Nimesh Jhaveri — Direct/Cross/Redirect/Recross
1,479 linesDIRECT EXAMINATION BY MR. SCHENK:
MR. SCHENK: GOOD MORNING, MR. JHAVERI.
NIMESH JHAVERI: GOOD MORNING.
MR. SCHENK: IF YOU ARE FULLY VACCINATED, AND WITH THE COURT'S PERMISSION, YOU MAY REMOVE YOUR MASK TO TESTIFY IF YOU WOULD LIKE.
NIMESH JHAVERI: THANK YOU.
MR. SCHENK: AND I ALSO WILL REMOVE MY MASK. MR. JHAVERI, DID YOU WORK AT WALGREENS?
NIMESH JHAVERI: I DID.
MR. SCHENK: FOR HOW LONG?
NIMESH JHAVERI: TWENTY-NINE YEARS.
MR. SCHENK: LET'S COME BACK TO THAT IN A MOMENT. I WONDER IF YOU CAN EXPLAIN TO THE JURY YOUR EDUCATIONAL BACKGROUND?
NIMESH JHAVERI: SURE. I'M A REGISTERED PHARMACIST. I HAVE A DEGREE IN PHARMACY, AS WELL AS I HAVE MY MBA IN ORGANIZATIONAL BEHAVIOR.
MR. SCHENK: AND WHERE DID YOU GET YOUR MBA?
NIMESH JHAVERI: I GOT MY MBA AT LAKE FORREST GRADUATE SCHOOL OF MANAGEMENT IN LAKE FORREST, ILLINOIS.
MR. SCHENK: AND AFTER GRADUATING FROM BUSINESS SCHOOL, WHERE DID YOU GO TO WORK?
NIMESH JHAVERI: I ACTUALLY WENT TO WORK, AFTER PHARMACY SCHOOL, AT WALGREENS.
MR. SCHENK: OKAY. AND DID YOU GET THE MBA WHILE YOU WERE WORKING?
NIMESH JHAVERI: I DID.
MR. SCHENK: AND DESCRIBE YOUR WORK HISTORY AT WALGREENS. YOU SAID YOU WERE THERE FOR 29 YEARS. DID YOU HAVE THE SAME JOB THE WHOLE TIME?
NIMESH JHAVERI: NO. I ACTUALLY STARTED AT WALGREENS IN 1989 AS A PHARMACY TECHNICIAN AND STORE CLERK WHILE GOING THROUGH SCHOOL, AND THEN BECAME A PHARMACIST, AND THEN WORKED IN VARIOUS POSITIONS OVER THE YEARS UNTIL OCTOBER OF 2018.
MR. SCHENK: AND YOU LEFT WALGREENS IN 2018?
NIMESH JHAVERI: I DID.
MR. SCHENK: WHILE YOU WERE WORKING AT WALGREENS, DID YOU BECOME FAMILIAR WITH A COMPANY NAMED THERANOS?
NIMESH JHAVERI: I DID.
MR. SCHENK: DO YOU REMEMBER WHEN YOU FIRST BECAME FAMILIAR WITH THERANOS?
NIMESH JHAVERI: SOMETIME IN 2010, '11, APPROXIMATELY AT THAT TIME.
MR. SCHENK: OKAY. AND IF YOU WOULD PLEASE DESCRIBE THAT EXPOSURE TO THE JURY. WHAT HAPPENED IN 2010 OR 2011?
NIMESH JHAVERI: SURE. I WAS ACTUALLY WORKING AND LEADING A PROJECT TO REDESIGN ALL OF OUR PHARMACIES TO BE MORE CUSTOMER CENTRIC AND PATIENT CENTRIC AND REDESIGNING ALL OF THE PHARMACY AREAS TO INCLUDE CERTAIN SPACES TO DELIVER CERTAIN HEALTH CARE SERVICES SO PATIENTS COULD HAVE SIMPLY MORE THAN THEIR PHARMACY. SO I RECEIVED A CALL FROM DR. JAY ROSAN, WHO WAS ALSO AT WALGREENS, AND THEY HAD BEEN MEETING WITH THE THERANOS TEAM, THE LEADERSHIP TEAM, AND ASKED ME IF I WOULD BE WILLING TO GIVE THEM A TOUR OF THE NEW SPACE. WE HAD A PILOT STORE IN WHEELING, ILLINOIS, AND I WAS MORE THAN HAPPY TO DO THAT, AND THAT'S WHEN I WAS EXPOSED TO THERANOS MORE AND MR. BALWANI AND MS. HOLMES.
MR. SCHENK: DID YOU MEET EMPLOYEES FROM THERANOS THAT DAY?
NIMESH JHAVERI: I MET BOTH OF THEM AT THE STORE, YES.
MR. SCHENK: AND BY "BOTH OF THEM," YOU MEAN MS. HOLMES AND MR. BALWANI?
NIMESH JHAVERI: THAT'S CORRECT.
MR. SCHENK: AND THEN WHAT DID YOU DO WITH THEM THAT DAY?
NIMESH JHAVERI: IT WAS A SHORT VISIT. I PROVIDED THEM A TOUR OF THE STORE, PROVIDED A TOUR OF THE SPACE WHERE WE CAN USE TO DELIVER DIFFERENT SERVICES FROM DIABETES EDUCATION SESSIONS TO LAB SESSIONS OR LAB SERVICES. IT WAS A FLEXIBLE SPACE, AND WE REALLY JUST GAVE THEM A TOUR OF THAT, THE WAITING AREA, AND THEN THE NEW PHARMACY WITH THE PHARMACIST SITTING OUTSIDE OF THE PHARMACY. IT WAS A VERY SHORT VISIT. AFTER THAT THEY THANKED ME AND, YOU KNOW, THAT WAS THE END OF THE VISIT.
MR. SCHENK: DO YOU RECALL IF, DURING THIS SHORT VISIT, YOU DISCUSSED THE THERANOS TECHNOLOGY OR WHAT THE BUSINESS MODEL AT THERANOS WAS?
NIMESH JHAVERI: NO. OF COURSE IT WAS INSIDE OF THE STORE, SO IT WAS IN A PUBLIC SETTING, SO THERE WAS NO REALLY DETAILED DISCUSSION. IT WAS REALLY THE IDEA OF DELIVERING LAB SERVICES IN THAT SPACE.
MR. SCHENK: OKAY. ABOUT HOW LONG WAS THIS VISIT, DO YOU KNOW?
NIMESH JHAVERI: ABOUT 15, 20 MINUTES. IT WASN'T THAT LONG.
MR. SCHENK: AND THEN AFTER THIS OCCASION, DID YOU HAVE ANOTHER OPPORTUNITY TO REENGAGE IN THE THERANOS PROJECT?
NIMESH JHAVERI: YES. PROBABLY A COUPLE YEARS LATER WHEN WALGREENS OPENED THE FIRST COUPLE OF STORES, I DID REENGAGE WITH THE THERANOS TEAM, AS WELL AS UNDERSTANDING WHAT THE STORES LOOKED LIKE. BUT THAT WAS THE NEXT TIME.
MR. SCHENK: OKAY. AND WOULD THAT HAVE BEEN IN 2013?
NIMESH JHAVERI: THAT'S RIGHT. I THINK IT WAS SOMETIME IN NOVEMBER, OR END OF 2013.
MR. SCHENK: OKAY. AND DESCRIBE FOR THE JURY WHAT YOUR ROLE WAS AT THAT POINT WHEN YOU REENGAGED IN THE LATTER PART OF 2013.
NIMESH JHAVERI: YEAH. MY ROLE HAD NOT CHANGED AT THAT TIME. WE WERE STILL DEVELOPING THE NEW LAYOUT, THE NEW EXPERIENCE, THE NEW DESIGN OF OUR PHARMACIES IN STORES, AND WE CONTINUED TO DO THAT. SO I WAS STILL LEADING THAT AND TESTING THOSE STORES. WE HAD A HANDFUL OF STORES AT THAT TIME THAT WE WERE TESTING, AND MY ROLE WAS TO UNDERSTAND THAT IF WE EXPANDED OR DELIVERED THIS TYPE OF A SERVICE, IN THIS CASE LAB SERVICES WITH THERANOS, HOW WOULD IT FIT INTO THE DESIGN OF THE STORE? HOW WOULD IT FIT INTO THE EXPERIENCE OF THE STORE? IT'S QUITE DIFFICULT TO DO CONSTRUCTION IN A STORE AT A MINUTE'S NOTICE. WE WANT TO, YOU KNOW, NOT DISRUPT OUR TEAM MEMBERS. WE DON'T WANT TO DISRUPT OUR CUSTOMERS. SO IT DOES REQUIRE QUITE A BIT OF PLANNING. SO THIS WAS MY ROLE WAS TO UNDERSTAND WHAT THE NEEDS ARE, WHAT THE EXPECTATIONS ARE, AND HOW DOES IT FIT INTO OUR PLANNING.
MR. SCHENK: I SEE. AND THEN IN THE EARLY PART OF 2014, DID YOU RECEIVE A PROMOTION AT WALGREENS?
NIMESH JHAVERI: I DID.
MR. SCHENK: AND DESCRIBE THAT PROMOTION, PLEASE.
NIMESH JHAVERI: SURE. SO I DID RECEIVE A PROMOTION TO DIVISIONAL VICE PRESIDENT OF HEALTH CARE SERVICES AND HEALTH CARE SERVICES DEVELOPMENT, AND MY ROLE WAS A COMBINATION OF THE ROLE THAT I HAD BEFORE, OVERSEEING A CONCEPT, THE REDESIGNING OF THE STORES, WHICH WAS CALLED WELL EXPERIENCE, AS WELL AS SOME OF THE OTHER INNOVATIONS THAT THE COMPANY WAS THINKING ABOUT AND HOW DO WE OPERATIONALIZE AND EXECUTE ON THEM. SO THE THERANOS PARTNERSHIP WAS NOW PART OF MY RESPONSIBILITIES.
MR. SCHENK: YOU USED A TERM JUST NOW, WELL EXPERIENCE. IS THAT WHAT YOU WERE DESCRIBING TO US EARLIER, THE PATIENT CENTERED FOCUS OF WALGREENS STORES?
NIMESH JHAVERI: THAT'S EXACTLY CORRECT. THAT WAS THE INTERNAL TERM FOR THE PROJECT WELL EXPERIENCE. WE WERE TRYING TO CREATE THAT, QUOTE-UNQUOTE, WELL EXPERIENCE FOR OUR CUSTOMERS AND PATIENTS AS THEY WALKED IN AND GIVE THEM ACCESS TO SERVICES.
MR. SCHENK: WHEN YOU RECEIVED THIS PROMOTION, DID YOUR ENGAGEMENT IN THE THERANOS PROJECT CHANGE, OR YOUR RESPONSIBILITIES VIS-A-VIS THE THERANOS PROJECT?
NIMESH JHAVERI: YES, IT DID. ONCE I TOOK ON THE NEW ROLE MY RESPONSIBILITIES, I HAD A TEAM THAT ACTUALLY REPORTED TO ME THAT WAS NOW RESPONSIBLE FOR THE PARTNERSHIP AND REALLY OPERATIONALIZING THIS PARTNERSHIP THAT WE HAD HAD WITH THERANOS, OPEN MORE STORES SO WE CAN TEST AND LEARN AND CONTINUE TO REFINE.
MR. SCHENK: YOU JUST USED A TERM, OPERATIONALIZE. WHAT DO YOU MEAN BY THAT?
NIMESH JHAVERI: YEAH. OPERATIONALIZE IS A BROAD TERM, AND IT'S REALLY TAKING AN IDEA AND BRINGING IT TO MARKET, HELPING IT BECOME A REALITY. IN THIS CASE THERE WAS ABOUT THREE STORES, IF I REMEMBER CORRECTLY, THAT WERE OPEN WITH THERANOS WELLNESS SERVICES INSIDE OF THEM, AND THE IDEA WAS, HOW DO WE EXPAND THAT FURTHER? AND THAT REQUIRED -- OPERATIONALIZING SOMETHING REQUIRES, IN THE RETAIL SETTING, CONSTRUCTION, DESIGN, LAYOUT, HOW DO WE TRAIN OUR EMPLOYEES AND TEAM MEMBERS TO ACTUALLY EXECUTE ON THE SERVICE? WHAT DOES THE CUSTOMER EXPERIENCE LOOK LIKE? YOU KNOW, WHEN A PATIENT COMES IN AND WHEN A CUSTOMER WALKS IN, WHAT HAPPENS? ALL OF THOSE THOUGHTS AND IDEAS IS REALLY TO BRING IT INTO AN EXECUTABLE WAY INSIDE OF A STORE, AND SO THAT'S WHAT I MEAN BY OPERATIONALIZING.
MR. SCHENK: THANK YOU. WHEN YOU WERE DOING THIS WORK TO OPERATIONALIZE THE THERANOS VENTURE, WERE YOU EVALUATING THE SUCCESS OF THE THERANOS PROJECT? YOU DESCRIBED THAT THERE WERE THREE STORES OPENED. WHERE WERE THOSE -- FIRST, WHERE WERE THOSE STORES?
NIMESH JHAVERI: THE THREE STORES, ONE WAS IN CALIFORNIA IN PALO ALTO, AND THE OTHER TWO WERE IN ARIZONA.
MR. SCHENK: AND WERE YOU LOOKING AT CERTAIN METRICS OR JUST PAYING ATTENTION TO HOW THE EXPERIENCE WAS GOING FOR CUSTOMERS TO DETERMINE FURTHER EXPANSION?
NIMESH JHAVERI: ABSOLUTELY. WE HAD A SET OF METRICS THAT WE HAD DECIDED WITH THE THERANOS TEAM, EVERYTHING FROM PATIENT WAIT TIME TO HOW LONG IT TAKES TO CHECK YOU IN, TO MEASURES LIKE HOW MANY MEMBERS WE'VE TRAINED, WHAT THE EXPERIENCE LEVELS LOOK LIKE. AND THEN WE HAD SOME LAB RELATED MEASURES THAT WE ALSO HAD, THE PERCENTAGE OF VENOUS VERSUS FINGERSTICK, BECAUSE THAT WAS PART OF THE THERANOS VALUE PROPOSITION. SO WE HAD SEVERAL OF THOSE MEASURES THAT WE LOOKED AT AND MONITORED TO SEE, ARE WE SUCCEEDING? ARE WE HITTING THE GOALS THAT WE WANT TO HIT? ARE WE ACHIEVING THE HYPOTHESIS THAT WE SET OUT TO DO?
MR. SCHENK: WHEN A PATIENT WOULD COME INTO A WALGREENS THAT HAD A THERANOS, WHAT SERVICES COULD THAT INDIVIDUAL RECEIVE FROM THERANOS?
NIMESH JHAVERI: WELL, THEY WERE ABLE TO RECEIVE THEIR TRADITIONAL LAB WORK WHERE THEY OTHERWISE WOULD GO TO WITH A PROVIDER'S ORDER OR PHYSICIAN'S ORDER, THEY COULD GO TO A LAB. BUT IN THIS CASE THEY COULD GO TO WALGREENS PHARMACY AND ACTUALLY RECEIVE A FINGERSTICK OR VENOUS DRAW AND HAVE THEIR LABS DONE AND THOSE RESULTS WERE SENT TO THEIR PROVIDER WHO ORDERED THOSE TESTS.
MR. SCHENK: YOU SAID AT THIS STAGE ONE OF THE THINGS THAT YOU WERE PAYING ATTENTION TO WAS THE PERCENT OF VENOUS DRAWS OR FINGERSTICK DRAWS. EXPLAIN THAT TO ME. WHAT DO YOU MEAN?
NIMESH JHAVERI: ABSOLUTELY. SO IN A TRADITIONAL SETTING WHEN YOU WANT TO GET YOUR LAB WORK DONE AND YOUR DOCTOR ORDERS LAB WORK AND YOU NEED TO GET YOUR CHOLESTEROL CHECKED OR WHATEVER, YOUR BLOOD COUNT, YOU'LL GO TO THE LAB AND THEY'LL TAKE SOME BLOOD OUT FROM YOUR VENOUS, RIGHT BY YOUR ELBOW, OF SEVERAL TEST TUBES. IN THE CASE OF THERANOS SERVICES, THE UNIQUE PART OF IT WAS THAT YOU CAN DO THAT SAME TEST, THOSE SAME TESTS ON A SMALL AMOUNT OF BLOOD THROUGH A FINGERSTICK, WHICH WAS EXTRAORDINARY, AND THAT'S THE DIFFERENCE. AND SO THE REAL AMAZING EXPERIENCE FOR PATIENTS WAS TO COME IN, GET THOSE LABS THAT THEY TRADITIONALLY HAD THREE TEST TUBES THAT THEY WERE TAKING OUT, BEING ABLE TO BE DONE WITH A FEW DROPS OF BLOOD AND THROUGH A FINGERSTICK. SO IT WAS LESS PAINFUL, IT WAS MORE EFFICIENT, IT WAS FASTER, AND THAT REALLY IS THE DIFFERENCE BETWEEN THE TWO.
MR. SCHENK: AND WAS THE NUMBER OF FINGERSTICK DRAWS OR THE PERCENT, WAS THAT IMPORTANT TO WALGREENS? WAS THAT A STATISTIC THAT WALGREENS PAID ATTENTION TO?
NIMESH JHAVERI: IT WAS VERY IMPORTANT. IT WAS VERY IMPORTANT BECAUSE THAT'S -- THAT WAS THE THERANOS TECHNOLOGY THAT WE HAD SIGNED A PARTNERSHIP ON. IT WAS CHANGING THE LAB ENVIRONMENT, THE ABILITY FOR A PATIENT TO GET THEIR LAB WORK DONE IN A LESS PAINFUL WAY, AND LESS BLOOD REQUIRED WAS THE ACTUAL MAGIC THAT, YOU KNOW, THAT WAS SO INTRIGUING TO US AS WALGREENS.
MR. SCHENK: DURING THIS PERIOD OF TIME, DID YOU HAVE PERIODIC MEETINGS WITH INDIVIDUALS FROM THERANOS TO DISCUSS THIS TOPIC, THE PERCENT OF VENOUS DRAWS?
NIMESH JHAVERI: YES, SIR.
MR. SCHENK: DID YOU HAVE ONE MAJOR POINT OF CONTACT AT THERANOS, OR MANY?
NIMESH JHAVERI: MY MAJOR CONTACT OR DAY-TO-DAY CONTACT WAS MR. BALWANI. HE WAS THE CHIEF OPERATING OFFICER.
MR. SCHENK: SO WHEN YOU HAD THESE PERIODIC MEETINGS TO DISCUSS HOW THE ROLLOUT WAS GOING, WERE YOU HAVING THOSE DISCUSSIONS QUITE OFTEN WITH MR. BALWANI HIMSELF?
NIMESH JHAVERI: YES.
MR. SCHENK: YOUR HONOR, MAY I APPROACH?
JUDGE DAVILA: YES.
MR. SCHENK: (HANDING.)
MR. SCHENK: MR. JHAVERI, I'VE HANDED YOU A BINDER. I WOULD ASK YOU TO OPEN IT AND TURN TO TAB 1711.
NIMESH JHAVERI: OKAY.
MR. SCHENK: DO YOU RECOGNIZE THIS DOCUMENT?
NIMESH JHAVERI: I DO.
MR. SCHENK: IS THIS AN EMAIL FROM AN INDIVIDUAL AT WALGREENS TO A GROUP OF INDIVIDUALS, INCLUDING YOURSELF AND MR. BALWANI, IN MAY OF 2014?
NIMESH JHAVERI: YES.
MR. SCHENK: AND DOES IT ALSO INCLUDE AS AN ATTACHMENT SOME SLIDES?
NIMESH JHAVERI: YES, IT DOES.
MR. SCHENK: YOUR HONOR, THE GOVERNMENT OFFERS 1711.
MR. DOWNEY: YOUR HONOR, NO OBJECTION TO THE EMAIL. I THINK THE ATTACHMENT HAS 801 PROBLEMS WITHIN 801 PROBLEMS.
JUDGE DAVILA: MR. SCHENK?
MR. SCHENK: I'M NOT SURE WHICH SLIDES HE'S REFERRING TO OR WHAT THE SPECIFIC 801 OBJECTION IS.
MR. DOWNEY: WELL, YOUR HONOR, THERE ARE JUST VARIOUS STATEMENTS ON VIRTUALLY EVERY SLIDE FROM PAGE 10 TO REALLY FOLLOWING THEREAFTER WHICH ARE STATEMENTS BEING OFFERED TO STATE WHAT THE STATE OF THE PROGRAM WAS.
JUDGE DAVILA: WHY DON'T YOU TRY TO LAY A FOUNDATION AND LET'S GO FORWARD.
MR. SCHENK: YES. THANK YOU.
MR. SCHENK: MR. JHAVERI, WOULD YOU LOOK AT THE SLIDES FOR A MOMENT? THE SLIDES BEGIN ON PAGE 4 AND CONTINUE THROUGH THE REST OF THE EXHIBIT THROUGH PAGE 17.
NIMESH JHAVERI: IF I COULD JUST TAKE ONE MINUTE?
MR. SCHENK: PLEASE.
(PAUSE IN PROCEEDINGS.)
NIMESH JHAVERI: YES.
BY MR. SCHENK:
MR. SCHENK: WERE THESE THE TYPES OF SLIDES PREPARED IN THE ORDINARY COURSE OF BUSINESS FOR THE MEETINGS THAT WE JUST TALKED ABOUT?
NIMESH JHAVERI: YES, THIS WAS IN PREPARATION FOR A STEERING COMMITTEE MEETING IN MAY OF 2014, AND THESE SLIDES REFLECT THE INFORMATION THAT WE SHARED WITH THE STEERING COMMITTEE.
MR. SCHENK: AND WHEN THE SLIDES WERE PREPARED, DID YOU STRIVE TO INCLUDE ACCURATE CONTENT WITHIN THE SLIDES?
NIMESH JHAVERI: ABSOLUTELY. YOU KNOW, IT WAS A PARTNERSHIP, SO THE THERANOS TEAM AND THE WALGREENS TEAM, YOU KNOW, CREATED THESE SLIDES TOGETHER SO WE CAN TELL THE STATUS OF THE PROGRAM TOGETHER.
MR. SCHENK: AND WERE THESE SLIDES PRESERVED SO THAT IF, AFTER THE MEETING, YOU HAD A QUESTION ABOUT THE CONTENT OF A SLIDE OR SOMETHING THAT WAS DISCUSSED, YOU COULD GO BACK TO THE SLIDES AND LOOK AT THEM?
NIMESH JHAVERI: YES.
MR. SCHENK: YOUR HONOR, THE GOVERNMENT OFFERS 1711.
MR. DOWNEY: NO OBJECTION, YOUR HONOR.
JUDGE DAVILA: IT'S ADMITTED. THE EMAIL AND THE SLIDES ARE ADMITTED. THEY MAY BE PUBLISHED.
MR. SCHENK: THANK YOU, YOUR HONOR.
(GOVERNMENT'S EXHIBIT 1711 WAS RECEIVED IN EVIDENCE.)
BY MR. SCHENK:
MR. SCHENK: MR. JHAVERI, LET'S START WITH THE TOP PORTION OF THE EMAIL FROM THE SENDER AND IT'S FROM A PATTY HAWORTH. DO YOU SEE THAT?
NIMESH JHAVERI: I DO.
MR. SCHENK: AND WHO WAS MS. HAWORTH?
NIMESH JHAVERI: PATTY HAWORTH WAS A PROJECT MANAGER WHO WAS LEADING ALL OF THE PROJECT MANAGEMENT FUNDAMENTALS FOR THE PROJECT ITSELF.
MR. SCHENK: AND WITHIN THE TO LINE, THE FIRST NAME IS YOU; IS THAT RIGHT? YOU RECEIVED THIS?
NIMESH JHAVERI: THAT'S CORRECT.
MR. SCHENK: AND THEN ABOUT THE FOURTH LINE OF THE RECIPIENTS, DO YOU SEE S. BALWANI?
NIMESH JHAVERI: I DO.
MR. SCHENK: AND WAS THAT MR. BALWANI'S EMAIL ADDRESS?
NIMESH JHAVERI: YES, SIR.
MR. SCHENK: AND THE SUBJECT IS DIAGNOSTIC TESTING EXECUTIVE STEERING COMMITTEE SLIDE DECK. WHAT WAS THE EXECUTIVE STEERING COMMITTEE?
NIMESH JHAVERI: THE EXECUTIVE STEERING COMMITTEE WAS A COMMITTEE THAT WE HAD FORMED AT THE EXECUTIVE LEVEL AT BOTH COMPANIES, AND IT WAS DONE PERIODICALLY TO JUST KEEP ALL OF THE EXECUTIVES ABREAST OF WHAT IS GOING ON IN THE PROGRESSION OF THE PROJECT ITSELF.
MR. SCHENK: AND THE CONTENT SUGGESTS THAT THE SLIDE DECK IS ATTACHED FOR A MEETING TODAY. DO YOU SEE THAT?
NIMESH JHAVERI: I DO.
MR. SCHENK: YOU DESCRIBED A MOMENT AGO THESE PERIODIC MEETINGS. WAS THIS IN ADVANCE OF A MEETING THAT OCCURRED IN MAY OF 2014?
NIMESH JHAVERI: YES. THIS SLIDE DECK WAS FOR THAT MEETING FOR THAT PARTICULAR DAY.
MR. SCHENK: THANK YOU. AND I'D LIKE NOW TO HAVE YOU TURN TO PAGE 7 OF THE EXHIBIT. IF WE CAN JUST ZOOM IN ON THE TOP BOX. THE MEMBERS OF THE EXECUTIVE STEERING COMMITTEE APPEAR TO BE LISTED HERE. DO YOU SEE YOUR NAME?
NIMESH JHAVERI: I DO, SIR.
MR. SCHENK: AND ALSO MR. BALWANI AS COO FROM THERANOS?
NIMESH JHAVERI: YES, SIR.
MR. SCHENK: AND THERE ARE SOME OTHER INDIVIDUALS FROM WALGREENS LISTED WITH YOUR NAME. I WONDER IF YOU'LL TELL US WHO THEY ARE?
NIMESH JHAVERI: SURE. THE FIRST NAME IS KERMIT CRAWFORD. KERMIT WAS THE PRESIDENT OF PHARMACY SERVICES FOR WALGREENS AT THE TIME. JASON DUBINSKY. MR. DUBINSKY WAS THE FINANCIAL OFFICER. BRAD FLEUGEL. MR. FLEUGEL WAS THE CHIEF STRATEGY OFFICER AT THE TIME. ALEX GOURLAY. ALEX WAS THE HEAD OF OUR FRONT STORE OPERATIONS AT THAT TIME. DAILY LIVING IS WHAT IT WAS CALLED. AND THEN MYSELF. MARK WAGNER WAS THE HEAD OF OUR STORE OPERATIONS. AND THEN BRAD WASSON, WHO WAS MY BOSS, WAS THE HEAD OF THE INNOVATIONS GROUP.
MR. SCHENK: GREAT. THANK YOU VERY MUCH. IF YOU'LL NOW TURN TO PAGE 9. IF YOU CAN ZOOM IN ON THIS SLIDE, THE CONTENT. IT'S ENTITLED CURRENT OPERATIONS METRICS. WHAT DOES THAT MEAN? WHAT WERE THE CURRENT OPERATIONS METRICS?
NIMESH JHAVERI: WELL, AS I REFERRED TO EARLIER, WE HAD DETERMINED -- "WE" MEANING BOTH THE THERANOS TEAM AS WELL AS THE WALGREENS TEAM -- WHAT SHOULD WE BE MEASURING TO CONSTITUTE SUCCESS? ARE WE ACHIEVING THE SUCCESS FOR THIS PARTICULAR PROJECT AND HOW DO WE MEASURE THAT? AND SO THESE METRICS ARE IN REFERENCE TO THAT. THESE WERE THE ONES THAT WE DECIDED WOULD HAVE THE BIGGEST IMPACT ON THE SUCCESS OF THE PROJECT, AND SO THAT'S WHAT WE WERE MEASURING.
MR. SCHENK: GREAT. AND THERE ARE -- THE TWO COLUMNS ON THE RIGHT EACH HAVE DATES, FEBRUARY OF 2014 AND MAY OF 2014. DID THERANOS AND WALGREENS NOT JUST TRACK PROGRESS AT A PARTICULAR MOMENT, BUT OVER TIME?
NIMESH JHAVERI: WE DID.
MR. SCHENK: LET'S START WITH THE FIRST LINE. THE FIRST ROW IS NUMBER OF STORES LAUNCHED. DO YOU SEE THAT?
NIMESH JHAVERI: I DO.
MR. SCHENK: AND WHAT WAS THE NUMBER FOR FEBRUARY AND THEN MAY OF 2014?
NIMESH JHAVERI: FEBRUARY WAS THREE STORES LAUNCHED.
MR. SCHENK: AND THEN BY MAY?
NIMESH JHAVERI: ELEVEN STORES LAUNCHED.
MR. SCHENK: AND THE NEXT LINE IS AVERAGE PATIENTS PER STORE PER DAY. WOULD YOU READ THOSE NUMBERS TO THE JURY?
NIMESH JHAVERI: SURE. ON FEBRUARY 7TH, 2014, IT WAS .8; AND IN MAY OF 2014, IT WAS 3.1.
MR. SCHENK: WERE WALGREENS AND THERANOS TRACKING OR PAYING ATTENTION TO THE AVERAGE NUMBER OF PATIENTS PER STORE PER DAY?
NIMESH JHAVERI: YES, WE WERE.
MR. SCHENK: AND WAS THAT NUMBER IMPORTANT IN DETERMINING WHETHER THE PILOT WAS SUCCESSFUL?
NIMESH JHAVERI: IT IS VERY IMPORTANT. IT'S -- IT SHOWS A COUPLE OF DIFFERENT THINGS. NUMBER ONE, IT SHOWS ADOPTION OF THIS SERVICE BY PATIENTS. IT SHOWS, ARE WE GROWING NOT ONLY IN STORE COUNT, BUT IN THE NUMBER OF PATIENTS PER STORE? SO IT WAS VERY, VERY IMPORTANT. AND IT ALSO ALLOWED US TO DETERMINE IF THERE WAS A RETURN ON THE INVESTMENT THAT BOTH THERANOS AND WALGREENS IS MAKING.
MR. SCHENK: THE NEXT LINE IS AVERAGE CHECK-IN, 10 TO 11 MINUTES IN FEBRUARY, DOWN TO 8 MINUTES IN MAY. WAS AVERAGE CHECK-IN SOMETHING THAT THERANOS AND WALGREENS ALSO TRACKED?
NIMESH JHAVERI: ABSOLUTELY.
MR. SCHENK: WHY?
NIMESH JHAVERI: THIS IS PART OF THE PATIENT EXPERIENCE. AGAIN, THE ENTIRE SERVICE WAS TO CREATE A NEW PATIENT EXPERIENCE, ONE THAT IS EFFICIENT, ONE THAT IS LESS PAINFUL, ONE THAT IS LESS COST. AND SO WHEN A PATIENT CAME IN TO CHECK IN FOR THIS SERVICE, WE WANTED TO MAKE SURE THAT IT WAS GREAT FOR THEM, AND IT WAS SHORT, AND SO THAT'S WHY WE MEASURED IT FOR EVERY PATIENT.
MR. SCHENK: THE NEXT ROW IS AVERAGE PERFORM, 95 PERCENT RANGE. WHAT IS THAT?
NIMESH JHAVERI: YEAH. SO WHAT WE DID HERE WAS HOW MANY OF THOSE PATIENTS WE ENDED UP THEN DID THE FULL, THEY RECEIVED THE FULL SERVICE, AND HOW LONG IT TOOK FOR -- FROM WHEN THEY WENT INTO THE ROOM TO GET THEIR LAB TESTS DONE, HOW LONG DID IT TAKE? AND AGAIN, THAT WAS PART OF THE ENTIRE SERVICE. SO AS WE LOOK AT THESE NUMBERS, IT WAS SOMEWHERE BETWEEN 19 AND 20 MINUTES IN FEBRUARY, THE WHOLE EXPERIENCE; AND WE HAD THEN REDUCED IT DOWN FROM 13 TO 17 MINUTES. AND SO THAT WAS PART OF THE FULL EXPERIENCE.
MR. SCHENK: I SEE. AND THEN THE NEXT ROW, VENOUS DRAWS. IN FEBRUARY OF 2014 THEY WERE AT 43 PERCENT; AND IN MAY OF 2014 THEY ARE AT 39 PERCENT. WAS THAT SOMETHING THAT THERANOS AND WALGREENS TRACKED?
NIMESH JHAVERI: YES.
MR. SCHENK: WHY?
