Elizabeth Holmes admitted to a key part of the case against her

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

“This work was done in partnership with those companies and I was trying to convey that,” she said on the stand today. She added the logos before sending the memos to Walgreens, which Theranos would later partner with. Holmes wasn’t trying to fool anyone, she said. “I wish I’d done it differently.”

Holmes spoke slowly as she confessed. The testimony, given on her third day of questioning by her defense team, sounded polished. Rehearsed. It was the most confident she’d sound all day.

Those documents have been a major part of the case against Holmes in her trial for wire fraud. Investors testified that they thought the documents had been generated by the pharma companies themselves. And Holmes’ mea culpa didn’t explain why the language in the Schering-Plough memo had changed from “give accurate and precise results” in the version the drug company saw to “give more accurate and precise results… than current ‘gold standard’ reference methods” in the Walgreens version.

But maybe the confession was meant to make it sound more serious when Holmes spent other parts of her testimony passing the buck.

The clinical lab

Holmes said that lab director Adam Rosendorff, VP Daniel Young, and Balwani, her CFO, were responsible for the clinical lab — implying that whatever problems happened there weren’t her fault. And, maybe, that she wasn’t completely aware of those problems. As she discussed conditions in the lab, her speech sped up and she appeared nervous. She said she hadn’t pressured Rosendorff to approve tests. Hadn’t pressured Young, either. Hadn’t pressured anyone to sign off on a lab report they didn’t want to sign.

Whatever had gone on in the lab, well, that wasn’t her.

When Rosendorff raised concerns about the schedule for tests, “I recall telling Dr. Rosendorff that we’ll do whatever it takes to give him the time he needs to bring up the tests properly,” Holmes said. Those tests were delayed by months.

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

Holmes tried to convince Gangakhedkar to take a leave of absence, but the scientist quit. And we saw one reason why Gangakhedkar was so stressed: an email from Balwani (on which Holmes was copied!) scolding her for not working hard enough. “Please note the software team was here til 3:07AM — and is already here now at 10AM,” he wrote.

Holmes said she wished she’d handled this differently. “This was the wrong way to treat people.”

The rotten working environment at Theranos was a consistent theme among employees who testified in the trial. Entry-level employee Erika Cheung testified that people slept in their cars as they tried to address problems with quality control on Theranos tests. On the day Gangakhedkar quit, another member of her team also quit, also citing stress. A human resources employee emailed Holmes about it: “Surekha just came by and said she believes Tina is resigning because of health reasons, family life and stress,” that email said. “She said it is similar to the reasons she is resigning.”

Questionable marketing materials

As for Theranos’ marketing, which the prosecution argued deceived people about Theranos’s technology, that was the doing of Chiat Day, the firm that famously did the Apple “1984” ad, Holmes said. The images that conveyed Theranos’ message — like the image of the cute kid captioned with “Goodbye Big Bad Needle” — were symbols that Chiat Day told them to adopt for their brand identity. Images were especially important for conveying identity, the firm told Holmes.

But Holmes admits that she wasn’t hands-off with shaping Theranos’ image. Theranos hired a PR group, Grow Marketing, and managed to place a story in The Wall Street Journal’s opinion section, written by Joseph Rago, about how amazing Theranos was, titled: “Elizabeth Holmes: The Breakthrough of Instant Diagnosis.”

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

That was part of the press strategy —…



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