Elizabeth A. Holmes — Direct (Continued)
2,936 linesSAN JOSE, CALIFORNIA NOVEMBER 23, 2021 P R O C E E D I N G S
(COURT CONVENED AT 9:02 A.M.)
(JURY IN AT 9:02 A.M.)
JUDGE DAVILA: PLEASE BE SEATED. WE'RE BACK ON THE RECORD IN THE HOLMES MATTER. ALL COUNSEL ARE PRESENT. OUR JURY IS PRESENT. MS. HOLMES IS ON THE STAND. GOOD MORNING. BEFORE WE BEGIN, LADIES AND GENTLEMEN OF THE JURY, LET ME ASK YOU THAT QUESTION AGAIN. DURING OUR RECESS, HAVE ANY OF YOU HAD CAUSE TO LEARN ABOUT, READ, LISTEN, SPEAK ABOUT ANYTHING OR ANYTHING TO DO WITH THIS CASE? IF SO, PLEASE RAISE YOUR HANDS. ONCE AGAIN, I SEE NO HANDS. THANK YOU VERY MUCH. MS. HOLMES, YOU'RE STILL UNDER OATH. I THINK YOUR LAWYER HAS SOME QUESTIONS.
(DEFENDANT'S WITNESS, ELIZABETH HOLMES, WAS PREVIOUSLY SWORN.)
MR. DOWNEY: THANK YOU, YOUR HONOR.
DIRECT EXAMINATION (RESUMED) BY MR. DOWNEY:
MR. DOWNEY: GOOD MORNING, MS. HOLMES.
ELIZABETH A. HOLMES: GOOD MORNING.
MR. DOWNEY: DO YOU RECALL YESTERDAY THAT WE WERE DISCUSSING PARTNERSHIPS WITH PHARMACEUTICAL COMPANIES THAT THERANOS PURSUED BETWEEN 2006 AND 2010?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND DO YOU RECALL DISCUSSING THERANOS'S RELATIONSHIP WITH PFIZER DURING THAT PERIOD?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND DO YOU RECALL THAT YOU TESTIFIED ABOUT THERANOS HAVING A CONTINUED RELATIONSHIP WITH PFIZER AFTER 2010?
MR. DOWNEY: DO YOU RECALL THAT DURING THE GOVERNMENT'S CASE, DR. SHANE WEBER TESTIFIED?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND DO YOU RECALL THAT HE TESTIFIED ABOUT AN INTERNAL REPORT THAT HE PREPARED AT PFIZER CONCERNING THERANOS?
MR. DOWNEY: DID DR. WEBER OR ANYONE AT PFIZER EVER SEND YOU THAT REPORT?
MR. DOWNEY: DO YOU RECALL THAT HE TESTIFIED THAT HE HAD TWO TELEPHONE CONVERSATIONS WITH YOU, ONE IN NOVEMBER OF 2008 AND ONE IN JANUARY OF 2009?
MR. DOWNEY: YESTERDAY YOU DESCRIBED OCCASIONS WHERE YOU HAD CONVERSATIONS WITH DR. SAKUL AND DR. LIPSET AND OTHERS AT PFIZER AFTER JANUARY OF 2009?
MR. DOWNEY: AND DO YOU RECALL DR. WEBER PARTICIPATING IN ANY OF THOSE CONVERSATIONS?
ELIZABETH A. HOLMES: NO, HE DID NOT.
MR. DOWNEY: DO YOU RECALL HIM PARTICIPATING IN ANY MEETINGS THAT YOU HAD WITH SCIENTISTS AND EXECUTIVES FROM PFIZER AFTER JANUARY OF 2009?
MR. DOWNEY: DO YOU RECALL HIM BEING ON ANY TELEPHONE CONVERSATIONS THAT YOU HAD WITH PFIZER AFTER JANUARY OF 2009?
MR. DOWNEY: DO YOU RECALL DISCUSSION OF DR. WEBER WITH EITHER DR. SAKUL OR DR. LIPSET OR ANYONE ELSE FROM PFIZER AFTER JANUARY OF 2009?
MR. DOWNEY: YOU RECALL WHEN WE LEFT OFF YESTERDAY THAT WE WERE TALKING ABOUT SOME REPORTS THAT YOU GOT IN EARLY JANUARY OF -- OR EARLY FEBRUARY OF 2010 REGARDING EXPANSION OF THERANOS'S TECHNOLOGY TO -- FROM A 3.0 SYSTEM TO A 4.0 SYSTEM?
MR. DOWNEY: AND WHEN WE FINISHED, WE WERE -- YOU WERE TALKING ABOUT A PRESENTATION THAT DR. GIBBONS HAD GIVEN YOU IN FEBRUARY OF 2010. DO YOU REMEMBER THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: NOW, PRIOR TO FEBRUARY OF 2010, WAS THERANOS USING THE 3.0 DEVICE AND THE 3.0 SYSTEM IN CONNECTION WITH ITS WORK?
MR. DOWNEY: IS THAT THE DEVICE THAT IT USED IN CONNECTION, FOR EXAMPLE, WITH THE STUDIES THAT IT HAD RUN WITH PHARMACEUTICAL COMPANIES?
ELIZABETH A. HOLMES: IT IS.
MR. DOWNEY: AND WHAT WAS THE SIGNIFICANCE OF THE DESCRIPTIONS OF THE 4.0 DEVICE THAT YOU RECEIVED IN EARLY 2010 TO YOUR MIND?
ELIZABETH A. HOLMES: THE BIGGEST SIGNIFICANCE WAS THAT WE COULD NOT ONLY DO THIS ONE METHOD FOR IMMUNOASSAYS, BUT WE COULD ALSO DO THREE ADDITIONAL METHODS SIMULTANEOUSLY ON THE SAME DEVICE.
MR. DOWNEY: AND WHY WAS THAT IMPORTANT?
ELIZABETH A. HOLMES: BECAUSE IT MEANT THAT WE COULD RUN ANY TEST.
MR. DOWNEY: DID YOU CONTINUE TO DISCUSS THE DEVELOPMENT OF A SYSTEM 4.0 AT THERANOS THROUGHOUT 2010?
ELIZABETH A. HOLMES: WE DID.
MR. DOWNEY: AND DID YOU CONTINUE TO EVALUATE ITS FEASIBILITY AS AN ACTUAL SYSTEM AND PRODUCT?
MR. DOWNEY: DO YOU RECALL CONTINUING TO HAVE DISCUSSIONS ABOUT IT WITH DR. GIBBONS THROUGHOUT 2010?
ELIZABETH A. HOLMES: WE DID.
MR. DOWNEY: AND OTHER SCIENTISTS AND ENGINEERS AT THERANOS?
ELIZABETH A. HOLMES: YES. MOST OF OUR COMPANY GOT ENGAGED ON BUILDING IT.
MR. DOWNEY: AND DID YOU DISCUSS WITH DR. ROBERTSON, YOUR MENTOR FROM STANFORD, THAT THERANOS WAS DEVELOPING THIS SYSTEM?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: DO YOU RECALL WHAT FEEDBACK DR. ROBERTSON GAVE YOU ABOUT THERANOS'S DEVELOPMENT OF THIS 4.0 SYSTEM?
ELIZABETH A. HOLMES: DR. ROBERTSON SAID THAT THE IDEAS WERE VERY PROMISING AND THAT HE THOUGHT WE SHOULD PURSUE THE SPECIFIC TECHNICAL METHODS THAT WE'D IDENTIFIED AND THAT OUR DEVELOPMENT PLANS WERE FEASIBLE.
MR. DOWNEY: DID YOU BEGIN TO TALK OUTSIDE OF THERANOS DURING 2010 ABOUT THERANOS'S DEVELOPMENT OF A 4.0 SYSTEM?
MR. DOWNEY: IN CONNECTION WITH SOME OF THOSE DISCUSSIONS AND PRESENTATIONS, DID YOU CONSULT WITH THE SCIENTISTS AND ENGINEERS TO PREPARE FOR THEM?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: LET ME ASK YOU TO OPEN THE NOTEBOOK NEXT TO YOU, WHICH IS THE VOLUME 2 NOTEBOOK, AND TURN TO EXHIBIT 7100.
ELIZABETH A. HOLMES: OKAY.
MR. DOWNEY: AND DO YOU RECALL PREPARING TO GIVE A PRESENTATION TO THE PHARMACEUTICAL COMPANY GLAXOSMITHKLINE IN OCTOBER OF 2010?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: IS EXHIBIT 7100 SOME EMAIL COMMUNICATIONS THAT YOU HAD WITH DR. GIBBONS AND OTHERS AT THERANOS ABOUT THE PREPARATION FOR THAT PRESENTATION?
ELIZABETH A. HOLMES: 7100 IN MY BOOK IS EMAILS WITH DR. GIBBONS, BUT I DON'T THINK IT'S ABOUT THAT PRESENTATION.
MR. DOWNEY: OKAY. WHAT DOES 7100 CONCERN?
ELIZABETH A. HOLMES: IT CONCERNS QUESTIONS AS TO WHAT TESTS THE 4 SERIES SYSTEM COULD DO.
MR. DOWNEY: OKAY. WELL, LET'S TAKE A LOOK AT THAT IN ANY EVENT. I MOVE THE ADMISSION OF 7100.
MR. LEACH: NO OBJECTION, YOUR HONOR.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(DEFENDANT'S EXHIBIT 7100 WAS RECEIVED IN EVIDENCE.)
BY MR. DOWNEY:
MR. DOWNEY: LET'S LOOK AT THE BOTTOM OF 7100. THIS APPEARS TO BE AN EMAIL FROM YOU TO DR. GIBBONS AND MR. BALWANI AND MR. FRENZEL IN FEBRUARY OF 2010. DO YOU SEE THAT?
MR. DOWNEY: AND AT THE OUTSET OF THAT EMAIL, YOU SAY, "HERE'S THE GENERAL CHEMISTRY PANEL WE WANT TO HAVE - IT INCLUDES THE MOST COMMONLY RUN TESTS AND THE TESTS ON QUESTS GENERAL CHEMISTRY PANEL WITH THE EXCEPTION OF URIC ACID." AND THEN YOU ASK A QUESTION "IS THERE A BLOOD SURROGATE FOR THAT?" WHY WERE YOU SENDING THIS LIST OF GENERAL CHEMISTRY TESTS TO DR. GIBBONS IN FEBRUARY OF 2010?
ELIZABETH A. HOLMES: I WANTED TO ASK HIM IF WE COULD RUN THESE TESTS.
MR. DOWNEY: AND WAS THAT IN CONNECTION WITH THE SYSTEM 4.0?
MR. DOWNEY: LET'S LOOK AT DR. GIBBONS'S RESPONSE ABOVE. DO YOU SEE THAT THIS IS AN EMAIL FROM DR. GIBBONS TO YOU AND OTHERS ON FEBRUARY 22ND, 2010?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND HE SAYS, "THE ATTACHED PRESENTS MY ANALYSIS OF HOW THE ANALYTES YOU LISTED WOULD BE MEASURED IN SYSTEM 4.0. ESSENTIALLY ALL ARE POSSIBLE IN THE PROPOSED SYSTEM." WHAT DID YOU UNDERSTAND DR. GIBBONS TO BE COMMUNICATING TO YOU ABOUT THERANOS'S SYSTEM 4.0 IN FEBRUARY OF 2010?
ELIZABETH A. HOLMES: THAT THESE TESTS COULD BE RUN IN THAT SYSTEM.
MR. DOWNEY: HE NOTES A FEW CAVEATS AND NOTES BELOW WITH REGARD TO SOME PARTICULAR BLOOD TESTS. WERE ANY OF THOSE IMPORTANT IN YOUR EVALUATION OF WHETHER OR NOT THERANOS COULD, FOR ALL INTENTS AND PURPOSES, RUN ANY BLOOD TEST WITHIN THE PROPOSED SYSTEM 4.0?
ELIZABETH A. HOLMES: I'M JUST LOOKING AT IT. I READ IT TO MEAN THAT EVEN FOR THOSE THAT HE WAS HIGHLIGHTING, THERE WAS A SOLUTION AS TO HOW THOSE COULD ALSO BE RUN.
MR. DOWNEY: IS THIS A DOCUMENT THAT WAS USED FOR INTERNAL PURPOSES AT THERANOS OR WAS THIS IN CONNECTION WITH EXTERNAL COMMUNICATIONS?
ELIZABETH A. HOLMES: IT WAS IN CONNECTION -- I'M SORRY. WOULD YOU REPEAT THE QUESTION?
MR. DOWNEY: YEAH. WAS THIS IN CONNECTION WITH THE PRESENTATION OR AN INTERNAL DISCUSSION?
ELIZABETH A. HOLMES: THIS WAS AN INTERNAL DISCUSSION WHERE I WAS ASKING DR. GIBBONS IF THESE THINGS COULD BE DONE PRIOR TO AN EXTERNAL DISCUSSION.
MR. DOWNEY: OKAY. AND WAS THIS PRIOR TO THE TIME THAT YOU BEGAN TO DISCUSS THE SYSTEM 4.0 EXTERNALLY AT THERANOS?
MR. DOWNEY: OKAY. LET'S LOOK NOW AT EXHIBIT 15004.
ELIZABETH A. HOLMES: OKAY.
MR. DOWNEY: IS 15004 AN EMAIL EXCHANGE BETWEEN YOURSELF AND OTHERS AT THERANOS IN CONNECTION WITH PREPARING FOR AN EXTERNAL PRESENTATION ABOUT SYSTEM 4.0?
MR. DOWNEY: YOUR HONOR, I MOVE THE ADMISSION OF 15004.
MR. LEACH: NO OBJECTION, YOUR HONOR.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(DEFENDANT'S EXHIBIT 15004 WAS RECEIVED IN EVIDENCE.)
BY MR. DOWNEY:
MR. DOWNEY: LET'S LOOK FIRST AT THE BOTTOM OF PAGE 2 OF 15004. AND DO YOU SEE THAT DR. GIBBONS IS INDICATING TO YOU THAT HE HAS PUT TOGETHER A POWERPOINT FOR GSK, AND THEN HE GOES ON TO DISCUSS SOME PARTICULAR ASSAYS AND DESCRIBES THE LOCATION OF THE MATERIALS AND SO FORTH.
MR. DOWNEY: AND WAS THIS A PRESENTATION THAT YOU WERE TO GIVE TO A PHARMACEUTICAL COMPANY?
ELIZABETH A. HOLMES: IT IS.
MR. DOWNEY: AND GSK IS A REFERENCE TO GLAXOSMITHKLINE?
MR. DOWNEY: AND THAT IS A COMPANY I BELIEVE YOU TESTIFIED YESTERDAY THAT THERANOS HAD BEEN WORKING WITH FOR A NUMBER OF YEARS BEFORE 2010.
ELIZABETH A. HOLMES: IT IS.
MR. DOWNEY: IN RESPONSE TO HIS FORWARD, IN YOUR EMAIL YOU WRITE, "THANKS ALL. I'VE JUST HANDED AND WILL TAKE A LOOK AS SOON AS THE MATERIALS ARE CIRCULATED. THREE POINTS I WILL WANT TO HIGHLIGHT AND QUANTIFY AS NUMERICALLY AS POSSIBLE." AND THEN YOU GO ON TO LIST THE THREE POINTS. WHY WERE YOU SENDING THIS INQUIRY ABOUT THESE THREE POINTS BEFORE WE DISCUSS THE THREE POINTS?
ELIZABETH A. HOLMES: BECAUSE I'D SEEN THESE CONTENT IN THE SLIDES THAT OUR SCIENTISTS WERE PREPARING FOR ME, AND I KNEW I WOULD BE ASKED ABOUT THEM AND WANTED TO UNDERSTAND WHAT THE BASIS FOR THOSE STATEMENTS WAS.
MR. DOWNEY: OKAY. AND THE FIRST QUESTION YOU ASK IS, "WHY AND HOW OUR PLATFORM WILL BE CAPABLE OF THE FULL RANGE OF ASSAYS AND BE AT LEAST AS GOOD AS THE CRO." FIRST OF ALL, JUST SOME TERMINOLOGY. WHAT IS THE CRO?
ELIZABETH A. HOLMES: THE CRO IS THE, I THINK IT'S CONTRACT RESEARCH ORGANIZATION, WHICH IS THE COMPANY THAT THE PHARMAS HIRE TO RUN TRADITIONAL TESTING AND HELP RUN THE STUDIES.
MR. DOWNEY: OKAY. AND ARE TESTS THAT A COMPANY RUNS, ARE THEY EVALUATED AGAINST THE TEST FROM CRO?
MR. DOWNEY: AND WERE YOU -- HAD YOU BEEN PREPARED TO SAY THAT SYSTEM 4.0 AT THERANOS WOULD BE CAPABLE OF THE FULL RANGE OF ASSAYS COMPARABLE TO A LIST WITHIN THE CRO?
ELIZABETH A. HOLMES: OUR SCIENTISTS HAD SAID THAT, AND SO I JUST WANTED TO BETTER UNDERSTAND THAT STATEMENT.
MR. DOWNEY: OKAY. AND THEN IN THE SECOND POINT YOU ASK, "WHY AND HOW WE'LL ACHIEVE SIGNIFICANT COST SAVINGS." DO YOU SEE THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND WHY WAS THAT IMPORTANT?
ELIZABETH A. HOLMES: BECAUSE A SIGNIFICANT PART OF OUR BUSINESS MODEL WAS ABOUT BEING ABLE TO MAKE TESTING CHEAPER, AND I WANTED TO BE ABLE TO QUANTIFY THAT FOR THE PEOPLE I WAS MEETING WITH.
MR. DOWNEY: OKAY. AND THEN YOU GO ON TO SAY, "WHY AND HOW WE'LL ACCELERATE STUDIES SIGNIFICANTLY." WHAT WERE YOU REFERRING TO THERE?
ELIZABETH A. HOLMES: AGAIN, ANOTHER PART OF THE WORK WE WERE TRYING TO DO FOR PHARMACEUTICAL COMPANIES WAS SPEED UP THE STUDIES, AND WE WERE CONVEYING TO THEM THAT WE COULD DO THAT, AND I WANTED TO UNDERSTAND WHAT THE SCIENTISTS WERE THINKING ABOUT WHEN THEY WERE MAKING THOSE STATEMENTS.
MR. DOWNEY: AND DID DR. GIBBONS RESPOND TO THE THREE QUERIES THAT YOU HAD MADE IN THIS PRESENTATION?
ELIZABETH A. HOLMES: HE DID.
MR. DOWNEY: LET'S LOOK AT HIS EMAIL ABOVE, WHICH IS RESPONDING TO YOU AND INCLUDING OTHERS. FIRST, LET ME JUST ASK ABOUT THE OTHERS ON THE EMAIL. DO YOU SEE THAT SUREKHA GANGADKHEDKAR IS ON THE EMAIL?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND DO YOU RECALL THAT SHE TESTIFIED IN THIS PROCEEDING?
MR. DOWNEY: AND SHE WAS A SCIENTIST AT THERANOS WHO WORKED ON THE DEVELOPMENT OF ASSAYS?
ELIZABETH A. HOLMES: SHE WAS.
MR. DOWNEY: AND IN THE CC LINE THERE'S A REFERENCE TO MR. FRENZEL, WHO WE DISCUSSED YESTERDAY?
MR. DOWNEY: AND THERE IS ALSO A CC TO DANIEL YOUNG. DO YOU SEE THAT?
MR. DOWNEY: AND WHO WAS DANIEL YOUNG?
ELIZABETH A. HOLMES: DR. YOUNG WAS ALSO A SCIENTIST WHO WAS LEADING OUR INFORMATICS, OUR SOFTWARE INFORMATICS GROUP AND HAD STARTED TO BECOME MORE BROADLY INVOLVED IN RUNNING R&D.
MR. DOWNEY: OKAY. AND DR. GIBBONS RESPONDS TO YOUR INQUIRY ABOUT WHETHER AND HOW THE PLATFORM AT THERANOS WOULD BE CAPABLE OF THE FULL RANGE OF ASSAYS AND BE AT LEAST AS GOOD AS THE CRO BELOW. DO YOU SEE THAT HE SAYS, "I THINK WE HAVE DEMONSTRATED CAPABILITIES FULLY EQUIVALENT TO LAB METHODS AND AREAS WHERE WE HAVE DONE ASSAY DEVELOPMENT. OUR IMMUNOASSAYS MATCH THE BEST THAT CAN BE DONE IN CLINICAL LABS AND WORK WITH SMALL BLOOD SAMPLES. GENERALLY OUR ASSAYS ARE FASTER BY A FACTOR OF THREE TO TEN THAN KITS." AND HE GOES ON TO DESCRIBE SOME PARTICULAR CAPABILITIES OF THE SYSTEM. WHAT DID YOU UNDERSTAND THAT DR. GIBBONS WAS SAYING WHEN HE SAID THAT THERANOS'S 4.0 SYSTEM HAD DEMONSTRATED CAPABILITIES FULLY EQUIVALENT TO LAB METHODS IN AREAS WHERE THERANOS HAD DONE ASSAY DEVELOPMENT?
ELIZABETH A. HOLMES: HE WAS SAYING THAT THE DATA THAT WE HAD ACROSS THESE DIFFERENT METHODS IN WHICH WE HAD DONE ASSAY DEVELOPMENT DEMONSTRATED THAT OUR CAPABILITIES WERE FULLY EQUIVALENT TO A TRADITIONAL LAB.
MR. DOWNEY: AND HE TALKS ABOUT THE IMMUNOASSAYS THAT THERANOS WAS DEVELOPING AS MATCHING THE BEST THAT CAN BE DONE IN CLINICAL LABS. DO YOU SEE THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND WAS THAT SOMETHING THAT YOU BELIEVED AS OF 2010 BASED ON THE WORK THAT THERANOS HAD DONE WITH PHARMACEUTICAL COMPANIES?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: AND DID DR. GIBBONS AND OTHER SCIENTISTS AT THERANOS SHARE THEIR VIEW WITH YOU, SHARE A VIEW WITH YOU THAT THEY AGREED THAT THE IMMUNOASSAYS OF THERANOS MATCHED THE BEST THAT COULD BE DONE IN CLINICAL LABS?
MR. DOWNEY: IN THE SECOND PARAGRAPH HE GOES ON TO SAY, "WE HAVE ALSO SHOWN ABILITIES TO WORK IN ALL ASSAY AREAS," AND THEN HE LISTS A NUMBER OF SPECIFIC ASSAY AREAS. WHAT SIGNIFICANCE DID THIS HAVE WITH RESPECT TO SYSTEM 4.0?
ELIZABETH A. HOLMES: THESE ARE THE FOUR METHODS THAT WE DEVELOPED FOR SYSTEM 4.0, AND IT WAS BY BEING ABLE TO DO ALL FOUR OF THESE METHODS THAT WE COULD ACHIEVE THE GOAL OF RUNNING ANY TEST ON OUR PLATFORM.
MR. DOWNEY: OKAY. AND HE THEN GOES ON TO SAY, "IN GENERAL CHEMISTRY, WE MATCH REFERENCE METHODS." WAS THAT A REFERENCE TO SAYING WITH RESPECT TO THAT ASSAY METHOD, THERANOS MATCHED HOW OTHER BLOOD TESTS PERFORMED?
