Lisa Peterson — Direct
816 linesJUDGE DAVILA: BUT I JUST WANT TO RESERVE THOSE FOR OUR COURT PURPOSES FOR NOW. THANK YOU SO MUCH. THANK YOU. AND I THINK PEOPLE WERE IN AGREEMENT THAT WE WOULD NOT MEET ON THE 24TH OF NOVEMBER, THE DAY BEFORE THANKSGIVING, BUT INSTEAD WE WOULD MEET ON THE 18TH. I THINK THAT MEETS WITH EVERYONE'S APPROVAL. SO I WANT TO REMIND EVERYONE THAT WE'RE NOT IN SESSION DECEMBER 3RD. DECEMBER 3RD, WE WILL NOT BE IN SESSION ON THAT DATE. OKAY. I THINK THAT'S THE UPDATE FOR SCHEDULING PURPOSES. LET ME TURN TO ANOTHER TOPIC THAT REGRETTABLY HAS BEEN A CONTINUOUS ISSUE HERE IN THIS COURTROOM FOR THIS TRIAL, AND THAT IS THE NOISE. THIS IS REALLY -- AND I'M SPEAKING TO OUR PUBLIC AUDIENCE HERE. I'M GRATEFUL THAT YOU ARE HERE. I'M GRATEFUL THAT YOU ARE PARTICIPATING AND WITNESSING YOUR JUSTICE SYSTEM IN ACTION IN REALTIME.
I HAVE PERMITTED INDIVIDUALS TO REPORT HERE WITH LAPTOPS AND OTHER DEVICES ON THE CONDITION THAT THEY HAVE SILENT KEYBOARDS, AND I JUST WANT EVERYONE TO KNOW THAT I HAVE RECEIVED REPORTS THROUGH MS. KRATZMANN THAT, INCLUDING FROM JURY MEMBERS AND OTHER PARTICIPANTS IN THE TRIAL, THAT THE NOISE LEVEL FROM THESE KEYBOARDS IS BECOMING DISTRACTING, HAS BEEN DISTRACTING AT TIMES THROUGHOUT THE TRIAL. AND I'M GOING TO ASK INDIVIDUALS AGAIN, IF YOU DON'T HAVE A SILENT KEYBOARD, YOU SHOULDN'T BE IN THIS COURTROOM. YOU SHOULD BE IN THE OVERFLOW ROOM DOWNSTAIRS WHERE YOU CAN USE YOUR DEVICE. I UNDERSTAND THAT NOT ALL OF YOU HAVE THESE SILENT KEYBOARDS AND THAT SOMETIMES TYPING SPEED IS OF ESSENCE IN THE COMPLETION OF YOUR DUTIES, AND I RESPECT THAT. BUT I HOPE YOU ALSO ARE RECIPROCAL FOR THE JUDICIAL PROCESS AND THE TRIAL PROCESS AND THE NEED TO PROTECT MS. HOLMES'S RIGHT TO A FAIR TRIAL AND THE GOVERNMENT'S RIGHT TO PUT A PROSECUTION ON IN A FAIR AND FULSOME MANNER.
THERE IS SOME TENSION BETWEEN THESE TWO, I MENTIONED EARLIER, AND THE SOLUTION THAT WE HAVE FOR THIS TENSION IS TO ALLOW THOSE OF YOU TO PARTICIPATE IN REALTIME IN OUR OVERFLOW ROOM WHERE YOUR TYPEWRITERS CAN BE USED WITHOUT ANY ISSUE ABOUT DISTURBING THE TRIAL PROCESS DOWN THERE. IT MAY BE, AND I HOPE IT DOESN'T COME TO THIS, BUT IF THIS CONTINUES, IT MAY BE THAT I'LL HAVE ANYONE WHO IS GOING TO TYPE, INCLUDING THOSE OF YOU WHO HAVE SILENT KEYBOARDS AND THOSE WHO HAVE BEEN ABLE TO MONITOR YOUR TYPING AND KEEP YOUR TYPING SILENT, I'LL HAVE TO ASK ALL OF YOU TO GO DOWN TO THAT ROOM AND USE THE OVERFLOW ROOM. AND I HATE TO SEND ALL OF YOU DOWN THERE, INCLUDING THOSE OF YOU WHO ARE PRESCRIBING BY THE RULES OF BEING SILENT IN YOUR DEVICES, BUT IT MAY CAUSE -- BECAUSE OF THE ACTIONS OF A FEW, IT MAY CAUSE ALL OF YOU TO HAVE TO GO DOWN THERE AND SIT IN THAT ROOM. SO I JUST WANT TO PUT YOU ON NOTICE ABOUT THAT.
I MAY BRING UP ANOTHER MARSHAL TO MONITOR THINGS HERE SUCH THAT WE CAN KEEP THAT PORTION OF THE COURTROOM SILENT SO THAT EVERYONE, AND PARTICULARLY THE JURORS, CAN HEAR THESE PROCEEDINGS IN A FAIR AND FULL MANNER. SO I JUST WANT TO STATE THAT NOW. AND I APPRECIATE YOUR -- THOSE OF YOU WHO ARE TYPING HERE, I APPRECIATE YOUR CONSIDERATION ABOUT THIS. BUT I JUST HAVE TO GIVE YOU FAIR WARNING, IT MAY BE THAT I'LL HAVE TO HAVE YOU ALL MOVE DOWN TO THAT ROOM IF YOU'RE NOT ABLE TO KEEP YOUR DEVICES SILENT. AND LET ME SAY THAT ALSO INCLUDES TELEPHONE DEVICES. THIS MORNING I THINK WE HEARD TWO OR THREE RINGS, CHIMES OF PHONES GOING OFF, AND IF I BRING A MARSHAL IN HERE AND IF SHE HEARS A DEVICE, SHE'S GOING TO ASK YOU TO LEAVE, NOT JUST TURN OFF THE DEVICE. BUT YOU CAN'T BE HERE IN IF YOU'RE NOT ABLE TO POLICE IT. THIS TRIAL HAS BEEN GOING ON FOR SEVERAL WEEKS. MANY OF YOU HAVE BEEN HERE EVERY DAY OF THE TRIAL, AND I THINK YOU KNOW WHAT IS EXPECTED OF YOU. SO THAT'S ALL I'M GOING TO SAY ON THE MATTER. THANK YOU VERY MUCH. I THINK OUR JURORS WOULD BE GRATEFUL ALSO FOR THE ABILITY TO KEEP THAT FROM BEING A DISTRACTION FROM THEIR DUTIES. ALL RIGHT. ANYTHING FURTHER FROM EITHER SIDE?
MR. DOWNEY: YOUR HONOR, I JUST WANT TO REMIND THE COURT THAT I THINK YOU WERE GOING TO ENGAGE A PROTOCOL IF THERE WERE A DISTRACTION.
JUDGE DAVILA: THANK YOU. THANK YOU, MR. DOWNEY. LET ME JUST INDICATE THAT I RECOGNIZE THAT THERE MAY BE SOMEONE WHO NEEDS TO TAKE A BREAK FOR WHATEVER REASON IN THE JURY, AND IF YOU WOULD JUST RAISE YOUR HAND, PLEASE, RAISE YOUR HAND IF YOU NEED TO TAKE A BREAK AND WE WILL STOP THE PROCEEDING IMMEDIATELY AND WE CAN TAKE WHATEVER ACTION WE NEED TO DO TO ALLOW THAT JUROR ACCESS TO WHATEVER NEED THEY NEED TO ACCOMPLISH. I JUST WANT THAT TO BE KNOWN. SO PLEASE -- I KNOW THAT JUROR AND ALL OF YOU ARE GOING TO CONTINUE TO PAY ATTENTION TO THE TESTIMONY HERE, BUT SHOULD THE NEED ARISE THAT WE NEED TO TAKE A BREAK, PLEASE DO NOT BE SHY ABOUT PUTTING YOUR HAND UP, PUT YOUR HAND UP, AND WE'LL STOP THE PROCEEDINGS AND ALLOW THINGS TO GO FORWARD. ALL RIGHT. THANK YOU. THANK YOU, MR. DOWNEY. I APPRECIATE IT. YOU HAVE A WITNESS?
MR. LEACH: WE DO, YOUR HONOR. THE UNITED STATES CALLS LISA PETERSON.
JUDGE DAVILA: AND WE'RE GOING TO BREAK AT 11:00; IS THAT RIGHT?
MS. TREFZ: YES, IT IS.
JUDGE DAVILA: 11:00?
MS. TREFZ: YES.
JUDGE DAVILA: GOOD MORNING. IF YOU WOULD COME FORWARD, PLEASE. IF YOU COULD STAND HERE FACING OUR COURTROOM DEPUTY WHILE YOU RAISE YOUR RIGHT HAND, SHE HAS A QUESTION FOR YOU.
(GOVERNMENT'S WITNESS, LISA PETERSON, WAS SWORN.)
LISA PETERSON: YES.
JUDGE DAVILA: LET ME INVITE YOU TO HAVE A SEAT HERE. FEEL FREE TO ADJUST THAT CHAIR AND MICROPHONE AS YOU MAKE YOURSELF COMFORTABLE. THERE'S SOME FRESH WATER IN THE CONTAINER, AND FEEL FREE TO USE THAT AS YOU NEED. WHEN YOU ARE COMFORTABLE, WOULD YOU PLEASE STATE YOUR NAME AND THEN SPELL IT, PLEASE. AND I'LL ENCOURAGE YOU TO SPEAK DIRECTLY INTO THE MICROPHONE.
LISA PETERSON: LISA PETERSON. L-I-S-A, P-E-T-E-R-S-O-N.
JUDGE DAVILA: THANK YOU. COUNSEL.
MR. LEACH: THANK YOU, YOUR HONOR.
DIRECT EXAMINATION BY MR. LEACH:
MR. LEACH: GOOD MORNING, MS. PETERSON.
LISA PETERSON: GOOD MORNING.
MR. LEACH: IF YOU'RE FULLY VACCINATED AND COMFORTABLE, YOU HAVE THE COURT'S PERMISSION TO TESTIFY WITHOUT A MASK. WHERE DO YOU WORK?
LISA PETERSON: I WORK FOR RDV CORPORATION IN GRAND RAPIDS, MICHIGAN.
MR. LEACH: AND WHAT IS RDV CORPORATION?
LISA PETERSON: RDV CORPORATION IS THE FAMILY OFFICE FOR THE DEVOS FAMILY, AND WE'RE ALSO A REGISTERED INVESTMENT ADVISOR FOR OTHER FAMILIES AS WELL.
MR. LEACH: WHAT DO YOU DO FOR RDV?
LISA PETERSON: I WORK IN THEIR INVESTMENT GROUP, AND I'M ONE OF TWO PRIVATE EQUITY MANAGERS THAT MANAGES A PRIVATE EQUITY PORTFOLIO FOR RDV CORPORATION.
MR. LEACH: AND HOW LONG HAVE YOU SERVED IN THE INVESTMENT GROUP FOR RDV CORPORATION?
LISA PETERSON: ABOUT 17 YEARS.
MR. LEACH: IN APPROXIMATELY OCTOBER OF 2014, DID RDV CORPORATION MAKE AN INVESTMENT IN THERANOS?
LISA PETERSON: YES.
MR. LEACH: WE'LL COME BACK TO THAT, BUT FOR NOW, COULD YOU BRIEFLY DESCRIBE YOUR EDUCATIONAL BACKGROUND FOR US?
LISA PETERSON: I GRADUATED FROM MICHIGAN STATE UNIVERSITY IN 1992 WITH A FINANCE DEGREE.
MR. LEACH: AND COULD YOU BRIEFLY DESCRIBE YOUR PROFESSIONAL BACKGROUND LEADING UP TO JOINING RDV CORPORATION?
LISA PETERSON: I WAS A COMMERCIAL LENDER AT NDB BANK, WHICH WAS BOUGHT BY FIRST CHICAGO AND IS NOW PART OF JPMORGAN CHASE, I THINK, FOR ABOUT THREE YEARS; AND THEN AFTER THAT I WAS AN INVESTMENT BANKER WITH MACDONALD INVESTMENTS, WHICH GOT BOUGHT BY KEY BANK, AND WAS THERE UNTIL I STARTED WITH RDV CORPORATION IN 2005.
MR. LEACH: AND SO YOU'VE BEEN WITH RDV FOR APPROXIMATELY 16 YEARS?
LISA PETERSON: YEAH.
MR. LEACH: OKAY. MOST OF MY QUESTIONS RELATE TO THE 2014 TIME PERIOD, MS. PETERSON. IN THAT TIME PERIOD, WHAT WAS YOUR JOB AGAIN?
LISA PETERSON: SAME AS IT IS NOW. I MANAGE A PORTFOLIO OF PRIVATE EQUITY INVESTMENTS, WHICH MEANS I FIND AND MANAGE PRIVATE EQUITY FUNDS, INVESTMENTS IN THOSE PRIVATE EQUITY FUNDS, AND OCCASIONALLY THOSE FUNDS WILL ASK US TO COINVEST ALONGSIDE OF THEM. AND SO I HAVE A PORTFOLIO OF PRIVATE EQUITY FUND MANAGERS THAT I MANAGE AND A PORTFOLIO OF COINVESTMENTS ALONGSIDE OF THOSE PRIVATE EQUITY MANAGERS THAT I MANAGE.
MR. LEACH: WHAT DO YOU MEAN BY A COINVESTMENT?
LISA PETERSON: A COINVESTMENT IS WHEN WE INVEST INSIDE THESE PRIVATE EQUITY FUNDS, AND THERE'S SOMETIMES AN OPPORTUNITY THAT COMES ALONG WHERE THE TRANSACTION THAT THEY'RE LOOKING AT IS A LITTLE BIT BIGGER THAN WHAT THE FUND CAN DO ON ITS OWN. THEY WILL ASK US IF WE WANT TO COINVEST ALONGSIDE THE FUND. SO WE'LL HAVE AN INVESTMENT IN THAT COMPANY THROUGH THE PRIVATE EQUITY FUND, AND WE'LL ALSO HAVE A SIDE COINVESTMENT IN THAT COMPANY AS A COINVESTMENT.
MR. LEACH: AS PRIVATE EQUITY MANAGER WITHIN RDV, IS IT IMPORTANT FOR YOU TO UNDERSTAND THE INVESTING PRIORITIES FOR RDV CORPORATION?
LISA PETERSON: YES.
MR. LEACH: CAN YOU EXPLAIN THAT A LITTLE BIT?
LISA PETERSON: WELL, WE HAVE A STRATEGY THAT WE FOLLOW AND WE TRY TO STAY DISCIPLINED TO THAT STRATEGY. SO IT'S IMPORTANT FOR ME TO KNOW WHAT THE FAMILY AND MY BOSS IS LOOKING FOR IN TERMS OF WHAT TYPE OF PRIVATE EQUITY FUNDS ARE WE GOING TO LOOK FOR AND INVEST WITH, AND THEN WHAT TYPE OF COINVESTMENTS WOULD WE DO WITH THOSE GROUPS. SO, YES, IT'S IMPORTANT THAT I KNOW WHAT THE STRATEGY IS THAT WE'RE DOING.
MR. LEACH: I WANT TO STAY WITH YOU IN THE TIME PERIOD 2014.
LISA PETERSON: UH-HUH.
MR. LEACH: IN OR AROUND THAT TIME, DID YOU BECOME AWARE OF A COMPANY CALLED THERANOS?
