SAN JOSE, Calif. — Theranos founder and former CEO Elizabeth Holmes returned to the witness stand Tuesday, confirming key aspects of the prosecutor’s allegations behind the 11 counts of fraud she faces, but asserting that there was nothing wrong in what she did.
The prosecution has repeatedly shown jurors lab reports emblazoned with logos of the pharmaceutical companies Pfizer and Schering-Plough. Witnesses from those companies who worked with Theranos testified that the use of the logos was unauthorized and they were unaware of it at the time.
Holmes admitted that she was the one who had added the logos to Theranos lab reports and sent them to Walgreens as she pursued a deal to put her blood-testing startup's diagnostic machines in the pharmacy's retail stores.
Holmes acknowledged that in some cases, Theranos used third-party devices, rather than its own equipment.
“This work was done in partnership with those companies and I was trying to convey that,” she said by way of explanation. "I wish I had done it differently,” she added.
Addressing another key point made by the prosecution, Holmes said that when Theranos switched from using on-site analyzers to process samples to a centralized lab approach, it used third-party devices rather than its own equipment as an “invention” because there were too many samples to handle. Witnesses have testified that Theranos' signature blood-testing machine repeatedly failed quality assurance tests and delivered erroneous results. Holmes said the company didn’t tell its business partners about this arrangement because it was a trade secret.
She rebutted the prosecution's arguments about some of the alleged misrepresentations she made to investors, the media and business partners, affirming that she had received specific positive reports from employees and outside experts and believed their statements to be true.
When presented with company emails and PowerPoint presentations, defense attorney Kevin Downey asked Holmes about specific instances brought up by the prosecution.
Jurors saw an email sent to Holmes by then-chief company scientist, biochemist Ian Gibbons, about the development of Theranos' fourth-generation device.
“Our immunoassays match the best that can be done in clinical labs and work with small blood samples. Generally our assays are faster by a factor of three to 10 than kits,” Gibbons wrote.
Downey asked Holmes what she took that email to mean. “I understood that the 4 series could do any blood test,” she replied.
U.S. District Judge Edward Davila has instructed jurors that the emails between Holmes and her lab staff, along with many other exhibits, should be understood as indications of Holmes’ “state of mind” and not as facts of what actually happened.
Despite those promises being made to investors and the media, other witnesses testified that Theranos’ proprietary devices could only do a few tests and had major quality issues. For its rollout 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 testified the Theranos testing equipment in its labs had issues with excessive power demands and heat production. They were designed to be used at retail stores visited by patients over the course of a day, she said, but in the Theranos lab the devices were all clustered together and processed patient tests at once. The defense brought up an email between hardware project manager Tim Kemp that said the Theranos building in Palo Alto, California, couldn’t handle the power demands of running the devices to process a high volume of patients from the retail rollout and running the air conditioning to cool them.
If found guilty, Holmes faces up to 20 years in prison, a $250,000 fine and full or partial restitution to investors, totaling nearly $155 million.