ELIZABETH A. HOLMES: YES, I UNDERSTAND REFERENCE METHODS JUST MEANS THE TRADITIONAL TESTS.
MR. DOWNEY: OKAY. AND THEN HE GOES ON TO DISCUSS COST SAVINGS AND HE SAYS, "IT WILL ACCRUE FROM SMALL SAMPLE SIZE AND NO BLOOD DRAW REQUIREMENT." WHY WOULD COST SAVINGS RESULT FROM A SMALL SAMPLE SIZE AND NO BLOOD DRAW REQUIREMENT?
ELIZABETH A. HOLMES: BECAUSE YOU DON'T NEED ALL OF THE OVERHEAD ASSOCIATED WITH DOING A TRADITIONAL VENOUS DRAW WHERE YOU HAVE TO HAVE A TRAINED PHLEBOTOMIST, YOU HAVE TO HAVE CENTRIFUGES AND OTHER PROCESSING EQUIPMENT FOR THE SAMPLE AT A CLINICAL TRIAL SITE. YOU HAVE TO HAVE A LOT OF INFRASTRUCTURE FOR TRANSPORTING THOSE SAMPLES. AND IN OUR CASE THIS SYSTEM WAS DESIGNED TO BE IN THE FIELD OR IN SOMEONE'S HOME. YOU COULD TOUCH A CARTRIDGE AND BE ABLE TO PROCESS THE SAMPLE RIGHT THERE ON THE DEVICE.
MR. DOWNEY: AND THEN HE GOES ON TO TALK ABOUT "ACCELERATION OF STUDIES," AND THEN HE MENTIONS SOMEONE NAMED TINA AND SAYS SHE HAD DEVELOPED AN ASSAY IN THREE DAYS, AND HE SAYS WITH RESPECT TO ANOTHER ASSAY, FEASIBILITY HAD BEEN SHOWN IN LESS THAN TWO MONTHS. WHAT WAS THE SIGNIFICANCE OF THE TIME FRAMES THAT DR. GIBBONS GAVE YOU WITH RESPECT TO THE DEVELOPMENT OF THOSE ASSAYS?
ELIZABETH A. HOLMES: THEY'RE AMAZING. THE ABILITY TO PUT AN ASSAY ON OUR SYSTEM THAT FAST WAS REMARKABLE, AND THE ABILITY TO DO FEASIBILITY IN THESE NEW AREAS -- I THINK HAI IS TALKING ABOUT HOSPITAL ACQUIRED INFECTIONS - WAS A HUGE THING FOR OUR COMPANY.
MR. DOWNEY: NOW, IN 2010 HOW OLD WAS THERANOS AS A COMPANY?
ELIZABETH A. HOLMES: WE, WE WERE INCORPORATED IN 2004, SO JUST ABOUT SIX YEARS.
MR. DOWNEY: OKAY. AND AS OF EARLY 2010, DID THERANOS HAVE ALL OF THE PEOPLE AND PROCESSES IN PLACE TO FULLY DEVELOP THIS SYSTEM 4.0?
ELIZABETH A. HOLMES: WE HAD MANY OF THEM, BUT WE CONTINUED TO HIRE AS FAST AS WE COULD IN DIFFERENT SCIENTIFIC AND ENGINEERING GROUPS TO CONTINUE BUILDING IT.
MR. DOWNEY: WELL, TELL US WHAT HAD TO HAPPEN WITH REGARD TO EACH OF THE ENGINEERING GROUPS THAT YOU MENTIONED YESTERDAY. WHAT HAD TO HAPPEN WITH RESPECT TO THE DEVELOPMENT OF ASSAYS FOR SYSTEM 4.0 TO BE PUT IN PLACE?
ELIZABETH A. HOLMES: WHAT HAD TO HAPPEN IS THAT WE HAD TO TAKE OUR FORMULA FOR THE CHEMISTRY METHODS AND APPLY IT IN EACH OF THOSE AREAS TO THE TEST LISTS THAT WERE GOING TO BE PRIORITIZED FOR RETAIL. SO WHAT DR. GIBBONS IS TALKING ABOUT HERE IS THAT WE HAVE A WAY TO DO DEVELOPMENT VERY QUICKLY OF ANY NEW TEST TO PUT ON OUR PLATFORM. NOW WE NEEDED TO DO THAT.
MR. DOWNEY: OKAY. WHAT FURTHER WORK NEEDED TO BE DONE WITH REGARD TO DEVELOPMENT OF HARDWARE?
ELIZABETH A. HOLMES: WE NEEDED TO BUILD THE DEVICE WITH THE ADDITIONAL DETECTORS TO MEASURE MARKERS FOR THESE DIFFERENT METHODS AND SOME OF THE PROCESSING TOOLS, LIKE WE TALKED ABOUT A MINIATURIZED CENTRIFUGE, THAT WOULD ALLOW US TO RUN THESE METHODS.
MR. DOWNEY: OKAY. AND WHAT ABOUT THE SOFTWARE GROUP THAT YOU MENTIONED YESTERDAY? WAS MORE WORK NECESSARY THERE TO DEVELOP THE 4.0 SYSTEM?
MR. DOWNEY: WHAT WORK DID YOU HAVE TO DO IN CONNECTION WITH THE SOFTWARE GROUP?
ELIZABETH A. HOLMES: THERE WAS A LOT OF WORK IN THE SOFTWARE GROUP. PART OF IT WAS WHEN WE WOULD MEASURE MARKERS WITH THESE METHODS, WE NEEDED SOFTWARE TO INTERPRET THAT DATA. SO, FOR EXAMPLE, FOR THE CELLS, YOU TAKE A PICTURE OF THE CELLS ON THE LITTLE MICROSCOPE IN THE DEVICE, AND HOW YOU THEN TURN THAT INTO A LAB RESULT IS REALLY COMPLEX SOFTWARE THAT WE NEEDED TEAMS OF PEOPLE TO BUILD. OUR TECHNOLOGIES WORKED BY ALLOWING THE CARTRIDGE, WHEN IT WAS INSERTED INTO THE DEVICE, TO CALL THE CLOUD AND THEN SEND PROTOCOLS FROM THE CLOUD DOWN TO THE DEVICE TELLING YOU WHAT TO DO WITH THE CARTRIDGE THAT HAD JUST BEEN PUT IN, AND ALL OF THAT HAD TO BE DEVELOPED FOR THESE ADDITIONAL METHODS AS WELL.
MR. DOWNEY: NOW, I ASSUME -- IS IT SAFE TO ASSUME THAT THIS WAS A SIGNIFICANT UNDERTAKING FOR THE COMPANY?
ELIZABETH A. HOLMES: VERY MUCH.
MR. DOWNEY: IS THIS SOMETHING THAT YOU HAD CONVERSATIONS WITH THE BOARD OF DIRECTORS ABOUT AT THERANOS IN 2010?
MR. DOWNEY: AND REMIND US WHO WAS ON THE BOARD OF DIRECTORS AT THERANOS IN 2010? I THINK YOU TESTIFIED EARLIER THAT DON LUCAS WAS THE CHAIRMAN OF THE BOARD BOTH IN THE YEARS BEFORE 2010 AND CONTINUING IN THE YEARS AFTER; IS THAT RIGHT?
ELIZABETH A. HOLMES: HE WAS.
MR. DOWNEY: AND YOU TESTIFIED ABOUT -- ON FRIDAY ABOUT AN INVESTOR NAMED PETE THOMAS. DO YOU RECALL THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND WAS MR. THOMAS ON THE BOARD OF DIRECTORS IN 2010?
MR. DOWNEY: AND WAS DR. ROBERTSON ON THE BOARD OF DIRECTORS AT THERANOS IN 2010?
ELIZABETH A. HOLMES: HE WAS.
MR. DOWNEY: IS IT SAFE TO SAY THAT THERE WAS A LOT OF EXPERTISE ON THE BOARD OF DIRECTORS IN THE DEVELOPMENT OF NEW TECHNOLOGIES IN 2010?
ELIZABETH A. HOLMES: THERE WAS.
MR. DOWNEY: AND DID YOU DISCUSS WITH THE BOARD OF DIRECTORS THE PLANS THAT YOU HAD FOR HOW THIS SYSTEM 4.0 WOULD BE DEVELOPED AT THERANOS?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: LET ME ASK YOU TO LOOK AT EXHIBIT 15046.
ELIZABETH A. HOLMES: OKAY.
MR. DOWNEY: IS 15046 A PRESENTATION THAT YOU GAVE TO THE BOARD OF DIRECTORS IN 2010 ABOUT THE DEVELOPMENT OF SYSTEM 4.0?
ELIZABETH A. HOLMES: IT IS.
MR. DOWNEY: OKAY. YOUR HONOR, I MOVE TO ADMIT EXHIBIT 15046.
MR. LEACH: NO OBJECTION, YOUR HONOR.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(DEFENDANT'S EXHIBIT 15046 WAS RECEIVED IN EVIDENCE.)
BY MR. DOWNEY:
MR. DOWNEY: LET ME DIRECT YOU TO PAGE 3 OF THIS EXHIBIT. DOES THIS -- WAS THIS PRESENTATION GIVEN IN DECEMBER OF 2010?
MR. DOWNEY: OKAY. LET ME GO FORWARD TO PAGE 8 OF THE EXHIBIT. AS YOU SEE ON YOUR SCREEN, THERE WAS A LIST OF PRODUCTS ON THIS SLIDE, AND UNDER IT THERE'S A DESCRIPTION OF THE DEVICE AND IT REFERS TO 3X AND MINILAB. WHAT IS THAT A REFERENCE TO?
ELIZABETH A. HOLMES: THOSE ARE THE TWO DEVICES THAT WE WERE DEVELOPING AT THAT POINT.
MR. DOWNEY: OKAY. IS MINILAB PART OF THE SYSTEM 4.0?
ELIZABETH A. HOLMES: MINILAB, YES, IS WHAT WE CALLED THE 4 SERIES SYSTEM.
MR. DOWNEY: OKAY. AND THEN THERE'S A REFERENCE TO CARTRIDGE. AND ARE THOSE THE CARTRIDGES THAT YOU'VE BEEN DESCRIBING?
MR. DOWNEY: AND UNDER THAT IT SAYS MULTIPLEXING 65 PLUS ASSAYS. WHAT DID THAT MEAN?
ELIZABETH A. HOLMES: THAT MEANT THAT WE WERE DESIGNING OUR CARTRIDGES TO BE ABLE TO RUN 65 OR MORE ASSAYS ON THE CARTRIDGE AT THE SAME TIME.
MR. DOWNEY: AND THEN UNDER ASSAYS, YOU LIST AN 800 PLUS 10 MENU AND TPS LIBRARY. EXPLAIN TO US WHAT THAT MEANT.
ELIZABETH A. HOLMES: THAT MEANT THAT WE WERE GOING TO TAKE ALL OF THE TESTS THAT WE WERE AWARE OF FROM TRADITIONAL LABS AND INVEST IN THE DEVELOPMENT OF THOSE CHEMISTRIES TO RUN THEM ON OUR PLATFORM.
MR. DOWNEY: AND WHEN YOU SAY THE DEVELOPMENT OF THOSE CHEMISTRIES, ARE YOU REFERRING TO THE DEVELOPMENT OF AN ASSAY?
MR. DOWNEY: SO THAT YOU COULD RUN THAT BLOOD TEST?
ELIZABETH A. HOLMES: EXACTLY.
MR. DOWNEY: NOW, YOU DID NOT AT THAT TIME HAVE ALL OF THOSE ASSAYS SITTING WITHIN THERANOS, DID YOU?
MR. DOWNEY: BUT DID YOU HAVE A METHOD THAT WOULD BE -- YOU BELIEVED WOULD BE CAPABLE OF APPLYING TO THE DEVELOPMENT OF ALL OF THEM?
MR. DOWNEY: OKAY. LET ME ASK YOU TO LOOK AT THE NEXT PAGE, WHICH IS PAGE 9. AND THERE'S A SYSTEM INTEGRATION OF NEW TECHNOLOGIES. AND I DON'T WANT YOU TO GO THROUGH ALL OF THE PHOTOGRAPHS, BUT JUST AT A HIGH LEVEL, WHAT WERE -- WHY WERE THESE PHOTOGRAPHS INCLUDED IN THIS PRESENTATION AND WHAT DID THEY DEPICT?
ELIZABETH A. HOLMES: THEY'RE INCLUDED IN THIS PRESENTATION BECAUSE THEY'RE KEY COMPONENTS OF THE 4 SERIES DEVICE. WHAT THEY DEPICT IS THE -- SOME OF THE DETECTORS AND OTHER KEY TECHNOLOGIES IN THE DEVICE. IF I COULD JUST POINT TO SOME OF THEM?
MR. DOWNEY: SURE.
ELIZABETH A. HOLMES: SO THE IDEA WAS THAT WE WANTED TO BUILD A SYSTEM THAT COULD BE SHIPPED SOMEWHERE AND BE ABLE TO RUN ANY TEST THAT SOMEONE WANTED TO RUN. TO DO THAT, WE WOULD NEED TO LOAD TESTS OR CHEMISTRIES ONTO A CARTRIDGE, THAT CARTRIDGE HAD A BAR CODE, THE DEVICE WOULD RECEIVE IT, AND WHEN IT WAS ENTERED INTO THE SYSTEM, WE NEEDED TO PROCESS IT. THE ROBOT DOWN HERE ON THE BOTTOM RIGHT WAS THE KEYBOARD OF THAT FOR BEING ABLE TO PICK UP THE LITTLE COMPONENTS IN THE CARTRIDGE, MOVE THEM AROUND, AND THEN PUT THEM BACK INTO THE CARTRIDGE WHEN THE TEST WAS DONE. WHERE THEY WOULD BE MOVED TO IS EITHER THE CENTRIFUGE, WHICH WOULD SPIN THEM DOWN AND GET THEM READY TO BE READ, THE SAMPLES READY TO BE READ, OR ONE OF THESE DETECTORS ARE FOUR METHODS: NUCLEIC ACID AMPLIFICATION, THAT'S LIKE PCR; CYTOMETRY, WHICH IS A SLIDE ON A LITTLE MICROSCOPE READING CELLS; ELISA, WHICH IS THE IMMUNOASSAY WE HAVE BEEN TALKING ABOUT; OR THE COLORIMETRY, WHICH IS THE GENERAL CHEMISTRY.
MR. DOWNEY: SO ARE THESE DIFFERENT PICTURES OF THE HARDWARE THAT YOU WOULD BE DEVELOPING AS PART OF SYSTEM 4.0?
MR. DOWNEY: AND DID YOU ACTUALLY TALK THE DIRECTORS THROUGH THIS WHEN YOU GAVE THIS PRESENTATION IN DECEMBER OF 2010?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: LET ME ASK YOU TO GO TO PAGE 11 OF THIS SAME EXHIBIT. AND THIS IS LABELLED ASSAY VALIDATION ACROSS TECHNOLOGIES. AND WHAT WAS THIS SLIDE INTENDED TO DEPICT FOR PURPOSES OF THE 2010 BOARD MEETING?
ELIZABETH A. HOLMES: THIS IS REPRESENTATIVE DATA FROM EACH OF THESE TECHNOLOGIES INSIDE OF THE 4 SERIES VALIDATING THEIR PERFORMANCE.
MR. DOWNEY: NOW, YOU TALKED A MOMENT AGO ABOUT SOME OF THE EFFORTS YOU WOULD BE UNDERTAKING TO WORK ON SYSTEM 4.0. DID YOU EXPLAIN TO THE BOARD OF DIRECTORS THAT THOSE EFFORTS WOULD HAVE TO BE UNDERTAKEN WITHIN THE COMPANY?
MR. DOWNEY: LET ME ASK YOU TO LOOK AT PAGE 19. THIS IS A SLIDE IN THE SAME PRESENTATION WHICH IS LABELLED ORGANIZATION. AND EXPLAIN TO US WHAT THIS SLIDE WAS INTENDED TO CONVEY TO THE BOARD OF DIRECTORS.
ELIZABETH A. HOLMES: THIS IS INTENDED TO CONVEY THAT WE NEEDED TO RESTRUCTURE OUR WHOLE COMPANY TO BE ABLE TO ACHIEVE THESE GOALS OF RAPIDLY BUILDING THIS 4 SERIES DEVICE AND SHIPPING IT ON A VERY RAPID TIMEFRAME. WE HAD PUT 13 NEW TEAM LEADS IN PLACE, SCIENTIFIC AND ENGINEERING LEADS ACROSS THE COMPANY. WE HAD AMAZING PEOPLE WHO WERE VERY TALENTED IN A NUMBER OF DIFFERENT ENGINEERING DISCIPLINES, AND I WAS TALKING A LITTLE BIT ABOUT THEIR EXPERIENCE AND I WAS TALKING ABOUT OUR GOAL OF DOUBLING THE HEAD COUNT OF THE WHOLE COMPANY TO BE ABLE TO DO THIS.
MR. DOWNEY: SO WAS THE COMPANY GOING TO GO FROM 75 PEOPLE WORKING THERE TO 150?
MR. DOWNEY: ALL RIGHT. NOW, ALSO IN 2010, DID THE COMPANY START TO LOOK AT OTHER OPPORTUNITIES WHERE THERANOS MIGHT USE ITS TECHNOLOGY BEYOND PHARMACEUTICAL COMPANIES?
ELIZABETH A. HOLMES: WE DID.
MR. DOWNEY: WHEN WE TALKED YESTERDAY ABOUT PHARMACEUTICAL COMPANIES, YOU MENTIONED A NUMBER OF LARGE PHARMACEUTICAL COMPANIES WHERE THERANOS HAD BEEN ABLE TO ESTABLISH A RELATIONSHIP. DO YOU RECALL THAT?
MR. DOWNEY: DID THERANOS ALSO ENCOUNTER SOME CHALLENGES WITH RESPECT TO THE PHARMACEUTICAL COMPANIES IN TERMS OF THERANOS'S BUSINESS MODEL AND THOSE COMPANIES' BUSINESS MODEL?
ELIZABETH A. HOLMES: WE DID.
MR. DOWNEY: AND CAN YOU DESCRIBE THOSE?
ELIZABETH A. HOLMES: WE HAD DONE A NUMBER OF THESE VALIDATIONS, AND WE WANTED TO BUILD THAT PHARMACEUTICAL BUSINESS, AND WE COULDN'T GET CONTRACTS THAT WERE BIG ENOUGH TO REALLY GROW THE BUSINESS FAST ENOUGH.
MR. DOWNEY: AND WHEN YOU WERE ABLE TO VALIDATE YOUR TECHNOLOGY WITH THE PHARMACEUTICAL COMPANY, DID THAT MEAN THAT THEY WOULD USE THERANOS'S TECHNOLOGY FOR ALL OF THE BLOOD TESTING IN THAT COMPANY?
MR. LEACH: OBJECTION. LEADING. LEADING.
JUDGE DAVILA: OVERRULED. YOU CAN -- DO YOU UNDERSTAND THE QUESTION?
ELIZABETH A. HOLMES: I DO.
JUDGE DAVILA: YOU CAN ANSWER IT.
ELIZABETH A. HOLMES: OKAY. NO, IT DID NOT.
BY MR. DOWNEY:
MR. DOWNEY: OKAY. HOW WOULD YOU GET A PHARMACEUTICAL COMPANY TO USE THERANOS'S TECHNOLOGY FOR A CLINICAL TRIAL AFTER THAT COMPANY HAD VALIDATED THERANOS'S TECHNOLOGY?
ELIZABETH A. HOLMES: WE THEN HAD TO WORK WITH THE PEOPLE WITH WHOM WE VALIDATED THE TECHNOLOGY TO GO TO DIFFERENT CLINICAL GROUPS, ONCOLOGY, DIABETES, OTHERS, AND SEE IF ANYONE IN THOSE GROUPS HAD A DRUG WITH A STUDY, THAT IT WAS AT THE RIGHT POINT IN TIME TO BE ABLE TO INTRODUCE A NEW TECHNOLOGY. IT WAS A HUGE NUMBER OF DIFFERENT ORGANIZATIONS AND DIFFERENT PEOPLE THAT YOU HAD TO TRY TO WORK WITH.
MR. DOWNEY: NOW, WHEN YOU BEGAN CONSIDERING OTHER OPPORTUNITIES, DID YOU CONSIDER OPPORTUNITIES OTHER THAN MARKETING IT TO THE RETAIL COMPANY, OR WAS -- RETAIL BUSINESS, OR WERE YOU PRINCIPALLY THINKING ABOUT USING THE TECHNOLOGY WITH THE RETAIL BUSINESS?
ELIZABETH A. HOLMES: A GOAL OF OURS FROM OUR EARLY DAYS WAS TO BRING OUR TECHNOLOGY TO RETAIL, SO WE STARTED TO REALLY FOCUS IN ON THAT AT THAT POINT IN TIME.
MR. DOWNEY: OKAY. AND DID YOU IDENTIFY RETAIL COMPANIES THAT YOU THOUGHT MIGHT BE GOOD PARTNERS FOR THERANOS IN TERMS OF USING THERANOS'S TECHNOLOGY IN THEIR STORES?
MR. DOWNEY: LET ME ASK YOU, BEFORE I TALK ABOUT THOSE EFFORTS, TO DESCRIBE JUST HOW DID YOU FORESEE THAT A RETAIL PARTNERSHIP BETWEEN THERANOS AND A RETAIL COMPANY MIGHT WORK?
ELIZABETH A. HOLMES: OUR IDEA WAS TO PUT OUR DEVICE IN THE STORES AT A PHARMACY SO THAT PEOPLE COULD COME IN AND DO A TEST, LIKE A FLU TEST, RIGHT THERE ON THE SPOT, HAVE THAT DATA PROCESSED, AND BE ACCESSIBLE TO THEM ON A MOBILE APP WHERE THEY COULD START GETTING THEIR OWN DATA AND THEN TRENDING THAT DATA OVER TIME.
MR. DOWNEY: AND WHICH RETAIL COMPANIES DID YOU TRY TO INTEREST IN THAT IDEA?
ELIZABETH A. HOLMES: ALL OF THEM.
MR. DOWNEY: WHEN YOU SAY "ALL OF THEM," DO YOU MEAN ALL OF THE PHARMACEUTICAL -- ALL OF THE PHARMACY COMPANIES, OR WHAT TYPES OF RETAIL COMPANIES?
ELIZABETH A. HOLMES: EVERY PHARMACY COMPANY THAT WE KNEW OF.
MR. DOWNEY: OKAY. AND DID YOU CONSIDER ANY TYPES OF BUSINESSES OTHER THAN PHARMACY COMPANIES?
ELIZABETH A. HOLMES: NO. WE FOCUSSED ON RETAIL PHARMACIES.
MR. DOWNEY: OKAY. AND WHAT RETAIL PHARMACY COMPANIES DID THERANOS TRY TO INTEREST IN USING THERANOS'S TECHNOLOGY IN THEIR STORES?
ELIZABETH A. HOLMES: WE TALKED TO TARGET, WE TALKED TO CVS, WE TALKED TO WAL-MART, WE TALKED TO DUANE READE, WE TALKED TO WALGREENS, WE TALKED TO SAFEWAY, AND WE TALKED TO BOOTS.