LISA PETERSON: YES.
MR. LEACH: AND HOW DID YOU BECOME AWARE OF THERANOS?
LISA PETERSON: I WAS ON A PLANE RIDE BACK FROM CHICAGO WITH MY BOSS, RANDY DAMSTRA, AT THE TIME, AND ALSO THE PERSON THAT RAN OUR GROUP, OUR CEO AND CIO, JERRY TUBERGEN, AND JERRY HAD JUST HAD A MEETING WITH ELIZABETH HOLMES AND HER BROTHER CHRISTIAN AT A CONFERENCE THAT HE HAD ATTENDED.
MR. LEACH: AND WERE YOU GIVEN ANY RESPONSIBILITIES WITH RESPECT TO A POSSIBLE INVESTMENT IN THERANOS?
LISA PETERSON: YEAH. WE TALKED ABOUT IT ON THE PLANE RIDE BACK TO GRAND RAPIDS AND I HAD ASKED IF I COULD WORK ON THE TRANSACTION BECAUSE I HAD A NUMBER OF HEALTH CARE INVESTMENTS, FUNDS THAT I WORKED WITH, AND I LIKE HEALTH CARE AND IT WAS VERY INTERESTING TO ME. MY HUSBAND IS TYPE 1 DIABETIC AND DOES A LOT OF BLOOD TESTING, AND SO IT WAS VERY INTERESTING TO ME AND SO I WANTED TO WORK ON THAT ONE.
MR. LEACH: WHEN YOU SAY YOU WANTED TO WORK ON THAT, WHAT WERE YOU SIGNING UP FOR?
LISA PETERSON: SO I WAS SIGNING UP TO HELP FACILITATE AND INFORM AND DO ALL OF THE WORK ASSOCIATED WITH MAKING AN INVESTMENT IN THAT AND INFORMING THE FAMILY. SO THIS ONE WAS DIFFERENT THAN A TYPICAL COINVESTMENT BECAUSE THERE WASN'T ANY PRIVATE EQUITY FUND IN THE MIDDLE OF THE TRANSACTION. NORMALLY THERE'S A PRIVATE EQUITY FUND THAT MAKES AN INVESTMENT AND THEN WE COINVEST ALONGSIDE THEM. THIS ONE WAS A LITTLE BIT DIFFERENT IN THAT THERE WAS NO PRIVATE EQUITY FUND AND WE WANTED -- THE FAMILY IS VERY -- HAS A LOT OF AFFINITY TOWARDS HEALTH CARE AND EDUCATION AND JERRY WANTED THE FAMILY TO TAKE A LOOK AT THIS INVESTMENT. IT WAS VERY MUCH CHARACTERIZED TO JERRY THAT THIS WAS AN OPPORTUNITY THAT WE WERE BEING INVITED TO LOOK AT, AND HE WANTED TO TAKE THE OPPORTUNITY TO THE FAMILY AND SEE IF THEY WANTED TO MAKE AN INVESTMENT. SO MY ROLE WAS TO WORK WITH JERRY AND INFORM THE FAMILY ON EVERYTHING AND ATTEND CALLS AND MEETINGS AND PREPARE EVERYTHING THAT WOULD GO TO THE INVESTMENT COMMITTEE, WHICH IS MADE UP OF FAMILY MEMBERS.
JUDGE DAVILA: MR. LEACH, WILL YOU ASK -- WAS THIS FOUNDATIONAL AS TO HER EMPLOYMENT THEN?
MR. LEACH: YES.
JUDGE DAVILA: ALL RIGHT. LADIES AND GENTLEMEN, THE TESTIMONY THAT YOU HEARD, THIS IS REGARDING THE -- WHAT'S HIS NAME? JERRY?
LISA PETERSON: TUBERGEN.
JUDGE DAVILA: TUBERGEN, THANK YOU. YES, THE STATEMENTS ATTRIBUTED TO MR. TUBERGEN WERE NOT OFFERED FOR THE TRUTH OF THE MATTER ASSERTED BY HIM, BUT RATHER AS FOUNDATIONAL FOR THIS WITNESS'S EMPLOYMENT AND HER DUTIES AND HER ENGAGEMENT IN THAT REGARD AS FOUNDATION. SO GO AHEAD, MR. LEACH.
MR. LEACH: THANK YOU, YOUR HONOR.
MR. LEACH: AND DID I HEAR YOU SAY THAT YOU IN SOME SENSE VOLUNTEERED FOR THIS PROJECT?
LISA PETERSON: YES.
MR. LEACH: AND WHY WAS THAT?
LISA PETERSON: BECAUSE IT DIDN'T COME IN THROUGH ONE OF MY PRIVATE EQUITY FUNDS, SOMEONE HAD TO WORK ON IT ON THE INVESTMENT TEAM. AND SO I WANTED TO, SO HE SAID, SURE, I WOULD LOVE FOR YOU TO WORK ON IT.
MR. LEACH: AND WHY DID YOU WANT TO?
LISA PETERSON: BECAUSE I HAD A LITTLE BIT OF KNOWLEDGE IN THE HEALTH CARE SPACE AND IT INTRIGUED ME.
MR. LEACH: MAY I APPROACH, YOUR HONOR?
JUDGE DAVILA: YES.
MR. LEACH: (HANDING.)
MR. LEACH: MS. PETERSON, I'VE PLACED BEFORE YOU A BINDER OF DOCUMENTS, AND I'D LIKE TO DRAW YOUR ATTENTION, PLEASE, TO WHAT HAS BEEN MARKED AS EXHIBIT 1944. DOES THIS APPEAR TO BE AN EMAIL DATED SEPTEMBER 18TH, 2014?
LISA PETERSON: YES.
MR. LEACH: AND IS THIS CONSISTENT WITH THE TIME PERIOD WHEN YOU WERE APPROACHED BY MR. TUBERGEN ABOUT A POSSIBLE INVESTMENT OPPORTUNITY IN THERANOS?
LISA PETERSON: YES.
MR. LEACH: OKAY. THERE'S AN ATTACHMENT TO EXHIBIT 1944. DO YOU SEE THAT?
LISA PETERSON: YES.
MR. LEACH: AND AT SOME POINT DID MR. TUBERGEN PROVIDE YOU WITH THIS ATTACHMENT?
LISA PETERSON: YES.
MR. LEACH: OKAY. DO YOU KNOW WHERE HE GOT IT?
LISA PETERSON: NO, I DON'T KNOW WHERE HE GOT IT.
MR. LEACH: OKAY. WAS IT PART OF THE INFORMATION THAT YOU CONSIDERED IN CONNECTION WITH A POSSIBLE INVESTMENT IN THERANOS?
LISA PETERSON: YES.
MR. LEACH: YOUR HONOR, I OFFER EXHIBIT 1944.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(GOVERNMENT'S EXHIBIT 1944 WAS RECEIVED IN EVIDENCE.)
MR. LEACH: AND IF WE CAN START, MS. HOLLIMAN, ON PAGE 2. AND IF WE CAN ZOOM IN ON THE TOP PORTION.
MR. LEACH: DO YOU SEE THE EMAIL, MS. PETERSON, FROM JERRY TUBERGEN TO DICK DEVOS, DOUG DEVOS, DAN DEVOS, AND CHERI DEVOS?
LISA PETERSON: YES.
MR. LEACH: AND WHO ARE THEY?
LISA PETERSON: THEY ARE THE CHILDREN OF RICH DEVOS AND THE MEMBERS THAT WE WORKED FOR AT THE TIME.
MR. LEACH: MEMBERS OF THE INVESTMENT COMMITTEE YOU MENTIONED?
LISA PETERSON: SOME OF THEM ARE ON THE INVESTMENT COMMITTEE, YES. DOUG IS THE CHAIRMAN.
MR. LEACH: OKAY. AND THE FIRST SENTENCE OF THIS READS, "ALL. "THIS MORNING, I HAD ONE OF THE MOST INTERESTING MEETINGS I CAN RECALL WITH THE WOMAN PROFILED IN THE ATTACHED 'FORTUNE' MAGAZINE ARTICLE." DO YOU SEE THAT?
LISA PETERSON: YES.
MR. LEACH: AND IS THE ATTACHMENTS THE "FORTUNE" MAGAZINE ARTICLE, A COPY OF WHICH YOU AT SOME POINT GOT?
LISA PETERSON: YES.
MR. LEACH: OKAY. LET'S LOOK AT PAGE 2. AND IF WE COULD ZOOM IN ON UP AT THE TOP. MS. PETERSON, THERE APPEARS TO BE SOME LANGUAGE -- WELL, BEFORE I ASK THAT QUESTION, DO YOU SEE THAT THIS IS AN ARTICLE BY ROGER PARLOFF?
LISA PETERSON: YES.
MR. LEACH: AND UP AT THE TOP IT SAYS "1/1000TH THERANOS TESTS CAN BE PERFORMED ON JUST A FEW DROPS OF BLOOD, OR ABOUT 1/100TH TO 1/1000TH OF ORDINARY AMOUNT." DO YOU SEE THAT LANGUAGE?
LISA PETERSON: YES.
MR. LEACH: AND WAS THAT OF INTEREST TO YOU?
LISA PETERSON: VERY.
MR. LEACH: WHY?
LISA PETERSON: BECAUSE NO ONE HAD BEEN ABLE TO DO THAT BEFORE.
MR. LEACH: LET ME DRAW YOUR ATTENTION TO THE NEXT PAGE, PAGE 4. DO YOU SEE AN IMAGE THERE?
LISA PETERSON: YES.
MR. LEACH: AND DO YOU RECOGNIZE THE PERSON IN THAT IMAGINE?
LISA PETERSON: YES.
MR. LEACH: AND WHO IS IT?
LISA PETERSON: THAT'S ELIZABETH HOLMES.
MR. LEACH: AND DO YOU SEE MS. HOLMES HERE IN THE COURTROOM TODAY?
LISA PETERSON: YES.
MR. LEACH: AND WHERE IS SHE SEATED?
LISA PETERSON: RIGHT THERE (INDICATING).
MR. LEACH: AT THE DEFENSE TABLE?
LISA PETERSON: YES.
MR. LEACH: AND CAN YOU JUST DESCRIBE FOR THE RECORD WHAT SHE'S WEARING?
LISA PETERSON: SHE HAS A GREEN MASK ON.
MR. LEACH: OKAY. THANK YOU. WHAT DID YOU DO WITH THIS ARTICLE?
LISA PETERSON: READ IT.
MR. LEACH: AND WAS THIS SORT OF THE FIRST INFORMATION THAT YOU GOT IN CONNECTION WITH THERANOS?
LISA PETERSON: YES, AND THEN STARTED DOING SOME GOOGLE SEARCHES ALSO.
MR. LEACH: OKAY. LET ME NEXT DRAW YOUR ATTENTION TO EXHIBIT 5432. DO YOU HAVE THAT IN FRONT OF YOU?
LISA PETERSON: YES.
MR. LEACH: OKAY. DO YOU SEE AT THE TOP AN EMAIL FROM JERRY TUBERGEN TO ELIZABETH HOLMES WITH A COPY TO DANIEL EDLIN AND AMI NEIL?
LISA PETERSON: AMI, YES.
MR. LEACH: AND WHO IS MS. NEIL?
LISA PETERSON: AMI NEIL IS JERRY'S SECRETARY OR ASSISTANT AT THE TIME.
MR. LEACH: AND DOES IT APPEAR TO BE FORWARDING A MESSAGE FROM MS. HOLMES ON OR ABOUT SEPTEMBER 24TH, 2014?
LISA PETERSON: YES.
MR. LEACH: YOUR HONOR, I OFFER EXHIBIT 5432 INTO EVIDENCE.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(GOVERNMENT'S EXHIBIT 5432 WAS RECEIVED IN EVIDENCE.)
BY MR. LEACH:
MR. LEACH: LET'S START DOWN ON THE BOTTOM, MS. PETERSON. THERE'S AN EMAIL FROM JERRY TUBERGEN WITH A CC TO D. MOSLEY, AND THE SUBJECT IS CONFIDENTIAL DISCLOSURE AGREEMENT. DO YOU SEE THAT?
LISA PETERSON: YES.
MR. LEACH: WHO WAS D. MOSLEY?
LISA PETERSON: DAN MOSLEY WAS AN ESTATE ATTORNEY FOR THE FAMILY, AND HE'S THE ONE WHO INTRODUCED US TO ELIZABETH HOLMES.
MR. LEACH: DO YOU KNOW WHETHER MR. MOSLEY ULTIMATELY INVESTED IN THERANOS?
LISA PETERSON: I BELIEVE SO, YES.
MR. LEACH: AND AT OR AROUND THIS TIME, DID RDV EXECUTE A CONFIDENTIAL DISCLOSURE AGREEMENT SO IT COULD CONSIDER INFORMATION ABOUT THERANOS?
LISA PETERSON: YES.
MR. LEACH: LET'S MOVE FORWARD IN THE EMAIL CHAIN TO THE MESSAGE FROM MS. HOLMES. DO YOU SEE WHERE IT SAYS, "GOT IT. WE'RE VERY MUCH LOOKING FORWARD TO OUR MEETING"?
LISA PETERSON: YES.
MR. LEACH: AND DO YOU SEE MS. HOLMES WROTE, "I'VE HAD OUR TEAM PREPARE MATERIALS FOR YOU - LET US KNOW THE BEST ADDRESS TO WHICH TO SEND THEM AND WE'LL GET THEM OUT TO YOU." DO YOU SEE THAT?
LISA PETERSON: YES.
MR. LEACH: AND ULTIMATELY DID YOU RECEIVE SOME MATERIALS RELATING TO THERANOS?
LISA PETERSON: YES.
MR. LEACH: DESCRIBE FOR US WHAT YOU GOT.
LISA PETERSON: TWO VERY LARGE BINDERS AND A COVER LETTER.
MR. LEACH: OKAY. AND DID YOU REVIEW THOSE MATERIALS?
LISA PETERSON: ALL OF IT, YES.
MR. LEACH: WHY DID YOU REVIEW ALL OF IT?
LISA PETERSON: TRYING TO LEARN WHAT THIS COMPANY WAS ALL ABOUT, AS WELL AS MY PRIMARY JOB WAS TO INFORM THE FAMILY AND THE INVESTMENT COMMITTEE ON THIS OPPORTUNITY.
MR. LEACH: AND DID YOU -- DID YOU VIEW YOUR ROLE AS INFORMING THE FAMILY ABOUT WHAT WAS IMPORTANT AND RELEVANT TO AN INVESTMENT?
LISA PETERSON: YES.
MR. LEACH: DID YOU ULTIMATELY SPEAK TO MS. HOLMES BY TELEPHONE?
LISA PETERSON: JERRY AND I DID, YES.
MR. LEACH: OKAY. ROUGHLY WHEN WAS THAT?
LISA PETERSON: FIRST COUPLE OF DAYS OF OCTOBER 2014.
MR. LEACH: OKAY. BY THAT POINT IN TIME, HAD YOU REVIEWED THE MATERIALS THAT THERANOS HAD SENT?
LISA PETERSON: I HAD I THINK JUST GOTTEN THEM THAT MORNING FROM JERRY.
MR. LEACH: OKAY. LET ME DRAW YOUR ATTENTION TO WHAT WE HAVE MARKED AS EXHIBIT 2015. DO YOU RECOGNIZE THIS DOCUMENT?
LISA PETERSON: YES.