NIMESH JHAVERI: AGAIN, AS I EXPLAINED EARLIER, THERE WERE TWO METHODS OF HOW TO DRAW BLOOD. ONE WAS THROUGH A FINGERSTICK, AND THE OTHER WAS THROUGH YOUR TRADITIONAL VENOUS DRAW. SO, AGAIN, THE THERANOS SERVICE, THAT WAS TO DO IT THROUGH A FINGERSTICK, AND SO WE WANTED TO MEASURE THAT WHEN PATIENTS CAME IN, WERE THEY ACTUALLY RECEIVING A FINGERSTICK FOR THEIR BLOOD DRAW OR WERE THEY ACTUALLY RECEIVING A VENOUS DRAW FOR THEIR BLOOD DRAW? AND SO THAT'S WHY WE MEASURED THIS. THIS WAS A BIG PART OF THE EXPERIENCE.
MR. SCHENK: AND WHICH DIRECTION DID WALGREENS DESIRE TO SEE THAT NUMBER GO, VENOUS DRAWS INCREASE OR DECREASE?
NIMESH JHAVERI: DECREASE.
MR. SCHENK: AND WHY WAS THAT?
NIMESH JHAVERI: ULTIMATELY THAT WAS THE EXPERIENCE. IF WE WERE DOING VENOUS DRAWS, IF THE PATIENTS WERE RECEIVING A VENOUS DRAW WHEN THEY WALKED INTO A THERANOS WELLNESS CENTER INSIDE OF A WALGREENS, THE EXPERIENCE IS NO DIFFERENT THAN GOING TO A LAB, YOUR TRADITIONAL LAB. SO WHAT WE WERE TRYING TO DO WAS TO MAKE SURE THAT THAT NUMBER GETS TO ZERO, OR AS CLOSE AS POSSIBLE TO ZERO OVER TIME.
MR. SCHENK: WHEN WALGREENS WAS EVALUATING WHETHER TO EXPAND THERANOS SERVICES WITHIN WALGREENS STORES, WAS THIS NUMBER, VENOUS DRAW PERCENT, RELEVANT TO THAT DETERMINATION?
NIMESH JHAVERI: IT WAS.
MR. SCHENK: WHY?
NIMESH JHAVERI: AGAIN, IT'S PART OF THE EXPERIENCE AND IT'S PART OF THE OFFERING. YOU KNOW, IT'S, IT'S -- THIS WAS WHAT WAS BEING TOUTED AS THE NEW TECHNOLOGY, THE NEW EXPERIENCE, AND SO IF THIS NUMBER WAS IN THE 40 PERCENT OR HIGHER, OR NOT TO THE POINT WHERE IT WAS CLOSE TO ZERO PERCENT, THE PATIENTS WERE NOT RECEIVING THE SERVICE THAT THEY WERE PROMISED.
MR. SCHENK: DID YOU DISCUSS THE IMPORTANCE OF VENOUS DRAW PERCENT WITH MR. BALWANI?
NIMESH JHAVERI: YES.
MR. SCHENK: AND WOULD YOU TURN TO PAGE 10, THE NEXT PAGE. THIS SLIDE IS CALLED VENOUS DRAWS. AND THE FIRST LINE READS, "ORIGINALLY ESTIMATED THAT BY END OF FEBRUARY 2014 WOULD BE BELOW 20 PERCENT OF TOTAL DRAWS AND BELOW 10 PERCENT BY THE END OF AUGUST." DO YOU SEE THAT?
NIMESH JHAVERI: I DO.
MR. SCHENK: AND THERE'S A REFERENCE TO BELOW 10 PERCENT BY END OF 2014. AND THE SLIDE WE JUST LOOKED AT SHOWED THAT IT WAS 43 PERCENT; IS THAT RIGHT?
NIMESH JHAVERI: THAT'S RIGHT.
MR. SCHENK: AND THE NEXT SECTION ON THIS SLIDE UNDER CURRENT PROJECTIONS HAS SOME PROJECTIONS INCLUDED. FIRST, WHERE DID THESE PROJECTIONS COME FROM?
NIMESH JHAVERI: THIS CAME FROM THE THERANOS TEAM. MR. BALWANI PROVIDED THAT. WE ASKED HIM -- OBVIOUSLY WALGREENS IS NOT THE LAB. WE'RE NOT THE DEVELOPER OF THIS TECHNOLOGY. AND SO THIS CONTENT, THIS SLIDE WAS PROVIDED TO US BY MR. BALWANI.
MR. SCHENK: THE FIRST DASH READS, "BELOW 20 PERCENT BY END OF AUGUST AT A 90 PERCENT CONFIDENCE LEVEL." WHAT DOES THAT MEAN?
NIMESH JHAVERI: SO HE WAS VERY CONFIDENT, 90 PERCENT, THAT WE WOULD GET TO UNDER 20 PERCENT BY THE END OF AUGUST IN TERMS OF VENOUS DRAWS. SO 80 PERCENT -- TO MAKE IT VERY SIMPLE, 80 PERCENT OF THE PATIENTS COMING IN WOULD GET A FINGERSTICK.
MR. SCHENK: I SEE. AND BY THE END OF AUGUST 2014, WAS THAT ACHIEVED?
NIMESH JHAVERI: NO, SIR.
MR. SCHENK: IT THE NEXT DASH READS, "BELOW 10 PERCENT BY END OF OCTOBER, WITH A GREATER THAN 95 PERCENT CONFIDENCE LEVEL." FIRST, DID THIS ALSO COME FROM MR. BALWANI?
NIMESH JHAVERI: YES, SIR.
MR. SCHENK: DID IT COME TO PASS THAT BELOW 10 PERCENT OF THE PATIENTS RECEIVED A VENOUS DRAW BY THE END OF OCTOBER?
NIMESH JHAVERI: NO, IT DID NOT COME TO PASS.
MR. SCHENK: THE NEXT DASH READS, "BELOW 5 PERCENT BY THE END OF 2014 AT A 90 PERCENT CONFIDENCE LEVEL." DID MR. BALWANI PROVIDE THAT INFORMATION?
NIMESH JHAVERI: YES, SIR.
MR. SCHENK: AND DID THAT COME TO PASS? DID LESS THAN 5 PERCENT OF THE PATIENTS RECEIVE VENOUS DRAWS?
NIMESH JHAVERI: NO, IT DID NOT COME TO PASS.
MR. SCHENK: IT THEN CONTINUES, "AT WHICH POINT MOVE VENOUS DRAWS ONLY TO DESIGNATED/24-HOUR STORES." WHAT DOES THAT MEAN?
NIMESH JHAVERI: SO THE IDEA HERE IS THAT THE FINGERSTICK CAN BE DONE BY A PHARMACY TECHNICIAN THAT IS TRAINED TO DO A FINGERSTICK. A VENOUS DRAW REQUIRES A PHLEBOTOMIST, A LICENSED PHLEBOTOMIST THAT IS TRAINED. AND SO WHEN WE DID RECEIVE A CERTAIN PERCENTAGE, LIKE BELOW 5 PERCENT, WE WOULD THEN BE ABLE TO MOVE THE PHLEBOTOMIST TO ONLY 24-HOUR LOCATIONS WHERE THE VENOUS DRAW WAS REQUIRED STILL FOR CERTAIN TESTS. AND SO THAT WAS THE IDEA. AGAIN, TO PUT PHLEBOTOMISTS IN EVERY STORE WAS FINANCIALLY NOT ACHIEVABLE OR NOT SUSTAINABLE; AND THEN, SECONDLY, AT THE SAME TIME WE WERE NOT ACHIEVING THE EXPERIENCE THAT WE WANTED TO ACHIEVE. SO THE IDEA HERE WAS TO GET THE PERCENTAGE DOWN TO A BELOW 5 PERCENT, AND SO 95 PERCENT OF THE PATIENTS WOULD GET A FINGERSTICK, AND THOSE 5 PERCENT THAT STILL REQUIRED A VENOUS DRAW, WE WOULD THEN DIRECT THOSE PATIENTS TO A 24-HOUR LOCATION WHERE A PHLEBOTOMIST WOULD BE ON STAFF TO CONDUCT THE VENOUS DRAW.
MR. SCHENK: FROM AN ECONOMICS PERSPECTIVE, WHY IS IT BENEFICIAL TO ONLY HAVE PHLEBOTOMISTS IN 24-HOUR LOCATIONS?
NIMESH JHAVERI: WELL, NUMBER ONE, PHLEBOTOMISTS ARE TOUGH TO FIND, SO STAFFING IS A CONCERN. SECOND IS ALSO THERE IS AN ADDITIONAL SALARY NOW THAT HAS TO BE PAID FOR. WHAT WE WERE TRYING TO DO WITH THERANOS PARTNERSHIP IS TO TRAIN SOME OF OUR TEAM MEMBERS, OUR PHARMACY TECHNICIANS WHO WERE ALSO CERTIFIED IN PHARMACY, AND WE WERE TRAINING THEM TO BECOME TECHNICIANS THAT THEY CAN DO FINGERSTICKS FOR SO WE DON'T HAVE TO ADD AN ADDITIONAL INDIVIDUAL INSIDE OF A STORE. SO IT KEPT THE COST PROFILE LOW, IT MADE THE EXPERIENCE MORE SEAMLESS, AND IT MADE THE EXPERIENCE MORE EFFICIENT, AND SO THAT'S WHY THIS WAS IMPORTANT FOR US.
MR. SCHENK: DOES THE NEXT DASH BELOW THAT READS, "HOWEVER, THERE ARE FEW TESTS THAT WE (WALGREENS AND THERANOS) MAY AGREE TO OFFER FROM VENIPUNCTURE FOR SPECIALTY PHARMACY." WHAT DOES THAT MEAN? WHAT IS SPECIALTY PHARMACY?
NIMESH JHAVERI: YEAH. THERANOS WAS WORKING ON SOME MORE COMPLEX TESTS THAT WOULD REQUIRE MORE BLOOD FOR THE TESTING, AND SO THIS POINT WAS TO MAKE THAT IN THOSE 24-HOUR LOCATIONS WE WOULD TRANSFER SOME OF THOSE MORE COMPLEX TESTS THAT DID REQUIRE MORE BLOOD TO THOSE STORES. AND SO THAT'S WHAT WE'RE REFERRING TO HERE, THAT THERE MIGHT BE ALWAYS SOME TESTS THAT REQUIRE A FULL BLOOD DRAW.
MR. SCHENK: AND WERE THESE MORE COMPLEX TESTS LESS COMMONLY ORDERED?
NIMESH JHAVERI: THEY WERE LESS COMMONLY ORDERED, YES.
MR. SCHENK: SO DID YOU UNDERSTAND THAT THERANOS COULD DO THE MORE COMMONLY ORDERED TESTS BY FINGERSTICK, THAT THERE WOULD BE SOME OF THESE LESS FREQUENTLY OR LESS COMMONLY ORDERED TESTS THAT WOULD CONTINUE TO BE PERFORMED WITH A VEIN DRAW?
NIMESH JHAVERI: THAT'S CORRECT.
MR. SCHENK: AND THEN FINALLY IT READS, "WHY HIGHER NUMBER OF VENOUS DRAWS SO FAR." AND THEN IT GIVES A COUPLE OF REASONS. WHO PROVIDED THESE REASONS?
NIMESH JHAVERI: MR. BALWANI DID.
MR. SCHENK: THE FIRST REASON IS "LEARNING PROCESS AROUND ORDERING PATTERNS FOR ARIZONA." DO YOU KNOW WHAT THAT MEANS?
NIMESH JHAVERI: YES. SO PART OF THE DISCUSSION THAT MR. BALWANI AND I ALWAYS HAD IS HOW -- WHAT ARE YOU DOING -- "YOU" BEING THERANOS -- TO CONTINUE TO REDUCE THE NUMBER OF VENOUS DRAWS? AND THE REASONS THAT HE PROVIDED TO US WAS, ONE, THAT THEY WERE STILL LEARNING THE PATTERNS, THE ORDERING PATTERNS FROM THE PHYSICIANS IN EACH OF THESE AREAS, AND SO AS THEY LEARN, THEY CAN MAKE SURE THEIR NANOTAINERS AND THEIR TECHNOLOGY IS PREPARED AND READY FOR A FINGERSTICK TYPE OF A DRAW. AND SO THAT'S WHAT THIS IS REFERRING TO.
MR. SCHENK: AND THEN THE NEXT DASH READS, "ORDERING PATTERNS ARE DIFFERENT THAN ANTICIPATED AND THERANOS IS ADDING NEW CARTRIDGES RAPIDLY TO ADDRESS THESE PATTERNS." WHAT DOES THAT MEAN?
NIMESH JHAVERI: THAT'S EXACTLY A LITTLE BIT MORE EXPANSION OF MY POINT EARLIER IS AS THERANOS UNDERSTOOD WHAT THE PHYSICIANS WERE ORDERING IN THOSE PARTICULAR AREAS, THEY CAN BETTER PREPARE THEIR CARTRIDGES, THEIR NANOTAINERS, AND THEIR TECHNOLOGY TO BE ABLE TO DO THESE TESTS ON A FINGERSTICK.
MR. SCHENK: DID MR. BALWANI EXPLAIN TO YOU THAT ONE OF THE REASONS WHY THERE WERE HIGH VENOUS DRAW NUMBERS WAS BECAUSE OF TECHNOLOGICAL PROBLEMS WITH THE THERANOS TECHNOLOGY?
NIMESH JHAVERI: NO. HE ALWAYS EXPLAINED IT AS THEY WERE LEARNING FROM WHAT WAS BEING ORDERED, AND AS THEY LEARNED, THEY WOULD MAKE SURE THAT THEIR TECHNOLOGY WAS READY TO GO FOR -- WITH THE CARTRIDGES TO BE ABLE TO DO A FINGERSTICK.
MR. SCHENK: AND WHEN THERANOS DID A FINGERSTICK DRAW, WHERE DID YOU OR WALGREENS THINK THAT THAT BLOOD WAS BEING TESTED, ON A THERANOS DEVICE OR ON A DIFFERENT DEVICE?
NIMESH JHAVERI: ON A THERANOS DEVICE.
MR. SCHENK: DID YOU KNOW WHETHER THERANOS WAS MODIFYING THIRD PARTY DEVICES, CHANGING DEVICES THAT HAD BEEN MANUFACTURED BY SOMEONE OTHER THAN THERANOS TO TEST FINGERSTICK DRAWS?
MR. SCHENK: WOULD YOU NOW TURN TO THE 12TH PAGE. AND THE SLIDE IS CALLED MARKETING RESEARCH OVERVIEW, AND IT'S THE LAST ONE ON THE RIGHT THAT I'D LIKE TO BLOW UP. AND UNDER THE WORD "MARKETING," DO YOU SEE THAT?
NIMESH JHAVERI: YES, SIR.
MR. SCHENK: IT LOOKS LIKE THERE'S SOME DISCUSSION OF EXTERNAL ADVERTISING TO GENERATE AWARENESS OF SERVICE AND PERCEPTION OF WALGREENS AS A HEALTH CARE INNOVATOR. WHAT DOES THAT MEAN?
NIMESH JHAVERI: THE ENTIRE SENTENCE OR --
MR. SCHENK: FAIR QUESTION. WHAT WAS THE USE OF ADVERTISING -- FOR WHAT PURPOSE WAS ADVERTISING BEING DISCUSSED IN THESE MEETINGS?
NIMESH JHAVERI: YEAH. SO THIS WAS A BRAND NEW SERVICE FOR WALGREENS, AND CERTAINLY THERANOS WAS A BRAND NEW COMPANY THAT WAS DEVELOPING THIS NEW SERVICE, AND WE WANTED TO MAKE SURE THAT PEOPLE KNEW THAT THE SERVICE WAS AVAILABLE. SO WHETHER IT WAS SIGNAGE ON A STORE OR SIGNAGE BY THE PHARMACY, OR BILLBOARDS, WHATEVER IT TAKES TO LET FOLKS KNOW THAT THIS NEW SERVICE IS AVAILABLE. AND THAT'S WHAT WE WERE TALKING ABOUT HERE IS, HOW DO WE LET THE PUBLIC KNOW THAT THESE PARTICULAR STORES HAD THESE NEW SERVICE THAT THEY CAN NOW LET THEIR PHYSICIANS KNOW ABOUT? WALGREENS, AS A HEALTH CARE INNOVATOR, CERTAINLY WE WERE TRYING TO EXPAND THE SERVICES BEYOND SIMPLY YOUR FRONT OF STORE ITEMS, SHAMPOO, THINGS OF THAT NATURE, AND YOUR TRADITIONAL PHARMACY. SO WHAT THIS IS REFERRING TO IS THAT IT ALSO CONTINUES TO PUSH FORWARD WALGREENS'S REPUTATION AS BEING AN INNOVATOR IN THE HEALTH CARE SPACE.
MR. SCHENK: SO DID THERANOS AND WALGREENS DISCUSS USING ADVERTISING TO ENCOURAGE PATIENTS TO USE THE THERANOS BLOOD TESTING SERVICE?
NIMESH JHAVERI: YES. AND I WANT TO BE VERY CLEAR. PATIENTS CAN'T WALK IN AND GET THEIR LAB WORK DONE. JUST LIKE TODAY, YOU CAN'T SIMPLY WALK INTO THE LAB AND ASK FOR LABS, YOUR COMPLETE BLOOD PANEL OR THINGS OF THAT NATURE TO BE DONE. SO THE IDEA WAS THAT FOR PATIENTS TO KNOW ABOUT THIS SERVICE AND THEN TO GO TO THEIR PROVIDER AND SAY, HEY, I NEED LABS DONE, CAN I USE THAT NEW SERVICE? THAT REQUIRES LESS BLOOD AND IT'S LESS PAINFUL AND IT'S CONVENIENT AND IT'S AT MY WALGREENS STORE. THAT WAS THE IDEA HERE. SO WE WERE TRYING TO LET THE PUBLIC KNOW THAT THIS NEW INNOVATIVE SERVICE IS NOW AVAILABLE.
MR. SCHENK: THROUGH ADVERTISING?
NIMESH JHAVERI: THROUGH ADVERTISING, YES.
MR. SCHENK: AND YOU DESCRIBED THE INABILITY OF A PATIENT TO COME IN AND GET THEIR OWN BLOOD TEST ORDERS. DID THAT CHANGE AT SOME POINT IN ARIZONA, DO YOU KNOW?
NIMESH JHAVERI: YEAH. WHAT I REMEMBER IS AT SOME POINT ARIZONA DID ALLOW PATIENTS TO DO SELF-DIRECTED LABS, AND THAT DID CHANGE AT A CERTAIN POINT THEN, AND WE WERE MEASURING THAT AS WELL.
MR. SCHENK: WOULD YOU TURN TO THE NEXT PAGE. IT'S PAGE 13. THIS SLIDE INCLUDES MARKETING CONCEPTS. DO YOU SEE THAT?
NIMESH JHAVERI: YES, SIR.
MR. SCHENK: WERE THESE PROPOSED OR DISCUSSED WAYS TO ADVERTISE THE THERANOS BLOOD TESTING SERVICE?
NIMESH JHAVERI: YES.
MR. SCHENK: AND SO ONE OF THEM READS "THE SMALLER BLOOD TEST IS HERE." DO YOU SEE THAT ONE?
NIMESH JHAVERI: I DO.
MR. SCHENK: AND THE ONE BELOW THAT READS, "THE SMALLER, SMARTER BLOOD TEST." DO YOU SEE THAT ONE?
NIMESH JHAVERI: I DO.
MR. SCHENK: AND IN EACH OF THOSE SLIDES THERE'S SOME IMAGES. WHAT IS THE IMAGE ON THE RIGHT OF EACH OF THOSE SLIDES? DO YOU RECOGNIZE IT?
NIMESH JHAVERI: I DO. THAT WAS THE IMAGE OF THE NANOTAINER THAT THEY WERE USING, AND THE BLOOD THAT IS INSIDE OF IT, THE PICTURE OF THE BLOOD IS TO INDICATE THE SMALL AMOUNT OF BLOOD THAT IS REQUIRED FOR THIS TEST.
MR. SCHENK: AND SO WHEN THE BLOOD TESTING SERVICE WAS ADVERTISED TO THE PUBLIC, DID YOU, IN THE ADS, HIGHLIGHT THE FINGERSTICK NATURE OR THE SMALL BLEW DRAW NATURE OF THE TEST?
NIMESH JHAVERI: WE DID. WE DID.
MR. SCHENK: AND WHY DID YOU HIGHLIGHT THAT PART OF THE SERVICE IN PARTICULAR?
NIMESH JHAVERI: AGAIN, AS I MENTIONED EARLIER, THE INNOVATION HERE WAS THAT YOU CAN GET YOUR LABS DONE IN A FEW DROPS OF BLOOD WITH A FINGERSTICK. THAT WAS THE INNOVATION. AND SO THAT'S WHAT WE WANTED TO TELL PATIENTS AND CUSTOMERS ABOUT. IF IT WAS SIMPLY ANOTHER, YOU KNOW, THREE TEST TUBES OF BLOOD AT YOUR LOCAL LAB, WELL, THERE WASN'T ANYTHING INNOVATIVE THERE. WE WERE TRYING TO TELL, QUITE HONESTLY, ALL OF THE FOLKS AROUND THE STORES THAT THIS NEW INNOVATION NOW EXISTS, AND IT CAN BE AVAILABLE AT YOUR WALGREENS STORE.
MR. SCHENK: THANK YOU. WOULD YOU TURN NOW TO PAGE 15. THIS SLIDE IS CALLED DIAGNOSTIC TESTING TIMELINE. DO YOU SEE THAT?
NIMESH JHAVERI: YES, SIR.
MR. SCHENK: AND THERE ARE A COUPLE OF STARS ON THERE, AND THEN ON THE RIGHT THERE'S A LEGEND OR A KEY. DO YOU SEE THAT?
NIMESH JHAVERI: YES, I DO.
MR. SCHENK: AND IT LOOKS LIKE -- MY COPY IS A LITTLE BLURRY, BUT IT LOOKS LIKE IT SAYS DECISION TO SCALE BASED ON OPERATING MODEL.
NIMESH JHAVERI: CORRECT.
MR. SCHENK: AND WHAT DOES THAT MEAN?
NIMESH JHAVERI: WELL, AS I MENTIONED EARLIER, THE OPERATING MODEL IS EVERYTHING THAT IT TAKES TO LAUNCH A STORE AND TO CONTINUE TO LAUNCH MORE STORES. AND PART OF WHAT WE WERE DOING HERE, AND WHAT YOU SAW FROM 3 STORES TO 11 STORES, IS TO CONTINUE TO EXPAND OUR PILOT. IT'S NOT EASY TO WAKE UP ONE DAY AND SAY WE'RE GOING TO OPEN, YOU KNOW, HUNDREDS OF STORES. AS I MENTIONED EARLIER, IT REQUIRES TRAINING OF OUR STAFF, IT REQUIRES CONSTRUCTION, IT REQUIRES PLANNING OF HOW WE DO CONSTRUCTION, WHAT THE EXPERIENCE WILL LOOK LIKE, WHAT THE CUSTOMER SERVICE WILL LOOK LIKE, HOW DO WE KEEP THE DUST OFF OF PRODUCTS AND PEOPLE, WHAT DOES THE MARKETING AND THE I.T. LOOK LIKE? AND SO WE HAVE TO PLAN FOR THAT, AND SOMETIMES IT TAKES MONTHS AND, IN SOME CASE DEPENDING ON ZONING LAWS, YEARS. SO AS WE PLAN FOR ANY PROJECT, LET ALONE THE THERANOS PARTNERSHIP, WE DO A PROOF OF CONCEPT AND THEN A PILOT AND WE EXTEND THAT PILOT. AND AS WE LEARN MORE, WE CONTINUE TO EXPAND. AND IF WE'RE HITTING THE TARGETS FOR ANY PROJECT, THEN WE CONTINUE TO EXPAND. SO WHAT THIS IS SHOWING IS WHEN IT WOULD BE TIME FOR US TO MAKE THE DECISION FOR THE NEXT SET OF STORES AND WHAT WOULD DETERMINE THAT, AND SO THAT'S WHAT THIS TIMELINE SHOWS.
MR. SCHENK: AND WHEN THIS SLIDE WAS BEING DISCUSSED, DID YOU EXPLAIN TO MR. BALWANI THAT FURTHER EXPANSION, MORE WALGREENS STORES WITH THERANOS'S SERVICES WAS DEPENDENT UPON SUCCESS IN THE PILOT?
NIMESH JHAVERI: ABSOLUTELY. MR. BALWANI AND I SPOKE ABOUT ALL OF THIS ON A REGULAR BASIS ON WHAT CONSTITUTES SUCCESS, HOW TO EXPAND FURTHER, WHAT WILL BE REQUIRED, WHAT DOES THE DESIGN LOOK LIKE OF THE STORE TO, YOU KNOW, HOW FAST CAN WE GO? SO, YES, MR. BALWANI WAS FULLY AWARE OF ALL OF THIS.
MR. SCHENK: AND DID YOU EVER TELL MR. BALWANI THAT FURTHER EXPANSION OR NATIONWIDE EXPANSION WITH WALGREENS WAS GUARANTEED?
MR. SCHENK: WOULD YOU TURN TO PAGE 17. THIS SLIDE IS ENTITLED THE PATH FORWARD. AND THE FIRST BULLET READS, "OPERATIONS IMPROVEMENT." WHAT IS THE FIRST BULLET UNDER THAT?
NIMESH JHAVERI: "FOCUS ON VENOUS DRAWS REDUCTION."
MR. SCHENK: WHAT DOES THAT MEAN?
NIMESH JHAVERI: IT'S REDUCING THE PERCENTAGE OF DRAWS THAT ARE FROM THE VENOUS VERSUS FINGERSTICK.
MR. SCHENK: AND WAS THAT VERY IMPORTANT TO WALGREENS?
NIMESH JHAVERI: IT WAS.
MR. SCHENK: IF YOU'LL NOW GO DOWN TWO BULLETS WHICH BEING "ACHIEVE," "ACHIEVE 15 PATIENTS PER DAY PER STORE." WHAT DOES THAT MEAN?
NIMESH JHAVERI: AS I MENTIONED EARLIER, WE WERE MEASURING THE NUMBER OF PATIENTS THAT COME TO THE THERANOS WELLNESS SERVICES PER STORE PER DAY. AND WE WERE, IF YOU REMEMBER, AT 3.1 IN MAY. WHAT WE WERE TRYING TO HIT IS THE 15 PATIENTS PER DAY AS OUR GOAL.
MR. SCHENK: THANK YOU. WOULD YOU NOW TURN TO EXHIBIT 1755. DO YOU RECOGNIZE THIS DOCUMENT?
NIMESH JHAVERI: I DO.
MR. SCHENK: IS THIS ANOTHER EMAIL FROM MS. HAWORTH TO INDIVIDUALS AT THERANOS AND WALGREENS, INCLUDING MR. BALWANI AND YOURSELF, AND ATTACHING SOME MEETING MINUTES?
NIMESH JHAVERI: YES.
MR. SCHENK: YOUR HONOR, THE GOVERNMENT OFFERS 1755.
MR. DOWNEY: NO OBJECTION, YOUR HONOR.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(GOVERNMENT'S EXHIBIT 1755 WAS RECEIVED IN EVIDENCE.)
MR. SCHENK: THANK YOU.
MR. SCHENK: THIS EMAIL WAS SENT IN JUNE OF 2014, AND IT LOOKS LIKE THE SUBJECT SUGGESTS THAT IT'S MEETING MINUTES FROM A MEETING THAT HAPPENED AT THE END OF MAY OF THE SAME YEAR, OF 2014; IS THAT RIGHT?
NIMESH JHAVERI: THAT'S CORRECT.
MR. SCHENK: AND SO WERE THESE PARTNERSHIP MEETINGS WHERE YOU AND MR. BALWANI AND OTHERS ATTENDED, WERE THEY ROUGHLY MONTHLY?
NIMESH JHAVERI: YEAH, APPROXIMATELY MONTHLY.
MR. SCHENK: AND WERE THERE SOMETIMES POWERPOINT SLIDES PRESENTED LIKE THE ONES WE JUST TALKED ABOUT?
NIMESH JHAVERI: YES, THERE WOULD BE.
MR. SCHENK: AND ON OTHER OCCASIONS WERE THERE MEETING MINUTES FROM THE MEETING?
NIMESH JHAVERI: YES, THERE WERE.
MR. SCHENK: AND IF YOU WOULD TURN TO PAGE 6. THIS LOOKS LIKE THE FIRST PAGE OF THE MEETING MINUTES, AND I WANT TO ASK YOU ABOUT, WITHIN THE CONTENT OF MEETING MINUTES, THE SECOND PARAGRAPH, THE ONE THAT BEGINS WITH YOUR NAME. DO YOU SEE THAT?
NIMESH JHAVERI: I DO.
MR. SCHENK: AND IT READS, "NIMESH REMINDED US OF HOW FAR WE HAVE COME SINCE JANUARY. WE ARE AT 21 STORES NOW." AGAIN, THIS IS THE END OF MAY; IS THAT RIGHT?
NIMESH JHAVERI: THAT'S CORRECT.
MR. SCHENK: 2014. "A PILOT SHOULD NOT BE PERFECT. IT SHOULD BE SO THAT WE CAN LEARN EVERYTHING WE NEED TO SCALE. THE LEARNINGS THAT ARE COMING OUT OF THE FIRST 21 STORES ARE PRETTY GOOD. WE MAY NOT LIKE THEM, BUT WE ARE LEARNING." WHAT DID YOU MEAN BY THAT, "WE MAY NOT LIKE THEM," THE LEARNINGS, "BUT WE ARE LEARNING"? WHAT DOES THAT MEAN?
NIMESH JHAVERI: WE WERE IN THE THROES OF NOW EXPANDING, SO MORE PATIENTS COME THROUGH THE STORES, AND WE UNDERSTAND EXACTLY WHAT IS GOING ON, EVERYTHING FROM PATIENT WAIT TIME TO WHAT PERCENTAGE OF VENOUS DRAWS, AND SOME THINGS WERE MOVING IN THE RIGHT DIRECTION, AND SOME THINGS WERE NOT. SO MY POINT HERE WAS THAT WE ARE STILL LEARNING. WE ARE CONTINUING TO LEARN. YOU KNOW, IT'S DIFFICULT. WE MAY NOT LIKE ALL OF THE RESULTS. BUT THAT'S WHAT PILOTS ARE FOR. IT'S TO LEARN SO WE CAN PERFECT THOSE THINGS THAT ARE NOT PERFECTED OR IMPROVE THAT ARE NOT IMPROVED BEFORE WE SCALE. SO THIS WAS MY MESSAGE TO BOTH THE THERANOS TEAM AS WELL AS THE WALGREENS TEAM.
MR. SCHENK: EVEN NEWS THAT YOU DIDN'T, YOU DIDN'T LIKE TO HEAR WAS HELPFUL AT THIS POINT? IS THAT WHAT YOU MEAN? WE CAN BUILD UPON AND GAIN FROM THAT KNOWLEDGE?
NIMESH JHAVERI: ABSOLUTELY. FOR EVERY TYPE OF PROJECT, YOU NEED TO HAVE A BALANCED VIEW. YOU JUST CAN'T HAVE ROSE COLORED GLASSES. SO THAT'S WHAT I'M TRYING TO SAY HERE.
MR. SCHENK: DID YOU WANT TO SEE THIS PROJECT BE SUCCESSFUL? DID YOU WANT TO SEE THERANOS EXPAND IN WALGREENS STORES?
NIMESH JHAVERI: ABSOLUTELY.
MR. SCHENK: DID YOU AT THIS TIME STILL THINK THAT THERANOS WAS TESTING THE FINGERSTICK BLOOD DRAWS ON THE THERANOS DEVICE?
NIMESH JHAVERI: YES.
MR. SCHENK: DID YOU HEAR OF THE DEVICE CALLED AN EDISON? DOES THAT TERM SOUND FAMILIAR TO YOU?
NIMESH JHAVERI: I HAVE HEARD OF THAT.
MR. SCHENK: AND SO DID YOU THINK THAT THE BLOOD TESTING WAS DONE ON AN EDISON DEVICE?
NIMESH JHAVERI: WHAT I KNEW WAS THAT WHETHER IT WAS EDISON OR ANOTHER THERANOS DEVICE, IT WAS DONE ON A THERANOS DEVICE.
MR. SCHENK: AND AT THIS TIME WHEN THE LEARNINGS AREN'T ALWAYS GOOD BUT WE BENEFIT FROM THEM, DID YOU KNOW WHETHER THERANOS WAS TESTING PATIENT'S BLOOD ON MODIFIED THIRD PARTY DEVICES?
MR. SCHENK: HOW ABOUT THE VENOUS DRAW PERCENT? WERE YOU SATISFIED WITH WHERE THAT NUMBER WAS AT THIS POINT?
NIMESH JHAVERI: NO. NO ONE WAS SATISFIED WITH THE HIGH PERCENTAGE.
MR. SCHENK: WHEN YOU SAID NO ONE, DO YOU MEAN ALSO MR. BALWANI?
NIMESH JHAVERI: ABSOLUTELY.
MR. SCHENK: AND WHY DO YOU SAY THAT?