MR. DOWNEY: WERE ALL OF THOSE COMPANIES INTERESTED IN PARTNERING WITH THERANOS IN 2010?
MR. DOWNEY: WHAT KINDS OF REACTIONS DID YOU GET TO YOUR EFFORTS TO INTEREST THOSE COMPANIES IN, IN USING THERANOS TECHNOLOGY IN THEIR STORES?
ELIZABETH A. HOLMES: SOME OF THEM THOUGHT WE WERE TOO EARLY, THAT WE WERE TOO YOUNG AS A COMPANY, THAT WE DIDN'T HAVE THE EXPERIENCE TO BE ABLE TO DO WHAT WE SOUGHT TO DO, AND SOME OF THEM DIDN'T WANT TO PURSUE IT. SOME OF THEM DID, WALGREENS AND SAFEWAY.
MR. DOWNEY: AND DID YOU ULTIMATELY FOCUS ON WALGREENS AND SAFEWAY FOR PURPOSES OF LAUNCHING YOUR TECHNOLOGY IN THE RETAIL SETTING?
MR. DOWNEY: TELL US ABOUT THE FIRST MEETINGS WITH WALGREENS THAT YOU RECALL.
ELIZABETH A. HOLMES: I REMEMBER MEETING WITH DR. JAY ROSAN AND TALKING TO HIM ABOUT OUR IDEA, AND DR. ROSAN ASKING TO DO A FOLLOW-ON MEETING WITH SOME OF WALGREENS'S SENIOR LEADERSHIP.
MR. DOWNEY: OKAY. AND WAS THERE A FOLLOW-ON MEETING WITH WALGREENS'S SENIOR LEADERSHIP?
ELIZABETH A. HOLMES: YES, THERE WAS.
MR. DOWNEY: AND WHO ATTENDED THAT MEETING?
ELIZABETH A. HOLMES: DR. ROSAN WAS THERE, AND SO WAS MR. MIQUELON, AND I REMEMBER AT THE VERY END OF THE MEETING, THE CEO CAME IN TO SAY HELLO.
MR. DOWNEY: AND DURING THE COURSE OF THAT MEETING, DID YOU DESCRIBE THERANOS'S SYSTEM 4.0?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: AND DID WALGREENS DISCUSS WHAT ITS LEVEL OF INTEREST WAS IN LAUNCHING A BLOOD TESTING SERVICE WITHIN ITS RETAIL STORES?
ELIZABETH A. HOLMES: THEY DID.
MR. DOWNEY: AT THAT MEETING WAS -- DID YOU USE A SLIDE DECK TO DISCUSS THERANOS'S SYSTEM 4.0 AND OTHER ASPECTS OF THERANOS'S TECHNOLOGY?
MR. DOWNEY: LET ME ASK YOU TO LOOK AT EXHIBIT 278 WHICH IS ALSO IN EVIDENCE. IS THIS THE SLIDE DECK THAT YOU USED IN CONNECTION WITH YOUR MEETING WITH DR. ROSAN AND MR. MIQUELON?
ELIZABETH A. HOLMES: IT IS.
MR. DOWNEY: AND IS THIS A HARD COPY SLIDE DECK THAT YOU HANDED OUT, OR HOW DID YOU PRESENT THIS?
ELIZABETH A. HOLMES: I THINK IT WAS ON A COMPUTER THAT WE HAD, AND WE WOULD PULL UP SLIDES DURING THE DISCUSSION.
MR. DOWNEY: OKAY. DID YOU REVIEW ALL OF THE SLIDES AT THE MEETING?
MR. DOWNEY: LET ME ASK YOU TO LOOK AT PAGE 9 OF THE POWERPOINT. DO YOU SEE THAT THIS SLIDE IS LABELLED VALIDATION OF THERANOS SYSTEMS?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND IN THE FIRST BULLET POINT IT SAYS, "THERANOS SYSTEMS HAVE BEEN COMPREHENSIVELY VALIDATED OVER THE COURSE OF THE LAST SEVEN YEARS BY TEN OF THE FIFTEEN LARGEST PHARMACEUTICAL COMPANIES." DO YOU SEE THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND WHAT DID YOU MEAN TO CONVEY WHEN YOU SAID THAT THERANOS SYSTEMS HAD BEEN COMPREHENSIVELY VALIDATED BY THESE PHARMACEUTICAL COMPANIES?
ELIZABETH A. HOLMES: THAT OUR SYSTEMS, CHEMISTRIES, CARTRIDGES, DEVICES, SOFTWARE HAD BEEN TESTED AGAINST STANDARDS BY THESE COMPANIES.
MR. DOWNEY: AND WAS -- WHEN YOU REFERRED TO THE TEN PHARMACEUTICAL COMPANIES, WERE THEY -- WERE THE COMPANIES THAT WE DISCUSSED YESTERDAY SOME OF THOSE COMPANIES?
MR. DOWNEY: LET'S LOOK BACK FOR A MOMENT AT EXHIBIT 7742. AND I'D LIKE TO GO TO THE FOURTH PAGE OF THIS SLIDE, OF THIS EXHIBIT. AND DO YOU RECALL THAT WE DISCUSSED YESTERDAY THIS DOCUMENT WHICH IS NOW ON THE SCREEN, WHICH WAS LABELLED "WHERE IN THE WORLD IS THERANOS?"
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND IF YOU GO FORWARD A COUPLE OF PAGES FROM THERE, DO YOU SEE THAT THIS IS A LIST OF WHAT ARE DESCRIBED AS COMPLETED SUCCESSES?
MR. DOWNEY: WERE THE PHARMACEUTICAL COMPANIES LISTED HERE, WERE THEY SOME OF THE PHARMACEUTICAL COMPANIES THAT YOU WERE REFERRING TO IN THE SLIDE DECK WHEN YOU REFERRED TO TEN PHARMACEUTICAL COMPANIES VALIDATING THERANOS'S SYSTEMS?
ELIZABETH A. HOLMES: THEY ARE. AND WHAT YOU CAN SEE HERE IS THAT THERE ARE ALL SORTS OF DIFFERENT PARTS OF THE TECHNOLOGY THAT WAS EVALUATED AND VALIDATED IN THOSE PROGRAMS.
MR. DOWNEY: OKAY. LET'S GO NOW BACK TO EXHIBIT 278, WHICH WE WERE DISCUSSING A MOMENT AGO, THE SLIDE DECK THAT WAS USED AT THE INITIAL WALGREENS MEETING. AND I'D LIKE TO ASK YOU TO GO FORWARD TO PAGE 31 OF THIS DOCUMENT. AND AT THE TOP OF THE DOCUMENT UNDER "LAUNCH OF THERANOS SYSTEMS AT WALGREENS," IT READS, "THERANOS WOULD LIKE TO CEMENT A PARTNERSHIP WITH WALGREENS BY END OF APRIL 2010 TO LAUNCH THE GENERAL CHEMISTRY, INFLUENZA, AND FERTILITY TESTS IN Q4 2010." DO YOU SEE THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND WAS THAT THE ORIGINAL IDEA THAT THERANOS WAS SUGGESTING TO WALGREENS AND OTHER PHARMACEUTICAL PARTNERS?
MR. DOWNEY: DID YOU UNDERSTAND THAT IT WOULD BE POSSIBLE BY THE FOURTH QUARTER OF 2010 FOR THERANOS TO, TO LAUNCH ITS SERVICES IN THIS WAY?
MR. DOWNEY: THE REFERENCE AT THE END OF THE PARAGRAPH TO GENERAL CHEMISTRY, INFLUENZA, AND FERTILITY TESTS, IS THAT A REFERENCE TO ALL BLOOD TESTS?
MR. DOWNEY: WHY WAS THERANOS PROPOSING THAT A LAUNCH OF THERANOS BE -- TECHNOLOGY BE DONE WITH -- IN CONNECTION WITH THOSE THREE TESTS OR CATEGORIES OF TESTS?
ELIZABETH A. HOLMES: OUR IDEA FOR LAUNCHING OUR TECHNOLOGY AT WALGREENS WAS TO HAVE TEST PANELS THAT COULD BE MEANINGFUL TO PEOPLE. WE HAD DONE WORK IN THE PAST ON INFLUENZA AND FERTILITY AND THOUGHT THAT THOSE COULD BE MEANINGFUL TO PEOPLE COMING INTO WALGREENS, AND WE HAD BEEN WORKING ON THIS GENERAL CHEMISTRY PANEL WITH SCIENTISTS INTERNALLY AND THOUGHT WE COULD LAUNCH IT BY THE END OF THE YEAR.
MR. DOWNEY: NOW, DURING THE COURSE OF THIS MEETING IN 2010 -- WHAT MONTH WAS THIS MEETING, IF YOU RECALL?
ELIZABETH A. HOLMES: JUST LOOKING BACK AT THE EMAIL, I THINK IT WAS IN MARCH. END OF MARCH.
MR. DOWNEY: NOW, DID WALGREENS EXPRESS AFTER THAT MEETING THAT THEY MIGHT BE INTERESTED IN EXPLORING A RELATIONSHIP WITH THERANOS?
MR. DOWNEY: DID THEY ALSO EXPRESS TO THERANOS THAT THEY WOULD LIKE TO DO SOME DUE DILIGENCE TO EVALUATE WHETHER THERANOS WAS A PARTNER WITH WHOM WALGREENS THOUGHT IT COULD WORK?
ELIZABETH A. HOLMES: THEY DID.
MR. DOWNEY: OKAY. NOW, I WANT TO FOCUS ON TWO REPORTS FROM PHARMACEUTICAL COMPANIES THAT YOU SENT TO WALGREENS IN 2010. DO YOU RECALL THAT THERE'S BEEN TESTIMONY ABOUT THOSE REPORTS?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: ONE OF THOSE REPORTS WAS FROM SCHERING-PLOUGH; CORRECT?
MR. DOWNEY: AND THE OTHER REPORT WAS FROM PFIZER; CORRECT?
MR. DOWNEY: WHY DID YOU CHOOSE TO SEND THE SCHERING-PLOUGH REPORT TO WALGREENS AS PART OF ITS DUE DILIGENCE?
ELIZABETH A. HOLMES: BECAUSE WE HAD WORKED WITH SCHERING-PLOUGH TO ESTABLISH VERY RIGOROUS STANDARDS AGAINST WHICH TO VALIDATE OUR TESTS, AND WE HAD RUN THOUSANDS OF CARTRIDGES SHOWING NOT ONLY THAT WE COULD MULTIPLEX THE TESTS ON A SINGLE CARTRIDGE, BUT ALSO THAT WE COULD MEASURE MARKERS AT REALLY LOW LEVELS THAT ARE REALLY HARD TO DO, AND I WANTED TO SHARE THAT DATA.
MR. DOWNEY: WHEN YOU SAY "MULTIPLEX," WHAT DO YOU MEAN?
ELIZABETH A. HOLMES: SORRY. THE ABILITY TO RUN THE SAME TESTS ON A SINGLE CARTRIDGE, OR MULTIPLE TESTS ON A SINGLE CARTRIDGE AT THE SAME TIME.
MR. DOWNEY: OKAY. AND WHY DID YOU CHOOSE TO SHARE THE PFIZER REPORT WITH WALGREENS AS PART OF ITS DUE DILIGENCE PROCESS?
ELIZABETH A. HOLMES: BECAUSE, AGAIN, WE HAD WORKED WITH PFIZER FOR YEARS TO DEVELOP A STUDY THAT WOULD MEASURE THESE VERY COMPLICATED CANCER MARKERS IN PEOPLE'S HOMES, THE DEVICES WORKED, AND I THOUGHT THE DATA WAS REALLY GOOD, AND I WANTED TO SHARE IT WITH THEM.
MR. DOWNEY: DO YOU RECALL THAT THERE HAS BEEN TESTIMONY TO THE EFFECT THAT THE LOGOS OF THOSE PHARMACEUTICAL COMPANIES WERE ADDED TO THE TOP OF THOSE DOCUMENTS?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND WHO ADDED THE LOGOS OF THOSE COMPANIES TO THE TOP OF THOSE DOCUMENTS?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: WHEN DID YOU DO THAT?
ELIZABETH A. HOLMES: JUST BEFORE SENDING THEM TO WALGREENS.
MR. DOWNEY: WHY DID YOU DO THAT?
ELIZABETH A. HOLMES: BECAUSE THIS WORK WAS DONE IN PARTNERSHIP WITH THOSE COMPANIES, AND I WAS TRYING TO CONVEY THAT.
MR. DOWNEY: YOU'VE HEARD TESTIMONY FROM WITNESSES IN THIS CASE THAT THEY THOUGHT THAT THE REPORTS THAT YOU SENT HAD BEEN PREPARED BY THOSE PHARMACEUTICAL COMPANIES. DO YOU RECALL THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: DID YOU INTEND TO GIVE THAT IMPRESSION WHEN YOU TRANSMITTED THOSE REPORTS TO WALGREENS?
ELIZABETH A. HOLMES: NO. BUT I'VE HEARD THAT TESTIMONY IN THIS CASE, AND I WISH I HAD DONE IT DIFFERENTLY.
MR. DOWNEY: DID YOU -- AS OF 2010, SCHERING-PLOUGH NO LONGER EXISTED AS AN INDEPENDENT PHARMACEUTICAL COMPANY; IS THAT RIGHT?
ELIZABETH A. HOLMES: CORRECT.
MR. DOWNEY: BUT PFIZER DID; RIGHT?
MR. DOWNEY: DID YOU TRY TO CONCEAL FROM PFIZER THAT YOU HAD ADDED PFIZER'S LOGO TO THE TOP OF THE REPORT THAT YOU SENT TO WALGREENS IN 2010?
ELIZABETH A. HOLMES: NOT AT ALL.
MR. DOWNEY: LET ME ASK YOU TO LOOK AT EXHIBIT 15048. YOUR HONOR, I'M NOT SURE IF THIS IS IN YOUR NOTEBOOK?
JUDGE DAVILA: I DON'T BELIEVE IT IS.
MR. DOWNEY: BUT MR. LEACH HAS A COPY.
JUDGE DAVILA: THANK YOU.
ELIZABETH A. HOLMES: I DON'T KNOW IF I HAVE IT.
MR. DOWNEY: MAY I APPROACH THE WITNESS, YOUR HONOR?
JUDGE DAVILA: YES.
BY MR. DOWNEY:
MR. DOWNEY: (HANDING.) HAVE YOU HAD AN OPPORTUNITY TO REVIEW 15048?
ELIZABETH A. HOLMES: THE FIRST PAGE, YES.
MR. DOWNEY: OKAY. IS THE FIRST PAGE AN EMAIL BETWEEN CHRISTIAN HOLMES AT THERANOS AND VARIOUS PEOPLE AT PFIZER DISCUSSING POTENTIAL RELATIONSHIPS BETWEEN PFIZER AND THERANOS?
MR. DOWNEY: AND ARE THERE VARIOUS ATTACHMENTS TO THAT DOCUMENT?
ELIZABETH A. HOLMES: THERE ARE.
MR. DOWNEY: YOUR HONOR, I MOVE THE ADMISSION OF 15048.
MR. LEACH: NO OBJECTION, YOUR HONOR.
JUDGE DAVILA: THE ENTIRE DOCUMENT?
MR. DOWNEY: THE ENTIRE DOCUMENT.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(DEFENDANT'S EXHIBIT 15048 WAS RECEIVED IN EVIDENCE.)
BY MR. DOWNEY:
MR. DOWNEY: LET'S LOOK AT THE FIRST PAGE OF THE DOCUMENT. DO YOU SEE THAT THIS IS AN EMAIL FROM CHRISTIAN HOLMES TO A GROUP OF INDIVIDUALS AT PFIZER, AND THAT YOU WERE COPIED ON THE EMAIL?
MR. DOWNEY: AND DO YOU SEE THAT THIS EMAIL WAS SENT IN JANUARY OF 2014?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND DO YOU SEE THAT IN THE NOTE, CHRISTIAN HOLMES CONVEYS THAT ATTACHED TO THIS EMAIL IS A SLIDE DECK THAT YOU REQUESTED, AND THEN IN THE NEXT PARAGRAPH HE SAYS, ALSO ATTACHED IS A REPORT FROM OUR PROGRAM WITH PFIZER THAT WE RAN IN THE PAST FOR YOUR REFERENCE. DO YOU SEE THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: NOW, LET'S LOOK AT THE REPORT THAT IS ATTACHED. IS THIS DOCUMENT THE REPORT OF WORK THAT THERANOS DID TO -- WITH PFIZER?
ELIZABETH A. HOLMES: IT IS.
MR. DOWNEY: AND IS THIS THE VERSION OF THE REPORT THAT YOU TRANSMITTED TO WALGREENS SOMETIME AFTER MARCH OF 2010?
MR. DOWNEY: AND DO YOU SEE THAT THE -- THIS VERSION OF THE DOCUMENT ALSO HAS THE PFIZER LOGO ON THE FIRST PAGE?
ELIZABETH A. HOLMES: IT DOES.
MR. DOWNEY: LET'S GO BACK TO THE EMAIL. AND IF YOU LOOK UP AT THE ADDRESS AT THE VERY TOP OF THE EMAIL, DO YOU SEE THAT THIS TRANSMISSION WAS MADE TO SEVERAL INDIVIDUALS AT PFIZER?
MR. DOWNEY: WERE ANY OF THE INDIVIDUALS AT PFIZER INVOLVED WITH THE PROGRAM THAT THERANOS DID WITH PFIZER IN BETWEEN 2006 AND 2008?
MR. DOWNEY: AND WHICH OF THE ADDRESSEES WAS WORKING WITH THE PFIZER-THERANOS RELATIONSHIP AS OF 2006 TO 2008?
ELIZABETH A. HOLMES: DR. SAKUL.
MR. DOWNEY: AND IS DR. SAKUL SOMEONE WITH WHOM YOU HAD DEALINGS WITH PRIOR TO THE TIME THAT YOU TRANSMITTED THE REPORT?
MR. DOWNEY: AND WAS HE SOMEONE WITH WHOM YOU HAD DEALINGS WITH AFTER YOU HAD TRANSMITTED THE REPORT?
MR. DOWNEY: LET'S TALK ABOUT OTHER DUE DILIGENCE THAT WAS DONE IN CONNECTION WITH WALGREENS'S EXPLORATION OF A RELATIONSHIP WITH THERANOS. DO YOU RECALL AT SOME POINT THAT WALGREENS SAID THAT IT WANTED TO HAVE THE TECHNOLOGY THAT THERANOS HAD BEEN USING EVALUATED BY SCIENTISTS AT JOHNS HOPKINS?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND WAS THAT SOMETHING THAT THERANOS WAS WILLING TO DO?
MR. DOWNEY: AND CAN YOU EXPLAIN TO US, WHAT IS JOHNS HOPKINS?
ELIZABETH A. HOLMES: JOHNS HOPKINS IS A HEALTH SYSTEM, A HOSPITAL SYSTEM, AND A RESEARCH ORGANIZATION THAT IS ONE OF THE BEST HEALTH SYSTEMS IN THE WORLD.
MR. DOWNEY: AND WHAT DID YOU UNDERSTAND THE TEAM AT JOHNS HOPKINS WAS ASKED TO DO IN CONNECTION WITH WALGREENS'S EVALUATION OF THERANOS?
ELIZABETH A. HOLMES: THEY WERE ASKED TO EVALUATE OUR INVENTION AND ITS CAPABILITIES.
MR. DOWNEY: AND DID YOU EVENTUALLY MEET WITH THOSE SCIENTISTS AT JOHNS HOPKINS?
MR. DOWNEY: AND IN ADVANCE OF MEETING WITH THOSE SCIENTISTS, DID YOU TRANSMIT ANYTHING TO THEM FOR THEIR REVIEW RELATED TO THERANOS AND ITS TECHNOLOGY?
MR. DOWNEY: WHEN YOU HAD THE MEETING, WHO FROM JOHNS HOPKINS ATTENDED THE MEETING?
ELIZABETH A. HOLMES: I REMEMBER DR. KICKLER, WHO WAS ONE OF THEIR LABORATORY EXPERTS. THERE WAS OTHER LABORATORY EXPERTS, OTHER PHYSICIANS, AND LEADERS IN THE HOSPITAL SYSTEM.
MR. DOWNEY: AND WITH RESPECT TO THE MATERIALS THAT YOU TRANSMITTED IN ADVANCE, DID YOU DO THAT SO THAT THEY WOULD HAVE AN OPPORTUNITY TO UNDERSTAND THE SYSTEM IN PREPARATION FOR THE MEETING?
MR. DOWNEY: LET ME ASK YOU TO LOOK AT EXHIBIT 7109.
ELIZABETH A. HOLMES: OKAY.
MR. DOWNEY: IS EXHIBIT 7109 AN INTERNAL EMAIL BETWEEN YOURSELF AND OTHERS AT THERANOS TRANSMITTING THE FINAL JOHNS HOPKINS REPORT?
MR. DOWNEY: YOUR HONOR, I MOVE TO ADMIT EXHIBIT 7109.
MR. LEACH: NO OBJECTION, YOUR HONOR.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(DEFENDANT'S EXHIBIT 7109 WAS RECEIVED IN EVIDENCE.)
BY MR. DOWNEY:
MR. DOWNEY: IF YOU TAKE A MOMENT JUST TO FLIP THROUGH EXHIBIT 7109, IS THIS A SEVERAL HUNDRED PAGE DOCUMENT CONTAINING INFORMATION ABOUT THERANOS'S TECHNOLOGY?
ELIZABETH A. HOLMES: IT IS.
MR. DOWNEY: AND LET'S TAKE A MOMENT JUST TO SEE AT A HIGH LEVEL WHAT KIND OF INFORMATION THAT YOU TRANSMITTED TO THEM FOR THEIR REVIEW. LET'S LOOK FIRST AT PAGE 3, WHICH IS LABELLED ASSAY DEVELOPMENT VALIDATION AND SELECTED CLINICAL REPORTS. AND IF YOU GO FORWARD FROM HERE, YOU CAN JUST FLIP THROUGH FROM HERE. ARE THESE LISTS OF -- INFORMATION ABOUT VARIOUS CASE STUDIES AND OTHER INFORMATION ABOUT REFERENCE THAT HAD BEEN DONE IN -- AT THERANOS?
MR. DOWNEY: AND DID YOU ALSO PROVIDE DATA REGARDING THE PERFORMANCE OF THERANOS'S SYSTEMS TO JOHNS HOPKINS FOR THEIR REVIEW?
MR. DOWNEY: LET'S LOOK AT EXHIBIT -- AT PAGE 138 OF THAT SAME EXHIBIT. AND IF YOU GO FORWARD TWO PAGES FROM HERE. IS THIS -- ARE THESE CHARTS THAT WE'RE SEEING DISPLAYED HERE, ARE THESE VARIOUS FORMS OF DATA ABOUT HOW THERANOS TECHNOLOGIES PERFORMED RELATIVE TO VARIOUS REFERENCE SYSTEMS?
MR. DOWNEY: WHY DID YOU SEND THIS INFORMATION TO HOPKINS IN ANTICIPATION OF THE MEETING?
ELIZABETH A. HOLMES: BECAUSE WE WANTED THEM TO REVIEW OUR DATA AND THE DESIGNS OF OUR TECHNOLOGY IN PREPARATION FOR THE MEETING.