MR. LEACH: WHAT IS THIS?
LISA PETERSON: THIS WAS THE NOTES FROM THE CALL THAT WE HAD WITH ELIZABETH ON THAT DAY, WHICH WAS THE START OF A LOT OF INFORMATION THAT WE PULLED TOGETHER, THAT I PULLED TOGETHER FOR THIS IN PREPARATION FOR A LONGER MEETING AT THE COMPANY A WEEK OR TWO LATER.
MR. LEACH: DID YOU PREPARE THESE NOTES IN THE ORDINARY COURSE OF BUSINESS?
LISA PETERSON: YES.
MR. LEACH: AND DID YOU MAKE AN EFFORT TO BE ACCURATE IN YOUR NOTES?
LISA PETERSON: VERY.
MR. LEACH: AND WAS IT YOUR REGULAR PRACTICE TO TAKE NOTES OF CALLS OF POTENTIAL INVESTMENT OPPORTUNITIES?
LISA PETERSON: YES.
MR. LEACH: OKAY. YOUR HONOR, I OFFER EXHIBIT 215.
MR. LEACH: 2015. EXCUSE ME.
JUDGE DAVILA: 2015 IS ADMITTED, AND IT MAY BE PUBLISHED.
(GOVERNMENT'S EXHIBIT 2015 WAS RECEIVED IN EVIDENCE.)
BY MR. LEACH:
MR. LEACH: LET'S LOOK AT THE TOP PORTION OF YOUR NOTES, MS. PETERSON. UP AT THE TOP IT SAYS, "THERANOS CONF CALL NOTES." DO YOU SEE THAT?
LISA PETERSON: YES.
MR. LEACH: AND OCTOBER 3RD, 2014, THAT'S THE DATE OF THE MEETING?
LISA PETERSON: YES.
MR. LEACH: OR THE PHONE CALL? YOU WROTE "ELIZABETH HOLMES. "JLT, LP" WHAT DOES THAT REFER TO?
LISA PETERSON: THE PEOPLE ON THE CALL. SO ELIZABETH WAS ON THE CALL FROM HER SIDE, AND JLT IS JERRY TUBERGEN, AND LP IS ME.
MR. LEACH: AND YOU WROTE, "WHAT IS THE LONG-TERM VISION OF THERANOS?" WHAT WAS THAT GETTING AT?
LISA PETERSON: THE BOLD THINGS IN THIS MEMO ARE THE QUESTIONS THAT JERRY AND I HAD THOUGHT OF BEFORE THE CALL. SO THESE ARE THE QUESTIONS THAT WE WANTED TO ASK, WITH THE REST OF IT BEING THE ANSWERS THAT WE GOT.
MR. LEACH: OKAY. THERE'S AN ENTRY "WALGREENS (MARKET: 11 MM." IS THAT MILLION?
LISA PETERSON: YES.
MR. LEACH: " -- (TESTS/MONTH). "BOOTS IN EUROPE." WHAT IS THAT REFERRING TO?
LISA PETERSON: THE SIZE OF THE MARKET, THE PHARMACEUTICAL TESTING MARKET WITH WALGREENS.
MR. LEACH: AND WAS THAT SOMETHING THAT YOU DISCUSSED WITH MS. HOLMES ON THIS OCTOBER 2014 PHONE CALL?
LISA PETERSON: YES.
MR. LEACH: AND THERE'S A REFERENCE TO "INSURANCE, HOSPITALS/DOC GROUPS." WHAT DOES THAT REFER TO?
LISA PETERSON: THE SAME, THAT THESE WERE -- WE WERE TRYING TO GET A SENSE OF THE MARKET. SHE HAD REFERENCED CONTRACTS WITH MANY OF THESE GROUPS, SO WE WERE TRYING TO GET A SENSE OF IF THEY COULD PENETRATE THE MARKET, HOW BIG WOULD THAT BE, HOW BIG IS THE MARKET?
MR. LEACH: IF WE CAN ZOOM OUT, MS. HOLLIMAN, AND THERE'S A BOLD ENTRY FOR WALGREENS. THE BOTTOM HALF OF THE PAGE WOULD BE GREAT. THANK YOU. DO YOU SEE THE REFERENCE TO, "WALGREENS, NATIONAL ROLLOUT, PROJECTIONS BASED ON 900 STORES?
LISA PETERSON: YES.
MR. LEACH: AND WHAT DOES THAT REFER TO?
LISA PETERSON: WE TALKED ABOUT WALGREENS CONTRACTS WHICH WERE VERY MUCH IN THE PRESS AT THE TIME, AND SHE WAS GOING THROUGH THAT THEY HAD THIS CONTRACT AND THAT THEY WERE IN STORES IN ARIZONA AND THAT THEY WERE PREPPING FOR A NATIONAL ROLLOUT AND THAT THE PROJECTIONS THAT WERE IN -- THERE WERE TWO PAGES OF PROJECTIONS IN THE BINDER THAT WE RECEIVED, AND THAT THE PROJECTIONS THAT WERE THERE WERE BASED ON A ROLLOUT OF 900 STORES FOR WALGREENS IN 2015.
MR. LEACH: SO MS. HOLMES TOLD YOU THAT THE PROJECTIONS YOU HAD WERE BASED ON 900 STORES --
LISA PETERSON: YES.
MR. LEACH: -- FOR WALGREENS. BENEATH THAT, THERE'S A BOLD HEADING, "RISKS." "WE NOW HAVE LONG-TERM CONTRACTS, SO RISK IS EXECUTION." WHAT DID MS. HOLMES TELL YOU ABOUT THE RISKS OF AN INVESTMENT IN THIS PARTICULAR CALL?
LISA PETERSON: THAT'S EXACTLY -- WE ASKED HER WHAT THE RISKS WERE, AND THAT WAS HER ANSWER.
MR. LEACH: WHAT DID THAT MEAN, "NOW HAVE LONG-TERM CONTRACTS, SO RISK IS EXECUTION"?
LISA PETERSON: TO US IT MEANT THAT SHE HAD THESE LONG-TERM CONTRACTS AND THEY WERE ALREADY USING THEM IN WALGREENS STORES, AND THE EXECUTION WAS THE PEOPLE THAT SHE HAD AROUND HER AND THE ABILITY FOR WALGREENS TO ROLL OUT AND LAUNCH IT IN DIFFERENT MARKETS THAN JUST ARIZONA.
MR. LEACH: WAS THERE ANY DISCUSSION OF THERE BEING RISK AROUND THE UTILITY OF THE TECHNOLOGY?
LISA PETERSON: NONE.
MR. LEACH: LET'S LOOK AT THE NEXT PAGE, PLEASE. IF WE CAN ZOOM IN ON THE HEADING. THERE YOU GO. THANK YOU, MS. HOLLIMAN. DO YOU SEE HEADING, "GOALS FOR OCTOBER 14" AT THE TOP?
LISA PETERSON: YES.
MR. LEACH: WHAT DOES THAT REFER TO?
LISA PETERSON: THAT WAS THE DATE THAT WE HAD AN IN PERSON MEETING WITH HER WITH A FEW PEOPLE FROM THE INVESTMENT COMMITTEE.
MR. LEACH: OKAY. AND THEN THERE'S SOME WRITING UNDERNEATH THAT, "GET TO KNOW THE PEOPLE WHO ARE MAKING THE INVESTMENT AND WILL BE KEY IN THE RELATIONSHIP GOING FORWARD." DO YOU SEE THAT?
LISA PETERSON: YES.
MR. LEACH: AND DURING THIS TIME PERIOD, DID YOU FEEL AS IF THERANOS WAS SELECTING YOU AS AN INVESTOR?
LISA PETERSON: VERY MUCH SO.
MR. LEACH: EXPLAIN THAT FOR US.
LISA PETERSON: WE WERE VERY MUCH -- THE SITUATION WAS CHARACTERIZED THAT SHE WAS KIND OF HAND PICKING FIVE OR SIX PRIVATE FAMILIES TO INVEST IN HER COMPANY. SHE DIDN'T WANT LARGE PRIVATE EQUITY FIRMS OR INSTITUTIONAL INVESTORS BECAUSE THEIR TIMEFRAMES WERE TOO SHORT. THEY WANTED TO MONETIZE THAT INVESTMENT QUICKER THAN SHE WANTED TO. AND OFTENTIMES THEY WANT TO GO PUBLIC, AND SHE WANTED TO STAY A PRIVATE COMPANY. SO IT WAS VERY MUCH CHARACTERIZED AND WRITTEN IN HER LETTER TO US WITH THE BINDERS THAT SHE WAS INVITING US TO PARTICIPATE IN THIS OPPORTUNITY. SO THE GET TO KNOW THE PEOPLE WHO ARE MAKING THE INVESTMENT WAS WHAT SHE WAS SAYING, THAT THEY REALLY WANTED TO GET TO KNOW US AS MUCH AS WE WANTED TO DO DUE DILIGENCE ON THEM. THEY WANTED TO UNDERSTAND WHO THE INVESTORS WERE THAT WERE INVESTING WITH THEM.
MR. LEACH: LET ME MOVE FORWARD IN TIME AND DRAW YOUR ATTENTION TO WHAT HAS BEEN MARKED AS EXHIBIT 2073. DO YOU HAVE THAT, MS. PETERSON?
LISA PETERSON: YES.
MR. LEACH: AND DO YOU RECOGNIZE THIS?
LISA PETERSON: YES.
MR. LEACH: AND WHAT IS THIS?
LISA PETERSON: SO AFTER THAT PHONE CALL, I PUT TOGETHER A VERY THOROUGH MEMO OF ALL OF THE THINGS THAT I HAD READ IN THE BINDER AND EVERYTHING THAT WAS SAID ON THE PHONE CALL AND PUT IT TOGETHER INTO A MEMO THAT THE FAMILY COULD UTILIZE IN REVIEWING THIS OPPORTUNITY, AND WE WERE GOING TO REVIEW THIS MEMO ON THE PLANE RIDE ON THE WAY TO THE OCTOBER 14TH MEETING.
MR. LEACH: OKAY. WHY DID YOU PREPARE THIS MEMO?
LISA PETERSON: TO CONSOLIDATE ALL OF THE INFORMATION THAT WE HAD RECEIVED SO FAR FROM MS. HOLMES --
MR. LEACH: SO --
LISA PETERSON: -- IN THE BINDERS.
MR. LEACH: SO THAT RDV COULD MAKE AN INVESTMENT DECISION?
LISA PETERSON: CORRECT.
MR. LEACH: YOUR HONOR, I OFFER EXHIBIT 2073 INTO EVIDENCE.
JUDGE DAVILA: IT'S ADMITTED, AND IT MAY BE PUBLISHED.
(GOVERNMENT'S EXHIBIT 2073 WAS RECEIVED IN EVIDENCE.)
MR. LEACH: AND, MS. HOLLIMAN, IF WE CAN ZOOM IN ON THE SUBSTANCE.
MR. LEACH: MS. PETERSON, LET ME JUST GET SOME BACKGROUND FROM YOU. DO YOU SEE THE DATE OCTOBER 12TH, 2014?
LISA PETERSON: YES.
MR. LEACH: AND THAT'S A FEW DAYS IN ADVANCE OF THE MEETING OUT IN PALO ALTO?
LISA PETERSON: CORRECT.
MR. LEACH: AND THERE WERE SOME FOLKS. WE TALKED ABOUT MR. TUBERGEN, HE WAS YOUR BOSS AT THE TIME?
LISA PETERSON: YES.
MR. LEACH: AND IN THE CC LINE THERE'S AN INDIVIDUAL MICHAEL LUNT. WHO IS HE?
LISA PETERSON: OUR IN-HOUSE COUNSEL.
MR. LEACH: AND RANDY DAMSTRA, I THINK YOU MENTIONED HIM EARLIER, BUT WHO IS HE?
LISA PETERSON: HE RAN THE INVESTMENT GROUP.
MR. LEACH: YOU WRITE TO THIS GROUP IN THE THIRD LINE, "I THINK IT GIVES YOU AND THE FAMILY MEMBERS GOING ON THIS TRIP A SHORT BUT SOLID BASIS OF THE COMPANY, ITS OBJECTIVES, ITS HISTORY, ITS ADVANTAGES, ITS SKEPTIC'S VIEWS, ET CETERA, AND ENOUGH OF A VIEW TO HAVE AN ENGAGED AND PRODUCTIVE MEETING ON TUESDAY WITHOUT HAVING TO READ THROUGH THE FOOT OF MATERIALS SHE SENT." IS THAT A FAIR SUMMARY OF WHAT YOU WERE TRYING TO DO?
LISA PETERSON: YES.
MR. LEACH: AND THE FOOT OF MATERIALS, THOSE WERE THE BINDERS THAT YOU PERSONALLY REVIEWED?
LISA PETERSON: YES.
MR. LEACH: AND LET'S LOOK AT YOUR MEMO. IF WE CAN GO TO PAGE 4, AND IF WE CAN ZOOM IN ON THE TOP HALF. PERFECT, MS. HOLLIMAN. THANK YOU. DO YOU SEE WHERE IT SAYS, "RECAP OF CONVERSATIONS WITH ELIZABETH HOLMES, FOUNDER AND CEO OF THERANOS, AND EXCERPTS FROM WRITTEN MATERIALS PROVIDED TO RDV ON THE COMPANY"?
LISA PETERSON: YES.
MR. LEACH: AND AT THIS POINT, DID YOU HAVE ANY OTHER SOURCE OF INFORMATION FROM THERANOS BESIDES MS. HOLMES?
LISA PETERSON: THE PHONE CALL FROM MS. HOLMES AND THE BINDERS WERE THE TWO THINGS, AS WELL AS WHAT I COULD FIND ON THE INTERNET.
MR. LEACH: OKAY. YOU WRITE UNDER THE HEADING, "WHAT IS THERANOS TODAY? "INSTEAD OF VIALS OF BLOOD (ONE FOR EVERY TEST NEEDED), THERANOS REQUIRES ONLY A PINPRICK AND A DROP OF BLOOD TO PERFORM HUNDREDS OF TESTS, FROM STANDARD CHOLESTEROL CHECKS TO SOPHISTICATED GENETIC ANALYSES." DO YOU SEE THAT?
LISA PETERSON: YES.
MR. LEACH: WHERE DID YOU GET THAT INFORMATION?
LISA PETERSON: FROM MS. HOLMES AND THE MATERIALS.
MR. LEACH: AND WAS THAT RELEVANT TO YOU?
LISA PETERSON: YES.
MR. LEACH: WHY?
LISA PETERSON: BECAUSE IT SAID THAT THEY COULD DO HUNDREDS OF TESTS WITH A PINPRICK WITH A FINGERSTICK OF BLOOD.
MR. LEACH: IT THEN SAYS, "THE RESULTS ARE FASTER (COUPLE HOURS), MORE ACCURATE (100 PERCENT AUTOMATED, NO MANUAL HANDLING OF THE SAMPLE), AND FAR CHEAPER THAN CONVENTIONAL METHODS." DO YOU SEE THAT LANGUAGE?
LISA PETERSON: YES.
MR. LEACH: AND WHERE DID YOU GET THAT INFORMATION?
LISA PETERSON: THAT WAS IN THE MATERIALS, AND WE TALKED ABOUT IT ON THE PHONE CALL AS WELL.
MR. LEACH: WAS THAT RELEVANT TO YOUR ANALYSIS OF THERANOS?
LISA PETERSON: YES.