NIMESH JHAVERI: BECAUSE, YOU KNOW, WE SPOKE ON A REGULAR BASIS ON WHAT WILL CONSTITUTE SUCCESS, AND AS YOU SAW IN OUR PREVIOUS SLIDE, HE WANTED TO REDUCE THEM AS WELL BECAUSE, AGAIN, THAT WAS THE EXPERIENCE, THAT WAS THE INNOVATION, AND WE BOTH, AND OUR TEAMS, WANTED THOSE PERCENTAGES TO GO DOWN.
MR. SCHENK: NOW, IF YOU'LL TURN, PLEASE, TO 1884. IS THIS ANOTHER EMAIL FROM MS. HAWORTH TO A GROUP AT WALGREENS AND THERANOS, INCLUDING MR. BALWANI AND YOU, NOW IN AUGUST OF 2014?
NIMESH JHAVERI: YES.
MR. SCHENK: AND DOES IT ALSO INCLUDE SOME MEETING MINUTES?
NIMESH JHAVERI: IT DOES.
MR. SCHENK: AND A SLIDE DECK AS WELL?
NIMESH JHAVERI: YES, IT DOES.
MR. SCHENK: YOUR HONOR, THE GOVERNMENT OFFERS 1884.
MR. DOWNEY: NO OBJECTION, YOUR HONOR.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(GOVERNMENT'S EXHIBIT 1884 WAS RECEIVED IN EVIDENCE.)
MR. SCHENK: THANK YOU.
MR. SCHENK: LET'S START AGAIN AT THE TOP. IS THIS WHAT WE HAVE SEEN A COUPLE TIMES ALREADY, MS. HAWORTH SENDING A SLIDE DECK AROUND THE TIME OF ONE OF THESE PARTNERSHIP MEETINGS?
NIMESH JHAVERI: YES.
MR. SCHENK: AND IS THIS ONE FOR AN AUGUST 2014 MEETING?
NIMESH JHAVERI: YES.
MR. SCHENK: IF YOU'LL TURN TO PAGE 5. WITHIN THE MEETING MINUTES THERE'S A SECTION LABELLED CURRENT STATUS. DO YOU SEE THAT?
NIMESH JHAVERI: I DO.
MR. SCHENK: AND THE FIRST ITEM IS 30 STORES CURRENTLY LIVE, (ARIZONA 29; CALIFORNIA 1.) IS THAT RIGHT?
NIMESH JHAVERI: YES.
MR. SCHENK: AND SO WE'RE SEEING THE NUMBER OF STORES INCREASE. IS THAT STILL DURING THE PILOT PHASE?
NIMESH JHAVERI: IT IS.
MR. SCHENK: AND WERE YOU STILL PAYING ATTENTION TO THE METRICS WE TALKED ABOUT TOWARDS THE BEGINNING OF YOUR TESTIMONY TO SEE WHERE THE PILOT IS GOING?
NIMESH JHAVERI: YES.
MR. SCHENK: WOULD YOU TURN NOW TO PAGE 8. AT THE BOTTOM THERE'S A SECTION CALLED PLAN FOR FISCAL YEAR 2015. THE FIRST BULLET IS, "NEXT MARKET IS NORTHERN CALIFORNIA (5 STORES INITIALLY, THEN EXPAND FOR A TOTAL OF 40)." AND THE SECOND BULLET IS, "EXPANSION BEYOND THE 5 STORES WILL REQUIRE THERANOS DATA TO OBTAIN STORE SELECTION." WHAT IS THAT REFERRING TO?
NIMESH JHAVERI: WHAT WE WERE DOING WAS STARTING TO PLAN FOR POTENTIALLY MORE MARKETS. AS WE CONTINUED TO EXPAND THIS PILOT AND LEARN MORE, WE WERE STARTING TO PLAN TO SAY, OKAY, WHERE DO WE GO NEXT? AND IN THIS PARTICULAR CASE WE WERE DISCUSSING NORTHERN CALIFORNIA. AND WHERE WE PUT THESE LOCATIONS WAS VERY, VERY IMPORTANT. YOU KNOW, IT HAD TO BE NEAR SPECIFIC AREAS WHERE THERE WAS A NEED FOR THIS SERVICE, WHERE THERE WERE PHYSICIANS AND PROVIDERS THAT NEEDED THIS SERVICE. AND SO THEY WOULD PROVIDE US WITH DATA THAT WOULD GIVE US INPUT, INSIGHT INTO WHERE WE WOULD PUT THESE LOCATIONS, AND SO THAT'S WHAT WE WERE ASKING FOR.
MR. SCHENK: OKAY. WAS THE THERANOS SERVICE EVER EXPANDED IN NORTHERN CALIFORNIA?
NIMESH JHAVERI: NOT BEYOND THE ONE STORE.
MR. SCHENK: WOULD YOU HAD NOW TURN TO THE NEXT PAGE, PAGE 9. UNDER THE SECOND BULLET, THE SECOND SHADED BULLET, "INITIAL GOAL FOR FISCAL YEAR 15." IT CONTINUES SEPTEMBER THROUGH AUGUST. WAS THAT THE WALGREENS FISCAL YEAR, SEPTEMBER TO AUGUST?
NIMESH JHAVERI: YES.
MR. SCHENK: "WAS 500 STORES. NEED TO REDEFINE THIS GOAL." AND IN THE CHART UNDER THERANOS, 2015 IS DOWN TO 200. DO YOU SEE THAT?
NIMESH JHAVERI: I DO.
MR. SCHENK: AND SO WHAT IS HAPPENING HERE? CAN YOU EXPLAIN THAT TO ME?
NIMESH JHAVERI: YES. SO, AGAIN, AS I MENTIONED EARLIER, SOME OF THE RESULTS OF THE PILOT WERE GOOD, SOME OF THE RESULTS WERE NOT GOOD. FOR ALL OF THOSE REASONS, WE RESET THE NUMBER OF STORES THAT WE WANTED TO LAUNCH FROM 500 TO 200. IT MADE MORE SENSE. IT WAS MORE MANAGEABLE. AND WE COULD CONTINUE TO DO A CRAWL, WALK, RUN APPROACH. WHAT YOU SEE HERE IS WELL EXPERIENCE, IS THE MODEL I SPOKE ABOUT EARLIER, WHICH IS TO REDESIGN THE SPACE AND REDESIGN THE PHARMACY TO BE MORE PATIENT AND CONSUMER CENTRIC. SO WE WERE PLANNING FOR THOSE 2000 STORES, AND WHAT WE WANTED TO DO WAS TO UNDERSTAND HOW MANY OF THOSE STORES WOULD BECOME THERANOS WELLNESS CENTERS BECAUSE, AGAIN, WE WANTED TO GO INTO A STORE AND CONSTRUCT ONCE, DISRUPT THE STORE ONCE, DISRUPT CUSTOMERS AND PATIENTS ONCE. SO THAT'S WHY WE ARE PLANNING BOTH OF THEM AT THE SAME TIME.
MR. SCHENK: I SEE. WAS EVEN THIS 200 STORE NUMBER, WAS THAT EVER GUARANTEED?
NIMESH JHAVERI: NO. AS YOU SAW WITH THE 500, IT WASN'T GUARANTEED. WE REDUCED THAT TO 200.
MR. SCHENK: SO WHY IN 2014 ARE YOU TALKING ABOUT THE NUMBER OF 200 STORES?
NIMESH JHAVERI: AGAIN, IT WAS ALL ABOUT PLANNING. IF THE PILOT WAS GOING WELL AND WE WANTED TO THEN QUICKLY EXPAND, YOU CAN'T JUST QUICKLY EXPAND. YOU HAVE TO PLAN FOR IT. SO WHETHER IT WAS 5 STORES, 10 STORES, 200 STORES, OR 500 STORES, YOU STILL HAVE TO DO THE PLANNING BEHIND IT, AND THAT'S WHAT WE WERE TRYING TO DO. AND THAT PLANNING INCLUDED NOT ONLY THE WALGREENS, BUT THE THERANOS TEAM TO MAKE SURE THAT THEY WERE READY. AND SO THAT'S WHAT WE WERE DOING HERE.
MR. SCHENK: DID YOU COMMUNICATE THIS IDEA TO MR. BALWANI? AND BY "THIS IDEA," I MEAN THE NUMBER OF STORES NEEDED TO BE REDUCED FROM 500 TO 200, AND ALSO THAT THE 200 WASN'T GUARANTEED?
NIMESH JHAVERI: YEAH, NOT ONLY WAS IT COMMUNICATED, THIS WAS DECIDED TOGETHER. IT WAS A PARTNERSHIP. SO THESE DECISIONS WERE MADE TOGETHER. IT WAS NOT DONE IN A VACUUM BY WALGREENS OR BY THERANOS.
MR. SCHENK: WAS THE VENOUS DRAW PERCENT, THE NUMBER OF VENOUS DRAWS THAT WERE HAPPENING, WAS THAT PART OF THE REASON TO REDUCE THE NUMBER OF STORES?
NIMESH JHAVERI: ONE OF THE REASONS, YES.
MR. SCHENK: OKAY. WERE THERE OTHERS THAT YOU RECALL?
NIMESH JHAVERI: THE COST OF THE BUILDOUT WAS EXTREMELY HIGH AT THIS POINT. WE HAD NOT PERFECTED THE MODEL OR THE DESIGN. WE WERE STILL CHANGING DESIGNS. WHERE WE PUT IT INSIDE OF THE STORE ALSO ADDED TO THE COST. AND SO COST WAS AN OBSTACLE. TRAINING OF OUR TEAM MEMBERS WAS AN OBSTACLE. AS I MENTIONED EARLIER, IF WE REQUIRED PHLEBOTOMISTS, HIRING OF THOSE PHLEBOTOMISTS WAS AN OBSTACLE. SO AGAIN, THE ENTIRE OPERATING MODEL WAS NOT PERFECTED, AND SO THAT'S WHY WE DECIDED TO REDUCE THAT NUMBER DOWN.
MR. SCHENK: OKAY. AND I JUST WANTED TO REMIND YOU, THE EMAIL THAT THIS IS ATTACHED TO, IT'S DATED AUGUST 11, 2014; IS THAT RIGHT?
NIMESH JHAVERI: THAT'S RIGHT.
MR. SCHENK: NOW IF YOU'LL TURN TO 1896. IS THIS AN EMAIL FROM YOU TO MR. BALWANI ON AUGUST 15TH, 2014?
NIMESH JHAVERI: YES.
MR. SCHENK: ABOUT THE THERANOS-WALGREENS PARTNERSHIP?
NIMESH JHAVERI: YES.
MR. SCHENK: YOUR HONOR, THE GOVERNMENT OFFERS 1896.
MR. DOWNEY: NO OBJECTION.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(GOVERNMENT'S EXHIBIT 1896 WAS RECEIVED IN EVIDENCE.)
BY MR. SCHENK:
MR. SCHENK: SO ABOUT FOUR DAYS AFTER THE DOCUMENT THAT WE WERE JUST LOOKING AT, YOU SENT MR. BALWANI THIS EMAIL; IS THAT RIGHT?
NIMESH JHAVERI: YES, SIR.
MR. SCHENK: AND ALSO SOMEONE NAMED CASEY KOZLOWSKI. DO YOU SEE THAT?
NIMESH JHAVERI: I DO.
MR. SCHENK: AND WHO WAS THIS INDIVIDUAL?
NIMESH JHAVERI: CASEY KOZLOWSKI WAS THE DIRECTOR OF DIAGNOSTIC SERVICES WHO REPORTED TO ME AND WAS DAY-TO-DAY ON THIS PARTICULAR PROJECT.
MR. SCHENK: OKAY. IN THE FIRST SENTENCE YOU WRITE, "THERE HAS BEEN A LOT OF DISCUSSION WITH THE NEW LEADERSHIP ON EVERYTHING OUR COMPANY IS DOING TO DRIVE HEALTH CARE AND OUR COMPANY. AS YOU CAN IMAGINE, OUR PARTNERSHIP IS AT THE CORE." WHAT DID YOU MEAN, "NEW LEADERSHIP"?
NIMESH JHAVERI: WE WERE AT THIS POINT -- "WE" AS WALGREENS -- WAS IN THE PROCESS OF MERGING WITH BOOTS ALLIANCE IN THE UK AND IT HAD NOT BEEN COMPLETED YET AT THIS TIME. BUT AS WE WERE MERGING THE LEADERSHIP AND THEY WERE UNDERSTANDING WHAT EACH OF THE COMPANIES WERE DOING, WE WANTED TO MAKE SURE THAT THEY UNDERSTOOD OUR PARTNERSHIP WITH THERANOS. AND AS I SAID, THE PARTNERSHIP WAS AT THE CORE OF US, WALGREENS, BECOMING A HEALTH CARE SERVICE PROVIDER.
MR. SCHENK: AND YOU WRITE THAT "OUR PARTNERSHIP." IS THAT THE THERANOS-WALGREENS PARTNERSHIP IS AT THE CORE?
NIMESH JHAVERI: THAT'S CORRECT.
MR. SCHENK: AND WHAT DID YOU MEAN BY THAT?
NIMESH JHAVERI: WHAT I HAD MEANT BY THAT IS THAT THE LAB SERVICES THAT WILL BE DELIVERED THROUGH THERANOS AND WALGREENS, AND THAT PARTNERSHIP WAS ONE OF THE FIRST SERVICES THAT WE WERE GOING TO LAUNCH.
MR. SCHENK: I SEE.
NIMESH JHAVERI: AND THAT WAS THE CORE.
MR. SCHENK: AND WAS THAT SOMETHING THAT THE BOOTS ALLIANCE FOLKS WERE PAYING ATTENTION TO?
NIMESH JHAVERI: YES.
MR. SCHENK: THE NEXT SENTENCE READS, "WE HAVE MADE UNBELIEVABLE PROGRESS IN THE SHORT 5 MONTHS - I HAVE RECEIVED EMAILS FROM SEVERAL LEADERS TELLING ME THIS." DID YOU THINK THAT THAT WAS TRUE, THAT WALGREENS AND THERANOS HAD MADE PROGRESS IN THE LAST FOUR OR FIVE MONTHS?
NIMESH JHAVERI: WE DID.
MR. SCHENK: AND DID YOU STILL THINK THAT THERANOS WAS TESTING THE FINGERSTICK BLOOD ON THE EDISON DEVICE DEVICES?
NIMESH JHAVERI: ON ONE OF THE DEVICES.
MR. SCHENK: FORGIVE ME. YOU DIDN'T KNOW WHAT IT WAS CALLED?
NIMESH JHAVERI: THAT'S CORRECT.
MR. SCHENK: I SEE. DID YOU STILL NOT KNOW WHETHER THERANOS WAS TESTING ON MODIFIED THIRD PARTY DEVICES?
NIMESH JHAVERI: I DID NOT KNOW THAT.
MR. SCHENK: THE NEXT SENTENCE READS, "HOWEVER, IT WILL BE IMPORTANT THAT WE DRIVE WITH A SINGLE FOCUS TOGETHER. THE 2 AREAS WHICH MUST BE FOCUSSED ON ARE:" AND THEN THE FIRST IS "PATIENTS PER DAY WITH A 4 PLUS EXPERIENCE." WOULD YOU EXPLAIN THAT TO THE JURY?
NIMESH JHAVERI: SURE. AT THE END OF EACH BLOOD DRAW FOR EVERY PATIENT, WE WOULD HAND THEM AN IPAD, AND THAT IPAD WAS A SIMPLE QUESTIONNAIRE OF HOW DID YOUR SERVICE GO, WERE YOU SATISFIED, AND THERE WAS A FEW QUESTIONS, AND THEN IT WAS RATED 1 THROUGH 5. AND SO IF A PATIENT GAVE US A 5 EXPERIENCE, THAT WAS THE BEST. A 1 WOULD BE THE LOWEST. SO WHAT I WAS ASKING FOR IS AS WE CONTINUED TO GROW AND AS WE CONTINUED TO EXPAND, LET'S MAKE SURE THAT NOT ONLY OUR PATIENTS PER DAY CONTINUES TO GROW, BUT WE'RE DELIVERING A GREAT EXPERIENCE, A 4 PLUS EXPERIENCE. THAT'S WHAT I'M REFERRING TO HERE.
MR. SCHENK: I SEE. AND THEN THE NEXT ONE IS, "VENOUS PERCENT IN THE 10 PERCENT RANGE." WHAT DOES THAT MEAN?
NIMESH JHAVERI: AGAIN, IT'S THE VENOUS DRAW, THE TOTAL VENOUS DRAW PERCENTAGE TO BE BELOW 10 PERCENT. IT WAS HOVERING AROUND 40 PERCENT AT THIS TIME. SO, AGAIN, A SINGULAR FOCUS ON GETTING THAT PERCENTAGE DOWN BELOW 10 PERCENT.
MR. SCHENK: AND ONE OF THE FIRST DOCUMENTS I SHOWED YOU HAD THE CHART WHERE THE VENOUS DRAW IN FEBRUARY WAS AROUND 43 PERCENT, AND WE'RE NOW IN AUGUST. HAD, AT ANY POINT, THE VENOUS DRAW GOTTEN AROUND THIS 10 PERCENT RANGE THAT YOU WERE LOOKING FOR?
NIMESH JHAVERI: NO, SIR.
MR. SCHENK: HOW ABOUT AT ANY POINT DURING THE ENTIRE THERANOS-WALGREENS RELATIONSHIP? DID THE VENOUS DRAW PERCENT EVER GET AROUND 10 PERCENT?
NIMESH JHAVERI: NO, SIR.
MR. SCHENK: THE NEXT IS, "WE NEED TO HAVE A DOCUMENTED DETAILED PLAN ON BOTH OR IT WILL BE DIFFICULT FOR ME TO CONVINCE EXPANSION BEYOND ARIZONA." WHAT DID YOU MEAN BY THAT?
NIMESH JHAVERI: WHAT I WAS REFERRING TO IS THESE WERE THE -- THESE THREE METRICS RIGHT HERE WERE AT THE CORE OF THE SUCCESS THAT WE NEEDED TO ACHIEVE, AND IF WE'RE GOING TO ACHIEVE THEM, LET'S MAKE SURE THAT WE HAVE A PLAN. HOW DO WE DO IT? WHAT ARE THE THINGS THAT WE NEED TO DO? WHAT ARE THE PUTS AND TICKS THAT WE HAVE TO HAVE? AND HOW ARE WE GOING TO GET THERE? AND IF WE DON'T GET THERE, IT'S HARD FOR ME TO CONVINCE MYSELF, OR ANY LEADERSHIP AT WALGREENS, TO SAY WE SHOULD GO FURTHER BECAUSE WE JUST WEREN'T HITTING THE METRICS THAT WE SET OUT TO DO.
MR. SCHENK: SO WAS THE PERCENT OF VENOUS DRAWS AN IMPORTANT FACTOR IN DETERMINING EXPANSION BEYOND ARIZONA?
NIMESH JHAVERI: YES, IT WAS.
MR. SCHENK: AND FOUR DAYS EARLIER YOU HAD A MEETING WHERE YOU TALKED ABOUT THE NEED TO REDUCE THE NUMBER OF STORES FROM 500 TO 200. DO YOU RECALL THAT?
NIMESH JHAVERI: I DO.
MR. SCHENK: AND FOUR DAYS AFTER THAT MEETING YOU SEND AN EMAIL TO MR. BALWANI, AND ARE YOU INFORMING HIM THAT EVEN EXPANSION BEYOND ARIZONA IS IN QUESTION IF WE CAN'T GET THE VENOUS DRAWS BELOW 10 PERCENT?
NIMESH JHAVERI: YEAH, THE VENOUS DRAWS, THE PATIENTS PER DAY, AND THE EXPERIENCE ALL TOGETHER, WE NEED TO FOCUS IN ON THIS BEFORE WE CAN GO BEYOND ARIZONA.
MR. SCHENK: THANK YOU. WOULD YOU NOW TURN TO 1909. IS 1909 TWO EMAILS, ONE FROM YOU TO MR. BALWANI, AND THEN A RESPONSE FROM MR. BALWANI TO YOU A FEW DAYS LATER, AUGUST 21ST, 2014?
NIMESH JHAVERI: YES.
MR. SCHENK: AND IS THE SUBJECT MATTER THE THERANOS-WALGREENS PARTNERSHIP?
NIMESH JHAVERI: IT IS.
MR. SCHENK: YOUR HONOR, THE GOVERNMENT OFFERS EXHIBIT 1909.
MR. DOWNEY: NO OBJECTION, YOUR HONOR.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(GOVERNMENT'S EXHIBIT 1909 WAS RECEIVED IN EVIDENCE.)
BY MR. SCHENK:
MR. SCHENK: LET'S START WITH THE EMAIL ON THE BOTTOM FROM YOU TO MR. BALWANI. YOU ARE LISTING SOME TOPICS FOR DISCUSSION. AND THE SECOND BULLET UP FROM THE BOTTOM READS, "VENOUS DRAW PERCENTAGE PROGRESS." DO YOU SEE THAT?
NIMESH JHAVERI: I DO.
MR. SCHENK: AND WERE YOU ANXIOUS TO DISCUSS THE VENOUS DRAW NUMBERS WITH MR. BALWANI?
NIMESH JHAVERI: YES, I WAS.
MR. SCHENK: MR. BALWANI RESPONDS THEN IN THE EMAIL AT THE TOP OF THIS PAGE, AND IT'S THE FOURTH BULLET DOWN THAT I WANT TO DISCUSS WITH YOU. MR. BALWANI WRITES, "DISCUSS FURTHER YOUR COMMENT ABOUT HAVING TO CONVINCE THE NEW MANAGEMENT FOR EXPANSION BEYOND 40 STORES." WERE THE 40 STORES A REFERENCE TO THE STORES IN ARIZONA?
NIMESH JHAVERI: THAT'S CORRECT.
MR. SCHENK: "IF THERE ARE ISSUES HERE, THEN WE NEED TO DISCUSS THIS SOONER THAN LATER AS WE CAN'T SLOW DOWN OUR GROWTH FOR OBVIOUS REASONS. WOULD LIKE TO LEARN MORE HERE." DO YOU KNOW WHAT HE WAS REFERRING TO?
NIMESH JHAVERI: YES. WE HAD A DISCUSSION ON THIS. USUALLY WE HAD A REGULARLY SCHEDULED MEETING TO DISCUSS TOPICS ON THE PROJECT AND I WOULD PUT TOGETHER A FEW AGENDA ITEMS AND SO WOULD MR. BALWANI, AND THEN WE WOULD DISCUSS THEM AND MAKE SURE WE HAVE A PLAN FOR THEM. SO THIS WAS A TOPIC THAT HE WANTED TO DISCUSS, AND I EXPLAINED TO HIM EXACTLY WHAT I SAID EARLIER, THAT WE HAVE TO HIT THE METRICS, WE HAVE TO MAKE SURE THAT THE MODEL IS CORRECT, AND WE HAVE TO BE ABLE TO CREATE THE EXPERIENCE THAT WE SET OUT TO DO. IF WE DON'T, IT'S DIFFICULT TO EXPAND BEYOND THIS.
MR. SCHENK: AND DID YOU HAVE A FOLLOW-UP CONVERSATION WITH MR. BALWANI LIKE YOU HAD SUGGESTED?
NIMESH JHAVERI: I DID.
MR. SCHENK: WOULD YOU NOW TURN TO 1906. IS 1906 A CALENDAR INVITE FOR THAT DISCUSSION?
NIMESH JHAVERI: YES, SIR.
MR. SCHENK: AND DOES IT ALSO INCLUDE YOUR NOTES FROM THE PHONE CONVERSATION?
NIMESH JHAVERI: YES.
MR. SCHENK: YOUR HONOR, THE GOVERNMENT OFFERS 1906.
MR. DOWNEY: YOUR HONOR, I DON'T KNOW IF THE NOTES ARE ADMISSIBLE. THEY CAN CERTAINLY BE USED TO REFRESH THE WITNESS.
(PAUSE IN PROCEEDINGS.)
JUDGE DAVILA: MR. SCHENK, I'LL ADMIT THE TOP PORTION, AND THEN YOU CAN LAY A FOUNDATION FOR THE NOTES IF YOU CAN.
MR. SCHENK: THANK YOU.
(GOVERNMENT'S EXHIBIT 1906 WAS PROVISIONALLY RECEIVED IN EVIDENCE.)
BY MR. SCHENK:
MR. SCHENK: MR. JHAVERI, WHAT WAS YOUR PRACTICE WITH REGARD TO TAKING NOTES DURING A MEETING SUCH AS THIS ONE?
NIMESH JHAVERI: NOT NECESSARILY WITH MR. BALWANI, BUT IT WAS JUST MY PRACTICE WHENEVER I HAVE A MEETING, I WILL TAKE THE NOTES DOWN IN THE MEETING ITSELF SO I HAVE A RECORD OF IT. AND SO THIS IS A COPY OF THAT.
MR. SCHENK: AND SO THERE ARE SOME BULLETS. WERE THOSE JUST A CUT AND PASTE OF 1909, THE TOPICS THAT YOU WANTED TO DISCUSS?
NIMESH JHAVERI: EXACTLY.
MR. SCHENK: AND THEN THE NOTES BELOW THE WORD "NOTES," WERE THOSE YOU TAKING CONTEMPORANEOUS NOTES DURING THE MEETING?
NIMESH JHAVERI: YES, AS WE WERE DISCUSSING EACH ITEM AND WHAT WE EITHER DECIDED OR WHAT THE NEXT STEPS WERE, I WOULD NOTE THEM DOWN.
MR. SCHENK: AND YOU SAID THIS WAS YOUR PRACTICE NOT JUST WITH MR. BALWANI, BUT HOW YOU HANDLED NOTE TAKING DURING MEETINGS?
NIMESH JHAVERI: CORRECT.
MR. SCHENK: YOU GENERALLY TYPE THEM INTO THE CALENDAR INVITE ITSELF?
NIMESH JHAVERI: THAT'S CORRECT.
MR. SCHENK: YOUR HONOR, THE GOVERNMENT MOVES TO ADMIT 1906.
MR. DOWNEY: SAME OBJECTION.
JUDGE DAVILA: I'LL ALLOW IT. THIS IS CONTEMPORANEOUS WITH THE MEETING, SO THE OBJECTION IS OVERRULED.
MR. SCHENK: THANK YOU, YOUR HONOR. AND PERMISSION TO PUBLISH.
JUDGE DAVILA: YES.
(GOVERNMENT'S EXHIBIT 1906 WAS RECEIVED IN EVIDENCE.)
BY MR. SCHENK:
MR. SCHENK: FIRST IN THE BULLETS, WE AGAIN SEE REPEATED THE FOURTH BULLET, VENOUS DRAW PERCENTAGE PROGRESS. DO YOU SEE THAT?
NIMESH JHAVERI: I DO.
MR. SCHENK: AND THEN THE FINAL BULLET, IT LOOKS LIKE YOU JUST CUT AND PAST WHAT MR. BALWANI WROTE TO YOU THAT WE READ A MOMENT AGO ABOUT WANTING TO DISCUSS YOUR POINT ABOUT HAVING TO CONVINCE MANAGEMENT ABOUT EXPANSION; IS THAT RIGHT?
NIMESH JHAVERI: YES. AGAIN, WE COCREATED THE AGENDA ITEMS AND SO, YOU KNOW, I JUST LISTED THEM OF THE TOPICS THAT WE NEEDED TO DISCUSS.
MR. SCHENK: OKAY. UNDER NOTES AND THEN THE "EXPANSION" WORD, THE FIRST BULLET IS "TEN PATIENTS PER DAY WITH EXTREMELY HIGH CONFIDENCE BY END OF NOVEMBER, WE SHOULD BE HIGH CONFIDENCE (THIS WEEK THE AVERAGE WAS 5.5)." WHAT WERE YOU DISCUSSING WITH MR. BALWANI?
NIMESH JHAVERI: THAT FIRST BULLET POINT REFERS TO THE PROGRESS, WHAT WERE WE SEEING IN THE NUMBER OF PATIENTS THAT WERE USING THE SERVICE, AND SO THE INFORMATION THAT WE DISCUSSED WAS BY THE END OF NOVEMBER, MR. BALWANI FELT VERY STRONGLY THAT WE'LL HIT THAT TEN PATIENTS PER DAY. AND WE WERE ALREADY AT 5.5, AND SO THAT WAS THE POINT HERE.
MR. SCHENK: AND THEN THE SECOND BULLET HE'S TALKING ABOUT "GOING AGAINST 2 DEEPLY ENTRENCHED COMPANIES." DO YOU REMEMBER WHAT WAS BEING DISCUSSED AT THIS POINT?
NIMESH JHAVERI: YES. WE WERE -- THE TWO INCUMBENT PLAYERS IN THE LAB SPACE WAS QUEST DIAGNOSTICS AND LAB CORP. SO WHAT WE WERE DISCUSSING HERE IS THAT IT'S HIGHLY COMPETITIVE, AND THE POINT WAS THAT WE WERE GOING AGAINST THEM IN TERMS OF CAPTURING PATIENTS. AND SO THAT IS SOMETHING THAT WAS, YOU KNOW, SOMETHING TO WATCH OUT FOR.
MR. SCHENK: OKAY. AND THEN THE THIRD ONE DOWN, "VENOUS DRAW PERCENT -- HOW DO WE BALANCE -- BY END OF CALENDAR YEAR 2014 -- LESS THAN 10 PERCENT." WHAT WAS DISCUSS HERE?
NIMESH JHAVERI: THE DISCUSSION HERE WAS ABOUT HOW AND WHEN WILL THIS PERCENTAGE GO DOWN AND WHAT WILL BE REQUIRED TO DO THAT. SO THAT WAS THE DISCUSSION HERE.
MR. SCHENK: WHEN THE DESIRE TO HAVE THE VENOUS DRAW PERCENT REDUCED OR GO DOWN, DID MR. BALWANI EVER EXPLAIN TO YOU TECHNOLOGICAL OBSTACLES TO ACHIEVING A VENOUS DRAW REDUCTION?
NIMESH JHAVERI: NO. THE REASONS THAT HE PROVIDED WERE THE TWO REASONS THAT I MENTIONED EARLIER ABOUT THE PATTERNS, ORDERING PATTERNS FROM PHYSICIANS AND MAKING SURE THAT THE CARTRIDGES WERE READY. HE ALSO EXPLAINED TO ME THAT AT TIMES THERE ARE PHYSICIANS WHO ARE ORDERING BOTH TESTS, ONE WITH A VENOUS DRAW AND ONE WITH FINGERSTICKS, TO ENSURE THAT THEY'RE SEEING THE SAME RESULTS. SO THOSE WERE THE REASONS THAT HE PROVIDED.
MR. SCHENK: SO MR. BALWANI SUGGESTED TO YOU THAT THE CAUSE OF THE VENOUS DRAW NUMBERS WERE THE REQUESTS OR THE ACTIONS OF THE PHYSICIANS, THE ORDERING PATTERNS OF PHYSICIANS, OR THE DESIRE TO HAVE FINGERSTICK AND A VEIN DRAW ON THE SAME PATIENT AT THE SAME TIME?
NIMESH JHAVERI: YES.
MR. SCHENK: WOULD YOU TURN TO 2214. IS THIS ANOTHER EMAIL FROM MS. HAWORTH TO THE GROUP FROM THERANOS AND WALGREENS, INCLUDING YOURSELF AND MR. BALWANI, FOLLOWING A NOVEMBER 2014 PARTNERSHIP MEETING WITH A SLIDE DECK?
NIMESH JHAVERI: YES.
MR. SCHENK: YOUR HONOR, THE GOVERNMENT OFFERS 2214.
MR. DOWNEY: NO OBJECTION.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(GOVERNMENT'S EXHIBIT 2214 WAS RECEIVED IN EVIDENCE.)
BY MR. SCHENK:
MR. SCHENK: IF YOU WOULD TURN TO PAGE 6. SO NOW IN NOVEMBER OF 2014 DURING THIS MEETING, THIS SLIDE IS LABELED "CURRENT STATUS," AND THEN THERE ARE SOME NAMES? DO YOU SEE THAT, TRACY/ KIMBERLY?
NIMESH JHAVERI: YES.
MR. SCHENK: AND WHAT IS THAT A REFERENCE TO, TRACY/KIMBERLY, IF YOU KNOW?
NIMESH JHAVERI: YEAH, TRACY AND KIMBERLY WERE TEAM MEMBERS OF THERANOS. TRACY, IF I REMEMBER CORRECTLY, WAS IN CHARGE OF OPERATIONS FOR ARIZONA, AND KIMBERLY WAS IN CHARGE OF THE SALES TEAMS, AND SO THEY WERE GIVING THE STATUS.
MR. SCHENK: I SEE. THE FIRST BULLET IS "41 STORES CURRENTLY LIVE (ARIZONA 40; CALIFORNIA 1)." IS THAT THE MAXIMUM NUMBER OF STORES THAT THERANOS BECAME AVAILABLE WITHIN WALGREENS?
NIMESH JHAVERI: YES.
