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Elizabeth Holmes admitted playing a key role in the case against her


Who added the Schering-Plow and Pfizer logos to the lab reports produced by Theranos that investors received? Why, none other than Elizabeth Holmes.

“This work was done in partnership with these companies and I was trying to pass it on,” she said at the stand today. She added the logos before sending the memos to Walgreens, which Theranos would later partner with. Holmes wasn’t trying to deceive anyone, she said. “I wish I had done things differently. “

Holmes spoke slowly as she confessed. The testimony, given on his third day of questioning by his defense team, seemed polite. Say again. It was the most confident thing she had all day.

These documents formed an important part of the case against Holmes in his wire fraud trial. Investors said they believed the documents were generated by the drug companies themselves. And Holmes mea culpa did not explain why the language in Schering-Plow’s memo changed from “giving exact and precise results” in the version the drug company saw to “giving more precise and precise results … than the methods of current “gold standard” reference in the Walgreens Version.

But perhaps the confession was meant to make matters worse when Holmes spent other parts of his testimony passing the buck.

The clinical laboratory

Holmes said lab director Adam Rosendorff, vice president Daniel Young and Balwani, his chief financial officer, were in charge of the clinical lab, implying that whatever issues arose was not his fault. And, perhaps, she was not fully aware of these issues. As she discussed the conditions in the lab, her speech quickened and she looked nervous. She said she had not pressured Rosendorff to approve the tests. Hadn’t pressured Young either. had not pressured anybody to sign a lab report they didn’t want to sign.

Whatever happened in the lab, well, it wasn’t her.

When Rosendorff expressed his concerns about the timing of the tests, “I remember telling Dr Rosendorff that we will do whatever it takes to give him the time he needs to discuss the tests properly,” said Holmes. These tests were delayed for several months.

What about scientist Surekha Gangakhedkar, another employee who feared blame for Theranos’ problems? Well, damn it, Holmes had no idea Gangakhedkar had any reservations about Theranos testing. (Holmes did not directly address Gangakhedkar’s testimony that Holmes pressured her to approve the tests.) When the scientist resigned, she cited stress and health issues. Stress, moreover, can cause health problems.

Holmes tried to convince Gangakhedkar to take time off, but the scientist resigned. And we saw one of the reasons Gangakhedkar was so stressed: an email from Balwani (which Holmes was copied to!) Berating her for not working hard enough. “Please note that the software team was there until 3:07 a.m. – and is already here now at 10 a.m.,” he wrote.

Holmes said she wished she had handled it differently. “It was the wrong way to treat people.”

Theranos’ rotten work environment was a recurring theme among employees who testified at the trial. Newbie employee Erika Cheung said people slept in their cars as they tried to fix quality control issues on Theranos tests. The day Gangakhedkar resigned, another a member of his team also resigned, also citing stress. A human resources employee emailed Holmes about it: “Surekha just came by and said she thought Tina was stepping down due to health, family and stress reasons,” he said. E-mail. “She said it was similar to the reasons she was quitting.”

Questionable marketing materials

As for Theranos ‘marketing, which the prosecution says deceived people about Theranos’ technology, it was the work of Chiat Day, the company that made Apple’s famous “1984” advertisement, Holmes said. The images that conveyed Theranos’ message – like the image of the cute child captioned “Goodbye Big Bad Needle” – were symbols that Chiat Day told them to adopt for their brand identity. The images were above all important in conveying identity, the company told Holmes.

But Holmes admits that she didn’t mind shaping Theranos’ image. Theranos hired a public relations group, Grow Marketing, and managed to place a story in The Wall Street JournalJoseph Rago’s opinion section on The Incredible Theranos titled “Elizabeth Holmes: The Breakthrough of Instant Diagnosis”.

In the article, which Holmes said he reviewed before publication, Rago wrote that “Theranos’ processes are faster, cheaper and more accurate than conventional methods and only require microscopic blood volumes, not vial afterwards. bottle. This article was part of the marketing materials that investors received, convincing them to invest in Theranos.

It was part of the press strategy – to introduce Theranos before announcing its partnership with Walgreens. You know, whoever made Holmes send the logo reports. We’ve seen emails Holmes wrote about the rollout strategy. At the end of 2013, Theranos agreed to open its test sites in 3,000 stores over the next two years.

Slow deployment at Walgreens

Former Walgreens chief executive Nimesh Jhaveri said earlier in the lawsuit the rollout was slowed down because so much testing was done on venous swabs, instead of the finger pricks Theranos had promised.

According to Holmes, the deployment was going well in early 2014. By the end of the year, only 40 service centers had opened. But see, it wasn’t Holmes’ fault, because Walgreens had made an acquisition (of Boots, another drugstore) and all Walgreens executives had been replaced with Boots executives.

Strange financial projections

As for the wobbly financial projections that had convinced investors that Theranos was more profitable than it actually was, well, those models were Balwani’s and he prepared the projections that she used. Looking at projected revenues in 2014 ($ 140 million) and 2015 ($ 990 million), Balwani “built a model with a number of assumptions about how many stores Theranos would deploy and other work with them. doctors and hospital systems sending us samples, “and that’s how he screened,” Holmes said.

Balwani was the main contact for investor Daniel Grossman of PFM Management, Holmes said. Grossman has previously said Holmes lied to him about Theranos’ abilities, and that in meetings Holmes and Balwani attended, Holmes argued the most.

Problems with Safeway

As for Theranos’ unsuccessful attempt to open stores in Safeway, that was in part due to the change in management. Former Safeway CEO Steven Burd had testified that Theranos ‘frequent delays troubled him, but Holmes never told him there was a problem with Theranos’ technology. He withdrew; when a new direction arrived, Balwani took care of them.

The defense announced its strategy from day one: return the ball. The bet seemed to be that getting Holmes to admit her guilt in the forged memos would give her more credibility when she blamed others for almost everything else. But the difference between Holmes’ behavior when she admitted her role in the memos and when she spent time blaming others was stark. As she shied away from responsibility, for the first time in the trial, she looked nervous.

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