MR. DOWNEY: OKAY. AND CAN YOU TELL US WHAT HAPPENED AT THE MEETING WHEN YOU WENT TO THE MEETING?
ELIZABETH A. HOLMES: YES. WE HAD A VERY DETAILED DISCUSSION ABOUT DIFFERENT ASPECTS OF THE TECHNOLOGY DESIGNS AND THE DATA ITSELF. THE EXPERTS FROM HOPKINS ASKED A LOT OF QUESTIONS ABOUT THE DATA AND ABOUT OUR DESIGNS, OUR METHODS FOR DEVELOPING NEW TESTS, HOW WE WENT ABOUT THAT. AND WE ANSWERED THEM.
MR. DOWNEY: AND, IF YOU KNOW, DID JOHNS HOPKINS PREPARE A REPORT FOR WALGREENS COMMENTING ON JOHNS HOPKINS'S EVALUATION OF THERANOS'S TECHNOLOGY?
MR. DOWNEY: WAS THAT REPORT SHARED WITH YOU BY WALGREENS?
ELIZABETH A. HOLMES: IT WAS.
MR. DOWNEY: LET'S LOOK AT EXHIBIT 302, WHICH IS ALREADY IN EVIDENCE. IS THIS THE JOHNS HOPKINS REPORT ON THERANOS THAT YOU ARE REFERRING TO?
MR. DOWNEY: LET'S GO TO PAGE 2. LET'S JUST BLOW UP THE SECTION CALLED KEY FINDINGS. IF YOU LOOK AT KEY FINDINGS, DO YOU SEE THAT THERE ARE SEVERAL COMMENTS UNDERNEATH IT ABOUT THERANOS TECHNOLOGY?
MR. DOWNEY: AND DO YOU SEE THAT THE FIRST ONE IS "THE TECHNOLOGY IS NOVEL AND SOUND. IT CAN ACCURATELY RUN A WIDE RANGE OF ROUTINE AND SPECIAL ASSAYS"?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND DO YOU SEE THAT THE SECOND BULLET POINT SAYS, "THE TECHNOLOGY IS SIMPLE ENOUGH TO BE USED BY NON-SPECIALISTS IN THE FIELD"?
MR. DOWNEY: AND THEN IT GOES ON IN THE THIRD BULLET POINT TO LIST SOME SPECIAL STRENGTHS OF THE TECHNOLOGY?
MR. DOWNEY: AND DO YOU SEE THAT AMONGST THOSE IS ACCURACY?
MR. DOWNEY: AND MINIATURIZATION?
MR. DOWNEY: AND DO YOU SEE THE LAST ITEM COMMENTED ON IS THE COST PER STUDY WOULD BE SIGNIFICANTLY LOWER THAN CURRENTLY AVAILABLE?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: OKAY. WHAT DID YOU TAKE AWAY FROM THE FACT THAT THIS WAS HOPKINS'S EVALUATION OF THERANOS'S TECHNOLOGY?
ELIZABETH A. HOLMES: OUR TEAM WAS REALLY EXCITED ABOUT THIS. THIS WAS THE BEST LABORATORY EXPERTS, SOME OF THE BEST LABORATORY EXPERTS IN THE WORLD, AND WE HAD SENT THEM BINDERS OF MATERIAL TO REVIEW BEFORE OUR MEETING, WE HAD GONE THROUGH EVERY ASPECT OF OUR INVENTION IN DETAIL, AND GETTING THIS KIND OF FEEDBACK WAS AMAZING.
MR. DOWNEY: AT SOME POINT DID WALGREENS INDICATE TO THERANOS THAT IT WANTED TO NEGOTIATE AN AGREEMENT TO PUT THERANOS SERVICE CENTERS IN ITS STORES?
ELIZABETH A. HOLMES: THEY DID.
MR. DOWNEY: WERE YOU INVOLVED IN THE NEGOTIATIONS BETWEEN THERANOS AND WALGREENS THAT LED TO AN AGREEMENT?
MR. DOWNEY: WHO ELSE FROM THERANOS WAS INVOLVED?
ELIZABETH A. HOLMES: SUNNY BALWANI AND OUR -- SOME OF OUR LAWYERS WHO WORKED AT AN OUTSIDE FIRM.
MR. DOWNEY: OKAY. WERE, WERE -- DURING THE COURSE OF THOSE NEGOTIATIONS, DID THE COMPANIES EXCHANGE VARIOUS DRAFTS OF AGREEMENTS WITH CHANGES TO PROPOSED AGREEMENTS?
MR. DOWNEY: DID YOU SEE SOME OF THOSE DRAFTS WHICH WERE EXCHANGED BETWEEN THE COMPANIES?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: I WANT TO SHOW YOU ONE OF THOSE EXCHANGES. I WANT TO SHOW YOU EXHIBIT 7117.
ELIZABETH A. HOLMES: OKAY.
MR. DOWNEY: IS 7117 AN EMAIL FROM YOU TO VARIOUS PEOPLE AT WALGREENS TRANSMITTING CERTAIN COMMENTS ON PROPOSED AGREEMENTS BETWEEN WALGREENS AND THERANOS?
MR. DOWNEY: YOUR HONOR, I MOVE THE ADMISSION OF 7117.
MR. LEACH: NO OBJECTION, YOUR HONOR.
MR. DOWNEY: IF YOU CAN TURN YOUR ATTENTION TO PAGE 18.
JUDGE DAVILA: LET ME ADMIT IT FIRST.
MR. DOWNEY: WELL, SORRY, YOUR HONOR. YOU ARE SO SOFT-SPOKEN.
JUDGE DAVILA: WELL, I CAN CORRECT THAT.
(LAUGHTER.)
MR. DOWNEY: I WON'T GO THERE.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(DEFENDANT'S EXHIBIT 7117 WAS RECEIVED IN EVIDENCE.)
BY MR. DOWNEY:
MR. DOWNEY: LET ME DIRECT YOUR ATTENTION TO PAGE 11, AND PARAGRAPH 18 RATHER. AND DO YOU SEE THAT PARAGRAPH LABELLED WARRANTY?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND DO YOU SEE NEAR THE PARAGRAPH THERE ARE SOME CHANGES TO LANGUAGE ABOUT WARRANTIES ON CARTRIDGES?
MR. DOWNEY: AND DO YOU SEE ON THE LEFT THERE'S A COMMENT BOX WITH THERANOS REACTING TO SOME OF THOSE PROPOSALS?
MR. DOWNEY: AND DO YOU SEE THAT THE THERANOS COMMENT SAYS, "AS DISCUSSED, THIS IS A NEW PRODUCT, WE'LL OBVIOUSLY PROVIDE THE BEST TECHNOLOGY PERFORMANCE POSSIBLE BUT WE CANNOT COMMIT TO THINGS LIKE THIS WHICH HAVE NOT YET EVEN BEEN CHARACTERIZED." IS THAT A COMMENT THAT YOU SAW WHEN YOU WERE TRANSMITTING THIS DOCUMENT TO WALGREENS?
ELIZABETH A. HOLMES: YES. WE WROTE THIS.
MR. DOWNEY: AND WHAT DID YOU MEAN WHEN YOU WROTE THIS COMMENT AS A CHANGE ON THE PROPOSED AGREEMENT WITH WALGREENS?
ELIZABETH A. HOLMES: JUST THAT WE HADN'T EVEN CHARACTERIZED SOME OF THE PERFORMANCE REQUIREMENTS THAT THEY WERE ASKING US TO WARRANT, OR PROVIDE A WARRANTY TO, AND WE COULDN'T DO THAT BECAUSE WE HADN'T EVEN GOTTEN TO THE POINT OF CHARACTERIZING THOSE THINGS YET.
MR. DOWNEY: AND WHEN YOU SAY "CHARACTERIZING THOSE THINGS," WHAT DO YOU MEAN?
ELIZABETH A. HOLMES: MEANING WE WERE STILL IN THE DEVELOPMENT PROCESS AND WE NEEDED TO COMPLETE DEVELOPMENT AND DO THE STUDIES TO GET THE DATA TO BE ABLE TO MAKE REPRESENTATIONS LIKE THIS.
MR. DOWNEY: OKAY. DID THERE COME A POINT WHEN WALGREENS AND THERANOS ACTUALLY ENTERED INTO AN AGREEMENT?
MR. DOWNEY: AND WHEN WAS THAT?
ELIZABETH A. HOLMES: IN 2010.
MR. DOWNEY: OKAY. NOW, TO GET THE RELATIONSHIP GOING AFTER YOU SIGNED THE AGREEMENT, WAS THERE WORK LEFT TO DO?
MR. DOWNEY: WHEN DID THE THERANOS SERVICE CENTERS ACTUALLY LAUNCH IN WALGREENS STORES?
ELIZABETH A. HOLMES: IN 2013.
MR. DOWNEY: AND WHAT WORK WAS -- WERE WALGREENS AND THERANOS DOING BETWEEN 2010 AND 2013 TO GET READY TO LAUNCH THOSE SERVICE CENTERS?
ELIZABETH A. HOLMES: THERE WAS A HUGE AMOUNT OF WORK. WE HAD TO DO THE DEVELOPMENT OF THE TESTS FOR WHATEVER MENU WAS ULTIMATELY GOING TO BE SELECTED FOR LAUNCH; WE HAD TO WORK WITH INSURANCE COMPANIES TO GET CONTRACTED SO THAT PEOPLE WHO CAME TO THE STORES WOULD BE ABLE TO BILL INSURANCE FOR THE TESTS; WE HAD TO DEVELOP --
MR. DOWNEY: LET ME STOP YOU ON YOUR COMMENT ABOUT INSURANCE COMPANIES.
ELIZABETH A. HOLMES: YES. OKAY.
MR. DOWNEY: WHY DID YOU -- WHY DID THERANOS AND WALGREENS HAVE TO WORRY ABOUT THOSE INSURANCE CONTRACTS FOR PEOPLE WHO CAME TO SERVICE CENTERS IN WALGREENS STORES?
ELIZABETH A. HOLMES: BECAUSE IN MANY WAYS THE INSURANCE COMPANY WAS ESSENTIALLY THE CUSTOMER. THEY'RE THE ONES WHO PAY FOR THE TESTS, AND SO WE NEEDED -- AND IT WAS REALLY IMPORTANT TO WALGREENS THAT WE MADE SURE THAT EACH OF THE BIG INSURANCE COMPANIES WERE CONTRACTED SO THAT PATIENTS WOULD BE ABLE TO PRESENT AN INSURANCE CARD, AND THEY WANTED US TO BE ABLE TO AUTOMATICALLY BILL THOSE INSURANCE COMPANIES, WHICH WAS A WHOLE SET ALSO OF CUSTOM SOFTWARE ONCE YOU GOT THE CONTRACT.
MR. DOWNEY: OKAY. AND WAS THERANOS ABLE TO REACH AGREEMENTS WITH THOSE INSURANCE COMPANIES?
MR. DOWNEY: DO YOU RECALL THAT MR. GROSSMAN TESTIFIED LAST WEEK THAT THERANOS'S RELATIONSHIP WITH THOSE INSURANCE COMPANIES WAS A FACTOR WITH RESPECT TO PFM'S DECISION TO INVEST IN THE COMPANY?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND HE SPECIFICALLY MENTIONED UNITED HEALTH. DO YOU REMEMBER THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND DID THERANOS SUCCESSFULLY CONCLUDE AN AGREEMENT WITH UNITED HEALTH FOR REIMBURSEMENT FOR BLOOD TESTS AT THERANOS SERVICE CENTERS?
ELIZABETH A. HOLMES: WE DID.
MR. DOWNEY: LET ME ASK YOU TO LOOK AT EXHIBIT 14018.
ELIZABETH A. HOLMES: OKAY.
MR. DOWNEY: IS THIS THE AGREEMENT BETWEEN THERANOS AND UNITED HEALTH?
ELIZABETH A. HOLMES: IT IS.
MR. DOWNEY: YOUR HONOR, I MOVE TO ADMIT 14018.
MR. LEACH: NO OBJECTION.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(DEFENDANT'S EXHIBIT 14018 WAS RECEIVED IN EVIDENCE.)
BY MR. DOWNEY:
MR. DOWNEY: NOW, WE WERE TALKING ABOUT THE WORK THAT WALGREENS AND THERANOS DID BETWEEN 2010 AND 2013, AND YOU HAD MENTIONED INSURANCE COMPANIES, AND THEN I INTERRUPTED YOU.
ELIZABETH A. HOLMES: SORRY.
MR. DOWNEY: AND WHAT OTHER WORK DID WALGREENS AND THERANOS HAVE TO DO BETWEEN 2010 AND 2013?
ELIZABETH A. HOLMES: I WAS GOING TO TALK ABOUT THE SOFTWARE. THERE WAS SOFTWARE FOR BEING ABLE TO ELECTRONICALLY BILL; THERE WAS SOFTWARE TO BE ABLE TO HAVE ALL OF THE LAB DATA GO INTO ALL OF THESE DIFFERENT EMR, OR ELECTRONIC MEDICAL RECORDS; THERE WAS SOFTWARE THAT WE WERE BUILDING FOR A GREAT CHECK-IN EXPERIENCE AT RETAIL; THERE WAS SOFTWARE FOR HOW WE WERE HANDLING THE ACCESSION OF SAMPLES IN THE LABORATORY. AND SO THERE WAS A LOT ON THAT FRONT. THERE WAS REGULATORY QUESTIONS ON WHAT THE RIGHT REGULATORY APPROACH WAS FOR BEING ABLE TO LAUNCH OUR SERVICES. AND THERE WAS ALL OF THE ORGANIZATIONS THAT WERE NEEDED TO SUPPORT THE LAUNCH, LIKE CUSTOMER SERVICE CALL CENTERS AND SO ON TO BE ABLE TO DO THIS.
MR. DOWNEY: LET'S TALK FOR A MOMENT ABOUT THE REGULATORY ISSUES YOU MENTIONED. SO AM I CORRECT THAT THE CONCEPT WAS THAT THERANOS'S DEVICES WOULD ACTUALLY BE IN WALGREENS STORES?
MR. DOWNEY: AND BLOOD WOULD BE DRAWN FROM PEOPLE IN WALGREENS STORES; IS THAT RIGHT?
ELIZABETH A. HOLMES: EXACTLY. THE IDEA WAS THAT YOU COULD COME IN, YOU COULD DO A FINGERSTICK, YOU WOULD TOUCH A CARTRIDGE, PUT IT INTO THE DEVICE, AND DATA WOULD BE SENT TO THE CLOUD.
MR. DOWNEY: AND WHAT LEGAL OR REGULATORY ISSUES DID THAT INVOLVE?
ELIZABETH A. HOLMES: IT MEANT WE NEEDED TO UNDERSTAND THE RIGHT APPROACH AS IT PERTAINS TO FDA AND CMS, THE TWO REGULATORY AGENCIES.
MR. DOWNEY: AND DID WALGREENS AND THERANOS GO ABOUT TRYING TO FIGURE THAT OUT?
MR. DOWNEY: AND AT THE OUTSET OF THE PARTNERSHIP, WAS WALGREENS AGREEABLE TO HAVING THE DEVICES IN, IN ITS STORES?
ELIZABETH A. HOLMES: THEY WERE.
MR. DOWNEY: DID THEIR VIEW CHANGE AS THE PERIOD BETWEEN 2010 AND 2013 PROGRESSED?
MR. DOWNEY: TELL US HOW THEIR VIEW OF HOW THE PARTNERSHIP WOULD RUN CHANGED DURING THAT PERIOD?
ELIZABETH A. HOLMES: WALGREENS HAD A LOT OF REGULATORY LAWYERS AND EXPERTS, AND THEY ULTIMATELY DECIDED THAT WE SHOULD NOT PUT THE DEVICES IN THE STORE BECAUSE OF FDA AND CMS REASONS, BUT INSTEAD, THAT WE SHOULD BE A CENTRAL LAB WHERE SAMPLES ARE SHIPPED TO THE LAB.
MR. DOWNEY: AND DID THERANOS AGREE THAT THAT WAS NECESSARY?
ELIZABETH A. HOLMES: OUR LAWYERS HAD DIFFERENT OPINIONS, BUT WE AGREED TO DO WHAT WALGREENS WANTED.
MR. DOWNEY: WHEN BETWEEN 2010 AND 2013 DID THAT ISSUE ARISE?
ELIZABETH A. HOLMES: I THINK IN -- CERTAINLY BY 2012.
MR. DOWNEY: OKAY. DID THAT REQUIRE AN AMENDMENT TO THE AGREEMENT BETWEEN WALGREENS AND THERANOS?
ELIZABETH A. HOLMES: IT DID.
MR. DOWNEY: OKAY. LET ME ASK YOU TO LOOK AT EXHIBIT 617, WHICH IS ALREADY IN EVIDENCE.
ELIZABETH A. HOLMES: OH, OKAY.
MR. DOWNEY: AND DO YOU SEE THAT THIS IS AN AMENDMENT TO THAT AGREEMENT --
MR. DOWNEY: -- TO THE ORIGINAL AGREEMENT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND DO YOU SEE THAT IT WAS DATED JUNE OF 2012?
MR. DOWNEY: AND SO FROM JUNE OF 2012 UNTIL SEPTEMBER OF 2013, DID THERANOS AND WALGREENS WORK ON THE MODEL WHERE THERANOS WOULD HAVE A CENTRAL LAB?
MR. DOWNEY: SO ABOUT A LITTLE OVER A YEAR?
MR. DOWNEY: OKAY. NOW, I WANT TO TALK ABOUT, INTERNALLY AT THERANOS, THE EFFORTS THAT WERE MADE TO BE READY WITH REGARD TO THE TECHNOLOGY FOR THAT LAUNCH IN WALGREENS STORES. FIRST OF ALL, LET ME ASK YOU, WERE YOU THE PERSON AT THERANOS WHO WAS PUT IN CHARGE OF DEVELOPING THE PROJECT PLAN FOR GETTING READY TO LAUNCH IN WALGREENS STORES?
MR. DOWNEY: WHO WAS PUT IN CHARGE OF THAT PLAN?
ELIZABETH A. HOLMES: DR. YOUNG.
MR. DOWNEY: DR. YOUNG. DR. DANIEL YOUNG?
MR. DOWNEY: AND WHY WAS DR. YOUNG SELECTED AS THE PERSON WHO WOULD BE APPROPRIATE TO DO THAT?
ELIZABETH A. HOLMES: HE IS AN INCREDIBLY SMART PERSON WHO HAD DONE GREAT WORK IN OUR INFORMATICS TEAM. HE HAD SKILL SETS IN MODELING AND DATA, AND WE WANTED TO APPLY THEM TO THE WAY THAT WE WERE MANAGING THE PROJECT, AND TO R&D AND ENGINEERING MORE BROADLY.
MR. DOWNEY: LET ME ASK YOU TO BREAK DOWN THE PIECES OF THE TECHNOLOGY AS WE HAVE BEEN TALKING ABOUT THEM, ASSAYS, HARDWARE, SOFTWARE.
ELIZABETH A. HOLMES: YEAH.
MR. DOWNEY: YOU TALKED A LITTLE WHILE AGO ABOUT THE TEST MENU AND DEVELOPMENT OF THE TEST MENU. DID IT REMAIN THERANOS'S PLAN TO TRY TO OFFER SEVERAL HUNDRED TESTS AT A WALGREENS STORE AT THE TIME OF THE INITIAL LAUNCH?
ELIZABETH A. HOLMES: WE TRIED TO FIGURE OUT WHAT TESTS WOULD BE ORDERED BY PEOPLE COMING INTO THE STORE, AND OUR GOAL WAS TO BE ABLE TO PROVIDE ANYWHERE FROM 85 TO 95 PERCENT OF THE MOST COMMONLY ORDERED TESTS.
MR. DOWNEY: AND HOW DID THE COMPANY GO ABOUT TRYING TO ANALYZE THAT QUESTION?
ELIZABETH A. HOLMES: WE ASKED FOR DATA FROM OUR INSURANCE COMPANY PARTNERS, SO BLUE CROSS BLUE SHIELD AND OTHERS, AS WELL AS FROM THE RETAILERS THEMSELVES, ON WHAT TEST ORDERING PATTERNS THEY WERE SEEING, MEANING WHEN SOMEONE GOT A LAB TEST DONE, WHAT TEST WERE THEY ORDERING? AND WE BEGAN THE WORK TO UNDERSTAND WHAT TESTS WERE MOST COMMONLY ORDERED.
MR. DOWNEY: OKAY. AND IS THAT AN ANALYSIS THAT DR. YOUNG PERFORMED?
ELIZABETH A. HOLMES: YES, WITH HIS, WITH HIS DATA ANALYSIS TEAM.
MR. DOWNEY: OKAY. AND IN TERMS OF DEVELOPING THE ASSAYS, WHO AT THE COMPANY WORKED AS LEADERS WITHIN THE ASSAY DEVELOPMENT GROUP?
ELIZABETH A. HOLMES: WE AT THIS POINT HAD FORMED FOUR GROUPS. THERE WAS THE IMMUNOASSAY GROUP, WHICH WAS LED BY SUREKHA GANGADKHEDKAR; THERE WAS THE GENERAL CHEMISTRY GROUP, WHICH WAS LED BY DR. PAUL PATEL; THERE WAS THE CYTOMETRY GROUP, WHICH WAS LED BY DR. CHINMAY PANGARKAR; AND THERE WAS THE NUCLEIC ACID, OR PCR-LIKE GROUP, WE WERE BUILDING OUR OWN METHOD, WHICH WAS LED BY DR. ANDREA CUPPOLETTI.
MR. DOWNEY: AND DID DR. GIBBONS CONTINUE TO PLAY A ROLE WITH REGARD TO ASSAY DEVELOPMENT DURING THAT PERIOD?
ELIZABETH A. HOLMES: HE DID.
MR. DOWNEY: AND WHAT ROLE DID HE PLAY?
ELIZABETH A. HOLMES: HE SERVED AS THE CHIEF SCIENTIST TYPE OF PERSON WHO WAS ADVISING THOSE FOUR TEAMS.
MR. DOWNEY: AND DID YOU BELIEVE THAT THERANOS WOULD BE ABLE TO DEVELOP MOST BLOOD TESTS AS A RESULT OF THOSE EFFORTS?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: LET ME ASK YOU TO LOOK AT EXHIBIT 7230.
ELIZABETH A. HOLMES: OKAY.
MR. DOWNEY: IS THIS AN EMAIL FROM DR. YOUNG TO YOU IN 2012 UPDATING YOU ON THE DEVELOPMENT OF TESTS AND THEIR ASSOCIATED BILLING CODES?
ELIZABETH A. HOLMES: IT IS, YES.
MR. DOWNEY: YOUR HONOR, I MOVE TO ADMIT EXHIBIT 7230.
MR. LEACH: NO OBJECTION, YOUR HONOR.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(DEFENDANT'S EXHIBIT 7230 WAS RECEIVED IN EVIDENCE.)