MR. SCHENK: THE SECOND BULLET READS, "VENOUS DRAWS PERFORMED DURING 40 PERCENT OF VISIT (2014-YEAR TO DATE)." IS THAT RIGHT?
NIMESH JHAVERI: THAT'S CORRECT.
MR. SCHENK: AND WE SAW DURING YOUR TESTIMONY EARLIER THIS MORNING THAT IN FEBRUARY OF 2014 THE VENOUS DRAWS WERE AT 43 PERCENT. DO YOU RECALL THAT?
NIMESH JHAVERI: I DO.
MR. SCHENK: AND NOW IN NOVEMBER VENOUS DRAWS ARE STILL AT 40 PERCENT; IS THAT RIGHT?
NIMESH JHAVERI: YES.
MR. SCHENK: AND DID THE VENOUS DRAWS EVER GET TO A POINT THAT YOU OR WALGREENS WERE SATISFIED?
MR. SCHENK: WOULD YOU TURN NOW TO 2275. IS 2275 AN EMAIL FROM YOU TO MR. BALWANI THE NEXT MONTH? NOW WE'RE IN DECEMBER OF 2014?
NIMESH JHAVERI: YES.
MR. SCHENK: AND DOES THIS ALSO DISCUSS ISSUES RELATED TO THE THERANOS-WALGREENS PARTNERSHIP?
NIMESH JHAVERI: YES, IT DOES.
MR. SCHENK: YOUR HONOR, THE GOVERNMENT OFFERS 2275.
MR. DOWNEY: NO OBJECTION, YOUR HONOR.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(GOVERNMENT'S EXHIBIT 2275 WAS RECEIVED IN EVIDENCE.)
MR. SCHENK: THANK YOU.
MR. SCHENK: THE TOPIC IS CONTRACT AND OTHER TOPICS. DO YOU SEE THAT?
NIMESH JHAVERI: I DO.
MR. SCHENK: AND UNDER CONTRACT THERE'S A BULLET THAT BEGINS, "IN ADDITION." DO YOU SEE THAT?
NIMESH JHAVERI: YES, I DO.
MR. SCHENK: SO YOU WROTE TO MR. BALWANI, "IN ADDITION TO THE CONTRACT TERMS ATTACHED, WE ARE ASKING FOR TRANSPARENCY ON THE FOLLOWING: FINANCIAL CONDITION OF THE COMPANY (NEED IT FOR OUR AUDITORS), TECHNOLOGY/PROCESS DATA POINTS SO WE CAN REPRESENT THERANOS IN A MORE COMPREHENSIVE MANNER." WHAT DID YOU MEAN BY THAT?
NIMESH JHAVERI: YEAH. THERE ARE TWO POINTS HERE. I HAD JUST RECEIVED A CALL FROM OUR INVESTOR RELATIONS LEADERSHIP AND WE WERE RECEIVING QUESTIONS NOT ONLY INTERNALLY BUT EXTERNALLY ON THE PARTNERSHIP ITSELF. AND INTERNALLY PART OF THE AUDIT OF ALL OF THE INVESTMENTS THAT WALGREENS HAD MADE REQUIRED THAT WE HAD AN UNDERSTANDING OF THE FINANCIAL CONDITION OF THE COMPANY THAT WE WERE INVESTING IN. AND SO THAT WAS MY ASK HERE ON THE FIRST POINT. AND THEN THE SECOND IS UNDERSTANDING A LITTLE BIT MORE ABOUT WHAT IS GOING ON WITH THE TECHNOLOGY, SOME OF THE DATA POINTS THAT THEY'RE SEEING. SO WHEN WE RECEIVED QUESTIONS ON THERANOS, THAT WE CAN ANSWER THEM IN A MORE COMPREHENSIVE, INTELLIGENT MANNER RATHER THAN SIMPLY REFERRING THEM TO THERANOS THEMSELVES.
MR. SCHENK: I SEE. AND THEN NUMBER 4 ON THE EMAIL READS, "HOW LONG WILL WE HAVE PHLEBOTOMISTS IN ARIZONA? WHAT IS ACCEPTABLE PERCENT OF VENOUS DRAWS TO DEPLOY HUB AND SPOKE MODEL?" WHAT IS THAT A REFERENCE TO?
NIMESH JHAVERI: THAT IS IN REFERENCE TO THE DISCUSSION THAT WE HAD EARLIER. SO AS I MENTIONED, VENOUS DRAWS REQUIRE A PHLEBOTOMIST, A LICENSED PHLEBOTOMIST TO CONDUCT, AND SO IN THE ARIZONA STORES WE HAD PHLEBOTOMISTS IN ALL OF THE STORES TO DO THOSE VENOUS DRAWS, AND WHAT I AM ASKING IS SIMPLY AS THE PERCENTAGE OF VENOUS DRAWS TEND TO GO DOWN, THEN WE CAN MOVE THE PHLEBOTOMISTS, AND THEN MOVE THEM INTO THOSE 24-HOUR LOCATIONS THAT WE DISCUSSED EARLIER. SO THE HUB AND SPOKE MODEL IS IN REFERENCE TO THAT, WHERE THE MAJORITY, THE SPOKES, ARE THE STORES THAT ARE DOING PURE THERANOS FINGERSTICK SERVICES, AND THE HUB WOULD BE THE 24-HOUR LOCATION WHERE WE WOULD BE ABLE TO DO NOT ONLY THE FINGERSTICK SERVICES BUT ALSO, IF REQUIRED, THE VENOUS DRAW WITH A PHLEBOTOMIST.
MR. SCHENK: I SEE. SO THIS WAS IN DECEMBER OF 2014. LET'S TALK BRIEFLY JUST ABOUT THE FIRST TEN MONTHS OF 2015, JANUARY TO ABOUT OCTOBER. DID THE VENOUS DRAW NUMBER EVER GO DOWN TO A LEVEL AT WHICH EXPANSION BEYOND THE 40 STORES IN ARIZONA OCCURRED?
MR. SCHENK: AND WAS THAT SOMETHING THAT YOU AND MR. BALWANI CONTINUED TO TRACK?
NIMESH JHAVERI: WE DID.
MR. SCHENK: AND DID YOU CONTINUE TO DISCUSS THE REASONS WHY THE VENOUS DRAW NUMBERS WERE WHERE THEY WERE?
NIMESH JHAVERI: ABSOLUTELY.
MR. SCHENK: AND DID THE REASONS THAT MR. BALWANI PROVIDED FOR YOU EVER CHANGE, OR WERE THEY SIMILAR TO THE ONES THAT YOU ALREADY TESTIFIED ABOUT?
NIMESH JHAVERI: NO, THEY WERE SIMILAR.
MR. SCHENK: IN OCTOBER -- AROUND OCTOBER OF 2015 DID YOU READ AN ARTICLE ABOUT THERANOS?
NIMESH JHAVERI: I DID.
MR. SCHENK: AND GENERALLY SPEAKING, WAS THE ARTICLE NEGATIVE?
NIMESH JHAVERI: IT WAS.
MR. SCHENK: AFTER THE ARTICLE, DID YOUR ROLE IN THE OPERATIONALIZING OF THE THERANOS RELATIONSHIP CHANGE? YOUR ROLE IN IT, DID THAT CHANGE?
NIMESH JHAVERI: YES, MY ROLE DID CHANGE. OBVIOUSLY WE WERE NOT EXPANDING BEYOND THE 41 STORES THAT WE ALREADY HAD. AND BECAUSE OF THE ARTICLE, YOU KNOW, I TOOK A STEP BACK AS WE WERE NOT EXPANDING ANYMORE, WE WERE JUST SIMPLY MONITORING, AND OTHERS AT THE COMPANY TOOK LEAD.
MR. SCHENK: AT SOME POINT, DID WALGREENS STOP OFFERING THERANOS BLOOD TESTING SERVICES? CAN YOU STILL GO TO WALGREENS AND GET THERANOS BLOOD TESTING SERVICES?
NIMESH JHAVERI: YES, WE DID STOP AT ONE POINT.
MR. SCHENK: YOU DID STOP. SORRY, I ASKED YOU TWO QUESTIONS. DO YOU RECALL ROUGHLY WHEN YOU STOPPED?
NIMESH JHAVERI: WE STOPPED ONE OF THE SERVICES IN JANUARY OF 2016 IN ONE OF THE STORES. AND THEN THE REST OF THE STORES WERE TURNED OFF SOMEWHERE IN JUNE OF THAT YEAR, 2016.
MR. SCHENK: THANK YOU. YOUR HONOR, MAY I APPROACH?
JUDGE DAVILA: YES.
MR. SCHENK: (HANDING.)
MR. SCHENK: MR. BALWANI, I'VE HANDED YOU WHAT I'VE MARKED AS EXHIBIT 5387C, AND THIS DOCUMENT IS 16 PAGES AND CONTAINS SOME TEXT MESSAGES. YOUR HONOR, I BELIEVE THE PARTIES ARE AGREEING TO ADMIT THIS BASED ON A STIPULATION.
MR. DOWNEY: THAT'S CORRECT, YOUR HONOR.
JUDGE DAVILA: ALL RIGHT. THIS IS -- I'M SORRY, IS THIS 5387C DID YOU SAY?
MR. SCHENK: YES, YOUR HONOR.
JUDGE DAVILA: THAT'S ADMITTED, AND WITHOUT OBJECTION IT MAY BE PUBLISHED.
MR. SCHENK: THANK YOU.
(GOVERNMENT'S EXHIBIT 5387C WAS RECEIVED IN EVIDENCE.)
BY MR. SCHENK:
MR. SCHENK: MR. JHAVERI, I'D LIKE TO READ NOW SOME TEXT MESSAGES WITH YOU. I'LL HAVE YOU START, AND THEN IF YOU'LL FOLLOW ALONG WITH ME, I JUST WANT TO IDENTIFY THE COLUMNS FOR YOU. FIRST, THESE ARE NOT YOUR TEXT MESSAGES; IS THAT RIGHT?
NIMESH JHAVERI: NO, THESE ARE NOT MY TEXT MESSAGES.
MR. SCHENK: ARE THESE TEXT MESSAGES SENT BETWEEN MR. BALWANI AND MS. HOLMES?
NIMESH JHAVERI: YES, IT APPEARS TO BE.
MR. SCHENK: SO THERE'S A COLUMN WITH A DATE THAT IS THE THIRD COLUMN, DO YOU SEE THAT, AND THEY BEGIN MARCH OF 2010?
NIMESH JHAVERI: YES, SIR.
MR. SCHENK: AND THE NEXT COLUMN IS THE CONTENT. DO YOU SEE THAT?
NIMESH JHAVERI: YES.
MR. SCHENK: AND THEN THE NEXT TWO COLUMNS ARE SENDER AND RECIPIENT. SO THE FIRST NAME IS WHO SENT THE MESSAGE, AND THE SECOND IS WHO RECEIVED IT; IS THAT RIGHT?
NIMESH JHAVERI: THAT'S CORRECT.
MR. SCHENK: OKAY. I'D LIKE TO READ THEM WITH YOU. IF YOU WOULD, WHY DON'T YOU PLEASE START?
NIMESH JHAVERI: SURE. "WE HAVE AN OPPORTUNITY TO PUT TELEMEDICINE IN OUR CONTRACT WITH WAG."
MR. SCHENK: AND IS THAT A MESSAGE THAT MR. BALWANI SENT?
NIMESH JHAVERI: YES.
MR. SCHENK: AND THEN IT LOOKS LIKE MS. HOLMES RESPONDS, "WE SHOULD NAIL THAT." "AND ACTUALLY KICK IT OFF IN OUR MEETING WITH MAYO." "AND POSSIBLY CLEVELAND." "AND THEN BUILD THE TEAM HERE AS WE HIRE." "THEY WON'T BE READY OVERNIGHT ANYWAY."
NIMESH JHAVERI: "CLEVELAND CLINIC."
MR. SCHENK: "YES." MR. JHAVERI, I THINK THE NEXT ONE IS YOU.
NIMESH JHAVERI: YES. "WE WILL TALK, WE WILL BRING THIS UP AND NEGOTIATE AS LAST THING ONCE ALL ELSE IS DONE."
MR. SCHENK: "YES."
NIMESH JHAVERI: "I OPENED THE DOOR."
MR. SCHENK: "GREAT."
NIMESH JHAVERI: "WILL TELL U MORE IN PERSON."
MR. SCHENK: "K."
NIMESH JHAVERI: "THEY WERE DROOLING OVER CLEVELAND CLINIC ANNOUNCEMENT." "WE DID TESTER." "YESTERDAY."
MR. SCHENK: "EVERYONE IS." "HOPEFULLY THEY'RE OFF PEER REVIEW."
NIMESH JHAVERI: "WHICH IS WHY WE NEED TO DO GOOD-BYE CLEVELAND CLINIC."
MR. SCHENK: "EXACTLY." "ON CLEVELAND CLINIC." AND THEN IF WE CAN TURN TO PAGE 2 AT THE TOP.
NIMESH JHAVERI: "GOING THRU CVS CONTRACT. WE CAN'T WORK WITH WAG OR CVS. BOTH ARE SAME." "AND SWY."
MR. SCHENK: "CAN'T FORGET THAT."
NIMESH JHAVERI: "WE NEED TO THINK THRU OUR DISCUSSION ON THIS TOPIC."
MR. SCHENK: "MEANING TOMORROW'S?"
NIMESH JHAVERI: "NO. OUR OWN STORES."
MR. SCHENK: "EXACTLY."
NIMESH JHAVERI: "I AM THINKING. IT WILL DEPEND ON DISCUSSION TOMORROW WITH WAG."
MR. SCHENK: AND NOW WE'RE TURNING TO THE THIRD PAGE.
NIMESH JHAVERI: "IF CONTRACT TERMS AND WE DON'T HAVE 1000 STORES. WHAT HAPPENS TO 50M REMAINING INNOVATION PAYMENT."
MR. SCHENK: "DEPENDS ON WHY TERMS." "SCALE NOW IF NEED."
NIMESH JHAVERI: "SO FORCE BUILD 1000 STORES? I DON'T THINK THAT'S INTELLIGENT." "WITH CONTRACT EXPIRING IN AUGUST OF 2017 MEANS BUILDING OUT 1000 BY FEBRUARY 2016. NOT GOOD FOR US." "THERE ARE EQUAL NUMBER OF CVS AND WAG IN NEW YORK STATE BTW."
MR. SCHENK: AND NOW WE'RE TURNING TO PAGE 4.
NIMESH JHAVERI: "WHEN WE LAUNCH IN NEW YORK WE CAN LAUNCH WITH CVS AND GIVE THEM ONCE WE HAVE 50 E DONE, WE WILL BE INVINCIBLE.
MR. SCHENK: "AGREE." "IF TERMS BECAUSE WE TERM THEN WE RETURN. THEY TERM AND WE DON'T WANT TO WE KEEP."
NIMESH JHAVERI: "WE DON'T WANT 1000 STORES WITH ASSHOLES." "200 WILL BE ENOUGH TO PROVE OUR POINT."
MR. SCHENK: "I KNOW."
NIMESH JHAVERI: "I WILL SAY WE KEEP 25 NO MATTER WHAT."
MR. SCHENK: "BUT THEN DEPENDING ON WHO TERMS SHOULD WORK." "AGREE."
NIMESH JHAVERI: "YES." "BUT IF NATURAL TERMS THEN WE RETURN 25." "IF THEY DON'T BUILD 500 WE KEEP 25." "CORRECT."
MR. SCHENK: "YES. "NATURAL MEANING WE BOTH DECIDE NOT TO REVIEW? ALSO IF WE WANT TO RENEW BUT THEY DON'T."
NIMESH JHAVERI: "I WOULD LIKE TO KEEP SIMPLE. IF THEY BUILD MINIMUM 500 THEY GET ALL 50. IF THEY DON'T WE KEEP MINIMUM 25. I CAN ALSO SAY IF THEY DON'T BUILD 500 WE KEEP ALL 50 SINCE WE BANKED ON THEM." "GOING TO WAG MEETING." "DONE. CALL WHEN U HAVE 30 MINUTES."
MR. SCHENK: "AGREE WITH ABOVE." "WILL CALL SOON."
NIMESH JHAVERI: "MOSTLY TERRIBLE MEETING BUT NET NET IS WHAT WE WANT." "LOVE YOU TOO."
MR. SCHENK: THE -- I'M SORRY. THAT'S YOU.
NIMESH JHAVERI: "THE POINT ABOUT NARROWING DOWN MENU TO HIT HIGH FS PERCENTAGE CAME TO ME LIKE GIFT OF GOD."
MR. SCHENK: AND NOW WE'RE TURNING TO PAGE 5.
NIMESH JHAVERI: "I WAS MEDITATING ON THIS MEETING ALL NIGHT AND ALL DAY."
MR. SCHENK: "YOU NAILED IT."
NIMESH JHAVERI: "WE MUST HIT OUR VOLUME GOALS NOW." "WE NEED TO MAKE IT A MATTER OF LIFE AND DEATH." "SURVIVAL. WE MUST NOT LOSE."
MR. SCHENK: NOW WE'RE TURNING TO PAGE 6.
NIMESH JHAVERI: "BTW I SENT CVS DOCUMENT TO HEATHER AND CHRIS ON SATURDAY AND HAVEN'T RECEIVED ANY FEEDBACK FROM THEM."
MR. SCHENK: "OK I WILL BE THERE (LANDING IN 2 HOURS AND 10 MINUTES) AND CAN MEET WITH ANY CANDIDATES WE THINK MAKES SENSE. NOTHING IS ON MY CALENDAR. DO YOU WANT ME TO EMAIL HEATHER AND CHRIS ON TURNING THE CVS DOCUMENT?"
NIMESH JHAVERI: "NO."
MR. SCHENK: "ARE THEY HELPING YOU ON WAG CONTRACT?"
NIMESH JHAVERI: "NO ONE ON WAG CONTRACT BEING WANT ANYONE ON WAG CONTRACT. THIS U AND I NEED CLOSE OUR CHESTS." "DON'T WANT."
MR. SCHENK: NOW WE'RE TURNING TO PAGE 7.
NIMESH JHAVERI: "I PRESENTED CA BUY ASKED ME WHY WE WOULDN'T DO CA WITH WAG 'OUT OF CURIOSITY.'" "I TOLD HIM CVS HAS BETTER FOOTPRINT IN SOCAL BUT WALGREENS IS NOT TOO FAR BEHIND."
MR. SCHENK: NOW ON TO PAGE 8.
NIMESH JHAVERI: "CVS WON'T HAPPEN FOR ANOTHER YEAR." "SO IF THEY WANT WE WILL MOVE WITHOUT THEM." "WE WILL TALK ABOUT WAG WHEN U R BACK N." "I SENT U CONTRACT AND COVER NOTE. PLEASE SPEND TIME ON THAT SO I CAN SEND OUT."
MR. SCHENK: "HMM." "YEAH." "K." "WHAT'S YOUR SENSE ON WHY 12 MO FOR SERVICE?" "WHERE DID U LEAVE IT WITH HIM?"
NIMESH JHAVERI: "THEY DON'T KNOW THE UPSIDE OR DOWNSIDE OF NOT HAVING THIS."
MR. SCHENK: "YEAH." "WAS HE UPSET ABOUT MISSING PA?"
NIMESH JHAVERI: "AND THE FACT THAT WE ARE NOT GROWING WITH WAG IS SOMETHING THAT THEY ARE TRYING TO UNDERSTAND." "THEY ARE ALL LEMMINGS. THEY ONLY WANT IT IF OTHERS WANT IT."
MR. SCHENK: "THINKING."
NIMESH JHAVERI: "THE MINUTE I SAID CALIFORNIA HIS QUESTION WAS WHY CVS, WHY NOT WALGREENS?"
MR. SCHENK: "I KNOW."
NIMESH JHAVERI: "INSTEAD IF THERANOS WAS STRATEGIC TO THEM HE WOULD HAVE JUMPED ON IT."
MR. SCHENK: "SEEING OUR LOCATIONS IN PA WILL BE THE SAME REACTION."
NIMESH JHAVERI: "THEY DON'T THINK OF US AS STRATEGIC. EVERY CONVERSATION I HAVE WITH HIM HE SPEND AT LEAST HALF OF IT IN WHEN WE CAN PUT DEVICES IN MINUTE CLINICS." "JUST LIKE 3 YEARS AGO."
MR. SCHENK: NOW ON TO PAGE 9. MS. HOLLIMAN, I THINK THAT'S PAGE 16. DO WE HAVE 9 NEXT? THAT'S IT.
NIMESH JHAVERI: "HIGHEST VOLUME DAY TODAY .547 IN WAG."
MR. SCHENK: AND NOW ON TO PAGE 10.
NIMESH JHAVERI: "JC ARTICLE IS OUT."
MR. SCHENK: PAGE 11?
NIMESH JHAVERI: "I AM OK WITH LESS BLOOD AND DISCOMFORT IN HOLDING STATEMENT."
MR. SCHENK: "ALMOST ODD IF NOT THERE." AND NOW PAGE 12.
NIMESH JHAVERI: "OK." "JUST WORRIED ABOUT FDA AND CMS." "BUT OK." "HAVE TO TAKE THIS RISK."
MR. SCHENK: "WE MADE SUCH BIG DEAL WHEN THEY WERE HERE ABOUT VENIPUNCTURE BEING LESS BLOOD I AM COMFORTABLE WITH IT." "CRAMER WANTS EXCLUSIVE." "NO OTHER T.V."
NIMESH JHAVERI: "WAIT FOR DAVID."
MR. SCHENK: NOW ON TO PAGE 13. "SENDING DRAFT RUPERT EMAIL. THE LANGUAGE ABOUT WHAT JC SAID IS DAVID'S LANGUAGE DYING." "FYI."
NIMESH JHAVERI: "OK." "WHICH PART IS DAVID LANGUAGE."
MR. SCHENK: "THE PART ABOUT WHY I DIDN'T WANT TO TALK TO JC (HIS ACCUSATIONS) AS WELL AS THE OTHER PARAGRAPHS THAT WEREN'T THERE BEFORE. EVERYTHING NEW EXCEPT THE ONE SENTENCE I ADDED ON THE NEW ARTICLE." "I AM COMFORTABLE WITH SAYING THE DEATH AND SEX THING TO RUPERT BC IT MAKES THE POINT."
NIMESH JHAVERI: "DON'T."
MR. SCHENK: "DON'T WHAT?"
NIMESH JHAVERI: "DON'T MAKE THE DEATH AND SEX POINT. NOT OK."
MR. SCHENK: "CHALLENGE IS YOU SAW HOW EVERYONE REACTED IN PRESS TO ME NOT MEETING WITH HIM." "THEY DIDN'T THINK HIM CHALLENGING ME ON PATENTS WAS REMOTELY A GOOD REASON NOT TO MEET WITH HIM."
NIMESH JHAVERI: "BUT WE HAVE ENUFF POINTS TO SAY I DIDN'T MEET WITH HIM BECAUSE OF HIS FALSE ACCUSATIONS AND DIDN'T HAVE TO MEET WITH SOMEONE WHO WAS ATTACKING ME WITHOUT EVEN MEETING WITH ME. FOR EXAMPLE PATENTS." "I WOULDN'T OPEN UP USE PERSONAL LIFE OR MURDER BECAUSE ENOUGH PEOPLE ON TWITTER WILL ASSUME THAT THERE IS SOMETHING THERE. "IT'S FILTH." "AND WE NEED TO GET OUT OF FLIRTY." "FILTH."
MR. SCHENK: "AGREE FOR SURE ON OUTSIDE WORLD. EVEN WHEN RUPERT TO MAKE POINT."
NIMESH JHAVERI: "IF U FEEL STRONGLY ABOUT MURDER. BUT NOT PERSONAL LIFE." "I THINK IT IS IMPORTANT TO SEND THIS EMAIL BUT DOESN'T HELP WITH PUBLIC BEATING. ALL OUR PARTNERS ARE BAILING ONE AT A TIME AND SAME WITH OUR INVESTORS."
MR. SCHENK: AND NOW ON TO PAGE 14.
NIMESH JHAVERI: "DIGNITY WAG EVERYONE IS POSTURING TO WALK AWAY. WE R LOSING LEVERAGE FAST."
MR. SCHENK: "HAVE YOU TALKED TO WAG?"
NIMESH JHAVERI: "THEY ARE NOT TALKING FOR NOW UNTIL THEIR LAWYERS SAY SO."
MR. SCHENK: "TO US?"
NIMESH JHAVERI: "YES." "AT C LEVEL."
MR. SCHENK: "THEIR LAWYERS TOLD THEM NOT TO TALK TO US?"
NIMESH JHAVERI: "YES."
MR. SCHENK: "WOW."
NIMESH JHAVERI: "IN SO MANY WORDS." "NOT EXACTLY BUT THEY WILL BRING ALL OF THIS UP ABOUT FINGERSTICK, ET CETERA, IN CONTRACT NEGOTIATIONS." "IT IS GOING TO BE A VERY DIFFICULT 12 MONTHS." "OUR CLIA LAB FAILED MPV PT AT ALL 5 LEVELS. JUST FOUND OUT. DEALING WITH IT."
MR. SCHENK: NOW ON TO PAGE 15.
NIMESH JHAVERI: "MISS OLD DAYS. THESE DAYS ARE NOT WORTH WHATEVER WE R TRYING TO DO HERE." "NIM JUST TEXTED ME. WANTS TO TALK URGENTLY."
MR. SCHENK: "U CALLING HIM?"
NIMESH JHAVERI: "HE WILL CALL ME WHEN READY."
MR. SCHENK: "LET ME KNOW HOW IT GOES. THE FACTS ARE ON OUR SIDE."
NIMESH JHAVERI: "I KNOW. I AM STRONG ON FACTS. THEY ALWAYS REACT TO ANYTHING BUT I WILL BE STRONG."
MR. SCHENK: AND FINALLY PAGE 16.
NIMESH JHAVERI: "OK. WAG FREAKING OUT. LACK OF TRANSPARENCY." "WHY THEY FOUND THIS ALL OUT THRU MEDIA AND NOT THRU US."
MR. SCHENK: "K. THAT'S WHAT WE'LL DO." "HOW WAS NIM?
NIMESH JHAVERI: "WHY WE DIDN'T TELL THEM ABOUT TURNING OFF NANOTAINER A."
MR. SCHENK: "DID YOU TELL HIM IT LITERALLY JUST HAPPENED?"
NIMESH JHAVERI: "YES."
MR. SCHENK: "AND WE HADN'T FINALIZED PLAN W FDA YET AND STILL HAVEN'T."
NIMESH JHAVERI: "I TOLD HIM WE WERE SURPRISED BY THE ARTICLE AS MUCH AS THEY R." "YES." "BUT IT WAS MATTER OF COMMUNICATION. I HAD ACTUALLY THOUGHT ABOUT IT BUT GOT TOO BUSY TO CHAT WITH U."
MR. SCHENK: "THEN LET'S SHOW THEM THAT THIS LITERALLY IS STILL UP IN AIR." "SO WE LITERALLY JUST DECIDED SINCE THE DISCUSSION IS GETTING AIRED OUT IN PRESS?"
NIMESH JHAVERI: "OK." "HOWEVER ISSUE IS WE DIDN'T TELL THEM IN ADVANCE ABOUT SWITCHING."
MR. SCHENK: "WE'LL HAVE TO PRESENT WELL THAT WE HADN'T DECIDED TO."
NIMESH JHAVERI: "BAD IDEA. AT THIS POINT THEY KNOW. SO NEED TO BE TRANSPARENT."
MR. SCHENK: "HOW LONG HAS IT BEEN THAT WE DIDN'T TELL THEM?"
NIMESH JHAVERI: "3-4 WEEKS."
MR. SCHENK: "I'M TRYING TO REMEMBER WHAT OUR THINKING WAS ON THAT."
NIMESH JHAVERI: "NONE. WE JUST DIDN'T TELL THEM THINKING UNDER NEW MODEL THIS DOESN'T MATTER." "BUT ATTACKS LIKE THIS SCARE THEM AS THEY SCARE EVERYONE."
MR. SCHENK: "YEAH." MR. JHAVERI, WE JUST READ TEXT MESSAGES BETWEEN MARCH OF 2015 AND OCTOBER OF 2015. DURING THIS PERIOD, WERE YOU WORKING DILIGENTLY TO OPERATIONALIZE THERANOS BLOOD TESTING SERVICES INSIDE OF WALGREENS STORES?
NIMESH JHAVERI: YES.
MR. SCHENK: YOUR HONOR, MAY I HAVE ONE MOMENT?
JUDGE DAVILA: YES.
(DISCUSSION AMONGST GOVERNMENT COUNSEL OFF THE RECORD.)
MR. SCHENK: NO FURTHER QUESTIONS. THANK YOU.
JUDGE DAVILA: ALL RIGHT. THANK YOU. DO YOU HAVE CROSS-EXAMINATION?
MR. DOWNEY: I WILL, YOUR HONOR.
JUDGE DAVILA: LET'S TAKE OUR MORNING RECESS NOW, LADIES AND GENTLEMEN. SHOULD WE TAKE 25 MINUTES? LET'S DO THAT. 25 MINUTES. 25 MINUTES. YOU MAY STAND DOWN, SIR. YOU CAN STAND DOWN AND WE'LL TAKE 25 MINUTES.
MR. SCHENK: THANK YOU.
(RECESS FROM 11:07 A.M. UNTIL 11:45 A.M.)
JUDGE DAVILA: ALL RIGHT. THANK YOU. WE'RE BACK ON THE RECORD. ALL PARTIES PREVIOUSLY PRESENT ARE PRESENT ONCE AGAIN. OUR JURY IS PRESENT, AND OUR WITNESS IS ON THE STAND. MR. DOWNEY, YOU HAVE CROSS?
MR. DOWNEY: I DO, YOUR HONOR. YOUR HONOR, DURING THE BREAK I ASKED MS. KRATZMANN TO PASS UP A COPY OF THE EXHIBITS FOR YOU AND PLACE ONE ON THE WITNESS STAND FOR MR. JHAVERI.
JUDGE DAVILA: THANK YOU.
CROSS-EXAMINATION BY MR. DOWNEY:
MR. DOWNEY: GOOD LATE MORNING TO YOU, MR. JHAVERI. MY NAME IS KEVIN DOWNEY AND I REPRESENT MS. HOLMES. I'M GOING TO REMOVE MY MASK AS WELL SO WE CAN HEAR EACH OTHER DURING THIS CONVERSATION.
NIMESH JHAVERI: SURE.
MR. DOWNEY: YOU'VE WORKED IN AND AROUND RETAIL OPERATIONS FOR DECADES AT THIS POINT; RIGHT?
NIMESH JHAVERI: THAT'S CORRECT.
MR. DOWNEY: AND IT'S A HARD THING TO OPEN A RETAIL STORE, ISN'T IT?
NIMESH JHAVERI: IT IS.
MR. DOWNEY: AND IT IS A HARD THING TO EVEN OPEN A DEPARTMENT WITHIN A RETAIL STORE?
NIMESH JHAVERI: IT IS.
MR. DOWNEY: AND IT'S A HARD THING TO MANAGE A STORE; CORRECT?
NIMESH JHAVERI: IT IS VERY DIFFICULT TO MANAGE A STORE.
MR. DOWNEY: AND EVEN TO MANAGE A DEPARTMENT WITHIN A STORE; CORRECT?
NIMESH JHAVERI: CORRECT.
MR. DOWNEY: THERE'S A LOT TO IT?
NIMESH JHAVERI: THERE'S MANY THINGS THAT ARE REQUIRED.
MR. DOWNEY: OKAY. AND IF THE JOB THAT IS ASKED OF YOU IS TO OPEN 1500 STORES IN A YEAR, THAT'S A VERY HARD JOB; CORRECT?
NIMESH JHAVERI: THAT IS VERY DIFFICULT, YES.
MR. DOWNEY: BUT IF THE SENIOR MANAGEMENT OF YOUR COMPANY ASKS YOU TO DO THAT, THAT'S SOMETHING THAT YOU HAVE TO TRY TO ACCOMPLISH; CORRECT?
NIMESH JHAVERI: IF THEY ASK ME TO DO SOMETHING, YES, I WILL DO IT IN THE BEST WAY THAT I CAN.
MR. DOWNEY: OKAY. LET'S TALK ABOUT THE SITUATION THAT WAS IN PLACE WHEN YOU REALLY STARTED WORKING ON THE RELATIONSHIP BETWEEN THERANOS AND WALGREENS JUST SO I'M CLEAR ON THIS. YOU WERE NOT INVOLVED IN THE NEGOTIATION OF ANY OF THE AGREEMENTS BETWEEN WALGREENS AND THERANOS; CORRECT?
NIMESH JHAVERI: NO, SIR.
MR. DOWNEY: AND THERE WERE OTHER EXECUTIVES AT THERANOS WHO DID THOSE -- OR AT WALGREENS WHO DID THAT?
NIMESH JHAVERI: THAT'S CORRECT.
