So far, Elizabeth Holmes’ defense has had a hard time showing that Theranos has a real device and has worked with real pharmaceutical companies. This was actually not in question, particularly in the time period the defense was asking about. Still, it seems to be the point Hey, look, some things at Theranos were real.
But today, in her cyber scam experiment, we saw a scientific demonstration – not real science, just a marketing copy. We saw the guts of Theranos. We heard about the company doing iteration on the device. We’ve seen emails with pharmaceutical companies.
Theranos’ work with pharmaceutical companies was not in question; We saw the money Theranos got from this business early on in the prosecution’s case, with Controller Dennis Yam. The problem with drug companies was the “verification” reports that Theranos produced about their technology in those partnerships. Although the reports were written by Theranos employees, investors said they believed the reports were written by pharmaceutical companies.
To make matters worse, we saw two reports with Schering-Plow and Pfizer logos. Schering-Plow’s memorandum is also included in relation to its original version. When Theranos first sent the report to Schering-Plow, it didn’t have the drug company’s logo on it, and read that Theranos “gives accurate, accurate results.” The copy seen by Walgreens had the Schering-Plow logo and language that read “Gives more accurate and precise results…than current ‘gold standard’ reference methods.”
Investors testified that Theranos’ work with drug companies and the armed forces was significant. They thought this meant that drug companies and the Department of Defense had signed on to the technology, and used it in clinical trials and in Afghanistan — a lie that journalist Roger Barloff heard, too. Today, Holmes acknowledged that Theranos did not work with the Department of Defense at all.
Her testimony was brief – the trial was delayed by an hour and a half for a meeting in the judge’s rooms between the lawyers of the two sides. The reason for the meeting was not explained. The court hearing also ended relatively early, at 1 p.m. PT.
Holmes, who seemed comfortable on the mount, was asked to explain why the cartridges on the Series 1.0 did not work. They are stacked and held together with adhesive, but the adhesive can separate, leaving the stacked layers peeling off so they don’t work properly. I wasn’t quite sure why this was important – we knew Theranos was looping on the device.
Her answers were largely untechnical. Whether it was because she didn’t have the technical knowledge, or because she wanted to make sure she didn’t confuse the jury, was not clear to me. At times, Holmes’ testimony was so close to the documents that we found it funny. After reading the emails, you will be asked what they mean and you will reply with almost a word in the email. In the slide show, one of the slides was titled “Completed Successes”. Holmes’ attorney, Kevin Downey, asked her what success means in this context.
“The success was that we successfully achieved the objectives of the program,” she replied. And when it comes to the performance of Theranos? “I remember it was really good.”
The “completed hits” were, in Theranos parlance, almost all of the drug companies’ preliminary studies. The only exception was a study with Stanford University, which has already been published.
The outlines of working with several pharmaceutical companies were quite similar. A large pharmaceutical company will do preliminary work with Theranos, which Holmes has usually described as successful. But no clinical trial work has emerged. This was true for Merck, Bristol Myers Squibb, and Celgene. Theranos created tests for AstraZeneca and worked on a clinical trial for Centocor.
In the Centocor experiment, Theranos was tested against standard labs. When asked how her devices performed in comparison, Holmes replied, “He did well.” Many of her answers were brief and factual, as if she was discussing the weather.
The most interesting parts of her testimony were about Pfizer and Schering-Plow. Crucially, for Holmes to be found guilty of wire fraud, the government must show that it knew it was lying when it gave investors bad information — mistakes are not illegal.
So we saw some emails. At Schering-Plow, Constance Colin was the main point of contact for Theranos. (And Coleen testified earlier, for the prosecution.) As Colin testified, Merck bought her company while in contact with Holmes, and since she was put in charge of a newly incorporated group, working with Theranos has fallen by the wayside.
In an email from a Theranos employee to Holmes, the employee wrote that Cullen is overwhelmed with work from the acquisition. “Overall it was great,” the email continued. “I think calling her every morning for the past three weeks has finally paid off…” Holmes was asked directly if Colin had informed her of Schering-Plough’s poor opinion of Theranos tests. Holmes said no.
You can see where this is going – a very The generous reading 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 her contact had dropped the ball.
As for Pfizer, the defense produced emails that showed Holmes continued to talk to the company about the partnership until late 2015. In this email, a Pfizer employee suggested using Theranos’ Walgreens centers as clinical trial sites. This didn’t work, and Thearnos didn’t work in a Pfizer clinical trial.
It’s believable that all of these drug companies considered Theranos and chose not to proceed for unrelated reasons – but that’s a huge stretch. Taken together, we’ve seen a lot of drug companies have gone through to do real work with Theranos.
But the thing about today’s show is that Theranos’ early work has not been challenged. According to the government, the fraud did not start until later. Besides, liars don’t lie everyone the time.
And as she comes close to testifying on some other areas of interest, I hope there will be just as much contemporary email evidence. Since I had now heard Barloff’s tapes of Holmes, I was struck by how confident they were in their lies and how believable they were. Being prefixed with these tapes means that no matter how confident or trustworthy she is, I still find myself doubting what she says unless there is something else to confirm it.