BY MR. DOWNEY:
MR. DOWNEY: DO YOU SEE AT THE TOP THIS IS DR. YOUNG WRITING TO YOU IN FEBRUARY OF 2012. AND DO YOU SEE THAT IN THE SECOND PARAGRAPH HE SAYS, "AS YOU WILL SEE FROM THE CPT'S FROM," AND THEN HE GIVES A LONG CODE FROM A LIST, NUMBERS EQUALLING 1138, "THERE ARE NUMBER EQUAL 116 THAT ARE CURRENTLY CATEGORIZED AS 'NP,' NAMELY 'NOT PLANNED WITH CURRENT TECHNOLOGY ON THERANOS DEVICES AT THIS TIME.'" CAN YOU EXPLAIN THIS IN A MORE UNDERSTANDABLE MEANING FOR US?
ELIZABETH A. HOLMES: YES. DR. YOUNG HAD A TEAM GO THROUGH ALL OF THE CPT CODES, WHICH ARE THE BILLING CODES FOR TESTS, TO EVALUATE WHICH TESTS WE COULD DO, AND HE'S SAYING HERE THAT THERE ARE JUST OVER A THOUSAND CPT CODES THAT WE COULD DO.
MR. DOWNEY: OKAY. SO HE'S SAYING THAT THERE ARE ABOUT 1138 CPT CODES, BUT THERANOS WOULD NOT BE ABLE TO DO 116?
ELIZABETH A. HOLMES: EXACTLY.
MR. DOWNEY: NOW, WE LOOKED AT AN EMAIL EARLIER WHERE DR. GIBBONS HAD COMMENTED ON THE SPEED WITH WHICH THERANOS WAS CAPABLE OF DEVELOPING ASSAYS. DO YOU RECALL THAT FROM YOUR TESTIMONY EARLIER THIS MORNING?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND DID YOU ATTRIBUTE THAT IN PART TO THE METHOD OF -- THAT THERANOS HAD DEVELOPED OF DEVELOPING ASSAYS?
MR. DOWNEY: DID YOU SOMETIMES REFER TO THAT METHOD AS THERANIZING ASSAYS?
ELIZABETH A. HOLMES: YES. THERANIZING ASSAYS WAS WHAT WE CALLED OUR FORMULA FOR TURNING A TEST INTO A SMALL SAMPLE TEST.
MR. DOWNEY: OKAY. AND IS THAT SOMETHING ON WHICH THERANOS ULTIMATELY OBTAINED A PATENT?
ELIZABETH A. HOLMES: IT IS.
MR. DOWNEY: LET ME ASK YOU TO LOOK AT EXHIBIT 9649.
ELIZABETH A. HOLMES: OKAY.
MR. DOWNEY: CAN YOU JUST TAKE A MOMENT TO REVIEW THAT?
ELIZABETH A. HOLMES: OKAY.
MR. DOWNEY: IS THIS PATENT THE PATENT THAT THERANOS OBTAINED IN CONNECTION WITH THERANIZING ITS ASSAYS?
ELIZABETH A. HOLMES: YES, I THINK IT'S ONE OF THEM.
MR. DOWNEY: YOUR HONOR, I MOVE TO ADMIT EXHIBIT 9649.
MR. LEACH: NO OBJECTION, YOUR HONOR.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(DEFENDANT'S EXHIBIT 9649 WAS RECEIVED IN EVIDENCE.)
BY MR. DOWNEY:
MR. DOWNEY: LET ME ASK YOU TO LOOK AT THE FIRST PAGE. AND DO YOU SEE THAT THIS IS A PATENT CALLED "METHODS FOR IMPROVING ASSAYS OF BIOLOGICAL SAMPLES"?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND THERE'S A FILE NUMBER 22, AND IT INDICATES THAT IT WAS FILED ON JULY 25TH, 2014?
MR. DOWNEY: I'D LIKE TO JUST GO FORWARD IN THE PATENT TO PAGE 15 OF THE PATENT. I'LL DIRECT YOUR ATTENTION TO THIS DIAGRAM, FIGURE 13 ON PAGE 15. WHAT DOES FIGURE 13 CONVEY?
ELIZABETH A. HOLMES: FIGURE 13 IS SHOWING A TRADITIONAL CHEMISTRY FOR MEASURING CELL CYTOMETRY. SO THIS WOULD BE SOMETHING LIKE A CBC TEST THAT YOU WOULD DO. AND ON THE LEFT-HAND SIDE IT'S SHOWING THE STEPS AND THE TIME OF A TRADITIONAL ASSAY. AND ON THE RIGHT-HAND SIDE IT'S SHOWING THE STEPS AND THE TIME OF THE THERANOS SMALL SAMPLE ASSAY.
MR. DOWNEY: SO THE TIME IT TOOK FOR THE THERANOS ASSAY TO RUN WAS ABOUT 11 AND A HALF MINUTES?
MR. DOWNEY: AND THE TIME FOR A STANDARD ASSAY WAS ABOUT 31 MINUTES?
MR. DOWNEY: AND THERE APPEAR TO BE THESE FEWER STEPS. WHAT STEPS HAVE BEEN -- WHAT KINDS OF STEPS HAVE BEEN REMOVED?
ELIZABETH A. HOLMES: THERE WERE SEVERAL KEY CHANGES TO THE SMALL SAMPLE FORMULA WHICH HAD TO DO WITH CHANGING THE CONCENTRATION OF THE REAGENTS OR THE CHEMICALS THAT WERE USED IN THE TEST, CHANGING TEMPERATURE, AND CHANGING THE WAY YOU WOULD MIX OR INCUBATE A SAMPLE. IT JUST MEANS THE CHEMICAL SITTING TOGETHER WITH THE SAMPLE FOR CERTAIN AMOUNTS OF TIME, AND THOSE TYPES OF THINGS WERE MODIFIED HERE.
MR. DOWNEY: NOW, WERE THESE KINDS -- THIS KIND OF METHODOLOGY, WAS IT USED AS -- IN CONNECTION WITH THE DEVELOPMENT OF ASSAYS WITHIN THE COMPANY BETWEEN 2010 AND 2013?
ELIZABETH A. HOLMES: IT WAS.
MR. DOWNEY: AND WOULD THE LEADERS OF THE VARIOUS ASSAY TEAMS REPORT TO YOU ON HOW MUCH PROGRESS THAT THEY HAD MADE IN DEVELOPING ASSAYS DURING THAT PERIOD?
ELIZABETH A. HOLMES: THEY DID.
MR. DOWNEY: LET ME ASK FIRST ABOUT THE GENERAL CHEMISTRY TEAM. DO YOU RECALL THAT YOU TESTIFIED A MOMENT AGO THAT WAS ONE OF THE ASSAY TEAMS?
MR. DOWNEY: AND THAT WAS LED BY DR. PAUL PATEL?
ELIZABETH A. HOLMES: IT WAS.
MR. DOWNEY: LET ME ASK YOU TO LOOK AT EXHIBIT 7222.
ELIZABETH A. HOLMES: OKAY.
MR. DOWNEY: IS THIS AN EMAIL BETWEEN DR. YOUNG AND YOURSELF AND OTHERS WHERE HE IS RELATED TO THE DEVELOPMENT OF GENERAL CHEMISTRY ASSAYS?
MR. DOWNEY: YOUR HONOR, I MOVE TO ADMIT EXHIBIT 7222.
MR. LEACH: NO OBJECTION, YOUR HONOR.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(DEFENDANT'S EXHIBIT 7222 WAS RECEIVED IN EVIDENCE.)
BY MR. DOWNEY:
MR. DOWNEY: LET'S GO DOWN TO THE EMAIL AT 1:33 P.M. AND DO YOU SEE THAT YOU ASK DR. PATEL ABOUT THE BREAKDOWN OF ASSAY RUN TIME FOR ALL OF THE COLORIMETRY ASSAYS THAT THERANOS HAD. DO YOU SEE THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND THEN THAT EMAIL IS ACTUALLY ANSWERED ABOVE BY DR. YOUNG, AND DR. YOUNG INDICATES IN RESPONSE -- THAT IN RESPONSE TO YOUR EMAIL TO DR. PATEL, THAT HE'S FORWARDING A RECENT UPDATE. DO YOU SEE THAT?
MR. DOWNEY: AND LET'S LOOK AT THE UPDATE THAT HE ATTACHES, WHICH IS IN NATIVE FORM. AND DO YOU SEE THAT ON THE LEFT-HAND SIDE THERE'S A LIST OF BLOOD TESTS?
MR. DOWNEY: AND IF YOU GO DOWN TO THE BOTTOM OF THAT LIST, IT LOOKS LIKE THERE ARE ABOUT 48 BLOOD TESTS LISTED IN THE AREA OF GENERAL CHEMISTRY AT THAT TIME.
MR. DOWNEY: AND THEN THERE'S A -- IN THE MIDDLE COLUMN THERE'S A LIST OF HOW LONG IT TAKES TO RUN THOSE ASSAYS. DO YOU SEE THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND THEN ON THE NEXT COLUMN THERE'S A COLUMN LABELLED ASSAY DEVELOPMENT COMPLETION DATE. WHAT WAS THAT?
ELIZABETH A. HOLMES: IT LOOKS LIKE THIS IS JUST MARKING WHICH OF THESE TESTS HAVE BEEN DEVELOPED.
MR. DOWNEY: AND IF YOU GO DOWN, WAS IT -- DOES THIS REPORT REFLECT THAT ABOUT -- IT LOOKS LIKE ABOUT 42 OF THE 48 HAD BEEN COMPLETED?
ELIZABETH A. HOLMES: YES, I THINK SO.
MR. DOWNEY: AND THEN THERE ARE DATES ASSOCIATED WITH THE ANTICIPATED COMPLETION OF THE OTHERS?
MR. DOWNEY: OKAY. AND THIS IS A REPORT THAT YOU RECEIVED IN 2012?
ELIZABETH A. HOLMES: IT IS.
MR. DOWNEY: OKAY. NOW, ANOTHER ASSAY GROUP WAS THE GROUP LED BY DR. PANGARKAR THAT YOU MENTIONED; RIGHT?
MR. DOWNEY: AND THAT WAS THE CYTOMETRY TEAM WITHIN THE COMPANY?
ELIZABETH A. HOLMES: IT WAS.
MR. DOWNEY: AND DID YOU ALSO PERIODICALLY RECEIVE REPORTS FROM DR. PANGARKAR ABOUT THE PROGRESS OF DEVELOPMENT?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: LET ME ASK YOU TO LOOK AT EXHIBIT 7239.
ELIZABETH A. HOLMES: OKAY.
MR. DOWNEY: IS THIS AN EMAIL FROM DR. PANGARKAR TO YOU REPORTING ON THE PROGRESS OF ASSAY DEVELOPMENT IN THE CYTOMETRY TEAM?
ELIZABETH A. HOLMES: IT IS.
MR. DOWNEY: OKAY. YOUR HONOR, I MOVE TO ADMIT 7239.
MR. LEACH: NO OBJECTION.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(DEFENDANT'S EXHIBIT 7239 WAS RECEIVED IN EVIDENCE.)
BY MR. DOWNEY:
MR. DOWNEY: ALL RIGHT. IF YOU LOOK AT THIS EMAIL, DO YOU SEE THAT IT'S FROM JUNE OF 2012?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND DO YOU SEE THAT BELOW DR. PANGARKAR INDICATES THAT THERE HAVE BEEN ASSAY DEVELOPMENT AND CLINICAL STUDY SUMMARY REPORTS FOR ALL CYTOMETRY ASSAYS?
MR. DOWNEY: AND THEN HE GOES ON TO MAKE SOME COMMENTS REGARDING THE DEVELOPMENT OF THOSE ASSAYS. DO YOU SEE THAT?
MR. DOWNEY: AND IN THE -- UNDER THE FIRST BULLET POINT, THERE ARE A COUPLE OF BULLET POINTS, AND HE SAYS THAT "THERE IS SOUND SCIENCE AND METHOD DEVELOPMENT BEHIND OUR ASSAYS"?
MR. DOWNEY: AND THEN BELOW THAT HE SAYS "OUR ASSAYS GIVE RESULTS THAT AGREE WITH PREDICATE METHODS WITHIN CLIA PRESCRIBED LIMITS." DO YOU SEE THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND WHAT DID YOU TAKE AWAY FROM THIS EMAIL WHEN YOU RECEIVED IT AS TO THE PROGRESS OF THE DEVELOPMENT OF CYTOMETRY ASSAYS AT THERANOS?
ELIZABETH A. HOLMES: THAT DR. PANGARKAR AND HIS TEAM HAD DEVELOPED ALL OF THE TESTS FOR CYTOMETRY THAT WERE RELEVANT FOR RETAIL; THAT THE ASSAYS WERE SOUND, THEY WERE GOOD; AND THAT THEY WERE PERFORMING IN A WAY THAT MET THE CLIA CRITERIA FOR THE TESTS.
MR. DOWNEY: LET'S TALK ABOUT THE THIRD OF THE FOUR METHODS, THE IMMUNOASSAY METHOD. AGAIN, THAT TEAM WAS LED BY MS. GANGAKHEDKAR?
MR. DOWNEY: AND DO YOU RECALL HER TESTIFYING BACK AT THE EARLIER PART OF EARLY SEPTEMBER?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND WOULD SHE SOMETIMES PROVIDE UPDATES TO YOU ON THE DEVELOPMENTS OF IMMUNOASSAYS?
ELIZABETH A. HOLMES: SHE DID.
MR. DOWNEY: LET ME SHOW YOU EXHIBIT 7297, WHICH IS IN EVIDENCE.
ELIZABETH A. HOLMES: OKAY.
MR. DOWNEY: IF YOU'D LOOK AT THE FIRST PAGE HERE, DO YOU SEE THAT MS. GANGAKHEDKAR WROTE TO YOU, "PLEASE FIND THE UPDATES ON THE ELISA PROJECTS"?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND IS ELISA ANOTHER WAY OF SAYING IMMUNOASSAY?
MR. DOWNEY: AND THAT IS WHAT THE COMPANY HAD BEEN WORKING ON SINCE EARLY IN ITS LIFE; RIGHT?
MR. DOWNEY: AND THERE IS ALSO A NATIVE ATTACHMENT TO THIS DOCUMENT. LET'S TAKE A LOOK AT THAT. AND DO YOU SEE HERE THAT THERE IS A LIST OF ASSAYS? LET'S GO DOWN TO THE BOTTOM THERE AND SEE HOW MANY THERE ARE. THERE APPEAR TO BE A LIST OF ABOUT 93 ASSAYS OR BLOOD TESTS?
MR. DOWNEY: AND DO YOU SEE ON THE BOTTOM TABS THAT THOSE ARE WITHIN THE COMPLETED LIST OF ASSAYS IN THIS DOCUMENT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: OKAY. AND IF YOU LOOK BACK AT THE EMAIL THAT IS THE FIRST PAGE OF 7297, WAS THIS CONVEYED TO YOU IN EARLY -- OR IN LATE JUNE 2013?
MR. DOWNEY: OKAY. LET'S TALK ABOUT THE FOURTH ASSAY GROUP, FOURTH AND FINAL ASSAY GROUP, NUCLEIC ACID AMPLIFICATION. AND THAT GROUP WAS RUN BY DR. PRANAV PATEL?
ELIZABETH A. HOLMES: AT THAT POINT, YES.
MR. DOWNEY: AND LET ME ASK YOU TO LOOK AT 7315. AND WHEN YOU DO SO, MY QUESTION TO YOU WILL SIMPLY BE WHETHER THAT'S A REPORT FROM DR. PRANAV PATEL ABOUT ASSAY DEVELOPMENT IN THAT FOURTH ASSAY GROUP?
ELIZABETH A. HOLMES: IT IS.
MR. DOWNEY: YOUR HONOR, I MOVE TO ADMIT 7315.
MR. LEACH: NO OBJECTION, YOUR HONOR.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(DEFENDANT'S EXHIBIT 7315 WAS RECEIVED IN EVIDENCE.)
BY MR. DOWNEY:
MR. DOWNEY: DO YOU SEE THAT DR. PATEL WRITES IN THE FIRST PARAGRAPH OF THIS EMAIL, "ATTACHED IS THE DOCUMENT STATING THE CURRENT STATUS OF TNAA ASSAYS AND EXPECTED DATE OF COMPLETION"?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND THIS IS AN EMAIL SENT TO YOU IN AUGUST OF 2013?
MR. DOWNEY: OKAY. LET'S GO TO THE ATTACHMENT, ALSO NATIVE ATTACHMENT. AND DO YOU SEE THAT WITHIN THIS LIST THERE IS THE SAME TYPE OF LIST OF ASSAYS WITH COMPLETION DATES UNDER COLUMN E?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND DO YOU SEE THAT SEVERAL OF THE, IT LOOKS LIKE ABOUT 23 OF THEM HAVE BEEN COMPLETED?
MR. DOWNEY: AND DO YOU SEE THAT THE EXPECTED COMPLETION DATES FOR THE OTHER ASSAYS IS LATER IN AUGUST 2013?
MR. DOWNEY: AND DID YOU UNDERSTAND AS A RESULT OF THAT THAT ALL OF THE NUCLEIC ACID AMPLIFICATION ASSAYS WOULD BE DEVELOPED BY THE END OF AUGUST OF 2013?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: NOW, WHEN ALL OF THE BLOOD TESTS WITHIN THESE VARIOUS ASSAY GROUPS WERE BEING DEVELOPED, HOW IS THE WORK BEING DOCUMENTED?
ELIZABETH A. HOLMES: THE WORK WAS DOCUMENTED IN DEVELOPMENT AND VALIDATION REPORTS.
MR. DOWNEY: AND WHO WOULD PREPARE THOSE REPORTS?
ELIZABETH A. HOLMES: THE SCIENTISTS IN EACH OF THE ASSAY TEAMS.
MR. DOWNEY: OKAY. LET ME ASK YOU TO LOOK AT 15000.
ELIZABETH A. HOLMES: OKAY.
MR. DOWNEY: DO YOU HAVE THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: IS 15000 AN EMAIL BETWEEN YOU AND DR. YOUNG ABOUT THESE ASSAY DEVELOPMENT REPORTS IN 2012?
ELIZABETH A. HOLMES: IT IS.
MR. DOWNEY: YOUR HONOR, I MOVE THE ADMISSION OF 15000.
MR. LEACH: NO OBJECTION, YOUR HONOR.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(DEFENDANT'S EXHIBIT 15000 WAS RECEIVED IN EVIDENCE.)
BY MR. DOWNEY:
MR. DOWNEY: DO YOU SEE THAT YOU WRITE TO DR. YOUNG IN OCTOBER OF 2012 AND YOU SAY TO HIM, "I'VE BEEN FOLLOWING UP WITH THE ASSAY SYSTEMS TEAM LEADS." FIRST OF ALL, IS THAT A REFERENCE TO THE FOUR INDIVIDUALS THAT WE'VE DISCUSSED RECENTLY?
ELIZABETH A. HOLMES: IT IS.
MR. DOWNEY: AND YOU SAY, "ON THE REQUIREMENT THAT THEY MAKE THE KIND OF CHANGES REQUIRED FOR THE ISSUES YOU CAUGHT THIS WEEKEND BEFORE THE REPORTS EVER GET TO YOU OR ME." DO YOU RECALL WHAT LED YOU TO SEND THIS EMAIL?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND WHAT WAS THAT?
ELIZABETH A. HOLMES: WE WERE TRYING TO ENSURE THAT THE DEVELOPMENT AND VALIDATION WAS DONE ACCORDING TO STANDARDS THAT WERE SET BY THE FDA, AND WE WERE TRYING TO MAKE SURE THAT THE SCIENTISTS HAD THE RIGHT TEMPLATES TO DO THAT.
MR. DOWNEY: OKAY. AND THEN AT THE -- IN THE LAST SENTENCE YOU SAY, "AT THIS STAGE, THESE TEMPLATES WILL BE FDA GUIDANCE DOCUMENTS EFFECTIVELY."
MR. DOWNEY: AND WHY WAS IT IMPORTANT TO YOU THAT THESE DOCUMENTS BE DEVELOPED ACCORDING TO FDA STANDARDS?
ELIZABETH A. HOLMES: BECAUSE WE UNDERSTOOD THAT FDA STANDARDS WERE THE HIGHEST STANDARDS, AND WE WANTED TO VALIDATE OUR TESTS TO THE HIGHEST STANDARDS.
MR. DOWNEY: DO YOU KNOW HOW MANY OF THESE REPORTS OF ASSAY DEVELOPMENT WERE ULTIMATELY PREPARED AT THERANOS DURING YOUR TIME THERE?
MR. DOWNEY: HOW MANY?
ELIZABETH A. HOLMES: OVER 300.
MR. DOWNEY: WHEN -- I THINK YOU'VE HEARD TESTIMONY DURING THE CASE THAT VARIOUS PEOPLE OUTSIDE OF THERANOS WOULD, INVESTORS AND OTHERS, WOULD TRY TO UNDERSTAND THERANOS'S WORK. DO YOU RECALL SUCH TESTIMONY?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND DID YOU OFTEN MAKE ASSAY DEVELOPMENT REPORTS DOCUMENTING THERANOS'S WORK ON ASSAYS AVAILABLE TO THOSE WHO WERE TRYING TO UNDERSTAND AND EVALUATE THERANOS'S WORK?
MR. DOWNEY: DID YOU DO SO WITH SOME OF THE INFORMATION IN THOSE ASSAY DEVELOPMENT REPORTS REDACTED?
MR. DOWNEY: WHY WERE THERE REDACTIONS SOMETIMES?
ELIZABETH A. HOLMES: SOMETIMES THERE WAS TRADE SECRET OR CONFIDENTIAL INFORMATION ABOUT THE TECHNOLOGY ITSELF.
MR. DOWNEY: NOW, WE'VE BEEN TALKING ABOUT THE DEVELOPMENT OF THE ASSAYS. LET'S SWITCH TO THE HARDWARE OF THE 4.0 SYSTEM THAT WAS BEING DEVELOPED. AND I WANTED TO JUST PUT UP THE TWO DOCUMENTS THAT ARE ALREADY IN EVIDENCE, WHICH ARE 5388 AND 7747. IS THE DEVICE ON THE LEFT, 5388, THE 3.0 SERIES?
MR. DOWNEY: AND IS THE DEVICE ON THE RIGHT THE 4.0 SERIES?
ELIZABETH A. HOLMES: IT IS.
MR. DOWNEY: NOW, THAT'S THE OUTSIDE OF THE DEVICES, BUT I'D LIKE TO ASK YOU TO LOOK IN A MOMENT AT THE INTERIOR OF THOSE DEVICES SO THAT WE CAN UNDERSTAND WHAT THE DIFFERENCES BETWEEN THEM ARE. FIRST OF ALL, LET ME SHOW YOU WHAT IS IN EVIDENCE AS EXHIBIT 7746. AND THEN I BELIEVE 15011 I ADMITTED YESTERDAY. LET ME CHECK. BUT IF NOT, TAKE A LOOK AT 15011 AND SEE IF YOU CAN IDENTIFY IT IN THE INTEREST OF TIME?
ELIZABETH A. HOLMES: OKAY.
MR. DOWNEY: WAS THIS ADMITTED.
JUDGE DAVILA: I THINK IT WAS, YES.
BY MR. DOWNEY:
MR. DOWNEY: ALL RIGHT. CAN YOU EXPLAIN THE TWO DEVICES THAT ARE DISPLAYED HERE?
ELIZABETH A. HOLMES: YEAH, SO THE LEFT IS OUR 4 SERIES DEVICE.