MR. DOWNEY: THAT INCLUDED, FOR EXAMPLE, MR. WASSON, WHO WAS THE CEO, AND MR. MIQUELON, WHO WAS THE CFO?
NIMESH JHAVERI: I DON'T KNOW WHO WERE INVOLVED, BUT I WAS NOT INVOLVED IN THAT.
MR. DOWNEY: BUT YOU DO KNOW THAT ONE OF THE PRINCIPAL PLAYERS IN THE RELATIONSHIP BETWEEN WALGREENS AND THERANOS WAS DR. JAY ROSAN; CORRECT?
NIMESH JHAVERI: THAT'S CORRECT.
MR. DOWNEY: AND DR. ROSAN WAS A SENIOR EXECUTIVE AT WALGREENS; CORRECT?
NIMESH JHAVERI: THAT'S CORRECT.
MR. DOWNEY: AND WHEN YOU TOOK OVER THE RELATIONSHIP WITH MR. BALWANI, YOU UNDERSTOOD THAT DR. ROSAN HAD BEEN INVOLVED FOR MANY YEARS IN THAT RELATIONSHIP; CORRECT?
NIMESH JHAVERI: YES, I UNDERSTOOD THAT.
MR. DOWNEY: NOW, WHEN YOU STARTED WORKING TO -- I'LL USE THE WORD YOU USED. WHEN YOU STARTED WORKING TO OPERATIONALIZE THE PLAN THAT WAS IN PLACE TO OPEN A NUMBER OF THERANOS CENTERS IN WALGREENS STORES, DID SOMEONE BRIEF YOU ON THE SITUATION?
NIMESH JHAVERI: WELL, IF I CAN STEP BACK A LITTLE BIT. THERE WAS NO PLAN TO OPERATIONALIZE THE SERVICES. THEY HAD THREE STORES OPENED WHEN I HAD TAKEN OVER ON THE OPERATIONAL PIECE. SO WE WERE DEVELOPING A FULL PLAN TO GET THIS DONE, AND THAT'S PART OF MY RESPONSIBILITY, AS WELL AS MY TEAM'S RESPONSIBILITY.
MR. DOWNEY: OKAY. AND JUST SO THAT I'M CLEAR, YOU HAD NOT PLAYED A ROLE IN ANY KIND OF EVALUATION OF THE TECHNOLOGY OF THERANOS PRIOR TO THE TIME ANY AGREEMENTS WERE SIGNED; IS THAT RIGHT?
NIMESH JHAVERI: THAT'S CORRECT, SIR.
MR. DOWNEY: AND THAT WAS DONE BY OTHERS AT WALGREENS AND OUTSIDE CONSULTANTS ADVISING THEM; CORRECT?
NIMESH JHAVERI: THAT IS CORRECT.
MR. DOWNEY: AND AS FAR AS YOU KNOW, ADEQUATE DUE DILIGENCE WAS DONE IN THAT REGARD; CORRECT?
NIMESH JHAVERI: THAT IS CORRECT.
MR. DOWNEY: AND YOU ALSO WERE NOT INVOLVED IN CONTACT WITH MS. HOLMES; IS THAT CORRECT?
NIMESH JHAVERI: NO. I HAD VERY LITTLE CONTACT WITH MS. HOLMES.
MR. DOWNEY: OKAY. AND THAT WAS TRUE THROUGHOUT THE TIME THAT YOU WERE INVOLVED IN THE THERANOS-WALGREENS RELATIONSHIP; CORRECT?
NIMESH JHAVERI: YEAH, I MET WITH MS. HOLMES MAYBE TWO OR THREE TIMES AT MOST.
MR. DOWNEY: OKAY. NOW, WHEN YOU GOT YOUR ORIGINAL BRIEFING -- LET ME JUST ORIENT MYSELF IN TERMS OF THE DATE -- DID YOU BEGIN WORKING ON THE PARTNERSHIP IN EARNEST IN LATE 2013 OR EARLY 2014?
NIMESH JHAVERI: IN EARLY 2014.
MR. DOWNEY: AND THERE WERE A FEW STORES OPEN AT THAT TIME; CORRECT?
NIMESH JHAVERI: WHEN I TOOK OVER RESPONSIBILITY, THERE WERE THREE STORES OPEN, TWO IN ARIZONA AND ONE IN CALIFORNIA.
MR. DOWNEY: AND DID YOU TRY AND GET A SENSE OF WHAT WAS GOING ON IN THOSE STORES?
NIMESH JHAVERI: YES, I DID.
MR. DOWNEY: AND DID YOU LEARN RELATIVELY EARLY IN YOUR DEALINGS WITH THERANOS THAT A NUMBER OF BLOOD DRAWS WERE BEING CONDUCTED BY VENOUS DRAW?
NIMESH JHAVERI: YES, YES. PART OF MY ONBOARDING WAS ALSO TO UNDERSTAND FROM MY TEAM, OUR TEAM, THE WALGREENS TEAM, WHAT THE STATUS WAS AT THE STORES, WHERE THEY STOOD, WHAT THEY WERE SEEING, AND THEN THAT WAS PART OF MY LEARNING.
MR. DOWNEY: OKAY. AND SO YOU LEARNED AT THAT POINT THAT THERE WERE SOME BLOOD DRAWS THAT WERE BEING TAKEN BY FINGERSTICK; CORRECT? AND I THINK YOU SAID THAT THERE WERE SOME DRAWS THAT WERE BEING TAKEN BY VEIN, THAT WERE VENOUS DRAWS; CORRECT?
NIMESH JHAVERI: THAT'S CORRECT.
MR. DOWNEY: BUT REALLY THERE ARE THREE TYPES OF BLOOD DRAWS; CORRECT? THERE'S THE FINGERSTICK DRAW THAT YOU MENTIONED; THERE'S THE TRADITIONAL VENOUS DRAW; AND THEN YOU CAN TAKE A MICROSAMPLE DRAW FROM THE ARM AS WELL; CORRECT?
NIMESH JHAVERI: YES.
MR. DOWNEY: AND THAT'S CONSIDERED A VENOUS DRAW; CORRECT?
NIMESH JHAVERI: THAT'S CORRECT.
MR. DOWNEY: AND YOU LEARNED THAT PART OF THERANOS'S OPERATION IN THE STORE WAS THAT THEY WERE TAKING CERTAIN SAMPLES FROM THE VEIN AS MICROSAMPLES; CORRECT?
NIMESH JHAVERI: THAT'S CORRECT.
MR. DOWNEY: AND THAT WAS PUBLICLY ANNOUNCED PRIOR TO THE, TO THE PARTNERSHIP BEGINNING OPERATIONS; CORRECT?
NIMESH JHAVERI: YES, THERE WERE VENOUS DRAWS THAT WERE AT PEDIATRIC LEVEL DOSES, OR BLOOD DRAWS, THAT WERE PART OF THAT.
MR. DOWNEY: OKAY. NOW, WHEN YOU BEGAN WORK ON THE PARTNERSHIP, DID YOU SIT DOWN AND READ THE AGREEMENTS THAT WERE IN PLACE BETWEEN THERANOS AND WALGREENS?
NIMESH JHAVERI: I DID, SIR.
MR. DOWNEY: LET ME ASK YOU TO LOOK AT EXHIBIT 1083.
NIMESH JHAVERI: IS THAT IN WHICH BINDER?
MR. DOWNEY: I BELIEVE IT SHOULD BE IN VOLUME 2 OF THE TWO BINDERS THAT YOU HAVE, BUT I CAN HELP YOU LOCATE IT IF YOU HAVE DIFFICULTY.
NIMESH JHAVERI: YEAH.
COURT CLERK: THAT WAS PREVIOUSLY ADMITTED, COUNSEL.
BY MR. DOWNEY:
MR. DOWNEY: DO YOU HAVE THAT IN FRONT OF YOU?
NIMESH JHAVERI: IS THAT WHAT IS ON THE SCREEN NOW?
MR. DOWNEY: IT IS, YES.
NIMESH JHAVERI: YES.
MR. DOWNEY: AND DO YOU SEE THAT THIS IS AN EMAIL BETWEEN MR. MIQUELON, THE WALGREENS CFO, AND MS. HOLMES. DO YOU SEE THAT?
NIMESH JHAVERI: I DO.
MR. DOWNEY: AND DO YOU SEE THAT HE SAYS THAT HE'S ATTACHING A CONCEPTUAL FRAMEWORK?
NIMESH JHAVERI: YES.
MR. DOWNEY: AND THIS WAS SENT IN SEPTEMBER OF 2013. AND IS THAT ABOUT FIVE OR SIX MONTHS BEFORE YOU BEGAN WORKING ON THE PARTNERSHIP?
NIMESH JHAVERI: THAT'S CORRECT.
MR. DOWNEY: OKAY. LET ME ASK YOU TO TAKE A LOOK AT THE FIRST PARAGRAPH, WHICH IS ON PAGE 2 OF THE EXHIBIT. AND I WANT TO LOOK AT THIS FIRST PARAGRAPH, ROMAN NUMERAL I WHICH IS UP ON THE SCREEN. AND DO YOU SEE THERE IN THE TERM SHEET, MR. MIQUELON EXPRESSED THAT WALGREENS WAS WILLING TO COMMIT TO DEVELOPING THERANOS LAB SERVICES AT 1500 LOCATIONS IN THE FIRST 12 MONTHS AFTER THE START OF THE ROLLOUT?
NIMESH JHAVERI: YES.
MR. DOWNEY: AND DO YOU SEE THAT HE WAS ALSO WILLING TO COMMIT TO AN ADDITIONAL 1500 LOCATIONS IN THE FOLLOWING 12 MONTHS?
NIMESH JHAVERI: I DO SEE THAT.
MR. DOWNEY: AND THE ROLLOUT THAT THAT CONTEMPLATES, THAT'S A BIG JOB; RIGHT?
NIMESH JHAVERI: THAT IS A BIG JOB.
MR. DOWNEY: FOR MANY OF THE REASONS THAT YOU TALKED ABOUT WHEN YOU WERE ON DIRECT EXAMINATION WITH MR. SCHENK; RIGHT? YOU HAVE TO TRAIN PEOPLE; CORRECT? OFTEN YOU HAVE TO BUILD OUT IN A FACILITY; CORRECT?
NIMESH JHAVERI: THAT'S CORRECT.
MR. DOWNEY: AND YOU HAVE TO FIGURE OUT HOW THE PROCESS IS GOING TO WORK OF PATIENTS RELATING TO THE SERVICE; CORRECT?
NIMESH JHAVERI: THAT'S CORRECT.
MR. DOWNEY: AND SO THIS COMMITMENT WAS A HUGE COMMITMENT ON THE PART OF WALGREENS; CORRECT?
NIMESH JHAVERI: YES, IT WAS.
MR. DOWNEY: AND WHO WAS WORKING ON THAT TYPE OF A COMMITMENT AROUND THE TIME OF THE LAUNCH?
NIMESH JHAVERI: AT THE TIME OF THE LAUNCH --
MR. DOWNEY: ON THE WALGREENS SIDE?
NIMESH JHAVERI: I DO NOT KNOW EXACTLY WHO WAS WORKING ON IT AT THAT TIME, BUT I KNOW THERE WERE SOME FOLKS, DR. ROSAN WAS ONE OF THEM, THAT WAS INVOLVED, AND THERE WAS A SMALL TEAM LED BY KIM ROMANSKI WHO WAS PART OF IT.
MR. DOWNEY: AND WHO WAS WORKING ON WHAT YOU LATER STARTED TO WORK ON, WHICH WAS THE OPERATIONALIZATION OF THE PROGRAM?
NIMESH JHAVERI: I HAD PUT IN A TEAM, A LARGER TEAM LED BY CASEY KOZLOWSKI, WE MENTIONED HER NAME EARLIER, WHO LED THE TEAM WHO REPORTED TO ME.
MR. DOWNEY: I DON'T MEAN TO INTERRUPT, BUT I MEANT BEFORE YOU BEGAN WORK.
NIMESH JHAVERI: OH. AS I SAID, THE INDIVIDUALS THAT I JUST TALKED ABOUT, DR. ROSAN AND KIM ROMANSKI AND HER TEAM WERE WORKING ON IT BEFORE I STARTED.
MR. DOWNEY: OKAY. AND THEN YOU CAME AT SOME POINT IN 2014 AND YOU PUT IN PLACE A LARGER TEAM?
NIMESH JHAVERI: THAT'S CORRECT.
MR. DOWNEY: LET ME ASK YOU NOW TO LOOK AT -- I WANT TO SHOW YOU A COPY OF THE CONTRACT THAT WAS IN PLACE BETWEEN THERANOS AND WALGREENS. IT HAS ALSO BEEN PREVIOUSLY ADMITTED AND IT IS EXHIBIT 1387. AND IF YOU WANT TO LOOK AT THE ENTIRETY, IT SHOULD BE IN THAT SAME NOTEBOOK. SORRY. I'M POINTING YOU TO THE WRONG EXHIBIT. YES, OKAY. 1387, NOT 1837. DO YOU SEE THAT?
NIMESH JHAVERI: I DO.
MR. DOWNEY: AND IF YOU REVIEW THE ENTIRE DOCUMENT, DO YOU SEE THAT THAT'S A LETTER AND IT WAS SIGNED BETWEEN ELIZABETH HOLMES AT THE END ON THE LAST PAGE AND MARK VAINISI FROM WALGREENS. DO YOU SEE THAT?
NIMESH JHAVERI: I DO.
MR. DOWNEY: AND THIS WAS THE MOST RECENT AMENDMENT TO THE THERANOS-WALGREENS MASTER SERVICES AGREEMENT; CORRECT?
NIMESH JHAVERI: THAT'S I'M AWARE OF, YES.
MR. DOWNEY: AND THIS WAS ONE OF THE DOCUMENTS THAT YOU REVIEWED AT THE TIME THAT YOU BECAME THE PERSON IN CHARGE OF OPERATIONALIZING THE THERANOS-WALGREENS PARTNERSHIP; CORRECT?
NIMESH JHAVERI: THAT'S CORRECT.
MR. DOWNEY: IF YOU LOOK AT THE SECOND FULL PARAGRAPH ON PAGE 1 OF THE DOCUMENT, IT BEGINS THAT -- DO YOU SEE THE FIRST SENTENCE THERE? IT INDICATED IT WAS THE INTENTION OF THE PARTIES TO DEVELOP A MUTUALLY BENEFICIAL STRATEGIC RELATIONSHIP THAT FACILITATES THE SUCCESSFUL DEPLOYMENT OF THERANOS NATIONALLY, ESTABLISHES WALGREENS AS THE NATIONAL PARTNER FOR LABORATORY SERVICES THAT THERANOS IS ABLE TO PROVIDE, AND THERANOS AS WALGREENS'S NATIONAL PARTNER FOR SUCH THERANOS SERVICES. DO YOU SEE THAT?
NIMESH JHAVERI: I DO.
MR. DOWNEY: AND THAT WAS REALLY THE PURPOSE OF THIS AGREEMENT, TO GIVE SOME EXCLUSIVITY RIGHTS TO WALGREENS ON THE ONE HAND AND TO HELP FACILITATE A NATIONAL ROLLOUT FOR THERANOS ON THE OTHER; CORRECT?
NIMESH JHAVERI: THAT'S CORRECT.
MR. DOWNEY: IS THERE ANY MENTION IN THIS DOCUMENT OF THE PERCENTAGE OF DRAWS THAT WOULD BE ON FINGERSTICK?
NIMESH JHAVERI: I DO NOT KNOW. I WOULD HAVE TO READ THROUGH THE WHOLE DOCUMENT.
MR. DOWNEY: OKAY. IF -- IF THERE WERE NOT, DOES THAT SURPRISE YOU?
NIMESH JHAVERI: IT DEPENDS ON THE CONTRACT, RIGHT? SO IT'S NOT SIMPLY JUST THERANOS. DEPENDING ON HOW THE INDIVIDUALS AND THE TWO PARTIES CONSTRUCTED THE CONTRACT, SOMETIMES IT'S A HIGHER LEVEL CONTRACT AND THE DETAILS ARE THEN IN A SEPARATE SOW, OR STATEMENT OF WORK, OR SERVICE LEVEL AGREEMENT. SO I WOULD NOT BE SURPRISED IF ALL OF THOSE SPECIFICS ARE NOT IN THIS MASTER SERVICES AGREEMENT.
MR. DOWNEY: WELL, DO YOU KNOW OF ANY AGREEMENT BETWEEN THERANOS AND WALGREENS THAT CONTAINS A COMMITMENT ON THERANOS'S PART AS TO THE PERCENTAGE OF BLOOD DRAWS THAT WILL BE VENOUS?
NIMESH JHAVERI: I AM NOT AWARE OF THAT.
MR. DOWNEY: OKAY. AND YOU UNDERSTAND THAT UNDER THIS CONTRACT, WALGREENS PAID THERANOS AN INNOVATION FEE; CORRECT?
NIMESH JHAVERI: I DO.
MR. DOWNEY: AND THE PURPOSE OF PAYING THERANOS THAT INNOVATION FEE WAS TO ASSIST IT IN SCALING UP SO THAT THERE COULD BE A NATIONAL ROLLOUT; CORRECT?
NIMESH JHAVERI: THAT WAS PART OF IT, YES.
MR. DOWNEY: AND, OF COURSE, PART OF IT WAS TO OBTAIN THE EXCLUSIVITY THAT WALGREENS OBTAINED UNDER THE AGREEMENT; CORRECT?
NIMESH JHAVERI: CORRECT.
MR. DOWNEY: AND YOU TESTIFIED ON DIRECT THAT THERE WAS NO GUARANTEE, CORRECT, THAT THERE WOULD BE A ROLLOUT NATIONALLY OR EVEN BEYOND A CERTAIN NUMBER OF STORES; CORRECT?
NIMESH JHAVERI: THAT'S CORRECT.
MR. DOWNEY: BUT YOU UNDERSTOOD THAT WHEN WALGREENS MADE THIS COMMITMENT AT THE END OF 2014, IT WAS WALGREENS'S INTENTION TO DO EVERYTHING IT COULD TO FACILITATE AND DRIVE A NATIONAL ROLLOUT OVER THE NEXT TWO YEARS; CORRECT?
NIMESH JHAVERI: WE HAD EVERY INTENTION TO GO TO A NATIONAL ROLLOUT, AGAIN, IF IT WAS OPERATIONALLY FEASIBLE, THE METRICS WERE MADE, AND THE ACTUAL SERVICE DELIVERED ON ITS PROMISE.
MR. DOWNEY: AND THE PROCESS OF DOING THOSE THINGS, AGAIN, THAT WAS A HUGE TASK FOR WALGREENS TO PERFORM; CORRECT?
NIMESH JHAVERI: ABSOLUTELY. IT WAS A HUGE TASK FOR BOTH PARTIES.
MR. DOWNEY: NO QUESTION. A HUGE TASK FOR THERANOS; CORRECT?
NIMESH JHAVERI: YES.
MR. DOWNEY: AND THERANOS NEVER HAD ANY EXPERIENCE PRIOR TO THE WALGREENS LAUNCH WITH REGARD TO ROLLING OUT STORES WHERE THERE WOULD BE CONSUMER LAB SERVICES OFFERED; CORRECT?
NIMESH JHAVERI: I CAN'T SPEAK TO WHAT THEIR EXPERIENCE WAS, BUT I CAN TELL YOU IT WAS A HUGE UNDERTAKING FOR BOTH PARTIES.
MR. DOWNEY: RIGHT. AND WALGREENS HAD SIGNIFICANT EXPERIENCE IN THAT AREA; CORRECT?
NIMESH JHAVERI: ABSOLUTELY.
MR. DOWNEY: AND WHATEVER THERANOS THOUGHT, YOU KNEW THIS WAS GOING TO BE A HUGE TASK; CORRECT?
NIMESH JHAVERI: CORRECT.
MR. DOWNEY: OKAY. LET ME ASK YOU TO LOOK AT EXHIBIT 3755 AND ASK IF YOU CAN IDENTIFY WHAT THIS IS.
NIMESH JHAVERI: YEP. THIS IS SOMETHING CALLED A PROGRAM CHARTER, AND SO FOR ANY TYPE OF PROJECT OR PROGRAM THAT WE AT WALGREENS WOULD LAUNCH, THAT WE WOULD HAVE A DOCUMENT THAT STARTS TO SET FORTH WHAT THE INTENTION WAS, WHAT WE'RE TRYING TO DO, HOW WE'RE GOING TO DO IT. IT'S AN ITERATIVE DOCUMENT, SO AS WE LEARN MORE, WE UPDATE IT. BUT THE IDEA HERE IS TO START TO DOCUMENT WHAT OUR PLAN COULD LOOK LIKE.
MR. DOWNEY: OKAY. AND IT EXIST IN SOME -- IN SOME FORM IT'S STORED SOMEWHERE AND SOMEBODY HAS THE AUTHORITY TO MODIFY IT AS YOU GO FORWARD?
NIMESH JHAVERI: YES, SIR.
MR. DOWNEY: AND LET ME ASK YOU TO LOOK AT THE DATES THAT APPEAR TOWARDS THE FRONT OF THE DOCUMENT. DO YOU SEE THAT ON 3755, A LISTING OF DATES?
NIMESH JHAVERI: ARE YOU REFERRING TO THE DOCUMENT VERSION CONTROL?
MR. DOWNEY: YES.
NIMESH JHAVERI: YES, I DO.
MR. DOWNEY: AND THAT INDICATES DATES ON WHICH REVISIONS ARE MADE TO THE PROGRAM CHARTER; CORRECT?
NIMESH JHAVERI: THAT'S RIGHT.
MR. DOWNEY: LET ME ASK YOU TO LOOK AT -- WELL, WHAT DATE WAS THIS VERSION CURRENT AS OF?
NIMESH JHAVERI: ACCORDING TO THIS DOCUMENT, 3-5-2014.
MR. DOWNEY: AND WAS THAT AROUND THE TIME THAT YOU WERE GETTING INVOLVED WITH THE PROGRAM?
NIMESH JHAVERI: YES, SIR.
MR. DOWNEY: AND LET ME ASK YOU TO LOOK AT PAGE 2, THE EXECUTIVE SUMMARY. OH, YOUR HONOR, I MOVE THE ADMISSION OF 3755.
MR. SCHENK: NO OBJECTION.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(GOVERNMENT'S EXHIBIT 3755 WAS RECEIVED IN EVIDENCE.)
BY MR. DOWNEY:
MR. DOWNEY: ON THE SECOND PAGE I'M INTERESTED IN DIRECTING YOUR ATTENTION TO THE TOP HALF OF THE DOCUMENT WHICH IS CAPTIONED EXECUTIVE SUMMARY. DO YOU SEE THAT?
NIMESH JHAVERI: I DO.
MR. DOWNEY: AND THEN IN THE PARAGRAPH JUST AFTER THE FIRST SET OF BULLET POINTS IT SAYS, "THE OVERALL GOAL IS TO EXPAND TO 2500 STORES NATIONWIDE BY THE END OF FY16." FY REFERS TO FISCAL YEAR?
NIMESH JHAVERI: THAT'S RIGHT, FISCAL YEAR FOR WALGREENS.
MR. DOWNEY: OKAY. AND THE FISCAL YEAR FOR WALGREENS ACTUALLY ENDED IN THE MIDDLE OF THE CALENDAR YEAR; CORRECT?
NIMESH JHAVERI: IT DID. THE FISCAL YEAR STARTS IN AUGUST AND THEN ENDS IN SEPTEMBER.
MR. DOWNEY: OKAY. SO WHEN THIS DOCUMENT SAYS THAT THE GOAL WAS TO EXPAND TO 2500 STORES NATIONWIDE BY THE END OF FISCAL YEAR '16, THAT WOULD MEAN THAT THE GOAL WAS TO EXPAND TO 2500 STORES BY SEPTEMBER OF 2016; CORRECT?
NIMESH JHAVERI: YEAH, LET ME JUST CORRECT MYSELF. I REVERSED THE MONTHS. IT'S FROM SEPTEMBER 1ST THROUGH AUGUST 31ST OF THE FOLLOWING YEAR. SO IT WOULD BE AUGUST 31ST.
MR. DOWNEY: OKAY. SO THE GOAL WAS TO EXPAND TO 2500 STORES BY SEPTEMBER 1ST OF 2016; CORRECT?
NIMESH JHAVERI: 2016, CORRECT.
MR. DOWNEY: I BEG YOUR PARDON. NOW I'VE MISSTATED THE YEARS -- NO, I HAVEN'T ACTUALLY. LET ME TRY IT AGAIN AND WE'LL GET THE YEARS STRAIGHT. THE GOAL AS STATED IN THIS DOCUMENT WAS FOR THE THERANOS PARTNERSHIP TO EXPAND TO 2500 STORES NATIONWIDE BY SEPTEMBER 1ST, 2016; CORRECT?
NIMESH JHAVERI: THAT'S CORRECT. SO THE FISCAL YEAR -- JUST TO BE VERY CLEAR, FISCAL YEAR '16 STARTED IN AUGUST OF 2015 -- OR SEPTEMBER OF 2015 AND WENT TO AUGUST OF 2016.
MR. DOWNEY: OKAY. AND THEN IT REFERENCES WHAT THE PLAN FOR FISCAL YEAR '14 WAS. DO YOU SEE THAT?
NIMESH JHAVERI: I DO.
MR. DOWNEY: AND IT INDICATES THAT THE PLAN FOR FISCAL YEAR 2015 WAS TO ROLL OUT DIAGNOSTIC TESTING SERVICES TO 40 STORES BY AUGUST 1ST, 2014; CORRECT?
NIMESH JHAVERI: THAT'S CORRECT.
MR. DOWNEY: AND THAT WAS REALLY THE PROJECT THAT YOU WERE WORKING ON WITH MR. BALWANI THAT YOU WERE TALKING ABOUT IN YOUR DIRECT EXAMINATION?
NIMESH JHAVERI: YEAH. THE PLAN WAS, WHEN I TOOK OVER, TO GET TO 40 STORES BY THE END OF THAT FISCAL YEAR, AND WE HAD 41 STORES SOMETIME BY SEPTEMBER OR OCTOBER OF THAT YEAR. I CAN'T EXACTLY REMEMBER.
MR. DOWNEY: OKAY. NOW, THIS WAS -- HOW MUCH OF YOUR TIME WERE YOU DEVOTING TO HELPING WITH THIS PARTNERSHIP?
NIMESH JHAVERI: I HAD SEVERAL TEAMS REPORTING TO ME ON VARIOUS PROGRAMS, SO IT'S HARD TO SAY FROM A PERCENTAGE STANDPOINT. BUT THIS WAS -- AS I MENTIONED EARLIER TODAY, IT'S A CORE PART OF WHAT WE WERE TRYING TO DO.
MR. DOWNEY: IT WAS A SUBSTANTIAL PART OF YOUR TIME; CORRECT?
NIMESH JHAVERI: IT WAS A SIZEABLE PORTION.
MR. DOWNEY: LET ME ASK YOU TO LOOK AT THE NEXT SET -- THE BOTTOM HALF OF THAT DOCUMENT, WHICH IS LABELLED BUSINESS NEED/OPPORTUNITY. DO YOU SEE THAT?
NIMESH JHAVERI: YES, SIR.
MR. DOWNEY: AND IT SAYS, IF YOU READ THE FIRST SENTENCE UNDER "OPPORTUNITY," IT INDICATES THAT THERE WAS A FORECASTED SIZE FOR A MARKET OF $73 BILLION. DO YOU KNOW WHAT THAT REFERS TO?
NIMESH JHAVERI: YES. THAT WAS THE MARKET SIZE OF THE LABORATORY MARKET FOR THE U.S.
MR. DOWNEY: OKAY. AND THEN IN THE SECOND PARAGRAPH IT SAYS, "THE WALGREENS REVENUE OPPORTUNITY, AT A CAPTURE RATE OF 100 PERCENT OF THE MARKET, IS 6.3 BILLION BASED ON CURRENT CONTRACT." CAN YOU EXPLAIN THAT?
NIMESH JHAVERI: THIS WAS WHAT THE OPPORTUNITY FOR US, FOR WALGREENS WAS, TO CAPTURE PART OF THAT $73 BILLION. IF WE WERE TO ACHIEVE WHAT WAS STATED IN THE CONTRACT, I BELIEVE 1500 STORES, OR WHATEVER THAT NATIONWIDE LAUNCH WAS. AND SO THIS WAS REFERRING TO THAT.
MR. DOWNEY: SO ADDING $6.3 BILLION TO WALGREENS'S REVENUE WOULD BE A SUBSTANTIAL ACHIEVEMENT; IS THAT CORRECT?
NIMESH JHAVERI: ABSOLUTELY.
MR. DOWNEY: AND THAT'S WHY -- I DON'T WANT TO EMBARRASS YOU, BUT YOU WERE A SENIOR EXECUTIVE IN THE COMPANY?
NIMESH JHAVERI: CORRECT.
MR. DOWNEY: AND THAT'S WHY IT WAS SO MUCH OF YOUR TIME; CORRECT?
NIMESH JHAVERI: IT WAS, YES.
MR. DOWNEY: LET ME ASK YOU NEXT TO LOOK AT PAGE 5 OF THE DOCUMENT. DO YOU SEE THE TOP PORTION OF THAT DOCUMENT, WHICH IS A FINANCIAL OUTLOOK?
NIMESH JHAVERI: I DO.
MR. DOWNEY: AND DO YOU SEE THAT IT PROJECTS A CERTAIN NUMBER OF PATIENTS PER DAY FOR FISCAL YEAR '14 AND FISCAL YEAR '15? DO YOU SEE THAT?
NIMESH JHAVERI: I DO.
MR. DOWNEY: AND DO YOU SEE THAT FOR FISCAL YEARS, BOTH OF THOSE YEARS, THE PROJECTION IS THAT FIVE PATIENTS A DAY WOULD COME INTO THE STORE?
NIMESH JHAVERI: THAT'S CORRECT.
MR. DOWNEY: DID YOU EVALUATE THAT METRIC WHEN YOU HAD THE 40 STORE PILOT?
NIMESH JHAVERI: WE DID.
MR. DOWNEY: DID YOU ACHIEVE FIVE PATIENTS PER STORE PER DAY?
NIMESH JHAVERI: WE ACHIEVED 5.5, I BELIEVE, BY AUGUST OF 2014.
MR. DOWNEY: OKAY. IF YOU LOOK -- AND THEN THE HOPE WAS AFTER THAT THAT, THE NUMBER OF PATIENTS PER STORE PER DAY WOULD GROW; CORRECT?
NIMESH JHAVERI: THAT'S CORRECT.
MR. DOWNEY: AND THAT WOULD HAPPEN WITH MARKETING AND WORD OF MOUTH AND SO FORTH; CORRECT?
NIMESH JHAVERI: THAT'S CORRECT.
MR. DOWNEY: BY THE WAY, WHEN WE TALK ABOUT THE PRODUCT THAT WAS BEING OFFERED BY WALGREENS AND THE EFFORT TO GENERATE INTEREST IN IT, WERE THERE OTHER SERVICES THAT OFFERED A FINGERSTICK DRAW FOR PURPOSES OF CLINICAL BLOOD TESTING?
NIMESH JHAVERI: YEAH, WE HAD SOME STORES THAT ACTUALLY PROVIDED GLUCOSE TESTING OR HEMOGLOBIN AIC TESTING FOR DIABETES, AND SO WE DID, NOT ALL OF THE STORES, BUT SOME STORES DID HAVE THAT AS AN OFFERING. AND THOSE POINT OF CARE TESTING WERE PRIMARILY DIRECTIONAL. IT WAS SOMETHING THAT YOU WOULD TAKE HOME, YOUR DIABETES METER, THINGS OF THAT NATURE, AND WE WOULD DO THAT FOR THE PATIENT AT THE STORE. AGAIN, IT IS NOT A MECHANISM WHEREBY YOU CAN MAKE A DIAGNOSIS OF THOSE PARTICULAR TESTS, BUT IT GIVES THE PATIENT AN IDEA OF WHERE THEY STAND. AND SO IF THEY SEE ANY TYPE OF UNUSUAL NUMBERS, THEN THEY CAN GO AND SEE THEIR PROVIDER FOR ANY TYPE OF FURTHER EVALUATION.
MR. DOWNEY: SO THAT'S, FOR EXAMPLE, SOMETHING THAT SOME OF US ARE UNFORTUNATELY FAMILIAR WITH, THAT IF YOU SUFFER FROM A PARTICULAR DISEASE THAT REQUIRES YOU TO MONITOR YOUR GLUCOSE, YOU NEED THAT TYPE OF A METER OR SOMETHING THAT COULD PERFORM MONITORING OF ONE ANALYTE IN YOUR BLOOD; CORRECT?
NIMESH JHAVERI: THAT'S RIGHT.
MR. DOWNEY: BUT THERE WAS NO SERVICING THAT WAS OFFERING A BROAD RANGE OF ASSAYS WITH FINGERSTICK BLOOD DRAW, WAS THERE?
NIMESH JHAVERI: NO, SIR.
