Elizabeth Holmes admits to writing lab reports with drug company logos
SAN JOSE, Calif .– Theranos founder and former CEO Elizabeth Holmes returned to the witness stand on Tuesday, confirming key aspects of the prosecutor’s allegations behind the 11 fraud charges she faces, but saying that ‘there was nothing wrong with what she did.
The prosecution has repeatedly shown jurors lab reports bearing the logos of pharmaceutical companies Pfizer and Schering-Plow. Witnesses from these companies who worked with Theranos said that the use of the logos was not allowed and that they were not aware of it at the time.
Holmes admitted that she was the one who added the logos to Theranos’ lab reports and sent them to Walgreens as she pursued a deal to put her startup’s blood testing startup’s diagnostic machines in retail stores in the pharmacy.
Holmes acknowledged that in some cases Theranos was using third-party devices rather than its own equipment.
“This work was done in partnership with these companies and I was trying to pass it on,” she said in explanation. “I would have liked to have done differently,” she added.
Addressing another key point raised by the prosecution, Holmes said that when Theranos shifted from using on-site analyzers to process samples to a centralized lab approach, he used third-party devices rather than his own equipment as an “invention” because there were too many samples to handle. Witnesses said Theranos’ signature blood test machine repeatedly failed quality assurance tests and gave erroneous results. Holmes said the company did not notify its trading partners of the deal because it was a trade secret.
She refuted the prosecution’s arguments regarding some of the misrepresentation she allegedly made to investors, media and business partners, saying she had received specific positive reports from employees and outside experts and believed that their statements were true.
When presented with company emails and PowerPoint presentations, defense attorney Kevin Downey asked Holmes about the specific cases raised by the prosecution.
Jurors saw an email sent to Holmes by the company’s chief scientist, biochemist Ian Gibbons, regarding the development of Theranos’ fourth-generation device.
“Our immunoassays are the best that can be done in clinical laboratories and work with small blood samples. In general, our tests are a factor of three to ten faster than the kits, ”Gibbons wrote.
Downey asked Holmes what the email meant. “I understood that Series 4 could do any blood test,” she replied.
U.S. District Judge Edward Davila asked jurors that emails between Holmes and his lab staff, as well as many other exhibits, should be understood as indications of Holmes’ “state of mind” and not as facts about what really happened.
Despite these promises to investors and the media, other witnesses said Theranos’ proprietary devices could only perform a few tests and had major quality issues. For its deployment with Walgreens, the company relied on third-party devices that had been modified to process the company’s proprietary smaller “nanotainer” blood vials, but still returned erroneous results, according to testimony.
In a new line of defense, Holmes said Theranos test equipment in its labs had issues with excessive power demands and heat production. They were designed for use in retail stores that patients visited over the course of a day, she said, but in the Theranos lab the devices were all bundled together and processed patient tests into same time. The defense raised an email between hardware project manager Tim Kemp that said the Theranos building in Palo Alto, California, couldn’t handle the energy demands of using the devices to treat a high volume of patients from the retail rollout and using air conditioning to cool them.
If convicted, Holmes faces up to 20 years in prison, a fine of $ 250,000 and full or partial restitution to investors, for a total of nearly $ 155 million.