rosendorff said. According to Rosendorff, Balwani called the upstairs lab with conventional devices Jurassic Park: Balwani “believed the conventional devices were dinosaurs.”
Erin Woo
Rosendorff starting strong with why he quit Theranos, incl. unwillingness of management to perform proficiency testing and feeling pressured to vouch for tests he wasn’t confident in. Also: “The company was more about PR and fundraising than patient care.”
Erin Woo
The government is calling former Theranos lab director Adam Rosendorff today in the trial of Elizabeth Holmes. Per prosecutor John Bostic, this testimony is likely to take all day.
Erin Griffith
Mattis is done and now a prosecutor is reading text messages between Holmes and Balwani while a forensics guy from PWC says “yes” and “correct.” I guess this is how they have to present this evidence but it is really really bizarre.
Erin Griffith
On redirect: Why did Mattis initially support Holmes after the WSJ expose and then change his mind? There were too many surprises, he said. “We were unable to help her on the fundamental issues that she was grappling with if we only saw them in the rearview mirror.”
Erin Griffith
We look at Mattis’ emailed response to Holmes after the WSJ article. “Be swift in response with unassailable truth,” he wrote. “I have full faith in our plan.”
Erin Griffith
He also asks if Mattis knew Theranos was doing blood tests in a central lab.
Mattis: “I assumed the central Theranos lab was the Theranos machine.”
Erin Griffith
In cross-exam, Holmes lawyer Kevin Downey asked Gen. Mattis about his qualifications to evaluate Theranos’s technology and be a board director.
Erin Griffith
Initially Mattis thought the problem was fixable — the company simply messed up its messaging and could come clean. Soon after, he began to question whether or not the Edison machine worked. “There just came a point when I didn’t know what to believe about Theranos anymore.”
Erin Griffith
After WSJ article, board members emailed Holmes about the allegations. Her response: Theranos was transitioning from operating under one laboratory framework to another. Mattis: “I was still confused.” At a minimum, “we had a reputation problem here and an integrity problem.”
Erin Griffith
Ominous. After Theranos learned about a 2015 WSJ article by John Carreyrou that exposed problems with Theranos’s technology, there was a board meeting with a slide titled “Duty of Loyalty.” We are shown that slide, except it is comically redacted — all content blacked out — and Mattis doesn’t remember it.
Erin Griffith
We see an email from Holmes instructing Mattis that, in an interview with Ken Auletta of The New Yorker, he can’t discuss “how our technology works (i.e. that there is a single device that does all tests)”
Erin Griffith
Fortune published a long correction to that article, which I don’t remember seeing from a lot of other outlets that wrote positive stories. Parloff is listed as a witness and defense is attempting to compel him to turn over his notes.
Erin Griffith
Assistant U.S. attorney John Bostic pulls up Fortune’s 2014 cover story about Theranos. Mattis spoke to the reporter, Roger Parloff, and said Holmes gave him guidance on what he could and couldn’t say.
Erin Griffith
Still trying to train my brain to not hear “amino acid” every time they say “immunoassay”
Erin Griffith
Theranos got a lot of mileage out of a 2013 WSJ article! We see an email where Holmes sends Mattis the link, as well as a slide of it in a Theranos board presentation
Erin Griffith
We’re going through this board presentation, which has a slide claiming Theranos’s tech had been validated by 10 of the 15 largest pharmaceutical companies, alongside logos of FDA & WHO and a quote from Johns Hopkins.
Erin Griffith
What were your sources for information about the company? Mattis: “Ms. Holmes.” “Was she the primary source?” “The sole source.”
Erin Griffith
Mattis also invested $85k into Theranos, which he said was a significant sum “for someone who had been in govt. service for 40 years.”
Erin Griffith
Did you accept Ms. Holmes’s invitation to join Theranos’s board? “Yes I did, after asking why. I was not a medical person.” She said she wanted his mgmt. and organizational experience.
Erin Griffith
Mattis testified that he was not aware of Theranos devices ever being used on battlefields, military helicopters, clandestine operations…
Erin Griffith
Mattis testified that Holmes was “very aggressive” at wanting the military pilot program to get going. “She was very confident that if we got it in there, it would prove itself.” He knew it was a start-up, but noted that Holmes had been working on it for a decade by 2013.
Erin Griffith
oy, another email where Mattis calls Holmes “young Elizabeth.”
Erin Griffith
Holmes was the one telling him about the Theranos device’s capabilities, he said. “I was frankly amazed at what was possible.” But he added: “That didn’t take the place of having the device prove itself.”