MR. DOWNEY: SO PART OF THE EXCITEMENT ABOUT THERANOS THAT YOU SAW WAS THAT THAT WAS BEING OFFERED WITHIN WALGREENS; CORRECT?
NIMESH JHAVERI: THAT'S CORRECT.
MR. DOWNEY: AND AT THE TIME THAT YOU JOINED, ABOUT 60 PERCENT OF THE PATIENTS WHO CAME IN WERE HAVING THEIR BLOOD DRAWN BY FINGERSTICK; CORRECT?
NIMESH JHAVERI: BASED ON THE NUMBERS THAT WE SAW, YES.
MR. DOWNEY: OKAY. AND AS YOU UNDERSTOOD IT, THERANOS WAS WORKING TO INCREASE THAT PERCENTAGE OF PATIENTS; CORRECT?
NIMESH JHAVERI: YEAH. THEY WERE WORKING ON REDUCING THAT VENOUS DRAW TO, YOU KNOW, LESS THAN 10 PERCENT.
MR. DOWNEY: AND DID YOU UNDERSTAND THAT IF A PATIENT CAME IN AND HAD TO BE TESTED BY VENOUS DRAW FOR EVEN ONE ANALYTE IN THEIR BLOOD, THAT WOULD NECESSITATE A VENOUS DRAW?
NIMESH JHAVERI: THAT IS CORRECT.
MR. DOWNEY: AND DOES THAT RELATE TO THE COMMENTS THAT MR. BALWANI WAS MAKING TO YOU ABOUT THE CONFIGURATION OF CARTRIDGES?
NIMESH JHAVERI: I DON'T KNOW WHAT HE WAS STATING. WHAT HE WAS TELLING ME WAS, AS I STATED EARLIER, THAT THEY WERE STILL TRYING TO DETERMINE THE PATTERNS OF THE PRESCRIBING, THEY WERE STILL TRYING TO UNDERSTAND HOW TO MAKE SURE THAT THE CARTRIDGES WERE READY. HE ALSO STATED THAT INITIALLY THERE ARE SOME PHYSICIANS THAT WILL TEST TO MAKE SURE THAT THE VALUES THAT THEIR PATIENTS ARE RECEIVING FROM A FINGERSTICK VERSUS A VENOUS DRAW ARE THE SAME. AND SO THOSE ARE THE REASONS THAT HE PROVIDED THROUGHOUT ALL OF OUR DISCUSSIONS.
MR. DOWNEY: AND DID YOU KNOW THAT DURING THE COURSE OF CONTRACT NEGOTIATIONS BETWEEN THERANOS AND WALGREENS, THE PARTIES HAD EXCHANGED A SUBSTANTIAL AMOUNT OF DATA TRYING TO FIGURE OUT WHICH TESTS WOULD BE COMMONLY ORDERED?
NIMESH JHAVERI: I'M NOT AWARE OF THAT.
MR. DOWNEY: LET'S RETURN TO MARCH OF 2014.
NIMESH JHAVERI: UH-HUH.
MR. DOWNEY: I WANT TO ASK YOU ABOUT ONE ELEMENT OF THE COST THAT YOU SAID WOULD MAKE THE USE OF VENOUS DRAWS UNATTRACTIVE FOR WALGREENS, AND THAT WAS PHLEBOTOMISTS. DO YOU RECALL THAT?
NIMESH JHAVERI: THAT'S CORRECT.
MR. DOWNEY: BUT UNDER THE TERMS OF THE AGREEMENT, IT'S ACTUALLY THERANOS THAT BORE THE COSTS OF PHLEBOTOMISTS, ISN'T IT?
NIMESH JHAVERI: ABSOLUTELY CORRECT.
MR. DOWNEY: AND THEY CONTINUED TO PAY THAT COST OVER TIME?
NIMESH JHAVERI: CORRECT.
MR. DOWNEY: WERE YOU ALSO INVOLVED IN THE NEGOTIATIONS BETWEEN THERANOS AND THIRD PARTY PAYORS, LIKE INSURERS, TO INSURE THAT PATIENTS WOULD GET COVERAGE FOR THERANOS SERVICES?
NIMESH JHAVERI: NO. THE WALGREENS TEAM WAS NOT INVOLVED IN THAT.
MR. DOWNEY: LET ME ASK YOU TO LOOK AT PAGES 12 AND 13 OF THIS CHARTER DOCUMENT. DO YOU SEE AT THE BOTTOM -- I'M INTERESTED IN THE SEGMENT THAT CARRIES OVER THAT IS LABELLED OPERATIONAL READINESS.
NIMESH JHAVERI: I DO.
MR. DOWNEY: AND THIS LISTS MANY OF THE ITEMS THAT YOU DETAILED ON YOUR DIRECT EXAMINATION; CORRECT? THESE ARE THINGS THAT HAVE TO BE DONE IN ORDER FOR A STORE TO OPEN AND AN INFRASTRUCTURE TO BE ESTABLISHED?
NIMESH JHAVERI: YEAH. THESE ARE SOME OF THE ISSUES I THINK. CONSTRUCTION IS NOT IN HERE, AND ZONING AND DESIGNING AND ALL OF THOSE THINGS ARE NOT IN HERE. BUT THESE ARE SOME OF THOSE ITEMS.
MR. DOWNEY: OKAY. AND IN THIS EVALUATION OF OPERATIONAL READINESS, THERE'S NO REFERENCE TO HOW THE BLOOD IS BEING DRAWN BY PATIENTS WHO USE THE SERVICE, IS THERE?
MR. DOWNEY: LET ME ASK YOU TO LOOK AT PAGE 21 OF THE CHARTER DOCUMENT. BY THE WAY, WAS THIS A THERANOS OR WAS THIS AN INTERNAL WALGREENS DOCUMENT?
NIMESH JHAVERI: THIS WAS AN INTERNAL WALGREENS DOCUMENT.
MR. DOWNEY: OKAY. LET ME ASK YOU TO LOOK AT PAGE 21. AND IF YOU LOOK AT THE TOP HALF OF THE PAGE, IT INDICATES THE KEY PROGRAM RISKS. DO YOU SEE THAT?
NIMESH JHAVERI: YES, SIR.
MR. DOWNEY: AND IT INDICATES -- THE FIRST RISK IT IDENTIFIES IS THAT THERANOS DEVICES AND TESTS HAVE TO OBTAIN REGULATORY APPROVALS. AND THAT WAS TRUE; CORRECT?
NIMESH JHAVERI: ABSOLUTELY.
MR. DOWNEY: AND SOME OF THOSE REGULATORY APPROVALS WERE OBTAINED BEFORE YOUR WORK WITH THERANOS; CORRECT?
NIMESH JHAVERI: YES.
MR. DOWNEY: AND THERE HAD BEEN CERTIFICATION OF FACILITIES AS CLIA LABS; CORRECT?
NIMESH JHAVERI: YES.
MR. DOWNEY: BUT YOU UNDERSTOOD THAT THERANOS WAS STILL SEEKING REGULATORY APPROVALS FROM THE FDA ON OTHER ISSUES?
NIMESH JHAVERI: THEY WERE SEEKING APPROVAL ON FDA FOR TESTS AND THINGS OF THAT NATURE.
MR. DOWNEY: AND THEN THIS GOES ON TO LIST FIVE ADDITIONAL RISKS THAT ATTACH TO THE PROGRAM, AND THEY INCLUDED ABILITY TO SECURE FAVORABLE PAYOR CONTRACTS. DO YOU SEE THAT?
NIMESH JHAVERI: YES.
MR. DOWNEY: AND WHAT DOES THAT REFER TO?
NIMESH JHAVERI: THE IDEA HERE WAS THAT THERANOS WAS WORKING ON ENSURING THAT THE THERANOS LAB SERVICES ARE REIMBURSED BY CERTAIN PAYORS, IN THIS CASE HCSC, WHICH IS THE FOR BLUE CROSS, BLUE SHIELD, UNITED, AND WELLPOINT.
MR. DOWNEY: SO THOSE ARE ISSUES THAT HAD TO BE RESOLVED BETWEEN THERANOS AND THOSE INSURERS?
NIMESH JHAVERI: YES. AS I STATED, WE AT WALGREENS WERE NOT INVOLVED IN THAT WORK.
MR. DOWNEY: AND THIRD, IT REFERS TO DEVELOPING PRODUCTIVE PROVIDER RELATIONSHIPS. WHAT DOES THAT REFER TO?
NIMESH JHAVERI: THIS IS REFERRING TO THE PROVIDERS ARE THE PHYSICIANS, THE PRESCRIBERS, THE ONES WHO ARE ORDERING THE LAB TESTS, AND TO ENSURE THAT THERE ARE GOOD RELATIONSHIPS WITH THEM SO THEY UNDERSTAND WHAT THIS NEW SERVICE IS AND THEY UNDERSTAND WHAT THE PATIENT WILL RECEIVE, AND HOW IT WORKS. AND SO THAT STRATEGY, AGAIN, WAS PART OF THERANOS'S TEAM'S STRATEGY TO GO DO.
MR. DOWNEY: AND THE FOURTH ITEM WAS TO ENSURE THAT THERANOS DELIVERS WHAT IS NEEDED, INCLUDING I.T. SYSTEMS FOR THE PILOT. WHAT DOES THAT REFER TO?
NIMESH JHAVERI: WELL, THERE WERE CERTAIN SYSTEMS THAT -- AGAIN, THE ENTIRE SERVICE WAS NOT ON A WALGREENS PLATFORM. IT WAS ON A THERANOS I.T. PLATFORM. AND SO THE CHECK IN OF THE PATIENT, THE IPAD THAT I REFERRED TO FOR PATIENT EVALUATION OF THE SERVICE, ALL OF THOSE THINGS WERE BUILT BY THERANOS AND DELIVERED BY THEM SO WE CAN ACTUALLY EXECUTE THE MODEL.
MR. DOWNEY: AND THAT'S SOMETHING THAT YOU CONTINUED TO MONITOR DURING YOUR MEETINGS --
NIMESH JHAVERI: ABSOLUTELY, YES.
MR. DOWNEY: -- WITH PEOPLE AT THERANOS?
NIMESH JHAVERI: YES, ABSOLUTELY.
MR. DOWNEY: AND THEN THE NEXT ITEM IS DIRECT PATIENT TRAFFIC FOR LAB SERVICES. AND IT LOOKS LIKE THAT INVOLVES MARKETING AND WORKING WITH PRESCRIBERS AND PAYORS TO GENERATE INTEREST. DO YOU SEE THAT?
NIMESH JHAVERI: I DO.
MR. DOWNEY: AND THE LAST SAYS THE ABILITY TO LEVERAGE FIELD SALES FORCE TO FOCUS ON THE PROJECT BETA INITIATIVE. WHAT DOES THAT REFER TO?
NIMESH JHAVERI: SO PROJECT BETA WAS AN INTERNAL TERM FOR THE THERANOS PARTNERSHIP. OBVIOUSLY ONCE WE STARTED TO LAUNCH IT, WE REMOVED THE PROJECT BETA TERM. IT WAS JUST A NICKNAME, IF YOU WANT TO CALL IT THAT, THAT WE USED AT WALGREENS. SO WHAT WE WERE TRYING TO DO WAS INDICATE THAT AS WE OPEN STORES, WE NEED TO HAVE SUPPORT AT THE FIELD LEVEL. SO IF STORES HAVE ANY QUESTIONS, IF BOTH THE THERANOS TEAM AND/OR THE WALGREENS TEAM HAD ANY ISSUES OR CONCERNS OR QUESTIONS, THAT THERE WOULD BE A FIELD TEAM THAT COULD SUPPORT THEM, THAT COULD POTENTIALLY EVEN VISIT THE STORE TO ADDRESS AN ISSUE, AND THAT'S WHAT WE'RE FOCUSSING ON.
MR. DOWNEY: OKAY. NOW, AS OF THE TIME THAT THIS DOCUMENT WAS CURRENT IN MARCH OF 2014, MANY, MANY PEOPLE AT WALGREENS KNEW THAT A CERTAIN PERCENTAGE OF THERANOS BLOOD DRAWS WERE VENOUS; CORRECT?
NIMESH JHAVERI: THERE WAS A GOOD NUMBER THAT KNEW.
MR. DOWNEY: AND THAT WAS NOT, HOWEVER, IDENTIFIED AS A KEY PROGRAM RISK IN THE PROGRAM CHARTER, WAS IT?
NIMESH JHAVERI: NO, NOT FROM THIS PARTICULAR DOCUMENT.
MR. DOWNEY: OKAY. LET ME ASK YOU TO LOOK AT EXHIBIT 1673.
NIMESH JHAVERI: OKAY.
MR. DOWNEY: IS THIS AN EMAIL THAT YOU SENT TO A LARGE NUMBER OF INDIVIDUALS BOTH FROM WALGREENS AND A FEW FROM THERANOS?
NIMESH JHAVERI: YES.
MR. DOWNEY: AND ARE YOU DISCUSSING HERE THE EXPANSION OF THERANOS STORES?
NIMESH JHAVERI: THE EMAIL WAS TO INFORM THE RELEVANT FOLKS ON THE TEN STORES THAT ARE NOW LIFE IN PHOENIX.
MR. DOWNEY: YOUR HONOR, I MOVE THE ADMISSION OF 1673.
MR. SCHENK: NO OBJECTION.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(GOVERNMENT'S EXHIBIT 1673 WAS RECEIVED IN EVIDENCE.)
BY MR. DOWNEY:
MR. DOWNEY: IF YOU SEE THE FIRST PARAGRAPH, IT STATES THAT -- IT REITERATES THAT IN SEPTEMBER OF 2013, THERANOS AND WALGREENS HAD ANNOUNCED THEIR PARTNERSHIP; CORRECT?
NIMESH JHAVERI: YES.
MR. DOWNEY: AND THEN IN THE SECOND PARAGRAPH IT NOTES THAT ON THAT DATE, WHICH IS APRIL 15TH, 2014, EIGHT ADDITIONAL THERANOS CENTERS HAD OPENED IN PHOENIX; CORRECT?
NIMESH JHAVERI: CORRECT.
MR. DOWNEY: AND IT INDICATES THAT THERANOS HAD PROVIDED THE PHLEBOTOMISTS THE SUPPORT TO WALGREENS PERSONNEL; CORRECT?
NIMESH JHAVERI: YES.
MR. DOWNEY: AND THEN IT ANNOUNCED BELOW THAT, ANTICIPATED THE ADDRESSES THAT WOULD BE THE ADDRESSES FOR THE LOCATIONS; CORRECT?
NIMESH JHAVERI: YES.
MR. DOWNEY: ALL RIGHT. AND THEN IT STATES AT THE BOTTOM OF THAT PAGE WHAT YOU CAN SAY AND WHAT YOU CANNOT SAY. DO YOU SEE THAT?
NIMESH JHAVERI: I DO.
MR. DOWNEY: ALL RIGHT. AND IF YOU LOOK UNDER "WHAT YOU CAN NOT SAY," THE SECOND BULLET POINT SAYS, "FUTURE MARKET EXPANSIONS PLANS OUTSIDE OUR NORTHERN CALIFORNIA OR PHOENIX MARKET. ONLY MENTION OUR RELATIONSHIP AND THAT THE COMPANIES PLAN TO OFFER THE SERVICE AT WALGREENS LOCATIONS NATIONWIDE." DO YOU SEE THAT?
NIMESH JHAVERI: I DO.
MR. DOWNEY: AND THE REASON WHY YOU WROTE THIS EMAIL IS BECAUSE WALGREENS WAS MAKING AN ANNOUNCEMENT THAT WOULD GENERATE SOME ATTENTION WHERE INDIVIDUALS IN WALGREENS MIGHT BE ASKED ABOUT IT; CORRECT?
NIMESH JHAVERI: CORRECT. IT WAS JUST TO MAKE SURE THAT PEOPLE HAVE THE RELEVANT FACTS.
MR. DOWNEY: AND THERE MIGHT BE SOME INFORMATION THAT YOU DIDN'T WANT THE WALGREENS PERSONNEL TO BE TALKING ABOUT PUBLICLY; CORRECT?
NIMESH JHAVERI: PUBLICLY OR INTERNALLY BECAUSE THEY WERE JUST NOT INFORMED OF WHAT WAS GOING ON.
MR. DOWNEY: SO YOU IN ESSENCE WERE TELLING THEM THAT THIS IS AN ACCURATE DESCRIPTION OF WHERE WE ARE WITH THERANOS AND SAY THIS, BUT DON'T SAY ANYTHING MORE?
NIMESH JHAVERI: CORRECT.
MR. DOWNEY: OKAY. AND THIS WAS AS OF MID-APRIL; CORRECT?
NIMESH JHAVERI: THIS WAS APRIL 15TH.
MR. DOWNEY: OKAY. NOW, YOU REVIEWED DURING THE COURSE OF YOUR DIRECT EXAMINATION WITH MR. SCHENK THE MINUTES AND POWERPOINTS OF A SERIES OF MEETINGS BETWEEN MAY AND I THINK THE FALL, PERHAPS EARLY WINTER OF 2014. DO YOU RECALL THAT?
NIMESH JHAVERI: YES.
MR. DOWNEY: I WANT TO REDIRECT YOUR ATTENTION TO SOME OF THE SAME EXHIBITS. AND THE FIRST IS EXHIBIT 1755, WHICH IS ALREADY IN EVIDENCE.
NIMESH JHAVERI: 1755 IS NOT IN MY BINDER.
MR. DOWNEY: DO YOU STILL HAVE A WHITE BINDER?
NIMESH JHAVERI: YES.
MR. DOWNEY: YES, IT SHOULD BE IN YOUR BINDER.
NIMESH JHAVERI: I HAVE IT.
MR. DOWNEY: AND DO YOU SEE ON THE FIRST PAGE THAT THIS IS THE MINUTES OF A MAY 28TH MEETING BETWEEN WALGREENS PERSONNEL AND THERANOS PERSONNEL?
NIMESH JHAVERI: YES.
MR. DOWNEY: DO YOU SEE THAT? IF YOU GO TO PAGE 7 OF THE EXHIBIT -- AND JUST TO REORIENT US, THIS IS A RECORD OF WHAT WAS SAID DURING THE COURSE OF THESE MEETINGS BETWEEN THE TWO COMPANIES; CORRECT?
NIMESH JHAVERI: THAT'S CORRECT.
MR. DOWNEY: OKAY. IF YOU LOOK AT THE TOP OF PAGE 7, THE FIRST PARAGRAPH, IT SAYS, "NICOLE LEITER STATED THAT CHALLENGES ARE WHAT WE EXPECT IN A PILOT." WHO IS NICOLE LEITER?
NIMESH JHAVERI: NICOLE LEITER AT THE TIME HAD ARIZONA OPERATIONS FOR WALGREENS.
MR. DOWNEY: AND THE SECOND SENTENCE SAYS, "THE CHALLENGE IS HOW TO REACT QUICKLY TO ADDRESS THE GAPS." DO YOU SEE THAT?
NIMESH JHAVERI: I DO.
MR. DOWNEY: AND THE LAST SENTENCE OF THAT PARAGRAPH SAYS, "PER NIMESH, 40 IS IN THE BAG, WE NEED TO THINK ABOUT SCALE." DO YOU SEE THAT?
NIMESH JHAVERI: I DO.
MR. DOWNEY: AND THIS DOCUMENT IS AS OF MAY 28TH, 2015? OR 2014?
NIMESH JHAVERI: THAT'S CORRECT.
MR. DOWNEY: ALL RIGHT. I WANT TO LOOK AT ANOTHER SET OF THOSE MINUTES. LET ME ASK YOU TO LOOK AT THE EXHIBIT 1884.
NIMESH JHAVERI: I HAVE IT.
MR. DOWNEY: IS THIS ANOTHER SET OF PARTNERSHIP MEETING MINUTES REFLECTING WHAT HAPPENED IN MEETINGS BETWEEN THERANOS AND WALGREENS?
NIMESH JHAVERI: YES.
MR. DOWNEY: YOUR HONOR, I THINK 1884 IS IN EVIDENCE ALREADY, BUT IF NOT, I WOULD MOVE ITS ADMISSION.
MR. SCHENK: IT IS IN EVIDENCE.
JUDGE DAVILA: THANK YOU, MR. SCHENK.
BY MR. DOWNEY:
MR. DOWNEY: LET ME DIRECT YOUR ATTENTION TO PAGE 5. I WANT TO IN PARTICULAR ADDRESS YOUR ATTENTION TO THE BULLET POINT THAT BEGINS, "THERANOS EXPERIENCE SURVEY SUMMARY RESULTS." DO YOU SEE THE REFERENCE TO EXPERIENCE SURVEY?
NIMESH JHAVERI: I DO.
MR. DOWNEY: AND WHAT IS AN EXPERIENCE SURVEY IN THIS CONTEXT?
NIMESH JHAVERI: THIS IS WHAT I REFERRED TO EARLIER ABOUT THE PATIENT EXPERIENCE WHEN THEY WERE GIVEN THE IPAD AND THEY WOULD ANSWER A FEW QUESTIONS AFTER THEY RECEIVED THE SERVICE. THIS IS WHAT THIS IS REFERRING TO.
MR. DOWNEY: OKAY. AND THIS INDICATES THAT "THERANOS EXPERIENCE SURVEY SUMMARY RESULTS ARE OFF THE CHARTS." DO YOU SEE THAT?
NIMESH JHAVERI: YES, I DO.
MR. DOWNEY: AND DOES THAT REFLECT THAT THERE WAS SATISFACTION WITH THE THERANOS SERVICES IN THE WALGREENS STORES AS OF THIS DATE?
NIMESH JHAVERI: YES.
MR. DOWNEY: LET ME ASK YOU TO LOOK IN THAT SAME DOCUMENT AT PAGE 8. NOW, ONE OF THE CONSIDERATIONS IN EVALUATING THE PARTNERSHIP WAS HOW QUICKLY PATIENTS COULD GET THEIR TEST RESULTS; CORRECT?
NIMESH JHAVERI: THAT'S RIGHT.
MR. DOWNEY: BUT THE LABS DURING THIS PHASE OF THE ARRANGEMENT WERE LOCATED OFF SITE; CORRECT?
NIMESH JHAVERI: THE LABS WERE OFF SITE, CORRECT.
MR. DOWNEY: DO YOU RECALL HOW QUICKLY THERANOS WAS ABLE TO TURN AROUND THE RESULTS AFTER THEY WERE SENT TO THE THERANOS LAB?
NIMESH JHAVERI: I THINK, IF I REMEMBER CORRECTLY, IT WAS WITHIN 48 HOURS THE RESULTS WERE COMING THROUGH.
MR. DOWNEY: LET ME ASK YOU TO LOOK AT THE FIFTH BULLET POINT AT THE TOP OF THIS DOCUMENT BEGINNING "THERANOS CAN TURN AROUND." DO YOU SEE THAT?
NIMESH JHAVERI: YES.
MR. DOWNEY: AND SO THERE MIGHT BE AN ADDITIONAL TIME OF ONE HOUR, BUT THAT WOULD BE BECAUSE PRESUMABLY OF THE TRANSPORT OR THE STORAGE; CORRECT?
NIMESH JHAVERI: YEAH. AGAIN, ONCE IT LEFT THE WALGREENS STORE, THERANOS CONTROLLED THE SAMPLE, THE TESTING, AND THEN THE RESULTS BACK TO THE APPROPRIATE PROVIDER. SO IT'S HARD FOR US TO UNDERSTAND EXACTLY WHAT WAS CAUSING SOME OF THOSE DELAYS, BUT, YES, THEY WOULD BE IN CONTROL OF THAT.
MR. DOWNEY: ALL RIGHT. LET ME ASK YOU TO LOOK AT THE BOTTOM OF THAT SAME PAGE ON PAGE 8. WAS IT A TYPICAL DISCUSSION IN THESE MEETINGS AS TO WHAT FUTURE PLANS FOR EXPANSION WERE?
NIMESH JHAVERI: ABSOLUTELY. YOU KNOW, WHENEVER WE HAD THESE PARTNERSHIP MEETINGS, THERE WERE TWO PURPOSES, TWO OR THREE -- TWO MAIN PURPOSES FOR THESE PARTNERSHIP MEETINGS. ONE WAS TO DEVELOP THE PARTNERSHIP AND DEVELOP THE RELATIONSHIP; BUT SECOND IS TO DISCUSS NOT ONLY THE STATUS OF THE CURRENT NATURE OF THE PARTNERSHIP AND HOW THE SERVICE IS GOING, BUT ALSO TO DISCUSS WHAT OUR FUTURE PLANS COULD BE. YOU KNOW, WHERE SHOULD WE BE THINKING? HOW SHOULD WE BE THINKING ABOUT IT? AND SO THIS TYPE OF DISCUSSION IS NOT UNIQUE TO THIS PARTICULAR DATE. IT IS A COMMON DISCUSSION THAT WE HAD.
MR. DOWNEY: OKAY. LET ME ASK YOU TO LOOK ON PAGE 9, WHICH IS A CONTINUATION OF THAT SECTION. AND I'D ASK YOU TO LOOK AT THE BULLET POINT THAT BEGINS, INITIAL GOAL FOR FISCAL YEAR WAS 500 STORES. DO YOU SEE THAT?
NIMESH JHAVERI: YES, SIR.
MR. DOWNEY: AND UNDERNEATH THAT, IT SAYS WE NEED TO REDEFINE THIS GOAL. DO YOU SEE THAT?
NIMESH JHAVERI: YES.
MR. DOWNEY: AND THEN UNDERNEATH THAT THERE'S A BULLET POINT THAT TALKS ABOUT A NATIONWIDE GOAL. DO YOU SEE THAT?
NIMESH JHAVERI: YES.
MR. DOWNEY: AND THAT INDICATES THE GOAL -- A GOAL MIGHT BE 2000 TO 2500 STORES NATIONWIDE. DO YOU SEE THAT?
NIMESH JHAVERI: YES.
MR. DOWNEY: AND DO YOU RECALL IN THE ORIGINAL AGREEMENT, OR ACTUALLY IN THE AGREEMENT THAT WAS SIGNED AT THE END OF DECEMBER 2013, THE PROPOSAL WAS THAT THERE WOULD BE 3000 STORES ROLLED OUT. DO YOU RECALL THAT?
NIMESH JHAVERI: I DON'T RECALL THAT, BUT, YES.
MR. DOWNEY: OKAY. SO THE PROJECTION OF 2000 TO 2500 STORES WAS A REDUCTION IN WHAT WAS DESCRIBED IN THAT DECEMBER 2013 AGREEMENT; CORRECT?
NIMESH JHAVERI: IF THE NUMBER WAS REDUCED, YES. AGAIN, AS I MENTIONED EARLIER, WHENEVER DISCUSSIONS OF LAUNCH ARE HAD, WE LOOK AT ALL OF THE VARIABLES OF BOTH PARTIES, IN THIS CASE THERANOS AS WELL AS WALGREENS, AND WE CHANGE THOSE NUMBERS BASED ON WHAT WE'RE SEEING, THE RESULTS THAT WE'RE EXPERIENCING, THE PATIENT EXPERIENCE THAT YOU TALKED ABOUT THAT WE ARE SEEING. SO WHAT YOU'RE SEEING IS REALLY THOSE TYPES OF INPUTS GOING INTO WHAT THE NUMBER OF LAUNCHES SHOULD BE. NATIONWIDE LAUNCH? YES. WE HAD EVERY INTENTION AS WALGREENS TO LAUNCH NATIONWIDE. BUT AGAIN, HOW WE LAUNCH, WHAT WE DO, HOW WAS WE GO IS DEPENDENT ON MANY, MANY VARIABLES THAT I SPOKE ABOUT EARLIER.
MR. DOWNEY: OKAY. BUT AS OF AUGUST OF 2014, THIS 2500 WAS YOUR PROJECTION; CORRECT?
NIMESH JHAVERI: CORRECT.
MR. DOWNEY: ALL RIGHT. I WANT TO ASK YOU A LITTLE BIT MORE ABOUT THE PATIENT FEEDBACK FEATURE OF THE SERVICES. WHAT DO YOU GENERALLY REMEMBER ABOUT THE FEEDBACK THAT THE COMPANIES RECEIVED AS TO THEIR EXPERIENCE IN THERANOS SERVICE CENTERS IN WALGREENS STORES?
NIMESH JHAVERI: YEAH. I -- WHAT I REMEMBER IS THAT THE SERVICE LEVELS WERE BETWEEN 4 AND 5 ON A SCALE OF 1 TO 5. SO PATIENTS WERE SATISFIED WITH THE SERVICES THAT THEY WERE RECEIVING. I QUITE HONESTLY DON'T REMEMBER THE QUESTIONS THAT WERE ASKED. BUT GENERALLY SPEAKING, THE EXPERIENCE WAS GOOD.
MR. DOWNEY: OKAY. AND THAT WAS A POSITIVE ASPECT OF THE PARTNERSHIP I ASSUME?
NIMESH JHAVERI: IT IS, YES.
MR. DOWNEY: BECAUSE ULTIMATELY THAT'S THE MOST IMPORTANT THING; CORRECT?
NIMESH JHAVERI: IT'S ONE OF THE MOST IMPORTANT THINGS, RIGHT. YOU KNOW, PATIENT EXPERIENCE, ALONG WITH SOME OF THE OTHER METRICS, ARE ALL IMPORTANT. AND WE HAVE TO BALANCE THAT, WHETHER IT'S THE COST OF THE BUILD OUT, THE PATIENT WAIT TIME, THE VENOUS DRAW, OR ALL OF THOSE THINGS THAT WE AS BOTH PARTNERS DETERMINED WERE THE KEY TO SUCCESS HAD TO BE EVALUATED.
MR. DOWNEY: WELL, DID YOU GET A LOT OF FEEDBACK THAT THE PATIENTS WERE CONCERNED ABOUT THE FORM OF THE BLOOD DRAW?
NIMESH JHAVERI: I DON'T REMEMBER ANYTHING SPECIFIC THAT CAME TO ME WHERE A PATIENT HAD STATED ANYTHING ABOUT THE DRAW.
MR. DOWNEY: OKAY. LET ME ASK YOU TO LOOK AT EXHIBIT 2394. WE MIGHT BE BACK TO YOUR OTHER NOTEBOOK NOW. DO YOU SEE THAT?
NIMESH JHAVERI: I DO HAVE 2394. IT'S A -- CAN YOU JUST CONFIRM WHICH DOCUMENT, BECAUSE I DON'T SEE IT ON THE SCREEN.
MR. DOWNEY: I DON'T THINK I'VE YET MOVED IT INTO EVIDENCE.
COURT CLERK: HUH-UH.
BY MR. DOWNEY:
MR. DOWNEY: CAN I ASK YOU, IF YOU LOOK AT IT IN THE NOTEBOOK, WHAT IT IS? ARE YOU ABLE TO FIND IT?
NIMESH JHAVERI: YES. IT IS IN THE WHITE BINDER, AND IT IS FEBRUARY 17TH, 2015, WALGREENS-THERANOS PARTNERSHIP MEETING SLIDE DECK.
MR. DOWNEY: OKAY. AND IS THIS SOMETHING THAT WAS PREPARED AS PART OF THE SERIES OF MEETINGS BETWEEN THERANOS AND WALGREENS CONCERNING THE RELATIONSHIP BETWEEN THE TWO COMPANIES?
NIMESH JHAVERI: YES.
MR. DOWNEY: LET ME MOVE THE ADMISSION OF 2394.
MR. SCHENK: NO OBJECTION.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(GOVERNMENT'S EXHIBIT 2394 WAS RECEIVED IN EVIDENCE.)
BY MR. DOWNEY:
MR. DOWNEY: LET ME ASK YOU TO LOOK AT EXHIBIT 2394, PAGE 7. DO YOU SEE THAT?
NIMESH JHAVERI: YES, I DO.
MR. DOWNEY: AND IS THIS A REFLECTION OF THE AVERAGE PATIENT EXPERIENCE IN THERANOS SERVICE CENTERS AS OF JANUARY 2015?
NIMESH JHAVERI: YES, AS OF JANUARY 2015, IT'S VERY CONSISTENT WITH WHAT I REMEMBER.
MR. DOWNEY: AND DID THE PATIENTS USING THE SERVICE RATE IT AT ABOUT 4.81 PERCENT -- I'M SORRY, 4.81?
NIMESH JHAVERI: YEAH.
MR. DOWNEY: THE OVERALL EXPERIENCE 4.81. DO YOU SEE THAT?
NIMESH JHAVERI: I DO.
MR. DOWNEY: AND DO YOU SEE THAT THE CHECK IN PROCESS WAS THE PROCESS THAT THE PATIENTS WERE THE LEAST HAPPY WITH IN THEIR AGGREGATE SCORES. DO YOU SEE THAT?
NIMESH JHAVERI: I DO.
MR. DOWNEY: AND DO YOU SEE THAT THE FACILITIES RATED AT ABOUT 4.79. DO YOU SEE THAT?
NIMESH JHAVERI: I DO.