MR. LEACH: HOW SO?
LISA PETERSON: IT SHOWED THAT THIS WAS GOING TO BE A GAME CHANGER FOR HEALTH CARE.
MR. LEACH: OKAY. LET ME DRAW YOUR ATTENTION TO PAGE 5 OF THE EXHIBIT. DO YOU SEE THE HEADING, "WHAT ARE THE MAIN RISKS THAT THERANOS FACES?"
LISA PETERSON: YES.
MR. LEACH: AND IN THAT FIRST SENTENCE, YOU WROTE, "HOLMES BELIEVES THE COMPANY'S PRIMARY RISK IS THE EXECUTION OF ITS BUSINESS PLAN RATHER THAN TECHNOLOGY, VALIDATION, AND CUSTOMER ACCEPTANCE." DO YOU SEE THAT LANGUAGE?
LISA PETERSON: YES.
MR. LEACH: AND WHERE DID YOU GET THAT INFORMATION?
LISA PETERSON: WE TALKED ABOUT THAT ON THE PHONE, AS WELL AS IT'S IN HER PACKET OF INFORMATION.
MR. LEACH: AND WAS IT RELEVANT TO YOU THAT THE COMPANY'S PRIMARY RISK WAS EXECUTION RATHER THAN TECHNOLOGY VALIDATION?
LISA PETERSON: YES.
MR. LEACH: HOW SO?
LISA PETERSON: IT GOES ON FURTHER TO SAY THAT IT HAD BEEN DOING WORK FOR PHARMACEUTICAL COMPANIES FOR THE LAST 9 YEARS, 10 OF THE TOP 15, AND THAT LENDED A LOT OF CREDIBILITY THAT WHAT SHE WAS SAYING WAS TRUE, THAT THESE TESTS, THE FINGERSTICK TESTS WORKED.
MR. LEACH: LET ME DRAW YOUR ATTENTION, PLEASE, TO THE BOTTOM OF PAGE 5. DO YOU SEE THE HEADING, "WHAT ARE THERANOS'S KEY OBJECTIVES FOR THE MEETING ON OCTOBER 14TH?"
LISA PETERSON: YES.
MR. LEACH: AND THE LAST SENTENCE SAYS, "THUS, HOLMES AND THE THERANOS TEAM WANT TO GET TO KNOW THE PEOPLE MAKING THE INVESTMENT, UNDERSTANDING THEIR INVESTMENT PHILOSOPHY, AND TARGET INVESTMENT PROFILE, AS WELL AS MEET IN PERSON THOSE WHO WILL BE INTERACTING WITH THE COMPANY ON A GO-FORWARD BASIS." IS THAT WHAT WE TALKED ABOUT EARLIER IN TERMS OF THERE WAS AN ELEMENT OF THERANOS SELECTING YOU FOR THIS?
LISA PETERSON: YES, AND WE TALKED ABOUT THAT SPECIFICALLY ON THE PHONE CALL.
MR. LEACH: AND "YOU" MEANING RDV, NOT "YOU" LISA PETERSON?
LISA PETERSON: CORRECT.
MR. LEACH: LET'S LOOK BRIEFLY AT PAGE 6. AND IF WE CAN ZOOM IN ON THE TOP HALF OF THE PAGE, MS. HOLLIMAN. THAT'S GOOD. UP AT THE TOP, IT READS, "APPENDIX - STATISTICS AND NOTEWORTHY ITEMS." DO YOU SEE THAT, MS. PETERSON?
LISA PETERSON: YES.
MR. LEACH: AND WHAT DID YOU MEAN BY THAT?
LISA PETERSON: A LOT OF THIS WAS TAKEN FROM THE BINDERS THAT WE RECEIVED, OTHER THAN THIS SKEPTIC COMMENT AT THE BOTTOM OF THE PAGE, WHICH WERE MORE FOUND ONLINE.
MR. LEACH: AND WHY DID YOU INCLUDE THIS IN YOUR MEMO?
LISA PETERSON: BECAUSE I WANTED THE FAMILY MEMBERS GOING ON THE TRIP AND THE INVESTMENT COMMITTEE TO UNDERSTAND ALL OF THE THINGS THAT IT COULD DO.
MR. LEACH: OKAY. AND ALL OF THE INFORMATION THAT YOU THOUGHT WAS IMPORTANT?
LISA PETERSON: YES.
MR. LEACH: LET ME DRAW YOUR ATTENTION TO THE THIRD BULLET. DO YOU SEE WHERE IT SAYS IN THE SECOND SENTENCE, "THERANOS AUTOMATES THE PRE- AND POST-ANALYTIC PROCESSES (NO MANUAL HANDLING OF THE SAMPLE), DRASTICALLY MINIMIZING THE HUMAN ELEMENTS OF PROCESSING IS WHICH IS PROVEN TO CAUSE THE MAJORITY OF LAB TEST ERRORS." DO YOU SEE THAT?
LISA PETERSON: YES.
MR. LEACH: AND WHERE DID YOU GET THAT INFORMATION?
LISA PETERSON: I BELIEVE IT WAS BOTH IN THE BINDERS, AND WE ALSO TALKED ABOUT THAT AS WELL, THAT SHE HAD MENTIONED THAT MOST OF THE ISSUES -- THINGS THAT WENT WRONG WAS FROM THE PEOPLE PERSONALLY HANDLING THE BLOOD AND THE ASSAYS.
MR. LEACH: AND WAS THIS ATTRACTIVE TO YOU?
LISA PETERSON: YES.
MR. LEACH: LET'S MOVE DOWN TO THE BOTTOM HALF OF THE PAGE. AND I WANT TO DRAW YOUR ATTENTION, MS. PETERSON, TO THE THIRD BULLET ON THE SCREEN WHERE IT SAYS, "THERANOS USES THEIR OWN ANALYZER EQUIPMENT." DO YOU SEE THAT LANGUAGE?
LISA PETERSON: YES.
MR. LEACH: AND WHY WERE YOU INCLUDING THIS IN YOUR MEMO?
LISA PETERSON: BECAUSE THIS WAS THE REASON GIVEN THAT THEY DIDN'T HAVE TO HAVE FDA APPROVAL.
MR. LEACH: AND WHERE DID YOU GET THIS INFORMATION, THAT "THERANOS USES THEIR OWN ANALYZER EQUIPMENT"?
LISA PETERSON: BOTH FROM CONVERSATIONS AND THE BINDERS.
MR. LEACH: CONVERSATIONS WITH MS. HOLMES?
LISA PETERSON: YES.
MR. LEACH: AND WAS THAT IMPORTANT TO YOU?
LISA PETERSON: YES.
MR. LEACH: WHY?
LISA PETERSON: BECAUSE, AGAIN, IT ALL LENDS CREDIBILITY TO THE FACT THAT THE ANALYZER WORKS.
MR. LEACH: OKAY. IN THE NEXT BULLET, IT SAYS, "A THERANOS ANALYZER STATION IS A SMALL FRACTION OF THE SIZE OF A CURRENT LAB, MAKING IT POSSIBLE TO PLACE A THERANOS LAB IN THE OPERATING ROOM OR IN A MILITARY EVACUATION HELICOPTER, ON SHIPS, IN REFUGEE CAMPS, VIRTUALLY ANYWHERE." DO YOU SEE THAT LANGUAGE?
LISA PETERSON: YES.
MR. LEACH: AND WAS THAT RELEVANT TO YOU?
LISA PETERSON: VERY MUCH SO.
MR. LEACH: OKAY.
LISA PETERSON: IT MADE IT PORTABLE.
MR. LEACH: AND WHERE DID YOU GET THIS INFORMATION?
LISA PETERSON: FROM THE CONVERSATIONS AND THE BINDERS. MOSTLY THAT ONE IN THE CONVERSATIONS. WE TALKED ABOUT CERTAIN INSTANCES IN WHICH THEY WERE USING THE ANALYZER IN REAL LIFE.
MR. LEACH: MS. HOLMES TOLD YOU THAT?
LISA PETERSON: YES.
MR. LEACH: AND WHAT DID SHE SAY?
LISA PETERSON: THAT THEY WERE USING THEM ON MILITARY HELICOPTERS, AND AGAIN, THEY WERE USING THEM IN CLINICAL TRIALS WITH PHARMACEUTICAL COMPANIES.
MR. LEACH: IN THE NEXT BULLET IT SAYS, "INCUMBENT PLAYERS CRITICIZE THERANOS'S LACK OF PUBLICATION OF ANY VALIDATION STUDIES IN PEER-REVIEW JOURNALS." DO YOU SEE THAT LANGUAGE?
LISA PETERSON: YES.
MR. LEACH: AND THEN FURTHER ON IT SAYS, "UNLIKE MOST LABS, THERANOS DOES NOT BUY ANALYZER EQUIPMENT FROM A THIRD PARTY, AND THEY DO NOT SELL THEIR ANALYZERS TO OTHER LABS." DO YOU SEE THAT?
LISA PETERSON: YES.
MR. LEACH: AND WHERE DID YOU GET THAT INFORMATION?
LISA PETERSON: FROM OUR CONVERSATION AND THE BINDERS. MOSTLY OUR CONVERSATION AROUND THAT ONE.
MR. LEACH: WAS THAT RELEVANT TO YOU?
LISA PETERSON: VERY.
MR. LEACH: AND WHY WAS IT RELEVANT THAT THERANOS DID NOT BUY ANALYZER EQUIPMENT FROM THIRD PARTIES?
LISA PETERSON: BECAUSE IT WAS DIFFERENT THAN THE COMPETITORS AND IT MEANT THAT THEY DIDN'T HAVE TO HAVE FDA APPROVAL.
MR. LEACH: DID MS. HOLMES EVER TALK TO YOU ABOUT THE CONCEPT OF A LAB IN A BOX?
LISA PETERSON: YES.
MR. LEACH: AND TELL US ABOUT THAT, PLEASE.
LISA PETERSON: THAT WAS ESSENTIALLY WHAT -- HOW SHE DESCRIBED HER ANALYZER, THAT IT WAS A LAB IN A BOX AND IT WAS PORTABLE AND THAT THEY COULD DO HUNDREDS OF TESTS ON THAT BOX, AND THE GOAL WAS TO GET WITHIN, LIKE, FIVE MILES OF EVERY CONSUMER.
MR. LEACH: LET ME MOVE FORWARD IN TIME TO THE MEETING THAT YOU DESCRIBED IN PALO ALTO. DID THAT HAPPEN ON OR ABOUT OCTOBER 14TH?
LISA PETERSON: YES.
MR. LEACH: AND YOU FLEW OUT PERSONALLY FOR THAT MEETING?
LISA PETERSON: YES.
MR. LEACH: AND WHO ELSE WAS THERE?
LISA PETERSON: DOUG DEVOS WAS THERE, WHO CHAIRED THE INVESTMENT COMMITTEE; RICK DEVOS, WHO WAS ON THE INVESTMENT COMMITTEE; CHERI DEVOS, WHO WAS A SIBLING OF DOUG DEVOS; AND JERRY TUBERGEN AND MYSELF.
MR. LEACH: AND WHY DID YOU ATTEND?
LISA PETERSON: AGAIN, I WAS FACILITATING ALL OF THE INFORMATION AND HELPING THEM WITH INFORMING THEM ON THE INVESTMENT AND LISTENING AND TAKING A LOT OF NOTES.
MR. LEACH: AND WHO WAS THERE FROM THE THERANOS SIDE?
LISA PETERSON: ELIZABETH HOLMES AND SUNNY BALWANI.
MR. LEACH: DID YOU -- WAS THERE SOME TYPE OF POWERPOINT PRESENTATION DURING THE MEETING?
MR. LEACH: OKAY. DID YOU SEE ANY DEVICES DURING YOUR TIME?
LISA PETERSON: YES.
MR. LEACH: AND WHAT DID YOU SEE?
LISA PETERSON: THEY SHOWED US THE ANALYZER AND RAN IT, AND THEN EVENTUALLY TOWARDS THE END OF THE TOUR CHERI HAD HER BLOOD TESTED.
MR. LEACH: AND DESCRIBE THE ANALYZER THAT YOU SAW FOR US.
LISA PETERSON: IT LOOKED LIKE A COMPUTER TOWER. IT WAS SMALL AND PORTABLE.
MR. LEACH: OKAY. AND DID THEY SHOW YOU ANY THIRD PARTY DEVICES?
MR. LEACH: DID YOU SEE ANY OF THE PRODUCTION FACILITIES?
MR. LEACH: DID YOU STEP INTO THE CLINICAL LABORATORY?
LISA PETERSON: NO, NO.
MR. LEACH: OKAY. YOU SAID CHERI DEVOS'S BLOOD WAS DRAWN?
LISA PETERSON: YES.
MR. LEACH: AND DESCRIBE THAT FOR US, PLEASE.
LISA PETERSON: THEY HAD -- A PART OF THE BUILDING THAT THEY WERE IN HAD A -- WHAT LOOKED LIKE SOME SMALL LITTLE WALK-IN CLINICAL CLINIC, AND SHE WENT IN AND THEY DID A FINGERSTICK TEST ON HER AND, TO MY KNOWLEDGE, SHE RECEIVED THE RESULTS.
MR. LEACH: BUT YOU NEVER SAW THE RESULTS?
LISA PETERSON: NO, HUH-UH.
MR. LEACH: AND WAS THIS IN THE ROOM WITH THE ANALYZER THAT YOU DESCRIBED?
LISA PETERSON: NOT THE ONE THAT WE -- THERE WERE TWO DIFFERENT ROOMS. WE WENT IN ONE ROOM WHERE THEY SHOWED US HOW IT WORKED, AND THEN CHERI WENT INTO A LITTLE CLINIC AREA WITH ANOTHER ANALYZER, TWO DIFFERENT AREAS OF THE BUILDING.
MR. LEACH: AND HOW LONG DID THIS MEETING LAST?
LISA PETERSON: ABOUT FOUR OR FIVE HOURS.
MR. LEACH: HOW DID IT END?
LISA PETERSON: HOW DID IT END? WE, WE TALKED FOR A LONG, LONG TIME AND EVERYTHING WAS VERY FAVORABLE TOWARDS THE END. AND WE DEPARTED AND CAUCUSED IN THE -- I WAS GOING IN A DIFFERENT LOCATION AND EVERYONE ELSE WAS GOING BACK ON THE PLANE, AND WE CAUCUSED OUT WHERE WE PARKED FOR, I DON'T KNOW, A GOOD 15 OR 20 MINUTES.
MR. LEACH: DID YOU WRITE A CHECK THEN AND THERE?
LISA PETERSON: NO. NO. BUT THERE WAS CONVERSATION AROUND MOVING OUR AMOUNT. WHEN WE WENT TO THAT MEETING, THE THOUGHT WAS TO DO 50 MILLION POTENTIALLY, THAT'S WHAT WE WERE LOOKING AT; AND WHEN WE LEFT THE MEETING -- THEY HAD TALKED IN THE MEETING ABOUT OTHER INVESTORS COMING IN FOR 100 MILLION, AND SO THE FAMILY, DOUG AND JERRY, THOUGHT THAT 100 MIGHT BE A BETTER NUMBER FOR US TO DO.
MR. LEACH: LET ME DRAW YOUR ATTENTION, PLEASE, TO WHAT HAS BEEN MARKED AS EXHIBIT 4858 IN YOUR BINDER. DO YOU RECOGNIZE THIS DOCUMENTED?