MR. DOWNEY: 77 -- 15011? NO, 7746. I'M SORRY.
ELIZABETH A. HOLMES: I DON'T KNOW. I CAN'T SEE THE NUMBERS. IT'S THE ONE -- DOES THE MOUSE WORK? HERE WE GO. OKAY. SO THIS IS THE 4 SERIES DEVICE (INDICATING). THIS IS THE 3 SERIES DEVICE (INDICATING). THE 4 SERIES DEVICE HAS A ROBOT RIGHT HERE THAT IS DESIGNED TO TAKE THE PARTS OUT OF THE CARTRIDGE AND MOVE THEM AROUND (INDICATING). THE ROBOT ON THE 3 SERIES IS HERE (INDICATING). YOU CAN SEE THE CARTRIDGE UNDERNEATH IT. THE CARTRIDGE HAS A BAR CODE ON IT. WHEN THE DEVICE CALLS THE CLOUD TO SAY, WHAT DO I DO WITH THIS CARTRIDGE, THE CLOUD SENDS THE INSTRUCTIONS THROUGH ELECTRONICS THAT ARE IN THE BOX, TELLS THE ROBOT WHAT TO DO, AND THE ROBOT RUNS THE TEST ACCORDING TO THOSE INSTRUCTIONS. IT WILL PICK UP THESE LITTLE COMPONENTS, MOVE THEM AROUND, MIX LIQUID TOGETHER, MOVE IT BACK TO BE SEATED, MOVE IT BACK TO BE READ. BACK HERE THERE'S A DETECTOR, WHICH IS A MEASUREMENT DEVICE, CALLED A PMT (INDICATING). ON THE 4 SERIES, THAT PMT IS HERE (INDICATING). THERE ARE ALSO OTHER DETECTORS FOR THE OTHER METHODS THAT WE HAVE TALKED ABOUT, THE SPECTROMETER FOR GENERAL CHEMISTRY, THE FLUORESCENCE BASED SYSTEM FOR PCR OR NUCLEIC ACID AMPLIFICATION, THE MICROSCOPY SYSTEM, WHICH IS LIKE A MICROSCOPE THAT CAN RUN ADVANCED CHEMISTRIES HERE, AND THE MINI CENTRIFUGE FOR PROCESSING THOSE SAMPLES TO GET THEM READY TO BE ABLE TO DO THOSE DIFFERENT METHODS BACK HERE (INDICATING).
MR. DOWNEY: NOW, IS THIS THE INSIDE OF A SINGLE 4.0 SERIES WHERE THERE IS ALSO -- IS THAT RIGHT?
ELIZABETH A. HOLMES: IT IS.
MR. DOWNEY: ALL RIGHT. WERE THERE ALSO DEVICES DEVELOPED WITHIN THE 4.0 SERIES THAT COMBINED SEVERAL ANALYZERS IN ONE DEVICE?
ELIZABETH A. HOLMES: YES, WE ENDED UP DEVELOPING AN ADDITIONAL DEVICE THAT WAS CAPABLE OF RUNNING SIX SAMPLES AT A TIME, SO ESSENTIALLY IT WAS LIKE BAYS OF THESE DEVICES THAT WERE REPLICATED SIX TIMES.
MR. DOWNEY: AND WHO WAS THE SCIENTIST WHO WAS RESPONSIBLE FOR LEADING HARDWARE DEVELOPMENT AT THERANOS DURING THE PERIOD BETWEEN 2010 AND 2013?
ELIZABETH A. HOLMES: DR. YOUNG OVERSAW THE PROCESS. WE HAD TONY NUGENT AT THERANOS EARLY ON, AND THEN TIM SMITH.
MR. DOWNEY: OKAY. AND WOULD YOU RECEIVE UPDATES ON THE DEVELOPMENT OF THE HARDWARE BETWEEN 2010 AND 2013?
MR. DOWNEY: LET ME ASK YOU TO LOOK AT EXHIBIT 12310. I'M GOING TO ASK YOU IF THIS IS ONE SUCH UPDATE.
ELIZABETH A. HOLMES: OKAY.
MR. DOWNEY: IS THIS AN EMAIL FROM -- INTERNAL EMAIL FROM ENGINEERS AND SCIENTISTS AT THERANOS UPDATING YOU ON THE DEVELOPMENT OF THE HARDWARE IN THE 4.0 DEVICE?
MR. DOWNEY: YOUR HONOR, I MOVE THE ADMISSION OF 12310.
MR. LEACH: NO OBJECTION.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(DEFENDANT'S EXHIBIT 12310 WAS RECEIVED IN EVIDENCE.)
BY MR. DOWNEY:
MR. DOWNEY: LET'S LOOK FIRST AT THE TOP EMAIL, THE TOP ADDRESS. DO YOU SEE THERE THAT THIS IS AN EMAIL FROM SAMARTHA ANEKAL TO YOU --
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: -- IN 2012?
MR. DOWNEY: AND WHO WAS SAMARTHA ANEKAL?
ELIZABETH A. HOLMES: DR. ANEKAL OVERSAW A TEAM WE CALLED SYSTEMS INTEGRATION AND VALIDATION AND VERIFICATION.
MR. DOWNEY: WHAT IS THE REPORT THAT IS CONTAINED IN THIS EMAIL? WHAT IS BEING REPORTED ON?
ELIZABETH A. HOLMES: DR. ANEKAL -- LET'S SEE. IT'S FROM DR. ANEKAL. HE'S TALKING ABOUT THE DEVICES THAT HAVE BEEN BROUGHT UP, SO ARE READY FOR USE, OUT OF MANUFACTURING.
MR. DOWNEY: OKAY. AND HE REFERS IN THE FIRST PARAGRAPH TO 19 MONOS BEING BROUGHT UP. WHAT ARE 19 MONOS?
ELIZABETH A. HOLMES: HE'S REFERRING TO THE MINILAB THAT PROCESSES A SINGLE SAMPLE AT A TIME.
MR. DOWNEY: OKAY. AND THEN IN THE NEXT PARAGRAPH HE SAYS, "AS FAR AS MINILABS, ALL 46 BLADES WILL BE COMPLETED BY TOMORROW." WHAT IS THAT A REFERENCE TO?
ELIZABETH A. HOLMES: THAT'S TALKING ABOUT THE DEVICES THAT CAN PROCESS SIX SAMPLES AT A TIME. SO INSIDE OF THOSE DEVICES WE CALLED EACH SORT OF LAYER A BLADE, AND THAT WAS A COMPLETE DEVICE TO PROCESS A SINGLE SAMPLE.
MR. DOWNEY: OKAY. NOW, DID YOU CONTINUE TO RECEIVE REPORTS ABOUT THE DEVELOPMENT OF THE HARDWARE AT THERANOS BETWEEN DECEMBER OF 2012 AND AUGUST OF 2013?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: WAS IT ANTICIPATED THAT THERANOS WOULD BE MANUFACTURING THESE DEVICES INTERNALLY OR THAT IT WOULD BE USING EXTERNAL SOURCES TO MANUFACTURE THE DEVICES?
ELIZABETH A. HOLMES: WE MADE THE DECISION TO DO ALL OF THE MANUFACTURING OURSELVES.
MR. DOWNEY: WHY DID YOU DECIDE THAT?
ELIZABETH A. HOLMES: WE RECOGNIZED THAT THIS WAS NEW TECHNOLOGY THAT HAD NEVER BEEN MANUFACTURED BEFORE, AND THERE WERE A LOT OF INVENTIONS THAT WERE GOING INTO THE MANUFACTURING PROCESS ITSELF THAT WE WANTED TO BUILD THE EXPERTISE AROUND OURSELVES BECAUSE WE THOUGHT THAT THAT WAS A COMPETITIVE ADVANTAGE. WE THOUGHT THAT WE COULD BETTER CONTROL COST BY NOT HAVING TO PAY SUPPLIERS, AND GETTING THE SYSTEM TO BE REALLY INEXPENSIVE WAS ONE OF OUR CORE GOALS. AND WE THOUGHT THAT WE COULD CONTROL QUALITY IN THE BEST POSSIBLE WAY IF WE INVESTED IN REALLY EXPENSIVE VISION INSPECTION SYSTEMS TO LOOK AT EVERY PART AND TRIED TO PUT A LOT OF AUTOMATION ON THE MANUFACTURING LINES THEMSELVES.
MR. DOWNEY: WHAT STEPS DID THERANOS HAVE TO TAKE TO BE IN A POSITION TO DO ALL OF THAT MANUFACTURING ITSELF?
ELIZABETH A. HOLMES: WE HAD TO BUILD WHOLE NEW ORGANIZATIONS AROUND A MACHINE SHOP WITH MACHINISTS, AND AUTOMATED CNC LINES, TOOL AND DIE MAKERS, AND INJECTION MOULDING MACHINES TO BE ABLE TO PRODUCE THE PLASTIC PARTS, AND PRODUCTION FACILITY.
MR. DOWNEY: OKAY. HOW MANY PEOPLE WORKED IN MANUFACTURING AT THERANOS?
ELIZABETH A. HOLMES: ULTIMATELY A COUPLE HUNDRED, PROBABLY.
MR. DOWNEY: OKAY. NOW, AT SOME POINT DID THERE COME AN EFFORT TO UNDERTAKE WHAT YOU REFERRED TO A MOMENT AGO AS SYSTEMS INTEGRATION?
MR. DOWNEY: AND WAS THIS TO INTEGRATE ALL OF THE ELEMENTS OF THE TECHNOLOGY SO THAT YOU HAD A FINAL PRODUCT?
MR. DOWNEY: AND WERE DR. YOUNG AND DR. ANEKAL STILL LEADING THAT PROCESS IN 2013?
ELIZABETH A. HOLMES: THEY WERE.
MR. DOWNEY: AND WOULD THEY REPORT TO YOU AS THAT PROCESS OF SYSTEM INTEGRATION WENT FORWARD?
MR. DOWNEY: LET ME ASK YOU TO LOOK AT EXHIBIT 7286.
ELIZABETH A. HOLMES: OKAY.
MR. DOWNEY: IS THIS AN EMAIL THAT YOU RECEIVED IN APRIL OF 2013 REPORTING ON SYSTEMS INTEGRATION EFFORTS AT THERANOS?
ELIZABETH A. HOLMES: IT IS.
MR. DOWNEY: I WOULD MOVE TO ADMIT 7286.
MR. LEACH: NO OBJECTION.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(DEFENDANT'S EXHIBIT 7286 WAS RECEIVED IN EVIDENCE.)
BY MR. DOWNEY:
MR. DOWNEY: IF YOU TAKE A LOOK ON THE SCREEN AT EXHIBIT 7286, DO YOU SEE THAT THERE'S AN EMAIL FROM YOU -- FROM DR. YOUNG TO MR. BALWANI AND THAT YOU'RE COPIED?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND THEN DR. YOUNG REFERS IN THE FIRST PARAGRAPH SAYING "FOR THE TOP 75 WHOLE BLOOD TESTS, ONLY THE FOLLOWING ARE STILL UNDER DEVELOPMENT." DO YOU SEE THAT REFERENCE TO "THE TOP 75 WHOLE BLOOD TESTS"?
MR. DOWNEY: AND WHAT WAS YOUR UNDERSTANDING OF WHAT THAT MEANT?
ELIZABETH A. HOLMES: DR. YOUNG AND HIS TEAM HAD DONE ANALYSIS OF HOW MANY TESTS WERE MOST COMMONLY ORDERED AT RETAIL, AND 75 OF THEM COULD COVER SOMEWHERE BETWEEN 90 TO 95 PERCENT OF THE TESTS AT RETAIL. SO HE'S SAYING OF THAT LIST THAT BECAME THE TEST LIST THAT OUR SCIENTISTS FOCUSSED ON, ONLY TWO WERE STILL UNDER DEVELOPMENT.
MR. DOWNEY: AND THEN HE GOES ON TO SAY THAT THERE WERE VARIOUS FLU TESTS THAT WERE 95 PERCENT COMPLETED AND THAT THEY ARE STILL COMPLETING PREVALIDATION BEFORE MOVING THE TESTS TO CLIA FOR VALIDATION. DO YOU SEE THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND DO YOU SEE THAT HE REPORTED PROGRESS ON THE NEXT SET OF ASSAYS AS MOVING WELL?
MR. DOWNEY: OKAY. NOW, HOW MANY OF -- IF YOU CAN TELL FROM THIS EMAIL, HOW MANY OF THOSE 75 TESTS THAT WERE COMPLETED, HOW MANY OF THEM HAD ALREADY BEEN INTEGRATED ON TO THE DEVICE?
ELIZABETH A. HOLMES: FROM THIS EMAIL, ALL OF THEM EXCEPT FOR THE FOUR THAT DR. YOUNG LISTS THERE.
MR. DOWNEY: OKAY. AND WHAT IS THAT NUMBER?
ELIZABETH A. HOLMES: FOUR.
MR. DOWNEY: OKAY. I THINK YOU'VE TESTIFIED ABOUT THERANOS'S EFFORT TO MULTIPLEX, TO USE A TECHNICAL TERM, TO MULTIPLEX ASSAYS ON A CARTRIDGE.
MR. DOWNEY: AND THAT REFERRED TO PUTTING MULTIPLE BLOOD TESTS ON ONE CARTRIDGE, TAKING A BLOOD TEST AND PUTTING IT INTO THE DEVICE; RIGHT?
ELIZABETH A. HOLMES: EXACTLY.
MR. DOWNEY: WAS IT A FEATURE OF THIS TECHNOLOGY THAT WAS BEING INTEGRATED THAT IT WOULD BE MULTIPLEXED?
MR. DOWNEY: OKAY. DID YOU UNDERSTAND FROM THESE REPORTS THAT YOU RECEIVED BETWEEN 2010 AND 2013 THAT THE DEVELOPMENT OF THE TECHNOLOGY HAD BEEN SMOOTH AND THERE WERE NO PROBLEM WITH IT?
MR. DOWNEY: AND WHAT WAS YOUR UNDERSTANDING OF THE CHALLENGES DURING THAT PERIOD?
ELIZABETH A. HOLMES: IT'S NEVER SMOOTH. THERE ARE ALWAYS CHALLENGES. WE WERE CONSTANTLY WORKING TO MAKE SURE WE HAD THE RIGHT COMPONENTS IN THE DEVICE TO HANDLE ALL OF THE TESTS THAT WERE ULTIMATELY GOING TO BE THE TEST LIST FOR RETAIL. THAT MEANT THERE WAS A LOT OF CHANGES TO THE DEVICE. OUR RETAIL PARTNERS WANTED US TO MAKE CUSTOMIZATIONS TO THE DEVICE, LIKE THE DEVICE THAT COULD PROCESS SIX SAMPLES AT A TIME, WHICH MEANT WE NEEDED TO BUILD WHOLE NEW CUSTOM DEVICES FOR THAT. AND AS THOSE THINGS CHANGED, WE WOULD CONSTANTLY GO THROUGH THE SYSTEMS INTEGRATION PROCESS AND VALIDATION REPEATEDLY.
MR. DOWNEY: NOW, WAS IT THE PLAN BETWEEN JUNE OF 2012, WHEN YOU AGREED WITH WALGREENS THAT THERANOS WOULD OPERATE A CENTRAL LAB, UNTIL EARLY 2013 THAT THERANOS WOULD ACTUALLY TAKE ALL OF THESE DEVICES AND RUN THEM IN A CENTRAL LAB AT THERANOS?
ELIZABETH A. HOLMES: THAT WAS OUR PLAN ONCE WE DECIDED TO MOVE TO THE CENTRAL LAB MODEL, YES.
MR. DOWNEY: WERE THE DEVICES THAT THERANOS WAS DEVELOPING REALLY INTENDED TO BE USED IN A CENTRAL LAB?
MR. DOWNEY: WHAT WAS THEIR INTENDED USE?
ELIZABETH A. HOLMES: THEIR INTENDED USE WAS TO BE AT THE PLACE THE PATIENT WAS. THERE WAS A TOUCHSCREEN ON EACH OF THEM FOR PATIENTS TO OPERATE OR A TECHNICIAN TO OPERATE, AND THEY PROCESSED ONLY ONE SAMPLE AT A TIME.
MR. DOWNEY: OKAY. AS YOU ENTERED INTO 2013, DID YOU BEGIN TO MAKE PLANS TO, TO ACTUALLY LAY OUT THE PHYSICAL DESIGN OF THE CENTRAL LAB WHERE THESE SINGLE TEST DEVICES WOULD BE LOCATED?
MR. DOWNEY: LET ME ASK YOU TO LOOK AT EXHIBIT 7272.
MR. DOWNEY: IS THIS AN EMAIL EXCHANGE BETWEEN YOU AND OTHERS AT THERANOS RELATED TO LAYING OUT THE DESIGN OF THE CENTRAL LAB USING ALL OF THESE INDIVIDUAL DEVICES?
MR. DOWNEY: YOUR HONOR, I MOVE TO ADMIT 7272.
MR. LEACH: NO OBJECTION, YOUR HONOR.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(DEFENDANT'S EXHIBIT 7272 WAS RECEIVED IN EVIDENCE.)
BY MR. DOWNEY:
MR. DOWNEY: LET ME ASK YOU TO LOOK AT THE EMAIL THAT IS SLIGHTLY BELOW THE MIDDLE OF THE PAGE, AND THIS IS AN EMAIL FROM MR. BALWANI TO A TIM KEMP, AND THEN YOURSELF AND DANIEL YOUNG ARE COPIED. FIRST OF ALL, MR. BALWANI WAS THE CHIEF OPERATING OFFICER AND PRESIDENT OF THERANOS AT THIS TIME; IS THAT RIGHT?
ELIZABETH A. HOLMES: HE WAS.
MR. DOWNEY: AND HE HAD BEEN AT THE COMPANY FOR A PERIOD OF YEARS?
ELIZABETH A. HOLMES: HE HAD.
MR. DOWNEY: AND MR. BALWANI WRITES TO A TIM KEMP. WHO IS TIM KEMP?
ELIZABETH A. HOLMES: TIM KEMP OVERSAW SOME OF OUR SOFTWARE AND HARDWARE PROJECTS.
MR. DOWNEY: OKAY. AND IF YOU LOOK AT THE FIRST PARAGRAPH OF MR. BALWANI'S EMAIL, HE ASKS A QUESTION. DO YOU SEE THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND HE ASKS, "CAN YOU BALLPARK IF WE CAN FIT 15-20 NORMANDY CLUSTERS PLUS CLUNKERS LAB PLUS STORAGE FOR 100K-500K CARTRIDGES PLUS CLIA LAB OFFICE SPACE IN EMC? " CAN YOU EXPLAIN WHAT MR. BALWANI WAS ASKING IN THIS EMAIL?
ELIZABETH A. HOLMES: YES. ONE OF THERANOS'S OFFICES WAS A BUILDING CALLED EMC. SUNNY IS TRYING TO FIGURE OUT HERE IF WE COULD FIT 15 TO 20, WHAT HE'S CALLING CLUSTERS, WHICH ARE BANKS OF THERANOS DEVICES, AS WELL AS A LAB FOR TRADITIONAL TESTING AND STORAGE IN THIS OFFICE CALLED EMC.
MR. DOWNEY: OKAY. AND IF YOU GO TO THE EMAIL ABOVE, IT LOOKS LIKE MR. KEMP RESPONDS. AND DO YOU SEE THAT HE SAID "ATTACHED, PLEASE FIND A DRAWING SHOWING A SAMPLE LAYOUT OF 19 MINILAB CLUSTERS THAT CAN FIT ON TO THE GROUND FLOOR OF 3200 WITH MINIMAL RELOCATION OF WALLS." DO YOU SEE THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: LET'S TAKE A LOOK AT THE DRAWING THAT MR. KEMP REFERENCES. CAN YOU SEE IF WE CAN BLOW THAT UP, MR. BENNETT. NOW, IS THIS A DEPICTION OF WHAT THE LAYOUT OF THE CENTRAL LAB OF THERANOS WOULD BE IF THE TESTS IN THAT LAB WERE OPERATED ON THERANOS'S 4.0 DEVICES?
MR. DOWNEY: AND WAS THIS THE PLAN FOR RUNNING THEM AT THE TIME OF THE LAUNCH OF THERANOS SERVICE CENTERS IN WALGREENS STORES?
ELIZABETH A. HOLMES: THAT WAS OUR PLAN.
MR. DOWNEY: AND IF THERANOS WERE TO EXPAND THE NUMBER OF WALGREENS STORES IN WHICH IT WAS OPERATING SERVICE CENTERS, WOULD IT HAVE TO HAVE MORE AND MORE OF THESE INDIVIDUAL 4.0 DEVICES?
MR. DOWNEY: AND DID THERE COME A TIME WHEN YOU ALSO LEARNED THAT THERE MIGHT BE SOME PHYSICAL CHALLENGES WITH LAYING OUT THE MINILABS IN CONNECTION, THE 4.0 DEVICES IN CONNECTION WITH OPERATING THIS CENTRAL LAB?
MR. DOWNEY: LET ME ASK YOU TO LOOK BACK AT THE EMAIL THAT MR. KEMP SENT IN RESPONSE TO MR. BALWANI'S EMAIL. AND LET'S LOOK AT THE LAST PARAGRAPH. AND DO YOU SEE THAT MR. KEMP REPORTS, "WE DO HAVE AN ISSUE ABOUT POWER." AND THEN HE GOES ON TO DISCUSS THE ISSUE THAT HE WAS IDENTIFYING. WHAT WAS THE ISSUE ABOUT POWER, IF YOU RECALL?
ELIZABETH A. HOLMES: TO PUT THIS MANY DEVICES IN A SINGLE ROOM LIKE THAT WOULD REQUIRE VERY SIGNIFICANT ADJUSTMENTS TO THE BUILDING FOR POWER AND FOR HEAT. THEY GIVE OFF A HUGE AMOUNT OF HEAT.
MR. DOWNEY: OKAY. NOW, IF YOU WERE OPERATING IN A WALGREENS STORE, WOULD THE PATIENTS WHO CAME IN TO HAVE THEIR BLOOD TESTING ARRIVE OVER THE COURSE OF A DAY?
MR. DOWNEY: SO ONE MIGHT ARRIVE AT 2:30, ONE MIGHT ARRIVE AT 4:00, ET CETERA?
MR. DOWNEY: OKAY. NOW, WHEN YOU ARE OPERATING A CENTRAL LAB, HOW DO THE BLOOD SAMPLES ARRIVE ON DELIVERY?
ELIZABETH A. HOLMES: THEY ALL COME IN AT THE SAME TIME.
MR. DOWNEY: DID THAT PRESENT CHALLENGES FOR RUNNING THE 4.0 SERIES DEVICES IN A CENTRAL LAB?
ELIZABETH A. HOLMES: VERY MUCH SO.
MR. DOWNEY: OKAY. DID YOU BEGIN AT SOME POINT IN 2013 TO THINK ABOUT WAYS OF RESPONDING TO THE DIFFICULTIES PRESENTED BY HAVING TO OPERATE ALL OF THESE INDIVIDUAL DEVICES WITHIN THE CENTRAL LAB?
ELIZABETH A. HOLMES: WE DID.