MR. DOWNEY: AND DO YOU SEE THAT THE SKILL OF THE TECHNICIAN WAS ABOUT 4.86?
NIMESH JHAVERI: CORRECT.
MR. DOWNEY: AND SO THESE WERE PRETTY GOOD RESULTS FOR A NEW VENTURE, WEREN'T THEY?
NIMESH JHAVERI: YES. NO, THIS WAS VERY GOOD.
MR. DOWNEY: I HAVE A SLIDE I WANT TO SHOW YOU IN THAT SAME DECK, WHICH IS PAGE 10 AND PAGE 11. I DON'T KNOW IF YOU CAN SEE THIS WITHOUT THE COLOR COORDINATION, BUT THIS IS A QUESTION THAT WAS POSED TO PATIENTS WHO VISITED A THERANOS SERVICE CENTER; CORRECT?
NIMESH JHAVERI: YES.
MR. DOWNEY: AND DO YOU SEE THAT ABOUT 82 AND A HALF PERCENT OF PATIENTS WERE DEFINITELY COMING BACK WAS THEIR INDICATION AFTER THEY'VE HAD AN EXPERIENCE AT THERANOS SERVICE CENTERS?
NIMESH JHAVERI: YES.
MR. DOWNEY: AND ABOUT 15 PERCENT SAID THAT THEY WERE LIKELY TO RETURN; CORRECT?
NIMESH JHAVERI: I'M ASSUMING THAT ALL OF THE COLORS ARE EXACTLY THE SAME.
MR. DOWNEY: YEAH. AND THE NUMBER WHO SAID THAT THEY WOULD NOT RETURN WAS A VERY, VERY SMALL PERCENTAGE; CORRECT?
NIMESH JHAVERI: YES.
MR. DOWNEY: LESS THAN 1 PERCENT; CORRECT?
NIMESH JHAVERI: YES.
MR. DOWNEY: AND IN ADDITION TO ASKING FOR A RATING OF THE THERANOS SERVICE CENTERS, DID YOU ALSO ASK PEOPLE FOR COMMENTS ON HOW THE FACILITIES WERE OPERATING?
NIMESH JHAVERI: YEAH. I DON'T REMEMBER EXACTLY, BUT I COULD BELIEVE THAT THERE WAS A COMMENT SECTION FREE FORM AT THE END.
MR. DOWNEY: OKAY. LET ME ASK YOU TO LOOK AT PAGE 14, AND WE'LL START WITH THE BAD NEWS FIRST. THIS IS THE PAGE THAT IS LABELLED "HERE'S WHAT PEOPLE ARE COMPLAINING ABOUT."
NIMESH JHAVERI: I SEE IT.
MR. DOWNEY: AND THESE ARE COMMENTS THAT WERE MADE BY INDIVIDUAL PATIENTS AT -- WHO CAME TO A THERANOS SERVICE CENTER. DO YOU SEE THAT?
NIMESH JHAVERI: YES.
MR. DOWNEY: AND MANY OF THOSE COMMENTS RELATE TO SERVICE ISSUES; CORRECT?
NIMESH JHAVERI: YES, IT SEEMS SO.
MR. DOWNEY: AND THINGS LIKE DIFFICULTY CHECKING IN; CORRECT?
NIMESH JHAVERI: YEAH, THAT WAS ONE OF THE REASONS.
MR. DOWNEY: OKAY. AND SOME PEOPLE DIDN'T LIKE THE LAYOUT OF THE FACILITY AS IN THE LAST COMMENT. DO YOU SEE THAT?
NIMESH JHAVERI: YES.
MR. DOWNEY: BUT NONE OF THESE PEOPLE COMPLAINED ABOUT THE KIND OF BLOOD DRAW THAT THEY GOT; RIGHT?
NIMESH JHAVERI: NOT IN THESE COMMENTS, NO.
MR. DOWNEY: OKAY. AND IF YOU LOOK AT THE PRIOR TWO PAGES, I'M SAVING THE GOOD NEWS FOR LAST, THERE'S ANOTHER SECTION "HERE'S WHAT PEOPLE ARE SAYING," AND THESE ARE THE POSITIVE COMMENTS THAT PEOPLE EXPERIENCED; CORRECT?
NIMESH JHAVERI: CORRECT.
MR. DOWNEY: AND THESE ARE ALL VERY POSITIVE COMMENTS ABOUT THEIR EXPERIENCE AT A THERANOS SERVICE CENTER WITHIN WALGREENS; CORRECT?
NIMESH JHAVERI: YES.
MR. DOWNEY: AND I ASSUME THAT YOU RECEIVED THESE COMMENTS AS A POSITIVE SIGN OF HOW THE PARTNERSHIP WAS DOING?
NIMESH JHAVERI: YEAH, PATIENT EXPERIENCE WAS ONE OF THE METRICS THAT WE WERE MEASURING, SO ABSOLUTELY.
MR. DOWNEY: AND SOMETIMES PEOPLE COMMENTED THAT ALL ASPECTS OF THE SERVICE WERE GREAT AS IN THE SECOND TO LAST COMMENT ON THE BOTTOM OF PAGE 13. DO YOU SEE THAT WHERE IT SAYS "THERANOS IS SO MUCH BETTER THAN QUEST DIAGNOSTICS. I WAS IN AND OUT IN UNDER 10 MINUTES, THE STAFF WAS COURTEOUS AND THE ACTUAL BLOOD DRAWING WAS WAY LESS SCARY THAN WHAT I AM USED TO." DO YOU SEE THAT?
NIMESH JHAVERI: I DO.
MR. DOWNEY: AND YOU CONTINUED TO GET POSITIVE FEEDBACK ON THE SERVICES PROVIDED IN THE THERANOS SERVICE CENTERS THROUGHOUT YOUR TIME WORKING ON THIS PARTNERSHIP; CORRECT?
NIMESH JHAVERI: YEAH, THE SERVICE CENTER LEVELS WERE, AS I SAID, BETWEEN 4 AND 5.
MR. DOWNEY: AND WHEN YOU SAY SERVICE LEVELS, I JUST WANT TO BE CLEAR, THAT MEANS THE ENTIRE EXPERIENCE OF THE PATIENT WHEN THEY USE THE FACILITY; CORRECT?
NIMESH JHAVERI: YES. MY APOLOGIES. WHAT I'M REFERRING TO IS THE SERVICE EXPERIENCE THAT WE WERE MEASURING THROUGH THE IPADS AND THE QUESTIONNAIRE.
MR. DOWNEY: NOW, I WANT TO ASK YOU ABOUT THE RELATIONSHIP AS IT EVOLVED OVER TIME BETWEEN WALGREENS AND THERANOS. AM I RIGHT THAT THE LEADERSHIP OF WALGREENS CHANGED IN AUGUST OF 2014?
NIMESH JHAVERI: AT SOME TIME AFTER THE MERGER, SOME OF THE LEADERSHIP CHANGED.
MR. DOWNEY: OKAY. AND MR. MIQUELON, FOR EXAMPLE, LEFT?
NIMESH JHAVERI: CORRECT.
MR. DOWNEY: AND DID DR. ROSAN STAY AT THERANOS -- OR AT WALGREENS AT THAT POINT?
NIMESH JHAVERI: YOU KNOW, I DON'T KNOW. I DON'T REMEMBER THE EXACT TIME.
MR. DOWNEY: AND AUGUST OF 2014 IS THE TIME PERIOD THAT WE LOOKED AT WHERE YOU STARTED TO RAISE CONCERNS ABOUT THE NUMBER OF STORES THAT WOULD OPEN; CORRECT?
NIMESH JHAVERI: WHEN YOU SAY "RAISE CONCERNS," I'M NOT SURE.
MR. DOWNEY: WELL, I THINK YOU INDICATED THAT THE PLAN WAS TO OPEN A CERTAIN NUMBER, BUT THAT YOU MIGHT HAVE TO OPEN A LESSER NUMBER; CORRECT?
NIMESH JHAVERI: THAT'S RIGHT.
MR. DOWNEY: AND DO YOU RECALL THAT WE LOOKED AT THE NUMBERS PROJECTING THAT THE NUMBER OF STORES WOULD GO DOWN FROM 3000 TO 2000 OR 2500 NATIONWIDE?
NIMESH JHAVERI: YEAH, WHAT WE -- JUST TO BE VERY CLEAR, IN APRIL OF 2014, ABOUT A MONTH, MONTH AND A HALF AFTER I TOOK OVER, WE GAVE THE EXECUTIVE TEAM, THE EXECUTIVE COMMITTEE, A FULL VIEW AS TO WHERE WE WERE AND WHAT WE WERE GOING TO MEASURE FOR FURTHER SCALE, AND THAT WE WOULD MONITOR THAT. BASED ON THOSE RESULTS, WE WOULD CONTINUE TO EXPAND. AND IF WE ARE NOT SEEING THE RESULTS, WE WILL SLOW DOWN THE ROLLOUT. AGAIN, THE INTENTION WAS ALWAYS TO GO NATIONWIDE. WE WOULD NEVER GO INTO A PARTNERSHIP WITH A COMPANY LIKE THERANOS WHO HAS DEVELOPED SOMETHING INNOVATIVE LIKE THIS TO NOT GO NATIONWIDE. BUT IN ORDER FOR US TO GO NATIONWIDE, WE, AS BOTH COMPANIES, AGREED UPON WHAT THE METRICS WERE, WHAT THE EXPERIENCE SHOULD LOOK LIKE, WHAT THE COST SHOULD BE, YOU KNOW, WHAT ARE CERTAIN ATTRIBUTES LIKE THE VENOUS DRAW OR HOW WE TRAIN. AS WE HIT THOSE MEASURES AND BOTH COMPANIES ARE SATISFIED, WE WILL CONTINUE TO EXPAND, AND THAT'S WHAT WE EXPLAINED TO THE EXECUTIVE TEAM.
MR. DOWNEY: AND THE DECISION AS TO WHETHER OR NOT THERANOS WOULD EXPAND IN WALGREENS STORES DID NOT LIE WITH YOU, DID IT?
NIMESH JHAVERI: I WAS ONE OF THE INDIVIDUALS THAT WOULD BE GIVING INPUT INTO THAT DECISION.
MR. DOWNEY: BUT IT WAS THE EXECUTIVE TEAM THAT WOULD ULTIMATELY MAKE THAT DECISION; CORRECT?
NIMESH JHAVERI: BASED ON THE INFORMATION THAT I PROVIDE THEM AND BASED ON WHAT THE INFORMATION IS THAT I TELL THEM ON HOW THE PROJECT WAS GOING.
MR. DOWNEY: WELL, YOU WERE THE GUY ON THE GROUND; CORRECT?
NIMESH JHAVERI: I WAS THE GUY ON THE GROUND.
MR. DOWNEY: AND SO YOU'RE GIVING THEM INFORMATION AND ADVICE, ET CETERA?
NIMESH JHAVERI: YES. MY TEAM AND I ARE BOTH GIVING INFORMATION, AND WE'RE DOING IT TOGETHER WITH THE THERANOS TEAM. AS YOU NOTED, MR. BALWANI WAS RIGHT THERE WITH ME AT THE EXECUTIVE COMMITTEE MEETINGS. AND SO WE ARE PROVIDING A STATUS TOGETHER AS A PARTNER IN THIS TOGETHER.
MR. DOWNEY: AND SO -- AND YOU REPORTED TO THEM, I ASSUME, THAT THE PATIENTS WHO WERE USING THE SERVICE CENTER SEEMED TO BE PRETTY HAPPY; CORRECT?
NIMESH JHAVERI: YES.
MR. DOWNEY: AND YOU REPORTED TO THEM THAT ALTHOUGH THE LEVEL OF VENOUS DRAW WAS NOT AT THE LEVEL YOU WANTED, IT HAD DECREASED OVER TIME; CORRECT?
NIMESH JHAVERI: IT HOVERED AROUND BETWEEN 43, 40 TO 39 PERCENT IS WHAT WE SAW AND EXPERIENCED, AND WHATEVER THE RESULTS WERE AT THE TIME, THAT'S WHAT WE REPORTED TO THE EXECUTIVE TEAM.
MR. DOWNEY: SO, SO 65 PERCENT OR 55 PERCENT OR SO OF PATIENTS WERE GETTING THE FINGERSTICK; CORRECT?
NIMESH JHAVERI: THAT'S CORRECT.
MR. DOWNEY: AND THE REMAINING WERE PATIENTS WHO NEEDED SOME TESTS THAT REQUIRED A VENOUS DRAW, CORRECT, THE 43 PERCENT THAT YOU REFERENCED?
NIMESH JHAVERI: YES.
MR. DOWNEY: AND THEY MIGHT NEED A BLOOD TEST IN WHICH 10 OR 11 ASPECTS OF THEIR BLOOD WERE BEING TESTED; CORRECT?
NIMESH JHAVERI: THAT COULD BE A POSSIBILITY, YES.
MR. DOWNEY: AND IF ANY ONE OF THOSE ANALYTES NEEDED A VENOUS TEST, THEN THE PATIENT HAD TO HAVE A VENOUS TEST; CORRECT?
NIMESH JHAVERI: YES. THAT WAS THE DECISION TO MAKE SURE THAT THE PATIENT EXPERIENCE WAS RIGHT, SO THE PATIENT HAS NOT -- EITHER HAS A VENOUS DRAW PLUS A FINGERSTICK AT THE SAME TIME.
MR. DOWNEY: OKAY. NOW, IF I GO -- YOU NO LONGER ARE AFFILIATED WITH WALGREENS?
NIMESH JHAVERI: I AM NOT, SIR.
MR. DOWNEY: BUT IF I GO INTO A WALGREENS TODAY, CAN I GET MY BLOOD TESTED?
NIMESH JHAVERI: IT DEPENDS ON WHAT YOU'RE ASKING FOR BLOOD TESTED. SO THERE ARE STORES THAT COULD BE DOING THAT. IT'S HARD FOR ME TO SPEAK AT THAT. I'M NOT THERE ANYMORE.
MR. DOWNEY: WELL, YOU KNOW THAT LAB CORP. HAS OPENED FACILITIES IN WALGREENS STORES?
NIMESH JHAVERI: YES.
MR. DOWNEY: AND YOU KNOW THAT THE METHOD OF DRAWING BLOOD IN THOSE LAB CORP. CENTERS IN WALGREENS STORES IS VENOUS?
NIMESH JHAVERI: THAT IS CORRECT.
MR. DOWNEY: SO WALGREENS MADE THE DECISION TO OPEN FACILITIES IN ITS STORES THAT OFFERED ONLY VENOUS BLOOD DRAWS; CORRECT?
NIMESH JHAVERI: THAT WAS THEIR DECISION.
MR. DOWNEY: AND THAT WAS AT SOME POINT AFTER YOUR DEPARTURE?
NIMESH JHAVERI: YEAH.
MR. DOWNEY: DID THERE COME A TIME IN THE SUMMER OF 2014 WHERE YOU HAD AN OPPORTUNITY TO INTERACT WITH THE CHIEF MEDICAL OFFICER OF WALGREENS ABOUT THERANOS?
NIMESH JHAVERI: I CAN'T TELL YOU EXACTLY WHAT TIME. DR. LEIDER AND I INTERACTED ALL OF THE TIME ON VARIOUS ISSUES INCLUDING THERANOS.
MR. DOWNEY: AND JUST TO BE CLEAR, DR. LEIDER WAS DR. HARRY LEIDER?
NIMESH JHAVERI: HARRY LEIDER.
MR. DOWNEY: AND HE WAS THE CHIEF MEDICAL OFFICER AT WALGREENS; CORRECT?
NIMESH JHAVERI: THAT IS CORRECT.
MR. DOWNEY: AND WALGREENS HAD GOTTEN SOME INFORMATION THAT CAUSED IT TO WANT TO LOOK AT DATA ABOUT THERANOS BLOOD TESTS; CORRECT?
NIMESH JHAVERI: CAN YOU BE MORE SPECIFIC EXACTLY? AGAIN, I SPOKE TO HIM ABOUT A LOT OF THINGS.
MR. DOWNEY: WELL, LET ME ASK YOU --
NIMESH JHAVERI: YEAH.
MR. DOWNEY: -- DO YOU RECALL WHAT OCCASIONED YOUR INTERACTIONS WITH DR. LEIDER ABOUT THERANOS?
NIMESH JHAVERI: WELL, THERE WERE A LOT OF DIFFERENT OCCASIONS. WE GAVE HIM STATUS ON WHAT WAS GOING ON. THERE WAS AN INCIDENT THAT OCCURRED THAT ONE OF OUR NURSE PRACTITIONERS, ONE OF THE NURSE PRACTITIONERS FROM TAKE CARE CLINICS HAD VOICED A CONCERN, AND SO I BROUGHT DR. LEIDER IN, AND AS WELL AS DR. CARROLL, WHO IS THE CHIEF MEDICAL OFFICER FOR CLINICS. AND SO THAT WAS A TOPIC OF DISCUSSION THAT WE HAD.
MR. DOWNEY: AND THE NATURE OF THE DISCUSSION THAT YOU HAD WAS, WAS THE QUESTION OF WHETHER THERANOS TESTS WERE SUFFICIENTLY ACCURATE; IS THAT RIGHT?
NIMESH JHAVERI: THAT'S RIGHT.
MR. DOWNEY: AND SO YOU BROUGHT THOSE GENTLEMEN IN BECAUSE THEY HAD MEDICAL EXPERTISE; CORRECT?
NIMESH JHAVERI: CORRECT, AND DR. LEIDER WAS A FORMER LAB DIRECTOR.
MR. DOWNEY: AND YOU RAISED THAT -- THE QUESTIONS THAT HAD BEEN POSED TO YOU WITH THERANOS; CORRECT?
NIMESH JHAVERI: YES. WHAT I DID WAS I HAD BOTH PAT CARROLL, DR. CARROLL, AND HARRY LEIDER, DR. LEIDER, AS WELL AS MR. BALWANI, AND THEY HAD A CONFERENCE CALL WITH SEVERAL OF THE FOLKS OVER AT THERANOS.
MR. DOWNEY: AND MR. BALWANI BROUGHT SEVERAL OF THE SCIENTISTS INTO THE PROCESS BECAUSE THE QUESTIONS WERE ABOUT MEDICAL ISSUES AND SCIENTIFIC ISSUES?
NIMESH JHAVERI: THAT IS MY UNDERSTANDING.
MR. DOWNEY: OKAY. AND WHAT WAS THE OUTCOME OF THAT PROCESS?
NIMESH JHAVERI: THE OUTCOME WAS THAT BOTH DR. CARROLL AND DR. LEIDER WERE SATISFIED WITH THE ANSWERS THAT THEY RECEIVED.
MR. DOWNEY: OKAY.
NIMESH JHAVERI: AND WE ADDRESSED THE ISSUES WITH THE NURSE PRACTITIONER.
MR. DOWNEY: OKAY. YOUR HONOR, MAY I JUST HAVE A MOMENT?
JUDGE DAVILA: SURE.
(PAUSE IN PROCEEDINGS.)
BY MR. DOWNEY:
MR. DOWNEY: ONE MORE SUBJECT, MR. JHAVERI. I WANT TO ASK YOU, YOU MENTIONED ON YOUR DIRECT EXAMINATION THAT YOU BECAME AWARE OF AN ARTICLE CRITICAL OF THERANOS IN 2015; CORRECT?
NIMESH JHAVERI: THAT'S CORRECT.
MR. DOWNEY: AND AFTER THAT, JOURNALISTS BEGAN RAISING QUESTIONS WITH YOU ABOUT WHY WALGREENS WAS IN A PARTNERSHIP WITH THERANOS; CORRECT?
NIMESH JHAVERI: I DID NOT SPEAK TO ANY OF THE JOURNALISTS.
MR. DOWNEY: WELL, LET ME ASK YOU TO TAKE A LOOK AT EXHIBIT 7660, AND I'LL GIVE YOU A MINUTE TO REVIEW THIS.
NIMESH JHAVERI: YES.
MR. DOWNEY: IN THE FIRST PARAGRAPH, A QUOTATION IS ATTRIBUTED TO YOU BY THIS JOURNALIST. DO YOU SEE THAT?
NIMESH JHAVERI: I DO.
MR. DOWNEY: AND WAS THIS -- WERE YOU -- DOES THIS REFRESH YOUR RECOLLECTION THAT THAT'S A STATEMENT THAT YOU MADE IN 2016?
NIMESH JHAVERI: YES, THE STATEMENT WAS MADE IN THE CONTEXT. THIS INTERVIEW WAS ABOUT WALGREENS'S MOVE INTO HEALTH CARE SERVICES, AND SO THAT'S WHAT THE TOPIC WAS WITH THE ECONOMIST AND SO THEY ASKED ME A COUPLE OF QUESTIONS ABOUT THERANOS PARTNERSHIP, AND THE QUOTE THAT I MADE WAS ACTUALLY IN REFERENCE TO IF NURSE PRACTITIONERS WERE RECEIVING ANY TYPE OF INCORRECT RESULTS OR INACCURATE RESULTS, WOULD WE KNOW?
MR. DOWNEY: OKAY. AND WHEN YOU WERE DEPOSED, OR WHEN YOU ASKED THAT QUESTION, YOU SAID, TRUST ME, IF THE RESULTS WERE NOT THERE, WE WOULD HEAR --
MR. SCHENK: YOUR HONOR, OBJECTION. IT'S NOT IN EVIDENCE.
BY MR. DOWNEY:
MR. DOWNEY: I'M JUST ASKING, DOES THIS REFRESH YOUR RECOLLECTION AS TO WHAT YOU SAID?
NIMESH JHAVERI: YES.
MR. DOWNEY: AND TELL US WHAT YOU SAID IN RESPONSE TO THOSE INQUIRIES.
JUDGE DAVILA: YOU CAN ANSWER.
NIMESH JHAVERI: OKAY. WHAT THEY -- BASED ON THE INQUIRY, WHAT I SAID WAS -- AGAIN, THE ASK WAS IF NURSE PRACTITIONERS RECEIVED ANY TYPE OF INACCURATE RESULTS FOR THEIR PATIENTS, WOULD YOU KNOW AND WOULD THEY TELL YOU? AND MY COMMENT WAS DIRECTLY, TRUST ME, IF THERE WAS SOMETHING INACCURATE, WE WOULD KNOW. JUST LIKE THE ONE I SPOKE ABOUT EARLIER WHERE THEY WERE -- THEY INFORMED US THAT THEY POTENTIALLY THOUGHT THERE WAS A BAD RESULT. SO THAT WAS MY REFERENCE.
BY MR. DOWNEY:
MR. DOWNEY: AND WHEN YOU SAID "WE WOULD KNOW," THAT WAS A RHETORICAL STATEMENT; CORRECT? YOU WERE SAYING WE HAVEN'T HEARD THAT; CORRECT?
NIMESH JHAVERI: NO. WHAT I WAS REFERRING TO IN ALL OF OUR FIELD OPERATIONS -- LET ME TAKE A STEP BACK HERE. WHETHER IT'S IN THE PHARMACY OR IN THE TAKE CARE CLINICS, WE HAVE A LEVEL OF MANAGEMENT THAT GOES ALL OF THE WAY TO THE TOP. AND SO WHAT I WAS REFERRING TO SPECIFICALLY HERE IS IF A NURSE PRACTITIONER HAD A CONCERN ABOUT SOME TYPE OF RESULT, THAT THEY WOULD RAISE IT TO THEIR MANAGEMENT AND THAT IT WOULD COME TO US OR TO THE APPROPRIATE TEAM THAT WAS ACTUALLY RUNNING THAT PARTICULAR PROJECT.
MR. DOWNEY: UNDERSTOOD.
NIMESH JHAVERI: SO THAT'S WHAT I WAS REFERRING TO HERE.
MR. DOWNEY: UNDERSTOOD. DURING YOUR DIRECT EXAMINATION YOU WERE SHOWN AND YOU READ A SERIES OF TEXTS BETWEEN MR. BALWANI AND MS. HOLMES. DO YOU RECALL THAT?
NIMESH JHAVERI: YES, SIR.
MR. DOWNEY: AND YOU SAW SOME DISCUSSION IN THOSE TEXTS ABOUT CVS; CORRECT?
NIMESH JHAVERI: YES, SIR.
MR. DOWNEY: AND CVS IS A SIGNIFICANT COMPETITOR TO WALGREENS; CORRECT?
NIMESH JHAVERI: YES.
MR. DOWNEY: AND DID YOU KNOW IN 2015 THAT THERANOS WAS TALKING TO CVS ABOUT A POTENTIAL PARTNERSHIP?
NIMESH JHAVERI: I DID NOT SPEAK TO ANYONE IN DETAIL ABOUT CVS OR ANYTHING LIKE THAT. THAT WAS NOT MY PURVIEW.
MR. DOWNEY: AND DID YOU HAVE ANY KNOWLEDGE THAT THERANOS WAS PURSUING A PARTNERSHIP WITH CVS?
NIMESH JHAVERI: WHAT I KNEW WAS EARLY ON WHEN THERANOS WAS LOOKING FOR A PARTNER, THEY HAD SPOKEN TO SEVERAL CHAINS, SAFEWAY BEING ONE OF THEM, CVS, AND WALGREENS.
MR. DOWNEY: AND THAT WAS IN 2010?
NIMESH JHAVERI: WHENEVER I -- IT WAS SOMETIME IN 2013, 2014 WHEN I BECAME MORE INVOLVED IN THE PROJECT.
MR. DOWNEY: YOU LEARNED THAT IN 2013 AND 2014?
NIMESH JHAVERI: RIGHT.
MR. DOWNEY: BUT WHAT YOU JUST REFERENCED IS KNOWLEDGE ABOUT WHAT HAD HAPPENED IN 2010; CORRECT?
NIMESH JHAVERI: YEAH. I DON'T KNOW THE TIMEFRAME, SIR, TO BE HONEST.
MR. DOWNEY: WHENEVER THE WALGREENS-THERANOS INITIAL AGREEMENT HAD BEEN MADE; CORRECT?
NIMESH JHAVERI: CORRECT.
MR. DOWNEY: AND DID YOU KNOW ANYTHING ABOUT CONVERSATIONS BETWEEN CVS AND THERANOS IN 2015?
NIMESH JHAVERI: I DON'T KNOW THE DETAILS OF THAT.
MR. DOWNEY: DID YOU KNOW THAT THERANOS WAS PURSUING A POTENTIAL PARTNERSHIP WITH CVS BECAUSE OF -- WELL, DID YOU KNOW THAT THEY WERE PURSUING THAT TYPE OF PARTNERSHIP?
MR. DOWNEY: ALL RIGHT. YOUR HONOR, JUST ONE MOMENT.
(DISCUSSION AMONGST DEFENSE COUNSEL OFF THE RECORD.)
MR. DOWNEY: YOUR HONOR, I JUST WANT TO QUICKLY INTRODUCE TWO DOCUMENTS AND I'LL BE DONE.
MR. DOWNEY: I KNOW YOU TESTIFIED YOU DIDN'T HAVE MUCH CONTACT WITH MS. HOLMES. BUT ON OCCASION YOU EMAILED HER; IS THAT CORRECT?
NIMESH JHAVERI: I DID.
MR. DOWNEY: AND I WANT TO SHOW YOU AN EMAIL BETWEEN YOU AND MS. HOLMES. I WANT TO SHOW YOU A DOCUMENT AND ASK YOU IF IT'S AN EMAIL BETWEEN YOU AND MS. HOLMES, AND THAT'S EXHIBIT 7454. YEAH.
NIMESH JHAVERI: IS THAT IN VOLUME 1, SIR?
MR. DOWNEY: IT SHOULD BE IN VOLUME 2 OF THE BLACK BINDERS.
NIMESH JHAVERI: I HAVE IT.
MR. DOWNEY: AND CAN YOU TELL ME WHAT THIS IS?
NIMESH JHAVERI: YES. THIS IS MR. BALWANI HAD FORWARDED TO MYSELF AND BRAD WASSON WHO, AS I MENTIONED, WAS MY BOSS AT THE TIME, A LINK TO THE "FORTUNE" MAGAZINE ARTICLE THAT MS. HOLMES WAS ON THE COVER OF.
MR. DOWNEY: OKAY.
NIMESH JHAVERI: AND I HAD SENT AN EMAIL TO MS. HOLMES CONGRATULATING HER.
MR. DOWNEY: WELL, LET ME MOVE THE ADMISSION OF 7454.
MR. SCHENK: NO OBJECTION.
JUDGE DAVILA: INCLUDING THE SECOND PAGE? YOU WANT THE SECOND PAGE?
MR. DOWNEY: I DON'T NEED THE SECOND PAGE. LET'S SAY 7454A.
JUDGE DAVILA: ALL RIGHT. ANY OBJECTION TO THAT?
MR. SCHENK: YOUR HONOR, I THINK THE WHOLE THING SHOULD GO IN. I'M NOT SURE IT'S SEPARATE. I THINK IT'S ALL PART OF THE EMAIL FROM --
JUDGE DAVILA: WELL, THAT'S MY INQUIRY.
MR. DOWNEY: I DON'T OBJECT TO IT COMING IN, BUT I DIDN'T ATTACH THE ENTIRE ARTICLE, SO I CAN TRY TO AMEND THAT IN THE FUTURE.
JUDGE DAVILA: WELL, THIS WHAT I HAVE.
MR. DOWNEY: YES.
JUDGE DAVILA: YOU WANT WHAT I'M HOLDING?
MR. DOWNEY: YES.
JUDGE DAVILA: YOU WANT BOTH SIDES?
MR. DOWNEY: THAT'S FINE, YOUR HONOR, YES.
JUDGE DAVILA: ANY OBJECTION?
MR. SCHENK: NO. THANK YOU.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(DEFENDANT'S EXHIBIT 7454 WAS RECEIVED IN EVIDENCE.)
BY MR. DOWNEY:
MR. DOWNEY: SO THIS IS AN ARTICLE ABOUT MS. HOLMES THAT MR. BALWANI FORWARDED TO YOU; CORRECT?
NIMESH JHAVERI: CORRECT.
MR. DOWNEY: AND THEN YOU WROTE TO MS. HOLMES; CORRECT?
NIMESH JHAVERI: I DID.
MR. DOWNEY: AND YOU SENT HER GOOD WISHES IN YOUR FIRST PARAGRAPH; CORRECT?
NIMESH JHAVERI: YES.
MR. DOWNEY: AND THEN YOU SAY IN THE SECOND PARAGRAPH, "I AM SURE SUNNY AND CHRISTIAN ARE KEEPING YOU IN THE LOOP." CORRECT?
NIMESH JHAVERI: YES.
MR. DOWNEY: AND CHRISTIAN IS A REFERENCE TO CHRISTIAN HOLMES; CORRECT?
NIMESH JHAVERI: YES.
MR. DOWNEY: AND THAT'S MS. HOLMES'S BROTHER WHO ALSO WORKED AT THERANOS?
NIMESH JHAVERI: CORRECT.
MR. DOWNEY: AND YOU SAID, "TEAMS ARE WORKING WELL TOGETHER AND A LOT OF PROGRESS BEING MADE. SEE YA SOON." CORRECT?
NIMESH JHAVERI: CORRECT.
MR. DOWNEY: AND LET ME ASK YOU TO LOOK AT 7471.
NIMESH JHAVERI: YES, SIR.
MR. DOWNEY: IS THIS AN EMAIL BETWEEN YOU AND MS. HOLMES IN SEPTEMBER OF 2014?
NIMESH JHAVERI: IT IS.
MR. DOWNEY: AND THE ATTACHMENT IS AN ANNOUNCEMENT RELATED TO A LIST OF HONOREES?
NIMESH JHAVERI: YES.
MR. DOWNEY: YOUR HONOR, I MOVE THE ADMISSION OF 7471.
MR. SCHENK: NO OBJECTION.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(DEFENDANT'S EXHIBIT 7471 WAS RECEIVED IN EVIDENCE.)
BY MR. DOWNEY:
MR. DOWNEY: IF YOU JUST FOCUS ON THE ADDRESS AT THE BOTTOM -- AT THE TOP, RATHER, INDICATING IT'S FROM YOU TO MS. HOLMES, YOU SENT THIS IN SEPTEMBER OF 2014; CORRECT?
NIMESH JHAVERI: CORRECT.
MR. DOWNEY: AND THIS IS A LITTLE BIT AFTER -- A COUPLE OF WEEKS AFTER THE MEETINGS THAT YOU HAD WITH MR. BALWANI WHERE YOU INDICATED YOU MIGHT BE SCALING DOWN THE NUMBER OF STORES; CORRECT?
NIMESH JHAVERI: THAT'S CORRECT.
MR. DOWNEY: OKAY. AND IN THIS EMAIL, YOU SEND GOOD WISHES TO HER AGAIN; CORRECT?
NIMESH JHAVERI: YES.
MR. DOWNEY: AND IN THE SECOND SENTENCE YOU SAID, "AS YOU KNOW WE ARE MAKING GREAT PROGRESS IN OUR PARTNERSHIP." CORRECT?
NIMESH JHAVERI: YES.