LISA PETERSON: YES.
MR. LEACH: AND WHAT IS IT?
LISA PETERSON: THIS IS PART OF THE BINDERS THAT CAME AS PART OF THE DILIGENCE PACKETS.
MR. LEACH: AND DID YOU REVIEW THIS --
LISA PETERSON: YES.
MR. LEACH: LET ME PLEASE FINISH MY QUESTION. DID YOU REVIEW THIS AS PART OF PROVIDING INFORMATION TO RDV SO THAT IT COULD MAKE AN INVESTMENT DECISION?
LISA PETERSON: YES, THOROUGHLY.
MR. LEACH: YOUR HONOR, I OFFER EXHIBIT 4858.
MR. WADE: LET ME JUST BE CLEAR. WAS THIS THE ENTIRE BINDER THAT WAS OFFERED, OR IS THIS AN EXCERPT?
MR. LEACH: I'LL ASK THE WITNESS.
MR. LEACH: DO YOU KNOW, IS THIS THE ENTIRETY OF THE BINDER OR A PORTION OF THE BINDER?
LISA PETERSON: NO. NO.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(GOVERNMENT'S EXHIBIT 4858 WAS RECEIVED IN EVIDENCE.)
BY MR. LEACH:
MR. LEACH: DO YOU SEE THE HEADING THERANOS CONFIDENTIAL OVERVIEW, MS. PETERSON?
LISA PETERSON: YES.
MR. LEACH: AND LET ME PLEASE DRAW YOUR ATTENTION TO PAGE 3. THERE'S SOME HIGHLIGHTING AND SOME HANDWRITING ON PAGE 3. DO YOU SEE THAT?
LISA PETERSON: YES.
MR. LEACH: IS THAT YOUR HIGHLIGHTING AND HANDWRITING?
LISA PETERSON: YES.
MR. LEACH: OKAY. IT SAYS IN BLACK IN THE -- WHERE THE HIGHLIGHTING IS, "THERANOS'S PROPRIETARY PATENTED TECHNOLOGY RUNS COMPREHENSIVE BLOOD TESTS FROM A FINGERSTICK AND TESTS FOR MICRO-SAMPLES OF OTHER MATRICES AND GENERATES SIGNIFICANTLY HIGHER INTEGRITY DATA THAN CURRENTLY POSSIBLE." DO YOU SEE THAT LANGUAGE?
LISA PETERSON: YES.
MR. LEACH: AND IS THAT CONSISTENT WITH STATEMENTS THAT MS. HOLMES MADE TO YOU ON YOUR PHONE CALL WITH HER AND IN PALO ALTO?
LISA PETERSON: YES.
MR. LEACH: AND WAS THIS IMPORTANT TO YOU?
LISA PETERSON: VERY, YES.
MR. LEACH: IN THE NEXT ENTRY IT SAYS, "THERANOS IS THE WORLD'S FIRST AND ONLY CLIA-CERTIFIED LABORATORY RUNNING ITS TESTS ON MICRO-SAMPLES." AND THEN YOU WROTE "CLINICAL LAB IMPROVEMENT AMENDMENTS." IS THAT THE ACRONYM FOR CLIA?
LISA PETERSON: YES.
MR. LEACH: BEFORE THIS INVESTMENT, DID YOU HAVE ANY EXPERIENCE WITH CLIA?
MR. LEACH: LET'S LOOK AT PAGE 5, PLEASE. DO YOU SEE THE HEADING, "THERANOS IS CERTIFIED AS A HIGH COMPLEXITY CLIA LABORATORY"?
LISA PETERSON: YES.
MR. LEACH: AND THEN THERE'S A GREEN BAR, "HIGH COMPLEXITY REQUIRES THE HIGHEST LEVEL OF TRAINING, TECHNIQUE, RESULT INTERPRETATION, MOST STRINGENT STANDARDS, LABS ARE SURVEYED ROUTINELY AND RANDOMLY." WAS THIS IMPRESSIVE TO YOU?
LISA PETERSON: YES.
MR. LEACH: HOW SO?
LISA PETERSON: IT SHOWED THAT IT WAS A HIGH COMPLEXITY LAB, THAT THEY WERE RUNNING SOMETHING THAT WAS VERY COMPLEX AND DOING IT ACCURATELY.
MR. LEACH: AND WAS THAT SOMETHING THAT MS. HOLMES HELD OUT TO YOU IN YOUR MEETING OUT IN CALIFORNIA?
LISA PETERSON: YES.
MR. LEACH: OKAY. LET'S LOOK AT PAGE 7, PLEASE. DO YOU SEE THE HEADING, "THERANOS PROFICIENCY TESTING AND AUDITS"?
LISA PETERSON: YES.
MR. LEACH: AND DO YOU SEE THE LANGUAGE, "SINCE 2011 THERANOS'S CLIA LAB HAS BEEN SUBJECTED TO REGULAR PROFICIENCY TESTING BY MULTIPLE NATIONALLY RECOGNIZED AGENCIES"? DO YOU SEE THAT LANGUAGE?
LISA PETERSON: YES.
MR. LEACH: AND WAS THIS IMPRESSIVE TO YOU?
LISA PETERSON: YES.
MR. LEACH: AND DID YOU UNDERSTAND THAT THERANOS'S MINILAB DEVICE WAS BEING USED IN THE CLIA LAB SINCE 2011?
LISA PETERSON: YES.
MR. LEACH: AND DID YOU UNDERSTAND THAT THIS PROFICIENCY TESTING WAS DONE WITH RESPECT TO THERANOS'S MINILAB DEVICES BETWEEN 2011 AND 2014?
LISA PETERSON: YES.
MR. LEACH: AND IF THIS PROFICIENCY TESTING HAD RELATED TO ORDINARY FDA APPROVED MACHINES, WOULD THAT HAVE BEEN AS IMPRESSIVE TO YOU?
LISA PETERSON: IT WOULDN'T HAVE BEEN AS IMPRESSIVE. IT WOULD HAVE BEEN IMPRESSIVE, BUT NOT AS IMPRESSIVE AS THIS BECAUSE THIS HADN'T BEEN DONE BEFORE, THE FINGERSTICK.
MR. LEACH: PLEASE GO FORWARD TO PAGE 8. DO YOU SEE THE HEADING "VALIDATION OF THERANOS TESTS"?
LISA PETERSON: YES.
MR. LEACH: AND BENEATH THAT IT SAYS, "THERANOS HAS BEEN COMPREHENSIVELY VALIDATED OVER THE COURSE OF THE LAST SEVEN YEARS BY 10 OF THE 15 LARGEST PHARMACEUTICAL COMPANIES, WITH HUNDREDS OF THOUSANDS OF ASSAYS PROCESSED." I THINK YOU MENTIONED THIS EARLIER IN RESPECT OF YOUR MEMO. WAS THIS IMPRESSIVE TO YOU?
LISA PETERSON: YES.
MR. LEACH: HOW SO?
LISA PETERSON: IT, IT SAYS THAT THE -- WE TALKED ABOUT IT ALSO AT THE OCTOBER 14TH MEETING. I MEAN, IT WAS VERY IMPRESSIVE TO US THAT THEY HAD BEEN WORKING WITH PHARMACEUTICAL COMPANIES FOR THE LAST SO MANY YEARS AND DOING CLINICAL TRIALS. THEY WENT ON TO SAY THAT THEIR FINGERSTICK TECHNOLOGY WAS GREAT BECAUSE THEY COULD TEST SUBJECTS MULTIPLE TIMES A DAY, WHERE YOU COULDN'T DO THAT WITH A VENOUS TEST. AND, YES, IT WAS -- IT DEFINITELY LENT CREDIBILITY THAT THE TECHNOLOGY WORKS.
MR. LEACH: PLEASE MOVE FORWARD TO PAGE 12. DO YOU SEE THE HEADING "OVERVIEW OF CURRENT LABORATORY"?
LISA PETERSON: YES.
MR. LEACH: AND THERE IS SOME HIGHLIGHTING AND HANDWRITING. IS THAT YOUR HIGHLIGHTING AND HANDWRITING?
LISA PETERSON: YES.
MR. LEACH: OKAY. IN THE FIRST BULLET IT SAYS, "DECADES OLD BUSINESS PROCESSES - AND TECHNOLOGY INVESTMENTS AROUND THOSE BUSINESS PROCESSES - WITH VERY LITTLE MOTIVATION TO INNOVATE, HAS CREATED A DUOPOLY OF BUSINESSES BURDENED WITH INFRASTRUCTURE COSTS AND LITTLE/NO R&D." DO YOU SEE THAT?
LISA PETERSON: YES.
MR. LEACH: AND YOU WROTE QUEST LAB CORP. TO THE RIGHT. WHY DID YOU WRITE THAT?
LISA PETERSON: THAT WAS REFERRING TO THE DUOPOLY.
MR. LEACH: AND WHAT DID MS. HOLMES SAY TO YOU IN TERMS OF THERANOS'S INFRASTRUCTURE COSTS AND R&D INVESTMENTS?
LISA PETERSON: THAT THEY WERE OFFERING THE MARKET TEST RESULTS AT 50 TO 90 PERCENT LESS COSTS, WHICH WAS GOING TO BE VERY BIG FOR THE HEALTH CARE INDUSTRY.
MR. LEACH: PLEASE LOOK AT PAGE 14. DO YOU SEE THE HEADING "COST SAVINGS"?
LISA PETERSON: YES.
MR. LEACH: AND IS THIS ANOTHER SLIDE THAT YOU REVIEWED AS PART OF YOUR REVIEW OF THE THERANOS OPPORTUNITY?
LISA PETERSON: YES.
MR. LEACH: AND GENERALLY SPEAKING, WAS THE INFORMATION IN THIS POWERPOINT RELEVANT TO YOU?
LISA PETERSON: YES, VERY.
MR. LEACH: OKAY. THIS SAYS, "THE FULL RANGE OF TESTS. A FRACTION OF THE COSTS." AND THEN YOU HIGHLIGHTED 50 PERCENT. WHAT DID YOU UNDERSTAND THIS TO MEAN?
LISA PETERSON: WE WERE TOLD MULTIPLE TIMES THAT THEY COULD OFFER HUNDREDS OF TESTS. OUR THOUGHT WAS 200 TO 300 TESTS VIA FINGERSTICK ON THE ANALYZER, AND THEY WERE DONE AT 50 TO 90 PERCENT OF THE COSTS, AND ALL OF THE COSTS SHE SAID WERE PUBLISHED ON THEIR WEBSITE.
MR. LEACH: AND THIS COST SAVINGS SLIDE CONTINUES ON TO PAGE 15. IF WE COULD PLEASE LOOK AT THAT. AND THERE'S SOME MORE HIGHLIGHTING AND HANDWRITING DOWN AT THE BOTTOM. THERE'S A BULLET, "THE UNPRECEDENTED LACK OF VARIATION FROM SYSTEM TO SYSTEM YIELDS HIGHER INTEGRITY DATA." DO YOU SEE THAT?
LISA PETERSON: YES.
MR. LEACH: AND YOU WROTE "THERANOS IS STANDARDIZED"?
LISA PETERSON: YES.
MR. LEACH: WHAT DID THAT REFER TO?
LISA PETERSON: THAT THERE WASN'T ANY KIND OF MANUAL HUMAN INTERACTION WITH THE MACHINE, SO IT WAS MY WAY OF SAYING IT WAS STANDARDIZED.
MR. LEACH: OKAY. AND THAT'S INFORMATION THAT YOU GOT FROM MS. HOLMES?
LISA PETERSON: YES.
MR. LEACH: LET ME DRAW YOUR ATTENTION, PLEASE, TO PAGE 28. DO YOU SEE THE HEADING, "SAME TESTS, A WHOLE NEW APPROACH"?
LISA PETERSON: YES.
MR. LEACH: AND BENEATH THAT, "THE ACTIONABLE INFORMATION YOU NEED 1/1000TH THE SIZE OF A TYPICAL BLOOD DRAW." AND THERE ARE SOME IMAGES OF FINGERS AND TO THE RIGHT A SMALL VIAL. DO YOU SEE THAT?
LISA PETERSON: YES.
MR. LEACH: AND WHAT DID YOU UNDERSTAND THAT TO BE?
LISA PETERSON: THAT THAT WAS THE AMOUNT OF BLOOD THAT THEY NEEDED TO RUN THEIR HUNDREDS OF TESTS.
MR. LEACH: AND YOU HIGHLIGHTED, "THERANOS RUNS ANY TEST AVAILABLE IN CENTRAL LABORATORIES, AND PROCESSES ALL SAMPLE TYPES." WHY DID YOU HIGHLIGHT THAT?
LISA PETERSON: AGAIN, IT WAS JUST IN WRITING WHAT SHE HAD BEEN SAYING, THAT THEY WERE RUNNING HUNDREDS OF TESTS ON THIS ANALYZER.
MR. LEACH: AT THE BOTTOM IT SAYS, "THERANOS PROVIDES THE HIGHEST LEVEL OF OVERSIGHT, AUTOMATION, AND STANDARDIZATION IN OUR PRE- AND POST-ANALYTIC PROCESSES, ENSURING THE HIGHEST LEVELS OF ACCURACY AND PRECISION." WAS IT IMPRESSIVE TO YOU THAT THERANOS PROVIDED THE HIGHEST LEVELS OF ACCURACY AND PRECISION?
LISA PETERSON: YES, OF COURSE.
MR. LEACH: YOUR HONOR, I STILL HAVE MORE ON THIS DOCUMENT, BUT I KNOW IT'S 11:00 O'CLOCK.
JUDGE DAVILA: LET'S TAKE OUR BREAK. I SAID WE WOULD TAKE OUR BREAK AT 11:00, SO LET'S TAKE A 30 MINUTE BREAK AND WE'LL COME BACK. SO WE'LL BE IN RECESS.
(JURY OUT AT 11:01 A.M.)
JUDGE DAVILA: MS. PETERSON, YOU CAN STAND DOWN. PLEASE BE SEATED. THANK YOU. ALL RIGHT. THE RECORD SHOULD REFLECT THAT THE JURY HAS LEFT FOR A RECESS, AND THE WITNESS HAS LEFT THE COURTROOM. MR. DOWNEY?
MR. DOWNEY: YOUR HONOR, I JUST WANTED TO REQUEST THAT AT SOME POINT DURING THE BREAK THAT MR. SCHENK AND I HAVE A CHANCE TO HAVE A BRIEF CONVERSATION WITH YOU.
JUDGE DAVILA: SURE. WE CAN DO THAT RIGHT NOW IF YOU WOULD LIKE. SURE. I'LL ASK THE REPORTER TO JOIN US.
COURT CLERK: COURT IS IN RECESS.
(PROCEEDINGS HELD IN CHAMBERS.)
JUDGE DAVILA: COME ON IN. I'M SORRY. ALL RIGHT. WE'RE ON THE RECORD IN CHAMBERS WITH MR. DOWNEY AND MR. SCHENK AT MR. DOWNEY'S REQUEST.
