- The seventh week of Theranos founder Elizabeth Holmes’ fraud trial has come and gone.
- It featured revelations on plans for a $1 billion IPO and ways staff tried to skirt testing issues.
- Here’s everything that happened in the trial in its seventh week.
How Theranos tried to make unusual test results seem normal
Daniel Edlin, a college friend of Elizabeth Holmes’ brother, Christian, and Theranos’ former senior product manager, was pressed on his previous testimony about measures taken when guests like investors or business partners wanted to see the devices in action.
He spoke of a “demo app” that hid Theranos machine errors from view during demonstrations, as well as “null protocol,” which meant the machines didn’t actually analyze the samples, according to The New York Times. Edlin testified that, from there, Theranos staff would tell the guests their samples needed further analysis, and the blood would be sent to a lab, as Insider’s Adam Lashinsky reported.
In one email, Edlin pointed out a discrepancy in test results. Holmes replied, “The discrepancy will be a problem. We need to see if we can correct for it.” Young asked Edlin to change the reference ranges on some of the results, which made results appear to fall within the normal range when they were actually abnormal.
Plans for a $1 billion IPO
Bryan Tolbert, the vice president of finance at investment firm Hall Group, which had invested $5 million in Theranos in 2013, testified that he had gathered from a meeting with Holmes that Theranos had raised $16 million in its first round, according to Law360 reporter Dorothy Atkins. His meeting notes also showed Theranos expected to raise $30 million in a second funding round with an eventual plan to go public in 2008 via an IPO valued at $1 billion.
Former Pfizer scientist unsure who approved Theranos’ use of logo
Shane Weber, a former director of diagnostics at Pfizer, testified that he discouraged any deals with Theranos in a report about the now-defunct startup.
“Theranos unconvincingly argues the case for having accomplished tasks of interest to Pfizer,” he wrote, according to The Wall Street Journal. Holmes’ attorneys had repeatedly asked Judge Edward Davila to keep jurors from seeing the report, but Davila ultimately allowed prosecutors to present it.
Weber also wrote that Theranos was “non-informative, tangential, deflective or evasive” in its answers to due diligence questions.
Jurors also heard about Theranos’ use of Pfizer’s logo in a company report, implying that Pfizer had validated and supported Theranos’ technology. The report boasted about Theranos machines’ “superior performance,” but Weber said he had never authorized the Pfizer logo use, and he didn’t know of anyone at Pfizer who had, according to the East Bay Times. The report was later shared with Walgreens and other investors.
Theranos technology put to the test for possible use in the military
Some Theranos machines were sent to Africa to see if they could withstand high temperatures common in combat. Theranos had been having discussions with the Defense Department about possible uses of the company’s machines in the military.
Theranos employees’ emails, however, said the machines “did not have a way to cool down” and might run into performance issues if they operated outside of the range between 72 and 82 degrees, according to The Wall Street Journal.
A third juror departs
Yet another member of the 12-person jury has been dismissed. On Friday, a juror was excused and replaced with an alternate. This is the third juror to depart the trial; two of five alternates now remain with the case at roughly its halfway point. Judge Davila said there was “good cause” to excuse the juror but didn’t provide a specific reason, according to CNBC. Each departure raises concerns about a possible mistrial.
You can catch up on Week 1 here, Week 2 here, Week 3 here, Week 4 here, Week 5 here, and Week 6 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.