MR. DOWNEY: NOTHING FURTHER, YOUR HONOR.
JUDGE DAVILA: ANY REDIRECT?
MR. SCHENK: YES, YOUR HONOR.
JUDGE DAVILA: FOLKS, IF YOU WANT TO STAND AND STRETCH, PLEASE FEEL FREE.
JUROR: CAN I USE THE RESTROOM?
JUDGE DAVILA: WHY DON'T WE TAKE A BREAK. WHY DON'T WE DO THAT? SORRY, MR. SCHENK. LET'S TAKE A BREAK. 20 MINUTES.
MS. TREFZ: IF WE CAN DO 20 MINUTES, THAT WOULD BE IT FOR THE REST OF THE DAY.
JUDGE DAVILA: LET'S DO 20 MINUTES. YOU CAN STAND DOWN, SIR, AND WE CAN TAKE A BREAK FOR 20 MINUTES.
(JURY OUT AT 1:03 P.M.)
JUDGE DAVILA: YOU CAN WAIT OUTSIDE, SIR. YOU CAN GO. THANK YOU. ALL RIGHT. THANK YOU. THE RECORD SHOULD REFLECT THAT THE JURY HAS LEFT FOR THE BREAK AND THE WITNESS HAS LEFT THE COURTROOM AND ALL COUNSEL AND MS. HOLMES ARE PRESENT ONCE AGAIN. IT'S ABOUT TEN AFTER 1:00. I KNOW THERE'S THE 1:30 HEARING. I DON'T KNOW, SHOULD WE -- COUNSEL HERE IN THE COURTROOM, DID YOU INTEND TO -- ANY COUNSEL HERE IN THE COURTROOM, DID YOU INTEND TO JOIN OR ASSIST YOUR COLLEAGUES IN THAT MATTER?
MR. BOSTIC: FOR THE GOVERNMENT, YOUR HONOR, JUST ME, I THINK, AND I WOULDN'T ASK THAT TRIAL PROCEEDINGS BE STOPPED. I THINK THEY SHOULD CONTINUE IF THE OTHER PARTIES ARE AMENABLE TO IT.
JUDGE DAVILA: THAT WAS MY INQUIRY. THANK YOU, MR. BOSTIC.
MR. DOWNEY: FOR THE DEFENSE, YOUR HONOR, MR. CLINE IS GOING TO ATTEND THE 1:30 HEARING AND THE DEFENSE IS FINE WITH PROCEEDING.
JUDGE DAVILA: YOU HAVE FULL TRUST AND CONFIDENCE IN MR. CLINE?
(LAUGHTER.)
JUDGE DAVILA: THE RECORD WILL REFLECT THAT THERE WAS NO RESPONSE TO THAT. THERE WAS NO RESPONSE BUT LAUGHTER I THINK IS WHAT I HEARD. ALL RIGHT. THANK YOU.
MR. DOWNEY: I HAVE COMPLETE CONFIDENCE IN HIM.
JUDGE DAVILA: I'M SURE YOU DO. THANK YOU. LET'S TAKE OUR BREAK. THANK YOU.
COURT CLERK: COURT IS IN RECESS.
(RECESS FROM 1:05 P.M. UNTIL 1:32 P.M.)
(JURY IN AT 1:32 P.M.)
JUDGE DAVILA: PLEASE BE SEATED. WE'RE BACK ON THE RECORD. ALL COUNSEL ARE PRESENT. MS. HOLMES IS PRESENT. OUR JURY IS PRESENT. MR. JHAVERI IS BACK ON THE STAND. MR. SCHENK, YOU HAVE SOME REDIRECT?
MR. SCHENK: YES. THANK YOU, YOUR HONOR.
REDIRECT EXAMINATION BY MR. SCHENK:
MR. SCHENK: GOOD AFTERNOON AGAIN, MR. JHAVERI.
NIMESH JHAVERI: GOOD AFTERNOON.
MR. SCHENK: I WOULD LIKE TO COVER A COUPLE OF THE TOPICS THAT YOU DISCUSSED WITH MR. DOWNEY AND JUST MAKE SURE I UNDERSTAND YOUR ANSWERS, IF THAT'S OKAY.
NIMESH JHAVERI: SURE.
MR. SCHENK: THE FIRST TOPIC I WANT TO TALK ABOUT IS TOWARDS THE BEGINNING OF YOUR CROSS-EXAMINATION, YOU TALKED ABOUT THE NUMBER OF TIMES THAT YOU MET MS. HOLMES AS OPPOSED TO YOUR INTERACTIONS WITH MR. BALWANI. DO YOU RECALL THAT TESTIMONY?
NIMESH JHAVERI: YES.
MR. SCHENK: ON ONE OF THE OCCASIONS THAT YOU MET MS. HOLMES, WAS IT DURING A DEMONSTRATION OF THE THERANOS TECHNOLOGY?
NIMESH JHAVERI: YES, IT WAS AT THEIR CORPORATE OFFICE.
MR. SCHENK: IN PALO ALTO?
NIMESH JHAVERI: IN PALO ALTO.
MR. SCHENK: AND WHAT DO YOU RECALL ABOUT THAT?
NIMESH JHAVERI: WE HAD A -- IT WAS A MEET AND GREET WITH BOTH LEADERSHIP TEAMS AND WE WERE IN THE CONFERENCE ROOM. MS. HOLMES AND MR. BALWANI GAVE US A LITTLE BIT MORE OF OVERVIEW OF THE SERVICE AND WHAT THEY WERE TRYING TO DO. AND THEN WE WENT, AFTER THAT, TO ACTUALLY GET OUR BLOOD TESTED. AND SO WE WENT IN THE ROOM NEXT DOOR AND THEY DID A FINGERSTICK ON US, A COUPLE OF US THAT WANTED TO GET IT DONE. I DID GET IT DONE FOR ME. AND THEN THEY ALSO HAD A BLACK MACHINE THAT WAS ON THE TABLE THERE THAT THEY SHOWED US. AND THAT'S ABOUT IT. THAT WAS MY MEETING WITH HER.
MR. SCHENK: AND WHEN YOU SAID THE MACHINE ON THE TABLE, DID YOU UNDERSTAND THAT TO BE THE THERANOS PROCESSING UNIT, THE THERANOS TECHNOLOGY?
NIMESH JHAVERI: THE THERANOS TECHNOLOGY, THAT'S CORRECT.
MR. SCHENK: DID YOU UNDERSTAND THAT THE DEMONSTRATION THAT YOU WERE RECEIVING WOULD MIMIC OR MIRROR A PATIENT EXPERIENCE, WHAT THEY WERE GIVING TO YOU WAS WHAT A WALGREENS PATIENT WOULD EXPERIENCE?
NIMESH JHAVERI: CORRECT. THEY SHOWED US THE FINGERSTICK, THE NANOTAINER AND HOW THEY EXTRACTED THE BLOOD, AND SO IT WAS THE EXPERIENCE THAT POTENTIALLY A PATIENT WOULD SEE.
MR. SCHENK: THANK YOU. MS. KRATZMANN, COULD I HAVE THE ELMO. THANK YOU. I'D LIKE TO SHOW YOU EXHIBIT 1387. I BELIEVE YOU WERE SHOWN THIS BY MR. DOWNEY. DO YOU RECALL YOUR TESTIMONY ABOUT THIS DOCUMENT?
NIMESH JHAVERI: YES, SIR.
MR. SCHENK: AND AN AMENDED OR A REVISED SERVICES AGREEMENT?
NIMESH JHAVERI: YES.
MR. SCHENK: AND I THINK THAT MR. DOWNEY ASKED YOU IF, ANYWHERE IN THIS DOCUMENT, THERE WAS DISCUSSION OF THE PERCENT OF VENOUS DRAWS. DO YOU RECALL THAT TESTIMONY?
NIMESH JHAVERI: YES, SIR.
MR. SCHENK: AND I THINK YOU SAID I'D HAVE TO LOOK THROUGH IT, BUT I DON'T RECALL FOR SURE. IS THAT RIGHT?
NIMESH JHAVERI: CORRECT.
MR. SCHENK: AND MR. DOWNEY, I THINK, SAID WOULD IT -- WOULD YOU BE SURPRISED IF IT WASN'T IN THE DOCUMENT. DO YOU RECALL THAT?
NIMESH JHAVERI: YES, SIR.
MR. SCHENK: WAS VENOUS DRAW AN IMPORTANT METRIC THAT WALGREENS WAS TRACKING, REGARDLESS OF WHETHER IT'S IN THIS DOCUMENT OR NOT?
NIMESH JHAVERI: YES, IT WAS.
MR. SCHENK: WAS THE ACCURACY OF THERANOS TESTS IMPORTANT TO WALGREENS?
NIMESH JHAVERI: CRITICALLY IMPORTANT.
MR. SCHENK: IS ACCURACY IN THERE?
NIMESH JHAVERI: NOT THAT I KNOW OF.
MR. SCHENK: BUT IT'S STILL SOMETHING THAT IS IMPORTANT TO WALGREENS?
NIMESH JHAVERI: CORRECT.
MR. SCHENK: NOW I'M SHOWING YOU 3755, ALREADY ADMITTED, THAT MR. DOWNEY SHOWED YOU, AND IN THIS DOCUMENT IT TALKS ABOUT, IF YOU RECALL, SOME LANGUAGE ABOUT THERE BEING 2500 STORES AND THAT BEING THE GOAL FOR AUGUST OF 2016. DO YOU RECALL THAT?
NIMESH JHAVERI: YES, SIR.
MR. SCHENK: WHAT ASSUMPTIONS WERE BAKED INTO THAT GOAL?
NIMESH JHAVERI: THE ASSUMPTIONS, AGAIN, AS I MENTIONED EARLIER, IS OPERATIONALIZING THE SERVICE, AND PART OF THAT WAS HITTING ON THE METRICS THAT WE HAD DEFINED, EVERYTHING FROM PATIENT EXPERIENCE TO WAIT TIMES TO VENOUS DRAWS, AS WELL AS COST OF THE BUILDOUT. BUT THOSE WERE SOME OF THE BIGGER THINGS THAT REALLY INFORMED US ON WHEN TO LAUNCH, HOW TO LAUNCH, AND HOW MUCH TO LAUNCH.
MR. SCHENK: SO EVEN THOUGH THE DOCUMENT HAS 2500 STORES AS A GOAL, THAT WASN'T GUARANTEED, OR IT WASN'T EVER EXPRESSED TO THERANOS THAT THAT WAS GUARANTEED; IS THAT RIGHT?
NIMESH JHAVERI: I PERSONALLY HAD NEVER SAID THAT IT WAS GUARANTEED. AND, AGAIN, WHETHER IT WAS BRAD WASSON OR KERMIT CRAWFORD, THEY WOULD EXPECT ME TO PROVIDE THE RIGHT INFORMATION TO MAKE THOSE DECISIONS.
MR. SCHENK: I'D LIKE TO SHOW YOU, THIS IS PAGE 12 OF THAT SAME EXHIBIT, EXHIBIT 3755. AND ON PAGE 12 WE SEE OPERATIONAL READINESS. DO YOU SEE THAT?
NIMESH JHAVERI: YES, SIR.
MR. SCHENK: MR. DOWNEY ASKED YOU IF VENOUS DRAWS, OR THE PERCENT OF VENOUS DRAWS, WAS LISTED IN OPERATIONAL READINESS, AND I THINK YOU SAID IT WAS NOT LISTED THERE. IS THAT RIGHT?
NIMESH JHAVERI: THAT'S RIGHT.
MR. SCHENK: AND WAS VENOUS DRAWS STILL SOMETHING THAT WAS IMPORTANT TO WALGREENS, EVEN THOUGH IT WAS NOT LISTED ON OPERATIONAL READINESS?
NIMESH JHAVERI: YES, IT WAS.
MR. SCHENK: AND HOW ABOUT THE ACCURACY OF THERANOS BLOOD TESTS? IS THAT LISTED IN OPERATIONAL READINESS?
NIMESH JHAVERI: NO, SIR.
MR. SCHENK: AND WAS THE ACCURACY OF THERANOS BLOOD TESTS STILL NEVERTHELESS IMPORTANT TO WALGREENS?
NIMESH JHAVERI: YES.
MR. SCHENK: NOW I'M SHOWING YOU WHAT HAS BEEN ADMITTED AS 1884. THESE ARE MEETING MINUTES. DO YOU RECALL THIS DISCUSSION WITH MR. DOWNEY?
NIMESH JHAVERI: YES, SIR.
MR. SCHENK: AND NUMBER 6 WAS "MOSTLY IMPROVED PATIENT EXPERIENCE." MR. DOWNEY ASKED YOU SOME QUESTIONS ON A FEW DOCUMENTS ABOUT THE EXPERIENCE THAT PATIENTS HAD, AND YOU TESTIFIED THAT IT WAS MEASURED ON A SCALE OF 1 OR 0 TO 5 AND THAT THERE WERE MOSTLY 4 AND 5'S; IS THAT RIGHT?
NIMESH JHAVERI: THAT'S CORRECT.
MR. SCHENK: WHEN IN THE VISIT, OR WHEN IN THE PATIENT'S EXPERIENCE DO THEY GIVE THAT FEEDBACK? WHEN DOES THE PATIENT FILL OUT THE SURVEY?
NIMESH JHAVERI: IT WAS AT THE END OF THE FULL SERVICE. THAT'S WHEN THE IPAD WAS GIVEN TO THEM, AND THAT'S WHEN THEY FILL IT OUT.
MR. SCHENK: DO THEY HAVE THEIR TEST RESULTS BY THE TIME THEY'RE FILLING OUT THAT SURVEY?
NIMESH JHAVERI: NO, SIR.
MR. SCHENK: SO IF A PATIENT, LET'S SAY, WAS PREGNANT BUT WAS TOLD THAT THEY WERE NOT PREGNANT BY A TEST FROM THERANOS, THAT MIGHT AFFECT THEIR OPINION OR THEIR IMPRESSION OF THE EXPERIENCE?
NIMESH JHAVERI: IT COULD.
MR. SCHENK: BUT THAT WOULD NOT BE CAPTURED IN A SURVEY TAKEN AT THE END OF THEIR VISIT TO THE THERANOS AT WALGREENS?
NIMESH JHAVERI: NO. THE RESULTS WERE NOT AVAILABLE TO THE PATIENT AT THE TIME OF THE SURVEY.
MR. SCHENK: ALSO WITHIN THOSE SAME MEETING MINUTES, MR. DOWNEY READ YOU A LINE ABOUT ONE HOUR TURN AROUND TIME ONCE THE SAMPLE REACHED THE THERANOS LAB. DO YOU RECALL THAT TESTIMONY?
NIMESH JHAVERI: YES, SIR.
MR. SCHENK: FIRST OF ALL, WHERE DID THIS INFORMATION COME FROM THAT IT TOOK AN HOUR? WHERE WOULD THE SOURCE HAVE BEEN?
NIMESH JHAVERI: THAT INFORMATION COMES FROM THERANOS.
MR. SCHENK: AND DID SOMEONE FROM THERANOS EVER TELL YOU THAT IF THERANOS DEVICES FAILED QUALITY CONTROL CHECKS, THEY COULDN'T BE USED AT THAT POINT AND THAT THAT WOULD AFFECT THE TURN AROUND TIME? DID THEY EXPLAIN THAT TO YOU?
NIMESH JHAVERI: I DON'T RECALL EVER HAVING THAT INFORMATION.
MR. SCHENK: AND PRESUMABLY THAT WOULD AFFECT AN HOUR, ONE HOUR TURN AROUND TIME; IS THAT RIGHT?
NIMESH JHAVERI: CORRECT.
MR. SCHENK: I'M NOW SHOWING YOU WHAT WAS ADMITTED AS 2394. THIS IS THE 12TH PAGE OF THAT EXHIBIT, SOME SURVEY RESPONSES OR SCORES. DO YOU SEE THAT?
NIMESH JHAVERI: YES, SIR.
MR. SCHENK: AND IT'S BROKEN OUT ABOUT SORT OF THE STAGE IN THE PROCESS, THE INDIVIDUAL'S EXPERIENCE WITH THAT STAGE; IS THAT RIGHT?
NIMESH JHAVERI: THAT'S RIGHT.
MR. SCHENK: AND DOES THAT ROUGHLY TRACK HOW THE IPAD ASKED FOR RESPONSES AT THE VARIOUS STAGES?
NIMESH JHAVERI: CAN YOU ASK THAT QUESTION AGAIN, SIR?
MR. SCHENK: SURE. YOU SAID THE PATIENT WOULD FILL OUT THEIR SURVEY RESPONSES ON AN IPAD. THE KINDS OF QUESTIONS THAT THE PATIENT WAS ASKED TO ANSWER, DID THEY FIT INTO THESE CATEGORIES?
NIMESH JHAVERI: YES, THAT'S CORRECT.
MR. SCHENK: SO WAS THERE ANY CATEGORY ABOUT THE ACCURACY OF THE TEST?
NIMESH JHAVERI: I DON'T RECALL HAVING ANYTHING LIKE THAT.
MR. SCHENK: AND WOULD THE PATIENT KNOW ANYTHING ABOUT THE ACCURACY OF THE TEST WHEN THEY'RE COMPLETING THIS?
NIMESH JHAVERI: NO. AS I STATED, THE RESULTS ARE NOT YET AVAILABLE TO THEM. THEY HAD JUST TAKEN -- THE BLOOD WAS JUST DRAWN AT THAT POINT.
MR. SCHENK: AT THIS TIME DURING YOUR TESTIMONY, MR. DOWNEY ALSO ASKED YOU IF YOU KNEW WHETHER THE FORM OF THE BLOOD TEST, WHETHER IT WAS A FINGERSTICK OR VEIN DRAW, MATTERED TO PATIENTS, IF THAT WAS SOMETHING THAT PATIENTS CARED ABOUT. DO YOU RECALL THAT TESTIMONY?
NIMESH JHAVERI: YES.
MR. SCHENK: DID WALGREENS AND THERANOS DISCUSS ADVERTISING THE PATIENT EXPERIENCE, WHAT THE PATIENTS WOULD EXPERIENCE IF THEY CAME TO A THERANOS AT A WALGREENS?
NIMESH JHAVERI: YES. WE, WE HAD AN ENTIRE PLAN TO MARKETING BOTH FROM A SCIENCE STANDPOINT, FROM A COMMUNICATIONS STANDPOINT, AND HOW THAT EXPERIENCE WOULD LOOK.
MR. SCHENK: AND DID YOU MARKET OR ADVERTISE THE FINGERSTICK NATURE OF THE TEST?
NIMESH JHAVERI: YES. IF YOU RECALL, THE SIGNAGE HAD A PICTURE OF A SMALL AMOUNT OF BLOOD, AND THE LANGUAGE THAT WE USED WAS A SMALLER TEST, AND THE IDEA WAS THAT IT WOULD USE A SMALL AMOUNT OF BLOOD, AND IT WAS A PAINLESS, EFFICIENT TEST. SO THAT'S WHAT WE USED FOR MARKETING.
MR. SCHENK: DID WALGREENS THINK THAT IT WAS WORTH SPENDING MONEY ON ADVERTISING TO MARKET THE FINGERSTICK?
NIMESH JHAVERI: YES.
MR. SCHENK: I THINK I MAY HAVE SAID THAT THE SLIDE I JUST SHOWED YOU WAS PAGE 12. IT WAS ACTUALLY PAGE 7. I'M NOW SHOWING YOU PAGE 12, BOTH OF EXHIBIT 2394. SO ON EXHIBIT 2394, PAGE 12, I'M SHOWING YOU A SLIDE THAT MR. DOWNEY SHOWED YOU THAT HAS WHAT PATIENTS WERE SAYING AND QUOTES FROM PATIENTS. DO YOU RECALL THIS TESTIMONY?
NIMESH JHAVERI: YES.
MR. SCHENK: FIRST OF ALL, WHO PREPARED THIS SLIDE?
NIMESH JHAVERI: I BELIEVE THIS WAS PREPARED BY THE THERANOS TEAM.
MR. SCHENK: WHEN THERANOS PREPARED THIS SLIDE, DID THEY THEN DECIDE THE CONTENT, WHAT KINDS OF FEEDBACK TO PROVIDE TO WALGREENS?
NIMESH JHAVERI: YEAH. WE DIDN'T -- WALGREENS'S TEAM DID NOT HAVE ACCESS TO ANY OF THE RAW DATA FROM THE SURVEY RESULTS. THE RESULTS WERE THEN RECAPPED FOR US THROUGH THE THERANOS TEAM. SO THIS WOULD BE INFORMATION THAT THEY SAW ON SURVEYS AND THEN THEY PRESENTED THAT TO US.
MR. SCHENK: MR. DOWNEY ASKED YOU SOME QUESTIONS ABOUT SOMEONE NAMED DR. LEIDER. DO YOU REMEMBER THAT TESTIMONY?
NIMESH JHAVERI: YES, SIR.
MR. SCHENK: AND I THINK YOU TESTIFIED THAT THERE WAS A DISCUSSION INVOLVING YOURSELF, MR. BALWANI, DR. LEIDER, MAYBE SOME OTHERS, AND THAT AT THE END OF THE CALL YOU THOUGHT THAT DR. LEIDER, OR MAYBE THE PARTICIPANTS GENERALLY, WERE SATISFIED WITH THE COMMENTS THAT WERE MADE ABOUT, WAS IT THE ACCURACY OF TESTS?
NIMESH JHAVERI: YES. IT WAS AROUND THE ACCURACY OF A PARTICULAR TEST, I DON'T RECALL WHICH TEST IT WAS, THAT WAS BROUGHT UP BY ONE OF THE NURSE PRACTITIONERS. AND SO DR. CARROLL, WHO OVERSEES THE NURSE PRACTITIONERS, HAD RAISED THAT TO US, TO ME, SO I BROUGHT IN DR. LEIDER AND DR. CARROLL AND INFORMED MR. BALWANI OF THIS, AND THAT'S WHAT CAUSED THE MEETING TO OCCUR. MR. BALWANI, DR. LEIDER, DR. CARROLL, AND THERANOS'S TEAM WAS ON THE PHONE, AND SO THEY HAD A CONFERENCE CALL TO DISCUSS WHAT HAPPENED, WHY THIS HAPPENED. AND I WAS NOT IN THE MEETING AS I WAS RUNNING ANOTHER MEETING AT THE TIME, AND SO WHAT I WAS TOLD WAS THAT THEY WERE SATISFIED WITH WHAT WAS TOLD TO THEM BY THE THERANOS TEAM.
MR. SCHENK: I SEE. YOU WEREN'T THERE, YOU JUST HEARD DR. LEIDER AFTERWARDS SAY, WHATEVER IT IS THAT I HEARD SATISFIED ME?
NIMESH JHAVERI: THAT'S CORRECT.
MR. SCHENK: DO YOU KNOW WHETHER WALGREENS WAS GIVEN ACCESS TO RAW TEST DATA TO BE SATISFIED, TO REACH THAT CONCLUSION THAT THEY WERE SATISFIED?
NIMESH JHAVERI: FOR THAT PARTICULAR ISSUE I DO NOT REMEMBER.
MR. SCHENK: DO YOU KNOW WHETHER THEY WERE GIVEN THE THERANOS TECHNOLOGY, A BOX TO UP OPEN AND LOOK INSIDE AND TO REACH THE CONCLUSION THAT THEY SHOULD BE SATISFIED?
NIMESH JHAVERI: I'M NOT AWARE OF THAT.
MR. SCHENK: I'M NOW GOING TO SHOW YOU 7454 THAT WAS ALSO ADMITTED. THIS WAS AN EMAIL THAT YOU SENT TO MS. HOLMES AFTER MR. BALWANI SENT YOU AN ARTICLE, AN ARTICLE THAT APPEARED IN "FORTUNE" MAGAZINE, AND IF YOU LOOK ON THIS COVER UNDER THAT HEADING, "AIM TO REVOLUTIONIZE HEALTH CARE," THERE'S A JOURNALIST'S NAME. DO YOU SEE THAT?
NIMESH JHAVERI: LET ME SEE IF I CAN READ IT.
MR. SCHENK: I'M HAPPY TO READ IT TO YOU. I'M JUST WONDERING IF YOU SEE IT AT LEAST GENERALLY.
NIMESH JHAVERI: OH, BY ROGER PARLOFF?
MR. SCHENK: YES, CORRECT. WHEN MR. BALWANI SENT YOU THIS ARTICLE, DID YOU ASSUME THAT THE CONTENTS, THE DESCRIPTIONS ABOUT THERANOS WERE ACCURATE?
NIMESH JHAVERI: YES.
MR. SCHENK: AND WHEN YOU THEN RESPONDED TO MS. HOLMES AND COMPLIMENTED HER ON THIS COVERAGE, DID YOU ASSUME THAT THE DESCRIPTIONS IN THE ARTICLE ABOUT THERANOS WERE ACCURATE?
NIMESH JHAVERI: YES.
MR. SCHENK: YOU ALSO AT THIS TIME SENT AN EMAIL, THE EXHIBIT NUMBER WAS 7471, IN SEPTEMBER OF 2014 WHERE YOU WERE COMPLIMENTARY TO MS. HOLMES. DO YOU RECALL THAT?
NIMESH JHAVERI: YES.
MR. SCHENK: AND WHEN YOU SENT THAT EMAIL, WERE YOU STILL ACTING UNDER THE ASSUMPTION THAT MS. HOLMES HAD BEEN HONEST WITH YOU DURING ALL OF YOUR INTERACTIONS WITH HER AND WITH THERANOS?
NIMESH JHAVERI: YES.
MR. SCHENK: THANK YOU, YOUR HONOR.
MR. DOWNEY: YOUR HONOR, JUST VERY BRIEFLY.
RECROSS-EXAMINATION BY MR. DOWNEY:
MR. DOWNEY: MR. JHAVERI, YOU TESTIFIED ON REDIRECT ABOUT THE DEMONSTRATION THAT YOU HAD RECEIVED OF THERANOS TECHNOLOGY. DO YOU RECALL THAT?
NIMESH JHAVERI: YES, SIR.
MR. DOWNEY: AND THERE WERE VARIOUS TIMES THAT YOU HAD ACTUALLY TRIED TO GET A BLOOD DRAW IN CONNECTION WITH THOSE -- WITH THERANOS?
NIMESH JHAVERI: YES.
MR. DOWNEY: AND SOMETIMES YOU GOT A DRAW THAT WAS A FINGERSTICK; CORRECT?
NIMESH JHAVERI: CORRECT.
MR. DOWNEY: AND SOMETIMES YOU GOT A VENOUS DRAW; CORRECT?
NIMESH JHAVERI: THAT'S CORRECT.
MR. DOWNEY: AND PART OF THAT WAS AN EVALUATION OF HOW THE PROGRAM WAS RUNNING, WHETHER THE SERVICE WAS GOOD, ET CETERA?
NIMESH JHAVERI: YEAH. PART OF THAT WAS FOR ME TO EXPERIENCE WHAT A PATIENT WILL EXPERIENCE, AND SO I DID HAVE A LAB ORDER SENT IN FOR ME AT ONE OF THE STORES BECAUSE I WANTED TO EXPERIENCE WHAT A PATIENT WOULD WALK IN AND EXPERIENCE THEMSELVES, AND SO THAT WAS THE REASON.
MR. DOWNEY: AND YOUR PERSONAL EXPERIENCE OF THOSE SERVICES WAS POSITIVE; CORRECT?
NIMESH JHAVERI: YES.
MR. DOWNEY: YOU WERE ASKED ABOUT WHETHER THERE WAS AN EXPECTATION AT WALGREENS THAT THE TESTS BE ACCURATE; CORRECT? AND YOU UNDERSTOOD THAT, OF COURSE, THE BLOOD TESTS, THAT THERANOS WOULD MAKE EVERY EFFORT FOR THE BLOOD TESTS TO BE ACCURATE; CORRECT?
NIMESH JHAVERI: I WOULD ASSUME SO, YES.
MR. DOWNEY: NO ONE WOULD WANT TO OFFER INACCURATE BLOOD TESTS; CORRECT?
NIMESH JHAVERI: I WOULDN'T THINK SO, YES.
MR. DOWNEY: YOU WERE ASKED BY MR. SCHENK ABOUT DEVICES FAILING QUALITY CONTROL. DO YOU RECALL THAT?
NIMESH JHAVERI: YES.
MR. DOWNEY: YOU WOULD HOPE, WOULD YOU NOT, IF A DEVICE FAILED QUALITY CONTROL, THAT IT WOULD NOT BE USED FOR TESTING THAT DAY; CORRECT?
NIMESH JHAVERI: I WOULD HOPE THAT WOULD BE THE CASE, YES.
MR. DOWNEY: AND YOUR EXPECTATION IS THAT THE THERANOS LAB WOULD REMOVE THAT DEVICE FROM TESTING FOR THE DAY; CORRECT?
NIMESH JHAVERI: YES, THAT WOULD BE MY ASSUMPTION.
MR. DOWNEY: AND YOU WOULD WANT THEM TO MAKE SURE THAT THE DEVICE WAS NOT USED AGAIN IN TESTING UNTIL IT HAD PASSED QUALITY CONTROL; CORRECT?
NIMESH JHAVERI: CORRECT.
MR. DOWNEY: YOU TALKED ABOUT YOUR INTERACTIONS WITH DR. LEIDER AND THE THERANOS TEAM. DO YOU RECALL THAT?
NIMESH JHAVERI: YES.
MR. DOWNEY: DO YOU KNOW WHETHER HE WAS GIVEN CORRELATION DATA RELATED TO THERANOS TESTS?
NIMESH JHAVERI: AGAIN, I DO NOT KNOW WHAT WAS PROVIDED TO HIM DURING THAT CALL.
MR. DOWNEY: OKAY. YOU WERE ASKED ABOUT WHETHER DR. LEIDER OR OTHERS AT WALGREENS WERE GIVEN A THERANOS DEVICE. DO YOU RECALL THAT?
NIMESH JHAVERI: YES.
MR. DOWNEY: DO YOU KNOW WHETHER DR. ROSAN WAS GIVEN A THERANOS DEVICE?
NIMESH JHAVERI: I DO NOT KNOW THAT.
MR. DOWNEY: OKAY. MR. SCHENK ASKED YOU ABOUT THE ARTICLE THAT YOU FORWARDED TO MS. HOLMES. DO YOU RECALL THAT?
NIMESH JHAVERI: YES, SIR.
MR. DOWNEY: AND DO YOU RECALL AS YOU SIT HERE TODAY THE CONTENTS OF THAT ARTICLE?
NIMESH JHAVERI: I COULDN'T STATE EXACTLY WHAT WAS IN THE ARTICLE.
MR. DOWNEY: OKAY. FAIR ENOUGH. THANK YOU.
MR. SCHENK: NOTHING FURTHER.
JUDGE DAVILA: MAY THIS WITNESS BE EXCUSED?
MR. SCHENK: YES, YOUR HONOR.
JUDGE DAVILA: MR. DOWNEY, MAY THIS WITNESS BE EXCUSED?
MR. DOWNEY: YES, SIR.
JUDGE DAVILA: YOU'RE EXCUSED, SIR. THANK YOU VERY MUCH.
NIMESH JHAVERI: THANK YOU.
JUDGE DAVILA: YOU'RE WELCOME. YOU CAN JUST LEAVE ALL OF THE BINDERS AND THINGS THERE.
NIMESH JHAVERI: THANK YOU.
JUDGE DAVILA: THE GOVERNMENT HAS ANOTHER WITNESS?
MR. SCHENK: YES, YOUR HONOR. THE UNITED STATES CALLS DR. SUNIL DHAWAN.
JUDGE DAVILA: ALL RIGHT. THANK YOU.
(PAUSE IN PROCEEDINGS.)
JUDGE DAVILA: GOOD AFTERNOON, SIR. IF YOU WOULD STAND THERE FOR JUST A MOMENT, OUR COURTROOM DEPUTY WILL BE WITH YOU IN JUST A SECOND. IF YOU WOULD RAISE YOUR RIGHT HAND WHILE YOU FACE HER, SHE HAS A QUESTION FOR YOU.
(GOVERNMENT'S WITNESS, SUNIL DHAWAN, WAS SWORN.)
NIMESH JHAVERI: YES.
JUDGE DAVILA: THANK YOU, SIR. PLEASE HAVE A SEAT HERE. PLEASE MAKE YOURSELF COMFORTABLE. FEEL FREE TO ADJUST THE CHAIR AND MICROPHONE AS YOU NEED. I'LL ENCOURAGE YOU TO SPEAK DIRECTLY INTO THE MICROPHONE. WHEN YOU ARE COMFORTABLE, WOULD YOU PLEASE STATE YOUR NAME AND THEN SPELL IT, PLEASE.
NIMESH JHAVERI: SUNIL S. DHAWAN. S-U-N-I-L, S, LAST NAME IS D-H-A-W-A-N.
JUDGE DAVILA: THANK YOU. COUNSEL.
MR. SCHENK: THANK YOU, YOUR HONOR.