Elizabeth Holmes trial Week 6 recap: Trouble with Safeway and Walgreens deals, and how a dermatologist became the startup's lab director
fraud trialof Theranosfounder Elizabeth Holmeshas concluded its sixth week.
- It included testimony about Theranos' failed Walgreens and Safeway deals.
"I have never been more frustrated"
Former Safeway CEO Steven Burd returned to the stand, testifying that his company did at least 100 hours of due diligence on Theranos before signing a $400 million contract, according to CNBC.
Burd spoke of frequent launch delays, lost blood samples, nonsensical test results, and a "poor patient experience," according to the Wall Street Journal. He added that he worried about Safeway's reputation.
In late 2012, he wrote an email to Holmes with the subject line "Becoming Discouraged."
"I can only recall having been discouraged once in the last 62 years," he wrote. "That said, I am getting close to my second event."
On another occasion, he said, "We are so good together when we collaborate, but I have never been more frustrated. I want to help, but you are making it difficult." The deal dissolved in 2015.
"The haters are everywhere"
Former Walgreens CFO Wade Miquelon testified that Walgreens agreed to pay Theranos a $100 million "innovation fee," along with $40 million in convertible notes. In August 2013, Holmes asked Walgreens to speed up the $100 million payment, Miquelon said.
Shortly after the Wall Street Journal published its exposé on Theranos in 2015, Miquelon emailed Holmes words of encouragement.
"The haters are everywhere, but your contribution to the world cannot be bottled up," he wrote, according to the Journal. "You are going to help so many people in your lifetime it's absurd."
How a dermatologist became a Theranos lab director
Sunil Dhawan, a dermatologist for Theranos' former COO and President Sunny Balwani, testified that Balwani asked him to be Theranos' lab director, which Balwani said had a "minimal" time commitment, the Journal reports. Though Dhawan seemed an unusual choice, he met federal and state requirements. He testified that he rarely visited the lab and that he only worked five to 10 hours from November 2014 to the summer of 2015. He was paid $5,000 per month.
Theranos disappointed on its biggest promise, former Walgreens exec says
Former Walgreens executive Nimesh Jhaveri testified that the company was unaware that finger-stick samples were being tested on commercial third-party devices; Walgreens believed these tests were being run on Theranos' own devices. In 2014, roughly 40% of tests were still requiring vein draws instead of simple finger pricks, and Walgreens wanted to "get that number to zero." That never happened, despite Balwani's reassurance that venous draws would dip below 5% by the end of 2014, Jhaveri said.
He said this was disappointing because running a variety of tests with a single fingerprick was Theranos' biggest selling point.
Walgreens ultimately ended the partnership in 2016.
Theranos' former senior project manager testifies
Daniel Edlin, a senior project manager at Theranos, testified that Theranos sometimes set up partitions to hide parts of its labs before giving tours. He also said he was once asked to set up a display of Theranos' MiniLab machines for guests to see on a tour, but he later learned these devices were never used for clinical patient testing.
Edlin said he knew Theranos used third-party devices to run venous tests but wasn't aware the company also used them for finger-stick samples, according to KTVU.
He ultimately left Theranos in 2016.
"I no longer believed based on what I was seeing that the company was capable of standing behind the claims it had been making about its technology," he said, according to the Journal.
You can catch up on Week 1 here, Week 2 here, Week 3 here, Week 4 here, and Week 5 here. You can read how Holmes wound up on trial here and see the list of potential witnesses here. Everything else you need to know about the case is here.
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