So far, Elizabeth Holmes’ defense has been at pains to show us that Theranos had a real device and worked with real pharmaceutical companies. That actually hasn’t been in question, particularly in the time period the defense was asking about. Still, the point seems to be hey, look, some things at Theranos were real.
But today, in her wire fraud trial, we saw a science-y presentation — not actual science, just the marketing version. We saw the guts of Theranos devices. We heard about the company iterating on the device. We saw emails with pharma companies.
Theranos’ work with drug companies was never in question; we saw money Theranos made from that work early in the prosecution’s case, with comptroller Danise Yam. The issue with drug companies has been the “validation” reports that Theranos produced about its own technology in those partnerships. Though those reports were written by Theranos employees, investors said they thought the reports had been written by the pharmaceutical companies.
Making matters worse, two reports we saw bore logos for Schering-Plough and Pfizer. The Schering-Plough memo had also been gussied up relative to its original version. When Theranos first sent the report to Schering-Plough, it did not have the pharma company’s logo on it, and read that Theranos “give accurate and precise results.” The version Walgreens saw had Schering-Plough’s logo and language that said “give more accurate and precise results… than current ‘gold standard’ reference methods.”
Investors testified that the work Theranos had done with pharmaceutical companies and the armed forces had been important. They thought that meant the drug companies and the Defense Department had co-signed the technology, using it on clinical trials and in Afghanistan — a lie journalist Roger Parloff heard, too. Today, Holmes acknowledged that Theranos didn’t work with the Defense Department at all.
Her testimony was brief — the trial was delayed an hour and a half for a meeting in the judge’s chambers between attorneys for the two sides. The reason for the meeting wasn’t explained. The court session also ended relatively early, at 1PM Pacific.
Holmes, who seemed at ease on the stand, was asked to explain why the cartridges on the Series 1.0 device didn’t work. They were stacked and held together with adhesive, but the adhesive could come loose, which let the stacked layers peel apart so they wouldn’t work properly. I wasn’t entirely sure why this would matter — we knew Theranos was iterating on the device.
Her answers were largely non-technical; whether that was because she didn’t have technical knowledge, or because she wanted to make sure she wasn’t confusing the jury, wasn’t clear to me. At times, Holmes’ testimony hewed so closely to documents that we were being shown that it was funny. After reading emails, she’d be asked what they meant, and would respond with, nearly word-for-word, a sentence in the email. In a slideshow, one slide was titled “Completed Successes.” Holmes’ attorney, Kevin Downey, asked her what success meant in that context.
“A success was that we had successfully achieved the objectives of the program,” she replied. And when it came to Theranos’ performance? “I remember it being really good.”
The “completed successes,” in Theranos’ parlance, were almost all preliminary drug company studies. One exception was a study done with Stanford, which was actually published.
The outlines of the work with many drug companies were largely the same. A big drug company would do preliminary work with Theranos, which Holmes would typically characterize as successful. But no clinical trial work manifested. This was true for Merck, Bristol Myers Squibb, and Celgene. Theranos did create tests for AstraZeneca and worked on a clinical trial for Centocor.
In the Centocor trial, the Theranos device was tested against standard labs. Asked about how her device fared in comparison, Holmes said, “It performed well.” Many of her answers were brief and matter-of-fact, as though she were discussing the weather.
The most interesting parts of her testimony, however, had to do with Pfizer and Schering-Plough. Crucially, for Holmes to be found guilty of wire fraud, the government must show that she knew she was lying when she gave investors bad information — mistakes aren’t illegal.
So we saw some emails. At Schering-Plough, Constance Cullen had been Theranos’ main point of contact. (Cullen testified earlier, for the prosecution.) As Cullen testified, her company was bought by Merck while she was in contact with Holmes, and since she was put in charge of a newly-combined group, work with Theranos fell by the wayside.
In an email from a Theranos employee to Holmes, the employee wrote that Cullen was swamped with work from the acquisition. “All in all it was awesome,” the email went on. “I think calling her every single morning for the last three weeks finally paid off…” Holmes was asked directly if Cullen informed her of Schering-Plough’s low opinion of Theranos’ tests. Holmes said no.
You can see where this is going — a very generous read of the situation is that Holmes didn’t realize the technology was bad or that Merck didn’t want to work with her, she just thought that her contact dropped the ball.
As for Pfizer, the defense produced emails that showed Holmes had continued talking to the company about a partnership as late as 2015. In that email, a Pfizer employee proposed using Theranos’ Walgreens centers as clinical trial sites. This did not come to fruition, and Thearnos didn’t work on a clinical trial for Pfizer.
It is possible to believe that all these drug companies looked into Theranos’ device and chose not to move forward for unrelated reasons — but that’s a big stretch. Put together, we’ve seen that a lot of drug companies passed on doing real work with Theranos.
The thing about today’s presentation, though, is that Theranos’ early work isn’t contested. According to the government, the fraud didn’t start until later. Besides, liars don’t lie all the time.
As she gets closer to testifying about some of the other areas of interest, though, I hope there’s just as much contemporaneous email evidence. Because having now heard Parloff’s tapes of Holmes, I was struck by how confidently she’d lied and how believable she sounded. Being preceded by those tapes means that no matter how confident or trustworthy she sounds, I still find myself doubting what she says unless there’s something else to confirm it.
Credit: Notigroup Newsroom.
[This article may have been written with information from various sources]