MR. DOWNEY: OKAY. LET ME -- YOUR HONOR, MAYBE WE SHOULD BREAK HERE. IT'S A SENSIBLE TIME.
JUDGE DAVILA: SURE. WE'LL BREAK NOW. LADIES AND GENTLEMEN, WE'LL TAKE OUR MORNING BREAK NOW. SHOULD THIS BE 30 MINUTES, MR. DOWNEY?
MR. DOWNEY: YES. THANK YOU, YOUR HONOR.
JUDGE DAVILA: WE'LL TAKE A 30 MINUTE BREAK, PLEASE. WE'LL SEE YOU THEN. THANK YOU.
(RECESS FROM 10:56 A.M. UNTIL 11:37 A.M.)
JUDGE DAVILA: THANK YOU. PLEASE BE SEATED. WE'RE BACK IN SESSION. ALL PARTIES PREVIOUSLY PRESENT ARE PRESENT ONCE AGAIN. MR. DOWNEY, YOU'D LIKE TO CONTINUE?
MR. DOWNEY: THANK YOU, YOUR HONOR.
MR. DOWNEY: MS. HOLMES, DO YOU RECALL THIS MORNING THAT WE WERE TALKING ABOUT THE MODIFICATION TO THE AGREEMENT BETWEEN WALGREENS AND THERANOS WHERE THERANOS AGREED THAT THE INITIAL STEP TO OPEN THE CENTRAL LABORATORY WHERE BLOOD SAMPLES WOULD BE PROCESSED?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND THEN AFTER FDA APPROVAL FOR THERANOS DEVICES WERE OBTAINED, IT WOULD PUT THOSE DEVICES IN STORES?
MR. DOWNEY: AND IS THAT WHAT THERANOS AND WALGREENS BEGAN TO CALL PHASE I AND PHASE II?
ELIZABETH A. HOLMES: EXACTLY, YES.
MR. DOWNEY: PHASE I WAS THE PERIOD WHERE THERANOS WOULD OPERATE A CENTRAL LABORATORY?
MR. DOWNEY: AND PHASE II WAS THE PERIOD WHERE THERANOS DEVICES WOULD BE PLACED IN WALGREENS STORES?
MR. DOWNEY: WHEN YOU ENTERED INTO THAT AGREEMENT WITH WALGREENS IN THE SUMMER OF 2012, HOW LONG DID YOU ANTICIPATE THAT PHASE I OF THAT RELATIONSHIP WOULD LAST?
ELIZABETH A. HOLMES: WE THOUGHT IT WOULD BE INCREDIBLY SHORT.
MR. DOWNEY: DID YOU INTEND TO APPLY FOR FDA APPROVAL OF THERANOS'S TECHNOLOGY?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: AND DID YOU ANTICIPATE THAT WHEN YOU RECEIVED IT, THE PARTIES' RELATIONSHIP WOULD MOVE TO A PHASE II RELATIONSHIP?
MR. DOWNEY: I WANT TO JUST RETURN TO ONE SUBJECT WE TOUCHED ON BRIEFLY THIS MORNING, WHICH WAS THE ANALYSIS OF THE NUMBER OF TESTS THAT WOULD NEED TO BE PERFORMED IN WALGREENS STORES THAT WOULD COVER 90, OR 95 PERCENT OF THE TEST ORDERS. DO YOU REMEMBER THAT TESTIMONY EARLIER THIS MORNING?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND I BELIEVE YOU TESTIFIED THAT DR. YOUNG LED THAT ANALYSIS.
MR. DOWNEY: AND IS IT ACCURATE THAT DR. YOUNG HAD SOME EXPERTISE AROUND BIO STATISTICS?
ELIZABETH A. HOLMES: HE DID, YES.
MR. DOWNEY: AND HE WAS ALSO AN ENGINEER OF COURSE; CORRECT?
ELIZABETH A. HOLMES: YES, HE HAD A PH.D. IN MECHANICAL ENGINEERING AND NEURO SCIENCE.
MR. DOWNEY: OKAY. I'D LIKE TO ASK YOU TO LOOK AT EXHIBIT 7120.
ELIZABETH A. HOLMES: OKAY.
MR. DOWNEY: IS 7120 A SERIES OF EMAILS BETWEEN YOU AND DR. YOUNG RELATED TO TRYING TO IDENTIFY THE NUMBER OF TESTS THAT THERANOS WOULD NEED TO DEVELOP?
ELIZABETH A. HOLMES: IT IS.
MR. DOWNEY: YOUR HONOR, I MOVE THE ADMISSION OF 7120.
MR. LEACH: NO OBJECTION.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(DEFENDANT'S EXHIBIT 7120 WAS RECEIVED IN EVIDENCE.)
BY MR. DOWNEY:
MR. DOWNEY: IF YOU, IF YOU LOOK AT THE BOTTOM EMAIL, DO YOU SEE THAT THIS WAS SENT TO YOU BY DR. YOUNG IN AUGUST OF 2010?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND HE INDICATES THAT HE'S SENDING YOU AN ATTACHED LIST, WHICH APPEARS TO BE A LIST OF TESTS THAT HE'S REFERRING TO?
MR. DOWNEY: OKAY. AND THEN IF YOU GO ABOVE THAT TO THE NEXT EMAIL, IT'S ANOTHER EMAIL ACTUALLY FROM -- IN THE MIDDLE HERE, BUT FROM DR. YOUNG AT 11:30 A.M. DO YOU SEE THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND IN THAT EMAIL HE SAYS, "THE FIRST 43 TESTS (HIGHLIGHTED IN 'BLUE') COVER 90 PERCENT OF THE TEST VOLUME FOR ROUTINE TESTS." DO YOU SEE THAT?
MR. DOWNEY: CAN YOU EXPLAIN WHAT YOU UNDERSTOOD THAT TO MEAN WHEN YOU RECEIVED IT IN 2010?
ELIZABETH A. HOLMES: YES. HE -- DR. YOUNG IS SAYING HERE THAT HE HAS REVIEWED THE DATA SETS THAT WE WERE TALKING ABOUT EARLIER, WHICH CAME FROM INSURANCE COMPANIES AND RETAIL PARTNERS, TO UNDERSTAND HOW MANY TESTS COVERED 90 PERCENT OF ALL OF THE TESTS THAT ARE RUN IN A RETAIL ENVIRONMENT. AND HE'S SAYING THERE ARE 43 TESTS TO GET TO 90 PERCENT OF THE TEST VOLUME FOR RETAIL, AND THEN HE'S IDENTIFYING WHAT THOSE TESTS ARE.
MR. DOWNEY: AND WERE YOU DOING THIS ANALYSIS TO KNOW WHAT TESTS THERANOS WOULD NEED TO DEVELOP MOST QUICKLY?
ELIZABETH A. HOLMES: YES, AND WHAT TESTS WOULD BE ABLE TO SERVE PEOPLE WHO WERE GOING TO COME TO RETAIL.
MR. DOWNEY: DID DR. YOUNG CONTINUE TO REFINE THIS ANALYSIS IN THE PERIOD BETWEEN 2010 AND 2013?
ELIZABETH A. HOLMES: HE DID.
MR. DOWNEY: LET ME ASK YOU TO LOOK AT EXHIBIT 7137.
ELIZABETH A. HOLMES: OKAY.
MR. DOWNEY: IS 7137 ANOTHER EMAIL EXCHANGE BETWEEN YOU AND DR. YOUNG RELATED TO THE THERANOS TEST MENU?
MR. DOWNEY: YOUR HONOR, I MOVE THE ADMISSION OF 7137.
MR. LEACH: NO OBJECTION, YOUR HONOR.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(DEFENDANT'S EXHIBIT 7137 WAS RECEIVED IN EVIDENCE.)
BY MR. DOWNEY:
MR. DOWNEY: ALL RIGHT. NOW, DO YOU SEE IN THIS -- DO YOU SEE AT THE TOP THERE'S AN EMAIL FROM DR. YOUNG TO YOU IN NOVEMBER OF 2010?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND DO YOU SEE IN THE EMAIL DR. YOUNG SAYS THAT HE HAS PUT TOGETHER A NEW BASE LIST OF TESTS FOR WALGREENS BASED SOLELY ON THE FREQUENCY OF TESTS?
MR. DOWNEY: AND DO YOU SEE THAT HE INDICATES THAT IF YOU WERE TO DEVELOP 102 TESTS, THAT THAT WOULD COVER 96 PERCENT OF TESTS?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: CAN YOU EXPLAIN -- DID YOU HAVE AN UNDERSTANDING AT THE TIME OF WHY AN ADDITIONAL 60 OR SO TESTS WOULD NEED TO BE DEVELOPED TO MOVE FROM COVERING 90 PERCENT OF TESTS TO 96 PERCENT OF TESTS?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: CAN YOU EXPLAIN THAT TO US?
ELIZABETH A. HOLMES: YES. THERE'S A VERY SMALL NUMBER OF TESTS THAT ARE MOST COMMONLY ORDERED. MOST PEOPLE, WHEN THEY GO SEE A DOCTOR, MIGHT, FOR EXAMPLE, JUST GET A CBC, A CHEMICAL 14, AND MAYBE A LIPID PANEL. AS YOU START GETTING INTO THE RARE RESTS OR THE SPECIALTY TESTS, THERE'S A HUGE NUMBER OF THEM. SO DR. YOUNG'S LAST EMAIL THAT SAID 40 OR SO TESTS WOULD COVER 90 PERCENT. TO GET TO 96 PERCENT OR ULTIMATELY 100 PERCENT, YOU HAVE A LOT MORE TESTS, SORT OF A LONG TAIL, IF YOU WILL, TO GET TO THOSE LAST PERCENTAGES. SO HE'S SAYING HERE FROM HIS REVIEW OF WALGREENS, SAFEWAY, AND BLUE CROSS DATA, THAT 102 TESTS WOULD COVER 96 PERCENT OF ALL OF THE TESTS THAT WE WOULD SEE AT RETAIL.
MR. DOWNEY: AND DID YOU UNDERSTAND THAT HE WAS IN PART RELYING ON DATA THAT HAD BEEN GIVEN TO HIM BY INSURANCE COMPANIES?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: AND WHAT OTHER DATA, IF YOU KNOW, WAS HE RELYING ON TO CONDUCT THESE ANALYSES?
ELIZABETH A. HOLMES: IN THIS EMAIL DATA FROM WALGREENS AND SAFEWAY, WHICH WAS DATA THAT THEY OBTAINED FROM THEIR INSURANCE COMPANIES, SO CIGNA FOR SAFEWAY, AND I'M NOT SURE WHO IT WAS FOR WALGREENS, AGAIN, LOOKING AT THE ORDERING PATTERNS, WHAT TESTS WERE ORDERED IN THEIR POPULATION OF EMPLOYEES.
MR. DOWNEY: AND DID THERANOS THEN PRIORITIZE DEVELOPING THE TESTS THAT WERE MOST COMMONLY ORDERED AS PART OF ITS DEVELOPMENT PLAN TO LAUNCH?
MR. DOWNEY: I WANT TO ASK YOU ALSO ANOTHER QUESTION ABOUT THE DEVELOPMENT OF THE HARDWARE. DO YOU RECALL THAT WE DISCUSSED EARLIER TODAY SOME REPORTS THAT YOU RECEIVED OVER TIME FROM SCIENTISTS AND ENGINEERS ABOUT THE PROGRESS OF DEVELOPMENT THERE?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: NOW, I THINK YOU TESTIFIED YESTERDAY THAT IN A MUCH EARLIER PHASE WITH THERANOS, THAT THERANOS HAD ENCOUNTERED A SIGNIFICANT HARDWARE ISSUE WITH RESPECT TO ITS 1.0 DEVICE. DO YOU RECALL THAT?
MR. DOWNEY: AND THAT PROBLEM RELATED TO THE FACT THAT THE CARTRIDGES WOULD BECOME UNSEALED UNDER CERTAIN CONDITIONS?
MR. DOWNEY: DID YOU TRY TO TAKE STEPS DURING THE DEVELOPMENT OF THE 4.0 SERIES TO ENSURE THAT THERE WAS SUFFICIENT QUALITY CONTROL TO MAKE SURE THAT THOSE KINDS OF PROBLEMS DIDN'T HAPPEN?
MR. DOWNEY: LET ME ASK YOU TO LOOK AT EXHIBIT 7264.
ELIZABETH A. HOLMES: OKAY.
MR. DOWNEY: IS THIS AN EMAIL BETWEEN YOU AND DR. YOUNG REGARDING THE SHIPMENT OF THERANOS DEVICES?
ELIZABETH A. HOLMES: IT IS, YES.
MR. DOWNEY: YOUR HONOR, I MOVE THE ADMISSION OF 7264.
MR. LEACH: NO OBJECTION, YOUR HONOR.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(DEFENDANT'S EXHIBIT 7264 WAS RECEIVED IN EVIDENCE.)
BY MR. DOWNEY:
MR. DOWNEY: IF WE GO DOWN TO THE BOTTOM OF THAT, DO YOU SEE AN EMAIL FROM YOU TO DR. YOUNG AND DR. ANEKAL ASKING, WHEN IS OUR NEXT DEVICE SHIPMENT PLANNED?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: WAS THAT AN INQUIRY FROM YOU TO JUST DETERMINE WHEN THERE WOULD BE A SHIPMENT OF DEVICES?
ELIZABETH A. HOLMES: YES. WE WERE DOING SHIPMENTS OF DEVICES ON A REGULAR BASIS, AND I WAS ASKING WHEN THE NEXT ONE WAS.
MR. DOWNEY: AND WHY WERE YOU DOING -- THIS APPEARS TO HAVE BEEN ABOUT A YEAR BEFORE THE LAUNCH IN WALGREENS STORES; IS THAT RIGHT?
MR. DOWNEY: AND WHY WAS THERANOS DOING SHIPMENTS OF DEVICES IN OCTOBER OF 2012?
ELIZABETH A. HOLMES: BECAUSE WE WANTED TO MAKE SURE THAT THE DEVICES WERE ROBUST AND THAT ANY ISSUES THAT COULD EMERGE WE KNEW ABOUT AND HAD FIXED.
MR. DOWNEY: OKAY. IF YOU GO UP THROUGH THAT EMAIL, DO YOU SEE AT THE TOP THAT YOU SEND AN EMAIL QUESTION ABOUT THE PROJECT PLAN AND WHAT IT CONTAINS WITH REGARD TO SYSTEM RELIABILITY? DO YOU SEE THAT?
MR. DOWNEY: AND WHAT WERE YOU ASKING IN THIS EMAIL IN OCTOBER OF 2012?
ELIZABETH A. HOLMES: I WANTED TO MAKE SURE THAT IN OUR PROJECT PLAN WE HAD TESTS WHERE WE WOULD RUN HUNDREDS, I WAS SAYING HERE GO UP TO 1,000 SAMPLES, JUST TO ASSESS THE RELIABILITY OF THE SYSTEM. SO TEST IT OVER AND OVER AND OVER AGAIN.
MR. DOWNEY: NOW, I WANT TO RETURN TO WHERE WE LEFT OFF JUST BEFORE THE BREAK. AND DO YOU RECALL THAT WE WERE TALKING ABOUT THE POTENTIAL PLACEMENT OF THE 4.0 DEVICES THROUGHOUT THE CENTRAL LAB AT THERANOS?
ELIZABETH A. HOLMES: I DO, YES.
MR. DOWNEY: AND DID YOU BEGIN AT A CERTAIN POINT TO CONSIDER IT POTENTIALLY IMPRACTICAL FOR THESE DEVICES TO BE THE MEANS BY WHICH BLOOD TESTS WOULD BE RUN IN THAT CENTRAL LAB?
MR. DOWNEY: AND CAN YOU TELL US THE REASONS FOR THAT?
ELIZABETH A. HOLMES: THE DEVICES WERE DESIGNED FOR THE POINT OF CARE. THEY WERE DESIGNED TO BE OPERATED BY A CONSUMER, A PERSON WHO WAS EITHER A LAYPERSON OR A TECHNICIAN AT A STORE. THEY OPERATED WITH A TOUCHSCREEN THAT WAS DESIGNED TO GIVE INSTRUCTIONS TO THE PATIENT ABOUT INSERTING SAMPLES INTO THE CARTRIDGE, AND THEY ONLY PROCESSED A SINGLE SAMPLE AT A TIME. IF YOU HAD THEM IN BANKS IN A CENTRAL LAB, YOU WOULD EITHER NEED HUNDREDS OF PEOPLE SITTING THERE FEEDING CARTRIDGES INTO EACH INSTRUMENT, OR WE INVESTED IN TRYING TO SEE IF WE COULD BUILD ROBOTS THAT COULD DO THAT, AND IT WOULD BE A, A HUGE PROJECT JUST TO DEAL WITH 1,000 OR 10,000 SAMPLES COMING IN AT THE SAME TIME IN A MACHINE THAT WAS ONLY DESIGNED TO PROCESS ONE SAMPLE AT A TIME.
MR. DOWNEY: BUT THE SAMPLES THAT WERE USED IN CONNECTION WITH WALGREENS -- OR WITH THERANOS TECHNOLOGY WERE SMALL SAMPLES OF BLOOD; RIGHT?
ELIZABETH A. HOLMES: THEY WERE.
MR. DOWNEY: THEY WERE TYPICALLY DRAWN FROM A FINGERSTICK DRAW?
MR. DOWNEY: AND WERE THEY ALSO SOMETIMES DRAWN FROM A SMALL SAMPLE DRAWN FROM THE ARM?
MR. DOWNEY: WERE THERE A LOT OF OTHER DEVICES ON WHICH SMALL SAMPLES OF BLOOD COULD BE ANALYZED AS OF 2013?
MR. DOWNEY: DID YOU BEGIN TO CONSIDER ALTERNATE WAYS BY WHICH THOSE SMALL SAMPLES MIGHT BE PROCESSED IN A CENTRALIZED THERANOS LAB IN 2013?
MR. DOWNEY: TELL US WHAT HAPPENED.
ELIZABETH A. HOLMES: WE WERE TRYING TO FIGURE OUT THIS ISSUE OF HOW TO DEAL WITH HUGE NUMBERS OF SAMPLES COMING IN AT THE SAME TIME AND MAINTAIN OUR GOALS AROUND TURN AROUND TIME, HOW FAST WE COULD GET RESULTS BACK TO DOCTORS. WE FIRST STARTED LOOKING AT THE WAYS IN WHICH WE DEVELOPED MANY OF THESE CHEMISTRIES IN THE FIRST PLACE, WHICH WAS USING THOSE BIG TECAN ROBOTS WHERE WE HAD BEEN RUNNING CHEMISTRY FOR YEARS. THOSE ROBOTS COULD PROCESS MANY SAMPLES AT THE SAME TIME. AND WE THEN STARTED LOOKING AT OTHER WAYS WE MIGHT BE ABLE TO PROCESS THOSE SAMPLES AS WELL.
MR. DOWNEY: AND WHAT OTHER WAYS DID YOU LOOK AT?
ELIZABETH A. HOLMES: WE FIGURED OUT THAT THERE WERE TECHNOLOGIES MADE BY BIG MEDICAL DEVICE MANUFACTURERS THAT WERE CALLED OPEN PLATFORMS. THESE ARE DEVICES THAT WERE DESIGNED FOR COMPANIES TO PUT THEIR OWN PROPRIETARY CHEMISTRY ON. AND OUR ENGINEERS REALIZED THAT IF WE MADE SOME INVENTIONS AROUND HOW TO HANDLE A REALLY SMALL VOLUME OF FLUID ON THOSE DEVICES, WE COULD PUT OUR PROPRIETARY CHEMISTRIES ONTO THEM RUNNING OUR PROPRIETARY FORMULA, WHICH MEANT LOADING OUR, WHAT WE CALLED PROTOCOL, WHICH IS LIKE THE SOFTWARE INSTRUCTIONS FOR RUNNING THE PROTOCOL.
MR. DOWNEY: HAD ANY OTHER COMPANIES YET FIGURED OUT HOW TO DO THAT WITH A SMALL SAMPLE OF BLOOD?
MR. DOWNEY: I'D LIKE TO ASK YOU TO LOOK BACK AT EXHIBIT 15010.
ELIZABETH A. HOLMES: OH, OKAY.
MR. DOWNEY: IS THIS THE TECAN DEVICE THAT YOU REFERRED TO JUST A MOMENT AGO?
MR. DOWNEY: AND HOW WOULD YOU RUN A SMALL SAMPLE OF BLOOD ON THIS DEVICE?
ELIZABETH A. HOLMES: ON THIS DEVICE WE COULD PUT A CUSTOM CONSUMABLE. YOU SEE ON THE DEVICE THE BLUE OBJECT THAT IS UNDER THE ROBOT, THAT IS WHAT THEY CALL A PLATE. IT'S THE PLACE WHERE YOUR REAGENTS AND YOUR SAMPLE COULD GO. WE COULD BUILD CUSTOM PLATES THAT WERE REALLY SIMILAR TO OUR CARTRIDGE WITH LITTLE VESSELS THAT COULD CONTAIN VERY SMALL AMOUNTS OF SAMPLE.
MR. DOWNEY: OKAY. AND WHO AT THERANOS WAS INVOLVED IN THE TECHNOLOGY THAT WAS NECESSARY TO RUN -- BUILDING THE TECHNOLOGY THAT WAS NECESSARY TO RUN SMALL BLOOD SAMPLES ON THE TECAN DEVICE?
ELIZABETH A. HOLMES: MULTIPLE OF OUR SCIENTIFIC AND ENGINEERING TEAMS, OUR ASSAY TEAMS THAT WE TALKED ABOUT, ACROSS THE DIFFERENT METHODS; OUR HARDWARE TEAM TO DESIGN SPECIAL PIECES OF PLASTIC THAT COULD ACCOMMODATE REALLY SMALL VOLUMES OF FLUID. THEY MOVE DIFFERENTLY THAN BIG VOLUMES OF FLUID, SO YOU NEED SPECIAL ENGINEERING FOR THAT. OUR SOFTWARE TEAMS TO BE ABLE TO EXECUTE WHAT I WAS CALLING THAT PROTOCOL OR THAT FORMULA, AND THE CODE THAT WOULD RUN ON THIS DEVICE.
MR. DOWNEY: HOW QUICKLY WAS THE TEAM ABLE TO DEVELOP THE CAPACITY TO DO THAT?
ELIZABETH A. HOLMES: FOR THIS DEVICE WE HAD EXPERIENCE WITH THAT FOR YEARS UP TO THIS POINT BECAUSE WE HAD USED THESE DEVICES IN THE CONTEXT OF R&D, SO WE ALREADY HAD THAT CAPABILITY.
MR. DOWNEY: OKAY. YOU MENTIONED MODIFYING OTHER COMMERCIAL PLATFORMS. WHAT SPECIFIC PLATFORMS DID YOU LOOK AT?
ELIZABETH A. HOLMES: WE LOOKED AT MANY. WE ULTIMATELY FOCUSSED ON THE SIEMENS ADVIA AND THE BECTON DICKINSON FORTESSA DEVICES.
MR. DOWNEY: AND WERE YOU SUCCESSFUL IN MODIFYING THOSE TO ANALYZE SMALL SAMPLES OF BLOOD?