MR. DOWNEY: YOUR HONOR, I WAS OBSERVING DURING OUR FIRST SESSION JUROR NUMBER 5. I THINK SHE'S CLEARLY DOING THE BEST THAT SHE CAN TO TRY TO FOLLOW THE PROCEEDINGS. THERE WERE INTERIM PERIODS WHERE I THINK SHE WAS COMPLETELY DISTRACTED FROM MY VANTAGE POINT. SO I AM -- I'M NOT SURE THAT WHAT WE'RE ASKING HER TO DO IN THE CURRENT CIRCUMSTANCE IS REALLY A FAIR REQUEST. I WONDER IF WE MIGHT ADJOURN WITH THE BALANCE OF TODAY AND ALLOW HER TO GET HER ARMS AROUND THE SITUATION, AND THEN WE CAN DECIDE WHAT THAT MEANS FOR THE REST OF THE PROCEEDING. BUT I'M CONCERNED ABOUT ONE JUROR BEING DISTRACTED DURING DIFFERENT PERIODS OF THE TRIAL. OBVIOUSLY IT'S NOT IN THE GOVERNMENT'S DIRECT, BUT I'M CONCERNED ABOUT IT.
JUDGE DAVILA: SURE. MR. SCHENK?
MR. SCHENK: FROM MY SEAT I DID NOT HAVE THE OPPORTUNITY TO OBSERVE THE JUROR. I'D BE HAPPY TO GO BACK AND ASK OTHER PEOPLE ON MY TEAM IF THEY HAD THE OPPORTUNITY TO OBSERVE HER, OR THE COURT COULD ASK HER, IF THE COURT IS INCLINED TO ADJOURN FOR THE DAY AND ASK HER IF THAT WOULD BE HELPFUL FOR THIS JUROR. I DON'T KNOW THAT I'M IN A POSITION TO COMMENT. I JUST DIDN'T SEE IT FROM WHERE I SIT.
JUDGE DAVILA: THANK YOU. I WAS KEEPING AN EYE ON HER THROUGH THE -- THIS MORNING FOR, I GUESS WE'VE BEEN IN TESTIMONY FOR MAYBE AN HOUR OR 45 MINUTES, AN HOUR. AT ONE POINT I NOTICED HER HEAD WAS DOWN, SHE WAS LOOKING TOWARDS HER LAP, AND I THOUGHT SHE WAS -- IT LOOKED LIKE SHE WAS MANIPULATING A PHONE, MAYBE TEXTING, AND THEN SHE CAME UP AND SHE UNWRAPPED A PIECE OF FOIL AND PUT SOME GUM IN HER MOUTH. AND I THOUGHT, WELL, OKAY. I DIDN'T SEE HER -- I THINK I NOTICED HER LOOKING DOWN AT HER LAP AGAIN A COUPLE OF TIMES, BUT I DIDN'T SEE HER DO THE MANIPULATION. I THINK IT'S A GOOD IDEA, THOUGH, I THINK THAT SUGGESTION TO BRING HER IN AND ASK HER HER THOUGHTS MAYBE NOW WOULD BE BETTER THAN JUST TO GET HER REAL-TIME THOUGHTS ON WHERE THIS IS. SO, MS. KRATZMANN.
COURT CLERK: SO, WHEN THE JURORS WERE EXITING, SHE STARTED TO PUT HER AIR BUDS IN AND WAS GOING TO MAKE A CALL, SO I ASSUME SHE'S COMMUNICATING.
JUDGE DAVILA: COULD YOU ASK HER TO COME IN?
COURT CLERK: OKAY.
MR. DOWNEY: COULD WE RELOCATE OURSELVES, JUDGE?
JUDGE DAVILA: YEAH. LET'S HAVE YOU SIT BACK WHERE YOU WERE IF YOU DON'T MIND. THANKS. WOULD YOU GUYS LIKE SOME COFFEE OR TEA OR ANYTHING?
MR. SCHENK: NO. THANK YOU.
(PAUSE IN PROCEEDINGS.)
COURT CLERK: YOUR HONOR, I BELIEVE SHE HAS STEPPED OUTSIDE. DO YOU WANT ME TO WAIT UNTIL SHE RETURNS?
JUDGE DAVILA: CAN YOU POKE YOUR HEAD OUT IN THE HALLWAY THERE?
COURT CLERK: YES. AND IF SHE'S NOT OUT THERE, I PRESUME SHE'S NOT IN THE BUILDING.
JUDGE DAVILA: YES. OKAY.
(PAUSE IN PROCEEDINGS.) (THE FOLLOWING PROCEEDINGS WERE HELD IN CHAMBERS IN SEALED PROCEEDINGS WITH JUROR NUMBER 5 PRESENT, PAGES 4674- 4677.) AFTERNOON SESSION
(IN OPEN COURT.)
(JURY IN AT 11:42 A.M.)
JUDGE DAVILA: THANK YOU. PLEASE BE SEATED. WE'RE BACK ON THE RECORD. ALL PARTIES PREVIOUSLY PRESENT ARE PRESENT ONCE AGAIN. MS. PETERSON IS BACK ON THE STAND. THANK YOU. MR. LEACH.
MR. LEACH: THANK YOU, YOUR HONOR.
MR. LEACH: GOOD MORNING, MS. PETERSON. WHEN WE BROKE WE WERE GOING THROUGH PORTIONS OF THE POWERPOINT THAT YOU REVIEWED, AND I WANT TO DRAW YOUR ATTENTION, PLEASE, TO PAGE 30 OF EXHIBIT 4858. DO YOU SEE THE HEADING, "A NEW STANDARD IN QUALITY. "THE HIGHEST LEVELS OF ACCURACY."
LISA PETERSON: YES. IS THAT ON OKAY? YES.
MR. LEACH: DO YOU SEE THE HEADING, "A NEW STANDARD IN QUALITY. "THE HIGHEST LEVELS OF ACCURACY"?
LISA PETERSON: YES.
MR. LEACH: AND IS THAT A CONCEPT THAT MS. HOLMES SPOKE ABOUT IN YOUR MEETING IN CALIFORNIA IN PALO ALTO?
LISA PETERSON: YES.
MR. LEACH: AND DO YOU SEE WHERE IT SAYS, "BY SYSTEMATICALLY CONTROLLING AND STANDARDIZING OUR PROCESSES, THERANOS OFFERS TESTS WITH THE HIGHEST LEVELS OF ACCURACY." WAS THAT IMPORTANT TO YOU?
LISA PETERSON: YES, IT LENDED CREDIBILITY, AGAIN, TO THE ACCURACY OF THE ANALYZER.
MR. LEACH: LET ME DRAW YOUR ATTENTION, PLEASE, TO PAGE 32. DO YOU SEE THE HEADING "NEW POSSIBILITIES IN LAB"?
LISA PETERSON: YES.
MR. LEACH: AND BENEATH THE COLUMN "ROUTINE, SPECIALTY, AND ESOTERIC TESTING," DO YOU SEE WHERE IT SAYS, "COMPREHENSIVE LABORATORY TEST MENU AVAILABLE THROUGH THERANOS. "THERANOS RUNS ANY TEST AVAILABLE IN CENTRAL LABORATORIES. "THERANOS CAN PROCESS ANY SAMPLE TYPE." IS THAT CONSISTENT WITH REPRESENTATIONS THAT MS. HOLMES MADE TO YOU?
LISA PETERSON: YES, VERY.
MR. LEACH: AND LET ME DRAW YOUR ATTENTION, PLEASE, TO PAGE 38. DO YOU SEE THE HEADING "THERANOS LABORATORY MARKET"?
LISA PETERSON: YES.
MR. LEACH: AND IN THE FOURTH BULLET IT READS, "REPLACES OLD INFRASTRUCTURE WITH NEW." WHAT DID YOU UNDERSTAND THAT TO MEAN?
LISA PETERSON: I WOULD TAKE THAT TO MEAN AT THE TIME THAT IT WAS REPLACING THE OLD DUOPOLY INFRASTRUCTURE FROM QUEST AND LAB CORP. AND MAKING IT MORE AUTOMATED AND PORTABLE.
MR. LEACH: AND WHAT DO YOU MEAN BY "INFRASTRUCTURE"?
LISA PETERSON: THE BOX ITSELF, THE ANALYZER.
MR. LEACH: LET ME MOVE FORWARD TO PAGE 40. DO YOU SEE THE HEADING "THERANOS'S FOOTPRINT UPON NATIONAL DEPLOYMENT: "THERANOS WELLNESS CENTERS IN WALGREENS"?
LISA PETERSON: YES.
MR. LEACH: AND DID YOU DISCUSS THE WALGREENS ROLLOUT WITH MS. HOLMES IN YOUR MEETING IN CALIFORNIA ON OR ABOUT OCTOBER 14TH?
LISA PETERSON: YES.
MR. LEACH: AND THIS IS IN 2014?
LISA PETERSON: YES.
MR. LEACH: OKAY. DID MS. HOLMES OR MR. BALWANI SAY ANYTHING TO THE EFFECT THAT THE WALGREENS ROLLOUT WAS STALLING OR SLOWING?
LISA PETERSON: NOT AT ALL.
MR. LEACH: DID THEY SAY ANYTHING TO THE EFFECT THAT WALGREENS WAS FRUSTRATED BY THE NUMBER OF VENOUS DRAWS?
LISA PETERSON: NOT AT ALL.
MR. LEACH: DID YOU HAVE ANY CONCEPT THAT THERANOS WAS DOING VENOUS DRAWS?
LISA PETERSON: NONE WHATSOEVER.
MR. LEACH: PLEASE LOOK AT PAGE 49. DO YOU SEE THE HEADING "RECENT PRESS"?
LISA PETERSON: YES.
MR. LEACH: AND TO THE RIGHT THERE'S AN IMAGE OF A "FORTUNE" MAGAZINE ARTICLE, "THIS CEO IS OUT FOR BLOOD." ARE THESE PRESS ARTICLES THAT MS. HOLMES REFERRED -- OR THAT THIS POWERPOINT REFERRED YOU TO?
LISA PETERSON: YES.
MR. LEACH: AND DID YOU MAKE AN EFFORT TO REVIEW WHATEVER PUBLIC INFORMATION YOU COULD FIND ABOUT THERANOS?
LISA PETERSON: YES.
MR. LEACH: LET ME DRAW YOUR ATTENTION, PLEASE, TO PAGE 103 OF THIS DOCUMENT. IS THIS A PORTION OF THE MATERIALS IN THE BINDER THAT YOU REVIEWED, MS. PETERSON?
LISA PETERSON: YES.
MR. LEACH: OKAY. AND DO YOU SEE WHERE IT SAYS, "EXEMPLARY REPORTS FROM PHARMACEUTICAL PARTNERS"?
LISA PETERSON: YES.
MR. LEACH: PLEASE LOOK AT THE NEXT PAGE, PAGE 140, OR 104. AND IF WE CAN ZOOM IN, MS. HOLLIMAN, ON EVERYTHING DOWN TO THE WORD "CONCLUSIONS" AND THE THREE BULLETS. THERE YOU GO. THANK YOU. DOES THIS APPEAR TO BE SOMETHING CALLED "THERANOS ANGIOGENESIS STUDY REPORT"?
LISA PETERSON: YES.
MR. LEACH: AND DO YOU SEE THE PFIZER LOGO UP IN THE LEFT-HAND CORNER?
LISA PETERSON: YES.
MR. LEACH: AND DO YOU SEE THE THERANOS LOGO IN THE RIGHT-HAND CORNER?
LISA PETERSON: YES.
MR. LEACH: OKAY. DID YOU BELIEVE THIS REPORT WAS PREPARED BY PFIZER?
LISA PETERSON: YES.
MR. LEACH: WHY DID YOU BELIEVE THAT?
LISA PETERSON: BECAUSE THE LOGO WAS ON IT.
MR. LEACH: DID YOU EVER SEE A VERSION OF THIS REPORT WITH ONLY THE THERANOS LOGO ON IT?
MR. LEACH: DID YOU EVER SEE A VERSION OF THIS REPORT WHERE UNDERNEATH THE HEADING "THERANOS ANGIOGENESIS STUDY REPORT" IT SAYS "PREPARED FOR DR. AIDAN POWER"?
LISA PETERSON: I DON'T RECALL THAT.
MR. LEACH: OKAY. HAVE YOU EVER HEARD OF SOMEBODY CALLED DR. AIDAN POWER?
MR. LEACH: DID MS. HOLMES EVER TELL YOU THAT THIS REPORT WAS THERANOS'S WORK AND WAS NOT APPROVED BY PFIZER?
MR. LEACH: OKAY. WAS IT RELEVANT TO YOU THAT THIS CAME FROM PFIZER?
LISA PETERSON: VERY RELEVANT.
MR. LEACH: WHY?
LISA PETERSON: AGAIN, IT CAME FROM A LARGE COMPANY. IT VALIDATED EVERYTHING THAT SHE WAS TELLING US FROM A LARGE EXTERNAL INDEPENDENT THIRD PARTY.
MR. LEACH: LET'S LOOK, PLEASE, AT PAGE 129. DO YOU SEE THE PFIZER LOGO AGAIN, MS. PETERSON?
LISA PETERSON: YES.
MR. LEACH: AND THE THERANOS LOGO TO THE RIGHT?
LISA PETERSON: YES.
MR. LEACH: OKAY. AND THERE'S A NUMBER OF CONCLUSIONS LISTED ON THIS. WE SEE ON THE SCREEN 1 THROUGH 9.
LISA PETERSON: YES.
MR. LEACH: AND ON THE DOCUMENT ARE THERE SOME ADDITIONAL ONES, 10 THROUGH 13?
LISA PETERSON: I DIDN'T -- I DON'T HAVE IT IN THE BINDER HERE, BUT --
MR. LEACH: OKAY. THERE YOU GO.
LISA PETERSON: YES.
MR. LEACH: DID YOU BELIEVE THESE TO BE CONCLUSIONS THAT PFIZER HAD REACHED AFTER ITS WORK?
LISA PETERSON: YES.
MR. LEACH: OKAY. ASSUMING THESE WERE JUST THE VIEWS OF THERANOS, WOULD THAT HAVE HAD RELEVANCE TO YOU?
LISA PETERSON: NOT NEAR AS MUCH, NO.
MR. LEACH: WHY IS THAT?
LISA PETERSON: BECAUSE PFIZER IS A LARGE REPUTABLE PHARMACEUTICAL COMPANY THAT WE THOUGHT USED THE ANALYZER AND WAS SAYING THAT THE RESULTS WERE ACCURATE.
MR. LEACH: OKAY. LET ME DRAW YOUR ATTENTION, PLEASE, TO ANOTHER DOCUMENT. IT'S EXHIBIT 1853. I BELIEVE THIS IS IN EVIDENCE.
LISA PETERSON: I'M SORRY, WHAT IS THE NUMBER AGAIN?
MR. LEACH: 1853.
LISA PETERSON: 18 -- OKAY.
MR. LEACH: DO YOU RECOGNIZE THIS DOCUMENT?
LISA PETERSON: YES.
MR. LEACH: WHAT IS THIS?
LISA PETERSON: THESE ARE THE FINANCIAL STATEMENTS, FINANCIALS THAT WE RECEIVED AS PART OF THE DILIGENCE BINDER, AND THE WRITING IS MINE.
MR. LEACH: YOU RECEIVED THIS FROM THERANOS?
LISA PETERSON: YES.
MR. LEACH: AND DID YOU DISCUSS THIS PROJECTED STATEMENT OF INCOME WITH MS. HOLMES IN YOUR MEETING IN CALIFORNIA IN OCTOBER OF 2014?
LISA PETERSON: YES, WITH BOTH MS. HOLMES AND MR. BALWANI.
MR. LEACH: OKAY. AND YOU SEE THE LINE "PROJECTED STATEMENT OF INCOME" TO THE LEFT?
