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What we learned this week in the trial of Elizabeth Holmes

By Sara Ashley O'Brien, CNN Business

Updated: Mon, 25 Oct 2021 16:49:43 GMT

Source: CNN Business

One witness occupied the stand for the better part of week seven in the criminal trial of Theranos founder Elizabeth Holmes. For two days straight, jurors heard testimony from former Theranos insider Daniel Edlin, who was a friend of Holmes' brother and worked at the failed blood testing startup for five years.

Things sped up by the end of the three-day court week, with jurors hearing from two witnesses for the government: a former Pfizer scientist, Dr. Shane Weber, who recommended the company not partner with Theranos, and a Theranos investor, Bryan Tolbert.

For the first time, jurors heard Holmes' infamous voice, as the government played audio clips of a December 2013 investor call. In the clips, Holmes makes claims about the benefits of her company's blood tests, its work with the military and its focus at the time on scaling its retail footprint. Tolbert testified that he recorded the call before his firm decided to invest another $5 million in the company after first investing $2 million in 2006.

Before the day got underway Friday, a third juror was excused. The juror was released after telling the judge she was playing Sudoku during court proceedings to help her stay focused, the Wall Street Journal reported, citing a court transcript. Only two alternate jurors remain, with the trial expected to stretch into December.

Once hailed as the next Steve Jobs, Holmes is facing a dozen federal fraud charges over allegations that she knowingly misled investors, doctors, and patients about her company's blood testing capabilities in order to take their money. She has pleaded not guilty and faces up to 20 years in prison.

Theranos was once valued at $9 billion, with investors and partners taken by the promise that its technology could efficiently test for conditions like cancer and diabetes with just a few drops of blood taken by finger stick. But the company began to unravel after a 2015 Wall Street Journal investigation poked holes in the capabilities of its technology and blood testing methods.

Here are some of the key moments from inside the courtroom this week:

Media mogul Rupert Murdoch had his blood tested

Jurors were shown a January 2015 email exchange between Rupert Murdoch and Holmes that indicated the media mogul, who invested heavily in the startup, visited its office and had his blood tested by the company.

In an email, Holmes wrote: "It was wonderful to have you here today. I so look forward to the opportunity to continue our conversations, including one day a more detailed conversation on China...I [sic] would be an honor to have you be part of our company." Murdoch wrote back: "Thanks, Elizabeth. Enjoyed every minute of it. Any blood results? See you soon. Rupert."

An internal email shown in court revealed issues with his results: "CO2 is run way earlier than usual, so it's a bit high," the email read in part. It also noted that there was no sample to "rerun since it was a short draw." It is unclear what was relayed to Murdoch about his results. The emails were presented during Edlin's testimony.

Murdoch is one of several high-profile figures listed as a possible government witness. The Wall Street Journal reported in 2018 that "the losses for Mr. Murdoch, once the company's largest investor, total more than $100 million."

Internal wrangling over how Theranos should market itself

As Theranos was gearing up to announce its key partnership with Walgreens, kicking off a wave of press coverage about its blood testing, an attorney outlined a number of changes to language set to appear on its website. The attorney's guidance highlighted the fine line Theranos had to walk with its claims.

Some of the guidance from the attorney included: "Ensure substantiation for 'lowers the risk of anemia.'" "Replace 'faster and easier' with fast and easy." "Replace highest levels of accuracy with high levels of accuracy." "Change more precise to precise." "Remove 'unrivaled accuracy.'" "Ensure substantiation for 'diagnose sooner.'"

But some of the original language, including "highest levels of accuracy," was used in other materials, including in pages from binders that Edlin helped compile for investors like Murdoch at Holmes' request. (Edlin testified Holmes did the final review of binders before they were sent off.)

During cross-examination of Edlin, Holmes' attorney mentioned instances when Holmes herself pushed back on language, such as an email where she says to not use the word "unrivaled" in describing accuracy "as we've discussed many times." Asked by the prosecution whether attorneys reviewed materials shared with investors, Edlin testified that he wasn't aware of that happening.

Questionable demonstrations of technology for VIP guests

Edlin's testimony, and emails shown in the courtroom, also raised concerns about the technology demonstrations Theranos gave to investors, business partners, board members and other VIP guests.

He testified that the company would sometimes use a "demo app" to "shield" device errors from view as well as a "null protocol" that would make no attempt to analyze samples. According to emails there were instances when Theranos would remove results or tweak references on demo test results before delivering them to individuals, including with a group of Walgreens executives ahead of the consumer launch in 2013.

During cross examination, Holmes' attorney Kevin Downey pointed out that these tools could be used, for example, to accommodate guests who might not want to have their blood drawn but want to see the device operate. Downey questioned Edlin on whether the intent was to deceive anyone through the demo process, to which he testified: "Of course not."

Later, prosecutor John Bostic further pressed on the matter, asking Edlin whether part of the purpose of the demonstrations was to "to show that the technology performed well?" Edlin confirmed. Bostic then asked what would be the purpose of hiding errors. Edlin testified: "I don't know."

Last week, Edlin testified he was at times asked by Holmes to make changes ahead of tours, including hiding certain areas of its research and development lab from important visitors and sometimes used partitions to conceal areas where Theranos' devices were located.

Pfizer scientist says it didn't endorse Theranos' tech

A former Pfizer scientist who was tasked with assessing Theranos in late 2008 testified Friday morning that he recommended the pharmaceutical company not invest or pour resources into the startup.

Dr. Shane Weber, who worked at Pfizer from 2008 to 2014 as a director of diagnostics and is now retired, wrote in his internal report that, "Theranos does not at this time have any diagnostic or clinical interest to Pfizer."

He said his determination was based on a review of a Theranos study, patent information, as well as a one-hour teleconference call and written follow-up questions sent to the company.

In his assessment, he said he found Holmes to be "deflective" and providing "evasive non-informative answers" to his due diligence questions on the call.

Weber testified that his findings were accepted within Pfizer, and that he spoke with Holmes to relay that the company would not be working with Theranos. In an internal email after his conversation with Holmes, he relayed to others that he was "was polite, clear, crisp and patiently firm as she pushed back. She asked for other names at Pfizer to approach and I politely deflected."

More than a year later, however, Theranos sent Walgreens a version of the study that Weber had reviewed with Pfizer's logo on it in an effort to present it as a validation of the startup's technology. Weber testified that he came to the opposite conclusion.


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