Erin Griffith
Mattis testified the size of the Theranos device and its promised capabilities made it so attractive to potential military use. Accuracy and reliability were critical given the casualties, he said. “The stakes are very high.”
Erin Griffith
In one email, Mattis told Holmes he wants to explore a pilot project to test Theranos machines alongside the army’s existing systems to compare. Mattis testified that he was very “taken” by the possibilities of using a drop of blood for diagnostics.
Erin Griffith
Mattis, a U.S. general and former secretary of defense, was on Theranos’s board between 2013 and 2016.
We start by looking at 2011 emails between them after meeting. In one, Mattis writes, “thank you for your note, young Elizabeth, and I wish you every success.”
Erin Griffith
At the courthouse for US v. Holmes. James Mattis has taken the stand.
Erin Griffith
Gould’s testimony lasted around 15 minutes – From behind a clear mask, she got emotional discussing her experience finding out via Theranos tests that, after three miscarriages, her fourth pregnancy was not viable. The happy ending is that it was. She had a baby. Adjourned!
Erin Griffith
Defense wraps up by pointing out that Zachman’s practice had many many test results from Theranos beyond Ms. Gould that seemed to be fine. Judge Davila is eager to keep going, even though we are over on time today. Brittany Gould takes the stand.
Erin Griffith
Defense works to chip away at the testimony by implying that the Theranos test results simply existed on a different scale and should have been “rebaselined.” Also noted that Holmes’s brother Christian, who responded to Zachman’s complaint about the results, apologized.
Erin Griffith
Oh my, Theranos offered Zachman a “corrected” version of the results which simply removed a decimal point but the she says numbers still wouldn’t have made sense within the context of a viable pregnancy or a loss of one.
Erin Griffith
“This circumstance was very impactful to me as it stood out as such a red flag for the pregnancy.”
Erin Griffith
Gould took 5 blood tests, 3 from a subsidiary of Quest Diagnostics and 2 from Theranos. She went on a rollercoaster, with the Quest test showing she was pregnant, the two Theranos tests showing a miscarriage, and 2 more Quest tests showing she was indeed still pregnant.
Erin Griffith
Zachman describes the case of a patient named Brittany Gould (sp?) who had had 3 miscarriages. She came to see Gould after a positive at-home pregnancy test “to establish that yes, she is pregnant and look at the health of the pregnancy.”
Erin Griffith
Zachman was on a committee that evaluated service providers and her practice adopted Theranos blood tests around 2014. Theranos even set up a lab downstairs from one of her practice’s offices, which Zachman said was “very exciting.”
Erin Griffith
New witness: Audra Zachman, a nurse practitioner at an OB-GYN practice.
Erin Griffith
I have enjoyed chatting with some of the trial-heads and and fans of justice who have shown up to watch (provided they’re not moles :). Today I met a retired paralegal who says he was at the Patty Hearst trial!!
Erin Griffith
Redirect up. US Attorney Robert Leach reminds jurors that when Gangakhedkar resigned from Theranos, she had concerns about the reliability of Theranos’s tests and discussed them with Holmes.
Erin Griffith
More bad boss/good boss content: We see an email Gangakhedkar sent to Balwani defending how hard her team was working + an email she sent to her team praising their long hours. She then resigned from Theranos and Holmes attempted to get her to stay, offering time off.
Erin Griffith
Defense previously showed that Holmes let Gangakhedkar go to India to see family, painting her as a sympathetic boss and Balwani as the aggressive one. “[Balwani’s] trying to make you feel guilty that you weren’t working?” “Yes” “You were frustrated by that?” “Yes.”
Erin Griffith
We are still doing cross-examination of Gangakhedkar.
Wade shows an email from the former Theranos president, Ramesh Balwani (who goes by Sunny), chastising the lab workers for not working as hard as his software team, painting him as the one pushing unrealistically for overwork.
Erin Griffith
Zachman will now offer expert testimony on interpreting HCG tests (a hormone used to identify pregnancy status)
You expect HCG levels to double every 48 hours or so in early pregnancy.
Erin Griffith
Wade goes on a run of questions (peppered with “yes” responses by Gangakhedkar) arguing that the point of R&D is encountering issues and setbacks and fixing them.
“In R&D sometimes you have to fail before you can succeed right?”
“Yes.”
Erin Griffith
We see an email where Holmes asked Gangakhedkar for some testing data ahead of a meeting with the DoD. Gangakhedkar emails that Vitamin D data isn’t ready and Holmes writes asking for data on other tests. The point is, apparently, look at this example of Holmes not doing fraud.