LISA PETERSON: YES.
MR. LEACH: AND THEN THERE IS A COLUMN FOR DECEMBER 31ST, 2014. DO YOU SEE THAT?
LISA PETERSON: YES.
MR. LEACH: AND DID YOU BELIEVE THIS TO BE THERANOS'S REVENUE PROJECTIONS FOR THE YEAR ENDING 2014?
LISA PETERSON: YES.
MR. LEACH: OKAY. WHAT MONTH DID RDV RECEIVE THESE PROJECTED FINANCIAL STATEMENTS?
LISA PETERSON: OCTOBER.
MR. LEACH: OCTOBER OF 2014?
LISA PETERSON: YES.
MR. LEACH: AND DID THAT GIVE YOU ANY COMFORT THAT THERANOS WOULD BE BETTER ABLE TO HIT THOSE PROJECTIONS?
LISA PETERSON: YES.
MR. LEACH: EXPLAIN THAT FOR US.
LISA PETERSON: ONE WOULD ASSUME IN OCTOBER THAT THERE WERE -- IF THEY WERE PUTTING FORTH A PROJECTION FOR DECEMBER OF THAT YEAR, THAT THEY WERE AT OR CLOSE TO THAT PROJECTION.
MR. LEACH: THE FIRST LINE UNDER REVENUE U.S. COMMERCIAL ONLY SAYS, "LAB SERVICES FROM U.S. RETAIL PHARMACIES." AND THEN FOR 2014 THE AMOUNT IS 42 MILLION. DO YOU SEE THAT?
LISA PETERSON: YES.
MR. LEACH: AND DID YOU UNDERSTAND THAT TO BE REVENUE FROM THE WALGREENS RELATIONSHIP?
LISA PETERSON: YES.
MR. LEACH: AND THEN THERE'S TWO ENTRIES FOR PHYSICIAN OFFICES AND LAB SERVICES REVENUE FROM HOSPITALS IN THE AMOUNT OF 11 MILLION AND 47 MILLION. DO YOU SEE THAT?
LISA PETERSON: YES.
MR. LEACH: AND WHAT DID YOU UNDERSTAND THAT TO MEAN?
LISA PETERSON: THERE WERE A NUMBER OF HOSPITALS THAT SHE MENTIONED THEY HAD CONTRACTED WITH, LIKE INTERMOUNTAIN AND UCSF AND DIGNITY HEALTH WERE SOME THAT SHE NAMED. WE WERE ASSUMING THAT THOSE WERE REVENUES COMING FROM THOSE CONTRACTS.
MR. LEACH: THERE IS ALSO AN ENTRY FOR PHARMACEUTICAL SERVICES IN THE AMOUNT OF $40 MILLION. DO YOU SEE THAT?
LISA PETERSON: YES.
MR. LEACH: AND WHAT DID YOU UNDERSTAND THAT TO REFER TO?
LISA PETERSON: REVENUE COMING FROM THE CLINICAL STUDIES FROM PEOPLE LIKE PFIZER AND OTHER -- THE TOP 10 OF THE 15 PHARMACEUTICAL COMPANIES, THAT THERE WAS REVENUE COMING IN FROM THOSE.
MR. LEACH: THERE'S SOME QUESTION MARKS NEXT TO PHARMACEUTICAL SERVICES AND DOD. DO YOU SEE THAT?
LISA PETERSON: YES.
MR. LEACH: AND CAN YOU EXPLAIN WHAT YOU MEANT BY THAT, OR WHAT THAT REFERS TO?
LISA PETERSON: THE QUESTION MARKS -- THERE'S TWO DIFFERENT INKS ON HERE. THE QUESTION MARKS AND QUESTION OF ORDER OF MAGNITUDE WITH THE QUESTION MARKS. THE QUESTION MARKS WERE PUT ON THERE BEFORE THE MEETING AND DISCUSSED AND ANSWERED NOT SO MUCH ON THIS PAGE, BUT IN MY MEMO FOLLOWING THE MEETING.
MR. LEACH: OKAY. SO DO I UNDERSTAND YOU TO BE SAYING THAT THE LIGHTER INK IS QUESTIONS THAT YOU HAD GOING INTO THE MEETING, AND THEN THE DARKER INK IS WHAT YOU LEARNED IN THE MEETING?
LISA PETERSON: CORRECT.
MR. LEACH: OKAY. IN THE OCTOBER 2014 MEETING, DID MS. HOLMES OR MR. BALWANI TELL YOU THAT THERANOS HAD ZERO REVENUE FROM PHARMACEUTICAL COMPANIES IN 2013?
LISA PETERSON: NO, NO.
MR. LEACH: HOW ABOUT ZERO REVENUE FROM PHARMACEUTICAL COMPANIES IN 2012?
MR. LEACH: WOULD THAT HAVE BEEN RELEVANT TO YOU?
LISA PETERSON: YES, VERY.
MR. LEACH: WHY?
LISA PETERSON: BECAUSE IT WAS CONTRARY TO WHAT THEY WERE SAYING, THAT THEY HAD SIX OR SEVEN YEARS OF DOING WORK FOR MAJOR PHARMACEUTICAL COMPANIES.
MR. LEACH: OKAY. THE TOTAL AMOUNT OF REVENUE UNDER DECEMBER 31ST, 2014 IS $140 MILLION. DO YOU SEE THAT?
LISA PETERSON: YES.
MR. LEACH: AND WAS THAT IMPRESSIVE TO YOU?
LISA PETERSON: YES.
MR. LEACH: OKAY. TO THE RIGHT THERE'S SOME NUMBERS FOR 2015. DO YOU SEE THOSE?
LISA PETERSON: YES.
MR. LEACH: AND YOU'VE CROSSED OUT THE NUMBERS FOR PHYSICIAN'S OFFICES ON SITE SERVICES REVENUE FROM HOSPITALS AND PHARMACEUTICAL SERVICES AND HAVE WRITTEN SOME NUMBERS TO THE RIGHT. CAN YOU EXPLAIN WHAT THAT MEANS?
LISA PETERSON: DURING THE MEETING THEY HAD MADE SOME CHANGES TO THOSE NUMBERS, BUT THEY WERE MINOR. THE 160 IS 160 MILLION. IT'S NOT 160,000. IT'S JUST MY SHORTHAND.
MR. LEACH: OKAY. SO THE 60,000 OR ASSOCIATED --
LISA PETERSON: $60 MILLION. YES, YES.
JUDGE DAVILA: WHY DON'T YOU ASK YOUR QUESTION AGAIN?
MR. LEACH: I WILL. THANK YOU, MS. RODRIGUEZ.
MR. LEACH: SO THE 60,000 TO THE RIGHT OF THE CROSSED OUT 62 MILLION, YOU'RE CONVEYING 60 MILLION THERE?
LISA PETERSON: YES.
MR. LEACH: AND THAT'S THE LEVEL OF -- AND DOES THAT REFLECT THE CONVERSATION THAT YOU HAD WHERE MS. HOLMES AND MR. BALWANI WERE SAYING IN 2015 IT'S ACTUALLY GOING TO BE $2 MILLION LESS?
LISA PETERSON: YES.
MR. LEACH: AND THE TOTAL REVENUE THAT MS. HOLMES AND MR. BALWANI WERE PROJECTING FOR DECEMBER 31ST, 2005 WAS $990 MILLION?
LISA PETERSON: YES.
MR. LEACH: AND WAS THAT IMPRESSIVE TO YOU?
LISA PETERSON: YES.
MR. LEACH: ABOVE THE COLUMN, YOU WROTE THE WORDS, "900 LOCATIONS." WHAT DOES THAT REFER TO?
LISA PETERSON: THAT REFERRED TO WALGREENS, THE ROLLOUT THAT THEY WERE PLANNING. THE NUMBERS IN HERE WERE BASED ON A ROLLOUT AT WALGREENS OF 900 LOCATIONS FOR 2015. THERE'S ALSO 300 SAFEWAY LOCATIONS IN THAT NUMBER. AGAIN, THERE'S, THERE'S -- NOT ALL OF MY NOTES ON ARE THIS PAGE. THEY ALL CULMINATED INTO ANOTHER MEMO THAT WAS WRITTEN.
MR. LEACH: AND IF WE CAN ZOOM OUT, MS. HOLLIMAN, AND FOCUS ON THE NET INCOME DOWN AT THE BOTTOM. THANK YOU. DOES THIS REFLECT THAT MS. HOLMES AND MR. BALWANI WERE PROJECTING NET INCOME OF A $3 MILLION LOSS IN DECEMBER OF 2014?
LISA PETERSON: YES.
MR. LEACH: FOR THE YEAR?
LISA PETERSON: YES.
MR. LEACH: AND DOES THIS REFLECT THAT THEY WERE PROJECTING A PROFIT OF 230 MILLION BY THE END OF 2015?
LISA PETERSON: YES.
MR. LEACH: LET ME DRAW YOUR ATTENTION, PLEASE, TO WHAT HAS BEEN MARKED AS EXHIBIT 2107. DOES THIS APPEAR TO BE AN EMAIL FROM SUNNY BALWANI TO JERRY TUBERGEN, WITH A COPY TO MS. HOLMES, ATTACHING VARIOUS INVESTMENT DOCUMENTS?
LISA PETERSON: YES.
MR. LEACH: AND DID YOU ULTIMATELY REVIEW THE ITERATIONS OF THE INVESTMENT DOCUMENTS THAT ARE ATTACHED TO THIS EMAIL?
LISA PETERSON: YES, ALONG WITH OUR INHOUSE COUNSEL.
MR. LEACH: YOUR HONOR, I OFFER EXHIBIT 2107 INTO EVIDENCE.
(PAUSE IN PROCEEDINGS.)
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(GOVERNMENT'S EXHIBIT 2107 WAS RECEIVED IN EVIDENCE.)
MR. LEACH: MS. HOLLIMAN, IF WE CAN PLEASE ZOOM IN ON THE TOP HALF OF THIS EMAIL ON PAGE 1.
MR. LEACH: MS. PETERSON, DO YOU SEE THERE ARE SOME ATTACHMENTS TO THIS INVESTOR MASTER SIGNATURE PAGE, SERIES C-2. WHAT IS C-2?
LISA PETERSON: THAT WAS THE SERIES OF SECURITIES THAT WE WERE BUYING INTO.
MR. LEACH: AND THERE'S NEW INVESTOR.ZIP AND THERANOS BANK WIRE INSTRUCTION.PDF. I WANT TO DRAW YOUR ATTENTION, PLEASE, TO PAGE 56. DO YOU SEE THE HEADING "THERANOS, INC. "SERIES C-2 PREFERRED STOCK PURCHASE AGREEMENT"?
LISA PETERSON: YES.
MR. LEACH: AND IS THIS A LENGTHY LEGAL DOCUMENT RELATING TO THE TERMS OF THE POTENTIAL STOCK PURCHASE BY RDV?
LISA PETERSON: YES.
MR. LEACH: PLEASE LOOK AT PAGE 61. DO YOU SEE SECTION 4 DOWN AT THE BOTTOM, "REPRESENTATIONS AND WARRANTIES OF THE INVESTORS"?
LISA PETERSON: YES.
MR. LEACH: AND IN THIS CIRCUMSTANCE, RDV OR ITS AFFILIATE IS THE INVESTOR?
LISA PETERSON: CORRECT.
MR. LEACH: OKAY. AND IF WE CAN CONTINUE, PLEASE, TO PAGE 62. DO YOU SEE THAT THERE ARE CERTAIN REPRESENTATIONS RELATING IN 4.3, 4.4, 4.5, AND 4.6 RELATING TO THE INVESTOR'S INVESTMENT EXPERIENCE, THE NATURE OF THE INVESTMENT, ACCESS TO DATA, AND THE INVESTOR'S ACCREDITED STATUS?
LISA PETERSON: YES.
MR. LEACH: AND WERE THESE REPRESENTATIONS TRUE OF RDV AT THE TIME?
LISA PETERSON: AT THE TIME, YES.
MR. LEACH: OKAY. THANK YOU, MS. HOLLIMAN. WE CAN TAKE THAT DOWN. LET ME NEXT DRAW YOUR ATTENTION, PLEASE, TO EXHIBIT 2166. DO YOU RECOGNIZE THIS DOCUMENT?
LISA PETERSON: YES.
MR. LEACH: AND WHAT IS THIS?
LISA PETERSON: THIS IS THE DOCUMENT WE PUT TOGETHER FOR ALL INVESTMENTS THAT GO TO OUR INVESTMENT COMMITTEE.
MR. LEACH: WHEN YOU SAY "WE," DOES THAT INCLUDE YOU?
LISA PETERSON: YES, I PUT THIS TOGETHER.
MR. LEACH: OKAY. WHY DID YOU PUT THIS TOGETHER?
LISA PETERSON: BECAUSE WE NEEDED TO PUT TOGETHER EVERYTHING THAT WE HAD LEARNED ON THE INVESTMENT AND PRESENT IT TO THE INVESTMENT COMMITTEE.
MR. LEACH: OKAY. AND DID YOU PREPARE THIS IN THE ORDINARY COURSE OF BUSINESS?
LISA PETERSON: YES.
MR. LEACH: OKAY. DID YOU PREPARE THIS AT OR FROM -- AT OR AROUND THE TIME OF THE THERANOS INVESTMENT?
LISA PETERSON: YES, IN BETWEEN -- RIGHT AFTER THE MEETING THAT WE HAD ON THE 14TH OF OCTOBER.
MR. LEACH: OKAY. AND WAS IT RDV'S PRACTICE TO PREPARE APPROVAL DOCUMENTS SUCH AS THESE?
LISA PETERSON: YES.
MR. LEACH: YOUR HONOR, I OFFER EXHIBIT 2166.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(GOVERNMENT'S EXHIBIT 2166 WAS RECEIVED IN EVIDENCE.)
MR. LEACH: IF WE CAN PLEASE ZOOM IN, MS. HOLLIMAN, TO THE TOP HALF OF THE PAGE ALL OF THE WAY DOWN TO THE SECOND PARAGRAPH IN COMPANY OVERVIEW. A LITTLE BIT MORE. PERFECT.
MR. LEACH: WHO ELSE HAD A HAND IN PREPARING THIS, IF ANYONE, MS. PETERSON?
LISA PETERSON: THIS WAS, THIS WAS ALL ME THAT PREPARED THIS.
MR. LEACH: OKAY. UP AT THE TOP IT SAYS, "RDV APPROVAL DOCUMENT - NEW EQUITY INVESTMENT. "DIRECT INVESTMENT: THERANOS, INC." DO YOU SEE THAT?
LISA PETERSON: YES.
MR. LEACH: AND TO THE RIGHT DO YOU SEE "CLOSED: OCTOBER 31ST, 2014"?
LISA PETERSON: YES.
MR. LEACH: IS THAT APPROXIMATELY THE DATE OF RDV'S INVESTMENT?
LISA PETERSON: YES.
MR. LEACH: IN THE RDV OPPORTUNITY SECTION YOU WROTE IN THE THIRD LINE, "TO DATE, THE COMPANY HAS RAISED OVER $400 FROM VARIOUS INDIVIDUAL INVESTORS AND VENTURE CAPITAL FIRMS. THE LAST EQUITY RAISE WAS COMPLETED IN JAN-2014 AT A $9,000 VALUATION." WHAT DO YOU MEAN BY THAT $9,000 VALUATION?
LISA PETERSON: IT'S 9 BILLION AND THE ZEROS ARE OMITTED.
MR. LEACH: SO THAT'S ANOTHER INSTANCE WHERE, FOR EASE OF REFERENCE, YOU'RE OMITTING THE ZEROS?
LISA PETERSON: YES.
MR. LEACH: HALFWAY DOWN IN THE COMPANY OVERVIEW IT READS, "THERANOS MANUFACTURES ITS ANALYZER EQUIPMENT." DO YOU SEE THAT?
LISA PETERSON: YES.
MR. LEACH: AND WHY DID YOU INCLUDE THIS IN THE RDV APPROVAL DOCUMENT?
LISA PETERSON: BECAUSE IT'S VERY RELEVANT TO OUR UNDERWRITING OF THE INVESTMENT.
MR. LEACH: IF WE COULD ZOOM OUT NOW, PLEASE, MS. HOLLIMAN. AND IF WE COULD FOCUS ON THAT THIRD PARAGRAPH IN THE COMPANY OVERVIEW. IN THAT LAST SENTENCE OF THE THIRD PARAGRAPH IT READS, "THROUGH THIS WORK THERANOS HAS BEEN COMPREHENSIVELY VALIDATED SINCE 2015 BY 10 MAJOR PHARMACEUTICAL COMPANIES, WITH HUNDREDS OF THOUSANDS ASSAYS PROCESSED."
LISA PETERSON: BY 2005.
MR. LEACH: 2005, EXCUSE ME. WHY DID YOU INCLUDE THIS IN THE RDV APPROVAL DOCUMENT?
LISA PETERSON: BECAUSE IT'S VERY RELEVANT TO OUR UNDERWRITING OF THIS INVESTMENT THAT THEY WERE VALIDATED BY TEN MAJOR PHARMACEUTICAL COMPANIES, INCLUDING PFIZER.
MR. WADE: YOUR HONOR, I MOVE TO STRIKE THIS ANSWER AND THE LAST ANSWER UNDER 602 FOR THE REASONS THAT WE PREVIOUSLY RAISED.
JUDGE DAVILA: OVERRULED. THE ANSWER WILL REMAIN.
BY MR. LEACH:
MR. LEACH: LET'S LOOK AT PAGE 3, MS. PETERSON. DO YOU SEE THE ROW "GROWTH PLANS" TO THE LEFT? THERE'S A HEADING FOR THAT ROW CALLED -- OR THE FIRST PART CALLED "GROWTH PLANS"?
LISA PETERSON: YES.
MR. LEACH: AND IN THE BODY TO THE RIGHT IT READS, "WITH THE SUCCESSFUL BUILD-OUT OF THE PHOENIX MARKET, THERANOS WILL BE READY IN 2015 TO BEGIN A BROADER NATIONAL ROLLOUT. WALGREENS AND THERANOS PLAN TO HAVE 900 WELLNESS CENTER LOCATIONS IN 5 MAJOR METROPOLITAN MARKETS NEXT YEAR." WHERE DID THAT INFORMATION COME FROM?
LISA PETERSON: FROM THE CONVERSATION THAT WE HAD IN PALO ALTO.
MR. LEACH: OKAY. AND DID MS. HOLMES OR MR. BALWANI SAY ANYTHING TO THE EFFECT THAT WALGREENS WAS SCALING BACK THE NUMBER OF LOCATIONS?
MR. LEACH: IF WE CAN GO FURTHER DOWN TO THE FINANCIAL SUMMARY PORTION. ARE THESE FINANCIAL METRICS DRAWN FROM THE SPREADSHEET THAT WE LOOKED AT EARLIER WITH YOUR HANDWRITING, MS. PETERSON?
LISA PETERSON: YES.
MR. LEACH: AND THIS WAS INFORMATION THAT YOU GOT FROM MS. HOLMES AND MR. BALWANI?
LISA PETERSON: YES.
MR. LEACH: WHY WERE YOU INCLUDING THIS IN THE RDV APPROVAL DOCUMENT?
LISA PETERSON: BECAUSE THE FINANCIALS ARE ONE OF THE FUNDAMENTALS OF UNDERWRITING THE INVESTMENT THAT WE LOOK AT.
MR. LEACH: LET'S GO TO PAGE 6, PLEASE. DOES THIS SECTION RELATES TO INVESTMENT STRENGTHS?
LISA PETERSON: YES.
MR. LEACH: AND IF WE CAN GO DOWN A LITTLE BIT MORE, MS. HOLLIMAN. DO YOU SEE THE BULLET THAT READS, "A THERANOS ANALYZER STATION IS A SMALL FRACTION OF THE SIZE OF A CURRENT LAB, MAKING IT POSSIBLE TO PLACE A THERANOS LAB IN THE OPERATING ROOM OR IN A MILITARY EVACUATION HELICOPTER, ON SHIPS, IN REFUGEE CAMPS - VIRTUALLY ANYWHERE." IS THAT INFORMATION THAT YOU GOT FROM MS. HOLMES AND MR. BALWANI?
LISA PETERSON: YES.
MR. LEACH: AND WHY WERE YOU INCLUDING THAT IN THIS MEMO?
LISA PETERSON: BECAUSE, AGAIN, IT WAS CRITICAL TO OUR UNDERSTANDING OF THE INVESTMENT, THAT IT COULD DO THIS AND THAT IT WAS PORTABLE AND IT WAS VERY GAME CHANGING FROM -- FOR THIS INDUSTRY.
MR. LEACH: OKAY. AND IF WE CAN GO TO THE LAST PAGE, PLEASE, PAGE 7. AND IF WE CAN ZOOM IN ON THE ENTIRETY OF THE SUBSTANCE. DO YOU SEE MR. TUBERGEN'S SIGNATURE IN THE SIGNATURE BLOCK?
LISA PETERSON: YES.
MR. LEACH: AND IS THAT MR. DAMSTRA'S SIGNATURE TO THE RIGHT?
LISA PETERSON: YES.
MR. LEACH: OKAY. IN THE RISK SECTION IT READS, "FURTHERMORE, UNLIKE MOST LABS, THERANOS DOES NOT BUY ANALYZER EQUIPMENT FROM A THIRD PARTY AND THEY DO NOT SELL THEIR ANALYZERS TO OTHER LABS." IS THAT INFORMATION THAT YOU GOT FROM MS. HOLMES AND MR. BALWANI?
LISA PETERSON: YES.
MR. LEACH: AT ANY POINT IN TIME PRIOR TO INVESTING, DID MS. HOLMES TELL YOU THERANOS WAS USING THIRD PARTY MACHINES TO DO SOME OF ITS TESTING?
LISA PETERSON: NEVER.
MR. LEACH: DID THEY TELL YOU THEY WERE USING THIRD PARTY MACHINES TO DO THE MAJORITY OF THEIR TESTING?
MR. LEACH: PRIOR TO THE INVESTMENT, WERE YOU EVER TOLD THAT THERANOS WAS USING IT'S TSPU FOR NO MORE THAN 12 ASSAYS?
MR. LEACH: WOULD THAT HAVE MATTERED TO YOU?
LISA PETERSON: YES.
MR. LEACH: LET ME DRAW YOUR ATTENTION, PLEASE, TO WHAT IS IN EVIDENCE AS EXHIBIT 4845. AND WITH LEAVE, YOUR HONOR, I WOULD LIKE TO DISPLAY THAT.
JUDGE DAVILA: YES.
MR. LEACH: IF WE COULD GO TO PAGE 22.
LISA PETERSON: I SHOW 4858.
BY MR. LEACH:
MR. LEACH: WE'LL DISPLAY 4845 ON THE SCREEN, MS. PETERSON. I DON'T THINK IT'S IN YOUR BINDER.
LISA PETERSON: OH, OKAY.
MR. LEACH: AND IF WE CAN PLEASE ZOOM IN, MS. HOLLIMAN, ON THE SUBSTANCE. DOWN TOWARDS THE BOTTOM, MS. PETERSON, UNDER THE BOLD HEADING "ORIGINATOR INFORMATION," THE LAST LINE SAYS "LINE 1, DYNASTY FINANCIAL II LLC." ARE YOU FAMILIAR WITH THAT ENTITY?
LISA PETERSON: YES.
MR. LEACH: AND WHAT IS IT?
LISA PETERSON: IT'S AN ENTITY CREATED BY RDV CORP. THAT HOUSES A NUMBER OF INVESTMENTS, INCLUDING THIS ONE.
MR. LEACH: AND SO DYNASTY FINANCIAL II LLC IS THE LEGAL ENTITY THAT MADE THE INVESTMENT IN THERANOS ON RDV'S BEHALF?
LISA PETERSON: YES.
MR. LEACH: AND IF WE GO UP UNDER THE HEADING "BASIC INFORMATION" IN LINE 4, THERE'S AN AMOUNT OF $99,999,984. DO YOU SEE THAT?
LISA PETERSON: YES.
MR. LEACH: AND IS THAT THE AMOUNT OF RDV'S INVESTMENT?
LISA PETERSON: YES.
MR. LEACH: AND DO YOU SEE ABOVE THAT IN THE LINE OMAD, THERE'S A DATE 2014-10-31, OR THE NUMBERS. DO YOU SEE THAT?
LISA PETERSON: YES.
MR. LEACH: AND IS OCTOBER 31ST, 2014 THE APPROXIMATE DATE OF THE INVESTMENT?
LISA PETERSON: YES.
MR. LEACH: THERE'S A REFERENCE TO SOMETHING CALLED LAKESHORE CAPITAL MANAGEMENT. WHAT IS THAT?
LISA PETERSON: IT'S ONE OF OUR CASH ACCOUNTS.
MR. LEACH: THANK YOU, MS. HOLLIMAN. WE CAN TAKE THAT DOWN. I'D LIKE TO MOVE FORWARD IN TIME, MS. PETERSON, TO THE TIME PERIOD OF OCTOBER OF 2015. DO YOU HAVE THAT TIME PERIOD IN MIND?
LISA PETERSON: YES.
MR. LEACH: AT OR AROUND THAT TIME, DID YOU LEARN THAT "THE WALL STREET JOURNAL" HAD WRITTEN AN ARTICLE RAISING ISSUES ABOUT THERANOS?
LISA PETERSON: YES.
MR. LEACH: AND DID YOU KNOW THE AUTHOR OF THAT ARTICLE TO BE SOMEONE NAMED JOHN CARREYROU?
LISA PETERSON: YES.
MR. LEACH: AND AT OR ABOUT THAT TIME, DID YOU VIEW AN INTERVIEW OF MS. HOLMES ON THE T.V. SHOW "MAD MONEY"?
LISA PETERSON: YES.
MR. LEACH: PRIOR TO TESTIFYING, DID YOU HAVE A CHANCE TO REVIEW CLIPS OF THAT "MAD MONEY" INTERVIEW?
LISA PETERSON: YES.
MR. LEACH: YOUR HONOR, AT THIS TIME I WOULD LIKE TO PLAY CLIPS OF THAT "MAD MONEY" INTERVIEW, 2851, CLIPS 1, 2 AND 3.
JUDGE DAVILA: 2851? AND I'M SORRY, IT'S CLIPS?
MR. LEACH: 2851-1, 2851-2, AND 2851-3.
JUDGE DAVILA: ALL RIGHT. AND CAN YOU TELL US WHAT IS THE APPROXIMATE LENGTH OF EACH OF THOSE CLIPS?
MR. LEACH: THE FIRST CLIP IS ABOUT 5 SECONDS, THE SECOND CLIP IS LESS THAN A MINUTE, AND THE THIRD CLIP IS ONE TO TWO MINUTES.
JUDGE DAVILA: OKAY. THANK YOU.
MR. WADE: WE HAVE OBJECTIONS INITIALLY ON FOUNDATION. I BELIEVE THE WITNESS TESTIFIED THAT SHE READ IT BEFORE SHE TESTIFIED. I DON'T KNOW HOW IT CONNECTS TO THE EVENTS IN THE CASE AND WHAT THE RELEVANCE IS, SO I DON'T THINK WE HAVE A FOUNDATION PRELIMINARILY. WE ALSO HAVE 106 OBJECTIONS.
JUDGE DAVILA: ALL RIGHT. THANK YOU. SO, MR. LEACH, THIS WITNESS HAS TESTIFIED ABOUT THE INVESTMENT AND HER PARTICIPATION IN THAT. IS THIS A SEPARATE AREA, THEN, THAT IS CONNECTED TO THE INVESTMENT, OR IS THIS OFFERED SEPARATE FROM THE INVESTMENT ITSELF?
MR. LEACH: IT'S SEPARATE FROM THE INVESTMENT, YOUR HONOR. BUT I BELIEVE ON THE VIDEO THE DEFENDANT MAKES STATEMENTS RELATING TO THE SAME REPRESENTATIONS THAT INDUCED THE INVESTMENT, BUT IT'S A YEAR REMOVED FROM THE INVESTMENT ITSELF.
JUDGE DAVILA: ALL RIGHT.
MR. LEACH: BUT THE, THE --
JUDGE DAVILA: GO AHEAD.
MR. LEACH: THE DEFENDANT IS PRESENTED WITH ASSERTIONS FROM THE ARTICLE AND GIVEN THE OPPORTUNITY TO GIVE HER RESPONSE, AND THIS RELATES TO STATEMENTS THAT WERE MADE TO MS. PETERSON DURING THE COURSE OF THE INVESTMENT.
JUDGE DAVILA: ALL RIGHT. THANK YOU. I'LL NOTE THE OBJECTIONS THAT WERE MADE AND YOUR OBJECTIONS, MR. WADE, CURRENTLY. I'LL OVERRULE THE OBJECTIONS AND ALLOW THESE TO BE PLAYED. SO YOU'LL PLAY THEM SEQUENTIALLY?
MR. LEACH: YES, YOUR HONOR.
JUDGE DAVILA: ALL RIGHT. SO DO YOU HAVE NUMBER 1 QUEUED UP NOW THEN? LET'S SEE IF WE CAN GET THIS ON THE SCREEN.
(VIDEO PLAYING OFF THE RECORD.)
JUDGE DAVILA: THAT WAS THE FIRST CLIP?
MR. LEACH: THAT WAS THE FIRST CLIP, YOUR HONOR.
JUDGE DAVILA: AND LET ME JUST ASK FOR CLARITY'S SAKE, ARE YOU ASKING THAT THE COURT REPORTER NOT REPORT THIS, WHAT IS ON THE VIDEOS, OR DO YOU WANT THEM REPORTED?
MR. LEACH: WE HAVE A TRANSCRIPT WHICH WE'VE PROVIDED THE DEFENSE. I'M HAPPY TO APPEND THAT. I DON'T THINK IT'S NECESSARY FOR THE COURT REPORTER TO TAKE IT DOWN.
JUDGE DAVILA: OKAY. ANY OBJECTION TO THE COURT REPORTER NOT REPORTING THIS?
JUDGE DAVILA: ALL RIGHT. THANK YOU. SO THE COURT REPORTER WILL NOT HAVE TO TRANSCRIBE THE VIDEOS. THANK YOU.
(VIDEO PLAYING OFF THE RECORD.)
MR. LEACH: THAT COMPLETES 2851-2, YOUR HONOR, AND WE WILL PLAY NOW 2851-3.
JUDGE DAVILA: ALL RIGHT.
(VIDEO PLAYING OFF THE RECORD.)
MR. LEACH: THAT COMPLETES CLIP 2851-3, YOUR HONOR.