Erin Griffith
The Defense strategy re: Theranos lab problems seems to be: look, real work was being done; there were processes in place that sure seemed rigorous; the very people pointing out problems also signed off on it all.
Erin Griffith
So far it’s basically a call and response, where Wade describes work of Gangakhedkar + Theranos’s lab, and Gangakhedkar replies “yes.” “Were you proud of that work?” “Yes.” “And others at the company were happy about that work as well?” “I think so.”
Erin Griffith
Back in the San Jose courtroom today for more US v Holmes. Surekha Gangakhedkar, a scientist at Theranos, is back on the stand being cross-examined by Holmes’s lawyer Lance Wade.
Erin Woo
With that, Judge Davila is ending Gangakhedkar’s testimony for the day and instructing jurors not to consume media content about the trial, as always. The trial will resume on Tuesday — Erin Griffith will be at the courthouse to bring you live updates.
Erin Woo
We are now onto cross-examination. Holmes’s lawyer is questioning her about G.S.K.’s study of Theranos’s assays, pointing out that the study promoted her work. “The Theranos system eliminates the need for a lab and provided quality data,” the G.S.K. memo said.
Erin Woo
Despite having signed an N.D.A., Gangakhedkar printed out some documents and took them home when she left Theranos. “I was worried that I would be blamed,” she testified.
Erin Woo
Three days after the email from Balwani, Gangakhedkar sent Holmes her resignation email. She testified that she was “very stressed and unhappy and concerned” with the planning of the Walgreens launch.
Erin Woo
In an email from Balwani to Gangakhedkar, with Holmes copied, Balwani said the software team had been working until 3:07 a.m., but that the Edison blood-testing devices Gangakhedkar’s team worked on were “all sitting idle.” This was an example of the pressure they were under, Gangakhedkar said.
Erin Woo
And, with that, Cheung has been dismissed. The government is calling Surekha Gangakhedkar now, a former Theranos team manager.
Erin Woo
The government is now asking questions about a document that says, among other things, that Theranos’s devices “can be operated with minimal training” and that its results have “precision and accuracy equivalent to traditional clinical laboratory analyzers.” Neither is true, Cheung says.
Erin Woo
Cheung said they were constantly having to recalibrate the machines, which made results take 2-3 days rather than the couple hours promised. “We had people sleeping in the car because it was taking too long,” she said.
Erin Woo
Cheung just said she “became concerned about a month in” with the vitamin D samples, in November of 2013. She was concerned about the performance of the tests and that they were being used on patient samples.
Erin Woo
Defense is done with cross-examination, after showing Cheung Theranos policy documents she said she’d never seen. The government is now asking questions again for redirect.
Erin Woo
Holmes’s lawyer is asking Cheung a lot of questions about quality control checks that occurred on the Theranos devices. “There is a recognition that some errors would happen and this was the policy on how to deal with those errors,” he said.
Erin Woo
Erika Cheung is now taking the stand as cross-examination continues.
Erin Woo
The update you’ve all been waiting for: The judge is STILL pronouncing it ther-AH-nos.
Erin Woo
In the courthouse now for another day of the Elizabeth Holmes trial. We’re expecting to wrap up testimony today from Erika Cheung, one of the key whistleblowers in the case.
Erin Griffith
That’s it for today.🩸💉⚖️
Erin Griffith
So far the theme of the cross-exam of Cheung seems to be using excruciatingly arcane details about the processes and procedures of the Theranos lab to show that its work was very complicated, involving lots of smart, pedigreed people.
Erin Griffith
Cheung testified that in meetings about quality control failures, Theranos’s lab directors ignored the most obvious possible reason for the failures: “The Edison devices didn’t work.”
Erin Griffith
Trial gear alert: A reporter brought their own binoculars to see the exhibits on the TV screens.
Erin Griffith
Erika Cheung is back on the stand.
She described Theranos’s practice of demoing blood tests for V.I.P.s, where some of the results came from Theranos machines and others from Siemens analyzers.
Erin Griffith
At this point we have heard lawyers and witnesses pronounce “Theranos” hundreds of times, making me start to wonder whether judge is trying to mess with us by sticking to his “ther-AHHHHH-nos” pronunciation.
Erin Griffith
I should note the woman who clapped and yelled “you’re a good mom!” at Holmes yesterday suddenly stormed out of the courtroom after Judge Davila warned everyone that yelling stuff like that in front of any jurors could cause a mistrial. I don’t see her here today!
Erin Griffith
Elizabeth Holmes’s entourage is down to just her mom today.
https://www.nytimes.com/live/2021/10/20/business/news-business-stock-market