ELIZABETH A. HOLMES: WE DID. WE MADE INVENTIONS THAT ALLOWED US TO RUN SMALL SAMPLES OF BLOOD ON THOSE PLATFORMS.
MR. DOWNEY: LET ME ASK YOU TO LOOK AT THE PICTURE THAT IS ALREADY IN EVIDENCE AS 5389.
ELIZABETH A. HOLMES: OKAY.
MR. DOWNEY: IS THIS THE SIEMENS ADVIA?
MR. DOWNEY: NOW, HOW MANY SMALL SAMPLE TESTS AN HOUR COULD THAT SIEMENS TEST RUN?
ELIZABETH A. HOLMES: I BELIEVE OVER 100.
MR. DOWNEY: OKAY. AND, AND DO YOU KNOW, IS THAT THE NUMBER OF PATIENT SAMPLES IT COULD RUN?
MR. DOWNEY: AND HOW MANY BLOOD TESTS COULD IT ACTUALLY PERFORM WITHIN THOSE 100 OR SO PATIENTS?
ELIZABETH A. HOLMES: DOZENS.
MR. DOWNEY: OKAY. SO AS YOU WERE CONSIDERING HOW TO ACTUALLY OPERATE THE LAB, DID YOU BEGIN TO COMPARE THESE MODIFIED COMMERCIAL PLATFORMS AND THE TECAN TO POTENTIALLY OPERATE IN THE LAB WITH THE 4.0 DEVICES?
ELIZABETH A. HOLMES: WE DID.
MR. DOWNEY: AND TELL US YOUR THOUGHT PROCESS AS TO WHICH APPEARED TO BE THE WISER COURSE.
ELIZABETH A. HOLMES: IN THE CONTEXT OF PHASE I WHERE YOU HAVE REALLY LARGE SAMPLES COMING IN AT THE SAME TIME, THIS MADE A LOT MORE SENSE BECAUSE YOU COULD PROCESS ALL OF THOSE SAMPLES AT THE SAME TIME, AS OPPOSED TO HAVING THESE HUGE BANK OF DEVICES AND HUMAN OR ROBOT OPERATORS FOR EACH ONE AND WAITING UNTIL YOU COULD GET THE NEXT SAMPLE IN THE MACHINE BASED ON THE FACT THAT THE MACHINE ONLY PROCESSED ONE SAMPLE AT A TIME.
MR. DOWNEY: SO YOU ULTIMATELY DECIDED TO USE SOME OF THE MODIFIED PLATFORMS AND THE TECAN DEVICES FOR A LOT OF THE SMALL SAMPLE TESTS?
ELIZABETH A. HOLMES: WE DID.
MR. DOWNEY: NOW, THERE'S BEEN TESTIMONY FROM A NUMBER OF WITNESSES IN THE CASE THAT THEY WERE NOT AWARE THAT THERANOS WAS RUNNING BLOOD SAMPLES ON THESE -- OR ANALYZING BLOOD SAMPLES ON THESE KINDS OF PLATFORMS. DO YOU RECALL THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: DID THERANOS PUBLICLY DISCLOSE THAT IT WAS OPERATING THESE THIRD PARTY DEVICES?
MR. DOWNEY: DID YOU TELL MANY PEOPLE OUTSIDE OF THERANOS?
ELIZABETH A. HOLMES: NOT MANY.
MR. DOWNEY: OKAY. DID THERANOS SEEK PATENT PROTECTIONS FOR THOSE MODIFICATIONS?
ELIZABETH A. HOLMES: WE DID. WE SOUGHT WHAT IS CALLED NON-PUBLIC PATENT APPLICATIONS FOR THESE INVENTIONS AND WORKED TO PROTECT THEM AS TRADE SECRETS.
MR. DOWNEY: AND DID YOU ULTIMATELY RECEIVE A PATENT IN CONNECTION WITH THAT APPLICATION FOR THESE DEVICES?
ELIZABETH A. HOLMES: WE DID.
MR. DOWNEY: DID YOU TELL WALGREENS THAT YOU WERE RUNNING THE TESTS ON THESE MODIFIED COMMERCIAL PLATFORMS?
ELIZABETH A. HOLMES: NOT IN THIS WAY.
MR. DOWNEY: AND WHY NOT?
ELIZABETH A. HOLMES: BECAUSE THIS WAS AN INVENTION THAT WE UNDERSTOOD FROM OUR COUNSEL WE HAD TO PROTECT AS A TRADE SECRET, AND THAT IF WE DISCLOSED THAT INFORMATION, WE WOULD LOSE TRADE SECRET PROTECTION. THE BIG MEDICAL DEVICE COMPANIES LIKE SIEMENS COULD EASILY REPRODUCE WHAT WE HAD DONE IF THEY KNEW WHAT WE WERE DOING. THEY HAD MORE ENGINEERS THAN WE DID, AND A LOT MORE RESOURCES. AND SO THE ADVICE WAS TO KEEP IT CONFIDENTIAL SO THAT THERANOS WOULD HAVE THE CHANCE TO PROFIT OFF OF THAT INVENTION.
MR. DOWNEY: AND DO OTHER COMPANIES TODAY, AFTER DISCLOSURES ABOUT THERANOS, RUN SMALL SAMPLES ON THOSE MODIFIED PLATFORMS?
MR. LEACH: OBJECTION. RELEVANCE. 403.
JUDGE DAVILA: SUSTAINED.
BY MR. DOWNEY:
MR. DOWNEY: NOW, ONE OF THE STEPS THAT YOU MENTIONED THAT YOU WOULD BE TAKING IS APPLICATION FOR APPROVAL OF YOUR DEVICES TO THE FDA. DO YOU RECALL THAT?
MR. DOWNEY: AND DO YOU RECALL THAT AS PART OF YOUR EFFORT TO GET APPROVAL FOR THE THERANOS DEVICES, YOU HAD CONVERSATIONS WITH THE FDA ABOUT THE BUSINESS PLAN UNDER WHICH THERANOS WOULD PROCEED?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: DID YOU DISCLOSE TO THE FDA THAT YOU WERE USING THESE MODIFIED PLATFORMS FOR PURPOSES OF RUNNING BLOOD SAMPLES AT THERANOS?
MR. DOWNEY: WHY WERE YOU WILLING TO DISCLOSE TO THE FDA THAT YOU WERE USING THESE PLATFORMS, BUT NOT TO OTHER OUTSIDE AUDIENCES?
ELIZABETH A. HOLMES: BECAUSE THE FDA ASSURED WE COULD HAVE TRADE SECRET PROTECTION OF THE INFORMATION THAT WE WERE DISCLOSING, THAT IT WOULD NOT BE SHARED PUBLICLY.
MR. DOWNEY: OKAY. LET'S RETURN TO THE SUBJECT OF SORT OF THE PLACEMENT OF VARIOUS DEVICES IN THE LAB --
MR. DOWNEY: -- AND THE FINAL DEVELOPMENT OF THE 4 SERIES DEVICE AND TECHNOLOGIES AT THERANOS. DID YOU ULTIMATELY MAKE A DECISION NOT TO USE THE 4 SERIES DEVICE WITHIN THE CLINICAL LAB AT THERANOS?
MR. DOWNEY: AND DID THAT HAPPEN IN APPROXIMATELY 2013?
ELIZABETH A. HOLMES: IT DID.
MR. DOWNEY: AND APPROXIMATELY WHEN IN 2013 DID THAT HAPPEN?
ELIZABETH A. HOLMES: IN THE SUMMER OF 2013.
MR. DOWNEY: HAD THERANOS CONCLUDED SYSTEMS INTEGRATION OF THE SERIES 4 DEVICE IN THE SUMMER OF 2013?
ELIZABETH A. HOLMES: WE HAD.
MR. DOWNEY: BUT WERE THERE DELAYS IN FINALIZING THAT DEVICE'S READINESS TO LAUNCH?
ELIZABETH A. HOLMES: YES. THEY HAD NOT BEEN VALIDATED.
MR. DOWNEY: SO WAS THE 4 SERIES DEVICE READY TO LAUNCH AT THE TIME OF THE SOFT LAUNCH OF THERANOS'S CENTRAL LAB IN -- WELL, OF THE LAUNCH OF THERANOS SERVICE CENTERS IN SEPTEMBER OF 2013?
MR. DOWNEY: DID YOU CONSIDER WHETHER YOU -- THE 4 SERIES IMPLEMENTATION WAS DELAYED, THAT THAT WAS A -- THERANOS ABANDONING IT'S 4 SERIES TECHNOLOGY?
ELIZABETH A. HOLMES: NOT AT ALL.
MR. DOWNEY: WHAT HAPPENED WITH THE DEVELOPMENT OF THE 4 SERIES DEVICE AFTER YOU MADE A DECISION TO DELAY ITS USE IN THE CLINICAL LAB?
ELIZABETH A. HOLMES: WE IMMEDIATELY FOCUSSED ON GETTING THAT TECHNOLOGY INTO THE FDA AND ULTIMATELY FILING A LOT OF PRESUBMISSIONS WITH DATA TO INTRODUCE THE TECHNOLOGY TO THE FDA.
MR. DOWNEY: AND WHEN YOU BELIEVED THAT THAT TECHNOLOGY WAS READY FOR CLINICAL USE, DID YOU APPLY TO THE FDA AND MAKE THOSE SUBMISSIONS TO THE FDA?
MR. DOWNEY: DID YOU HAVE -- NOW, WE'LL TALK LATER. YOU ALSO MADE A DECISION TO USE CERTAIN OF THE 3 SERIES OF DEVICES IN CONNECTION WITH THE CLINICAL LAB; IS THAT RIGHT?
ELIZABETH A. HOLMES: WE DID, YES.
MR. DOWNEY: WHY DID THERANOS DO THAT?
ELIZABETH A. HOLMES: WE HAD A LOT OF EXPERIENCE WITH THEM FOR YEARS AT THAT POINT, AND A LOT OF CONFIDENCE IN THE TECHNOLOGY, AND AS WE PREPARED FOR PHASE II OF OUR MODEL, WE THOUGHT WE COULD USE THE MANY DEVICES THAT WE'D BUILT IN COMBINATION WITH THE HIGH THROUGHPUT PLATFORMS IN THE LAB.
MR. DOWNEY: OKAY. NOW, DO YOU RECALL THAT IN SEPTEMBER OF 2013 THE LAUNCH OF THERANOS STORES IN WALGREENS -- LAUNCH OF THERANOS SERVICE CENTERS IN WALGREENS WAS ANNOUNCED?
MR. DOWNEY: AND SHORTLY PRIOR TO THAT TIME, HAD THE CLIA LAB AT THERANOS BEEN WORKING TO VALIDATE VARIOUS ASSAYS IN CONNECTION WITH ITS EFFORTS TO OPEN FOR CLINICAL USE?
MR. DOWNEY: AND STARTING IN AUGUST, WAS THERE WORK TO TRY TO BRING ALL OF THERANOS'S ASSAYS INTO THAT CLIA LAB FOR VALIDATION?
ELIZABETH A. HOLMES: YES. I THINK IT STARTED EVEN BEFORE THEN.
MR. DOWNEY: WHO COORDINATED THAT PROJECT?
ELIZABETH A. HOLMES: DR. YOUNG ON THE R&D SIDE, DR. ROSENDORFF ON THE CLINICAL LAB SIDE, AND SUNNY BALWANI FROM THE BUSINESS OPERATIONS SIDE.
MR. DOWNEY: OKAY. TO DATE AS YOU AND I HAVE BEEN DISCUSSING THE DEVELOPMENT OF THE TECHNOLOGY, HAVE WE BEEN DISCUSSING THE DEVELOPMENT OF THESE ASSAYS IN THE RESEARCH AND DEVELOPMENT LAB AT THERANOS?
ELIZABETH A. HOLMES: WE HAVE.
MR. DOWNEY: AND SO THIS WAS THE PROCESS OF A CLIA VALIDATION FOR PURPOSES OF OFFERING BLOOD TESTS TO THE PUBLIC; IS THAT RIGHT?
ELIZABETH A. HOLMES: EXACTLY, YES.
MR. DOWNEY: WAS DR. ROSENDORFF INVOLVED IN THE PROCESS OF CLIA VALIDATION AT THERANOS?
MR. DOWNEY: WELL, WHAT DO YOU RECALL ABOUT THE PROCESS AROUND CLIA VALIDATION IN THE SUMMER AND FALL OF 2013?
ELIZABETH A. HOLMES: I RECALL THAT DR. ROSENDORFF ESTABLISHED A SERIES OF CRITERIA THAT NEEDED TO BE MET FOR VALIDATION; THAT THE SCIENTISTS WHO DEVELOPED THE TESTS WOULD WORK WITH HIM TO BRING THE TEST TO THE LAB, AND THEN RUN THESE EXPERIMENTS TO TRY TO MEET THE CRITERIA THAT HE HAD ESTABLISHED.
MR. DOWNEY: LET ME ASK YOU TO LOOK AT EXHIBIT 7314.
ELIZABETH A. HOLMES: OKAY.
MR. DOWNEY: LET ME ASK YOU FIRST, WAS IT YOUR EXPECTATION THAT MOST OF THE ASSAYS THAT HAD BEEN VALIDATED FROM A RESEARCH AND DEVELOPMENT PERSPECTIVE WOULD BE VALIDATED QUICKLY ON A CLIA BASIS?
MR. DOWNEY: LET ME ASK YOU TO LOOK AT THE EXHIBIT. IS THIS AN EMAIL FROM DR. YOUNG TO YOU IN AUGUST OF 2013?
ELIZABETH A. HOLMES: IT IS.
MR. DOWNEY: YOUR HONOR, I MOVE THE ADMISSION OF 7314.
MR. LEACH: NO OBJECTION, YOUR HONOR.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(DEFENDANT'S EXHIBIT 7314 WAS RECEIVED IN EVIDENCE.)
BY MR. DOWNEY:
MR. DOWNEY: IF YOU LOOK AT THE ADDRESS OUTLINE OR THE ADDRESS HEADER AT THE TOP, DO YOU SEE THAT IT'S DATED AUGUST 19TH, 2013?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: THAT'S ABOUT THREE WEEKS BEFORE THE ANNOUNCEMENT OF THERANOS SERVICE CENTERS IN WALGREENS STORES?
MR. DOWNEY: AND IS DR. YOUNG REPORTING TO YOU IN THIS EMAIL HIS EXPECTATION ABOUT THE NUMBER OF SMALL SAMPLE TESTS THAT WOULD BE AVAILABLE IN THOSE SERVICE CENTERS?
ELIZABETH A. HOLMES: HE IS, YES.
MR. DOWNEY: AND IF YOU WOULD LOOK AT THE BEGINNING OF THE EMAIL, HE SAYS, "THE CURRENT LAUNCH LIST COVERS 200 TESTS, IN BOTH BLOOD AND URINE SAMPLES. THE COLLECTION OF THESE REPORTABLES COVERS MORE THAN 97 PERCENT OF TEST FREQUENCY FOR THESE TWO MATRICES." DO YOU SEE THAT?
ELIZABETH A. HOLMES: I DO, YES.
MR. DOWNEY: AND MATRICES IS JUST A REFERENCE TO THE BODILY SUBSTANCE THAT IS BEING ANALYZED?
ELIZABETH A. HOLMES: YES, HE'S TALKING ABOUT BLOOD AND ALSO URINE.
MR. DOWNEY: OKAY. AND DID YOU UNDERSTAND HERE THAT 200 SMALL SAMPLE ASSAYS WOULD BE APPROVED AND LAUNCHED AT THE OUTSET OF THE THERANOS SERVICE CENTERS OPERATION?
ELIZABETH A. HOLMES: YES, THAT WAS OUR PLAN.
MR. DOWNEY: OKAY. IF YOU LOOK BELOW HERE, HE REPORTS ON A NUMBER OF SPECIFIC PIECES OF -- NUMBER OF TESTS AND PIECES OF HARDWARE. DO YOU SEE THAT HE APPEARS TO BREAK OUT BY THE ASSAY METHOD THE NUMBER OF SMALL SAMPLE TESTS THAT WILL BE PART OF THAT LAUNCH?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND ARE ALL OF THE NUMBERS PROVIDED HERE SMALL SAMPLE ASSAYS AS OPPOSED TO TRADITIONAL SAMPLES?
MR. DOWNEY: OKAY. SO WAS IT YOUR EXPECTATION THAT AS OF AUGUST OF 2013 THAT THIS NUMBER OF SMALL SAMPLE ASSAYS WOULD BE LAUNCHED IN THERANOS SERVICE CENTERS?
ELIZABETH A. HOLMES: IT WAS.
MR. DOWNEY: WHO AT THERANOS WAS RESPONSIBLE FOR MAKING THE DECISION AS TO WHETHER OR NOT AN ASSAY WAS CLINICALLY VALIDATED UNDER CLIA?
ELIZABETH A. HOLMES: THE LAB DIRECTOR.
MR. DOWNEY: WAS THAT DR. ROSENDORFF AS OF AUGUST 2013?
ELIZABETH A. HOLMES: IT WAS.
MR. DOWNEY: WERE THERE OTHERS WHO WERE INVOLVED WITH HIM IN ASSISTING HIM IN PLAYING A ROLE IN THAT PROCESS?
MR. DOWNEY: AND WHO ELSE WAS INVOLVED IN THAT PROCESS?
ELIZABETH A. HOLMES: WITHIN THE CLINICAL LAB THERE WERE PEOPLE WHO WORKED FOR HIM WHO WERE SENIOR LABORATORY SCIENTISTS AND SUPERVISORS, AND ON THE R&D SIDE THERE WERE THE SCIENTISTS WHO HAD DEVELOPED AND VALIDATED THE TESTS IN R&D.
MR. DOWNEY: AND IF THERE WERE A CLIA VALIDATION OF A TEST, HOW WOULD THAT BE DOCUMENTED?
ELIZABETH A. HOLMES: IN A CLIA VALIDATION REPORT.
MR. DOWNEY: AND WOULD THAT HAVE TO BE SIGNED OFF ON BY DR. ROSENDORFF?
ELIZABETH A. HOLMES: IT WOULD, YES.
MR. DOWNEY: AND ANY OTHERS?
MR. DOWNEY: WHO?
ELIZABETH A. HOLMES: THE CLINICAL LABORATORY SCIENTIST, THE GENERAL SUPERVISORS, TECHNICAL SUPERVISORS, SOMETIMES THE SCIENTISTS WHO DEVELOPED THE TESTS AND THEIR TEAM LEADS, SOMETIMES OTHER R&D LEADERSHIP, AND THEN DR. ROSENDORFF HIMSELF.
MR. DOWNEY: OKAY. DID YOU EVER PRESSURE DR. ROSENDORFF TO CLINICALLY VALIDATE TESTS THAT HE DID NOT WANT TO CLINICALLY VALIDATE?
MR. DOWNEY: DID YOU EVER PRESSURE DR. YOUNG TO CONTRIBUTE TO CLINICALLY VALIDATING A TEST THAT HE DID NOT WANT CLINICALLY VALIDATED?
MR. DOWNEY: DID YOU EVER PRESSURE ANYONE AT THERANOS TO SIGN OFF ON A CLINICAL OR CLIA VALIDATION WHERE THEY DID NOT WANT TO SIGN OFF ON THAT CLINICAL OR CLIA VALIDATION?
ELIZABETH A. HOLMES: ABSOLUTELY NOT.
MR. DOWNEY: DID YOU HAVE THE TRAINING TO MAKE A DECISION AS TO WHETHER OR NOT AN ASSAY WAS VALID FOR CLINICAL USE?
MR. DOWNEY: ARE YOU AWARE OF ANY ASSAY BEING USED IN THE CLINICAL LABORATORY AT THERANOS THAT WAS NOT VALIDATED AND APPROVED BY THE LABORATORY DIRECTOR?
ELIZABETH A. HOLMES: I AM NOT.
MR. DOWNEY: WOULD YOU HAVE PERMITTED THAT?
MR. DOWNEY: DO YOU RECALL THAT DR. ROSENDORFF TESTIFIED EARLIER IN THIS TRIAL?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND DO YOU RECALL THAT HE TESTIFIED ABOUT SOME INTERACTIONS WITH YOU RAISING CONCERNS ABOUT WHETHER OR NOT IT WAS POSSIBLE TO VALIDATE ON THE GIVEN SCHEDULE A CERTAIN NUMBER OF ASSAYS?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: WHAT DO YOU RECALL ABOUT, IF ANYTHING, ABOUT SUCH AN INTERACTION WITH DR. ROSENDORFF?
ELIZABETH A. HOLMES: I RECALL TELLING DR. ROSENDORFF THAT WE'LL DO WHATEVER IT TAKES TO GIVE HIM THE TIME THAT WE NEED TO BRING UP THE TEST PROPERLY UNTIL HE WAS SATISFIED WITH SIGNING OFF ON THEM.
MR. DOWNEY: WITH RESPECT TO THE TESTS ABOUT WHICH HE RAISED CONCERNS, DID YOU -- WAS THERE ANY DELAY IN THE LAUNCH OF THOSE TESTS?
MR. DOWNEY: AND DO YOU KNOW HOW LONG THE LAUNCH OF THOSE TESTS WAS DELAYED?
ELIZABETH A. HOLMES: MONTHS AFTER THAT TIME.
MR. DOWNEY: DID YOU UNDERSTAND THAT HE DID THE WORK THEREAFTER TO BECOME COMFORTABLE TO CLINICALLY VALIDATE THOSE ASSAYS BEFORE THEY WERE RELEASED FOR USE WITH MEMBERS OF THE PUBLIC?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: DO YOU RECALL ALSO THAT DOCTOR -- THAT MS. GANGAKHEDKAR TESTIFIED ABOUT CONCERNS THAT SHE HAD AROUND THE TIME OF THE LAUNCH OF THE CLIA LAB AT THERANOS?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND BY THAT TIME SHE WAS LEADING ONE OF THE ASSAY TEAMS IN THE RESEARCH AND DEVELOPMENT GROUP; RIGHT?
MR. DOWNEY: SHE WAS THE HEAD OF THE IMMUNOASSAY GROUP?
MR. DOWNEY: AND SHE RESIGNED IN SEPTEMBER OF 2013; IS THAT RIGHT?
ELIZABETH A. HOLMES: SHE DID.
MR. DOWNEY: DID YOU SPEAK WITH HER IN CONNECTION WITH HER INTENDED DEPARTURE FROM THERANOS?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: WHAT DO YOU RECALL HER TELLING YOU AT THAT TIME?
ELIZABETH A. HOLMES: SHE TOLD ME THAT SHE WAS STRESSED AND HAD HEALTH ISSUES. AND I SUGGESTED TO HER THAT SHE TAKE A LEAVE OF ABSENCE HOPING THAT SHE COULD ADDRESS THE HEALTH ISSUES.
MR. DOWNEY: LET ME ASK YOU TO LOOK AT EXHIBIT 13780.
ELIZABETH A. HOLMES: OKAY.
MR. DOWNEY: IS THIS AN EMAIL THAT WAS SENT TO YOU BY A THERANOS PERSON ABOUT MS. GANGAKHEDKAR'S DEPARTURE FROM THERANOS?
ELIZABETH A. HOLMES: YES. I THINK SHE'S TALKING ABOUT MS. GANGAKHEDKAR'S DEPARTURE AND ANOTHER EMPLOYEE'S DEPARTURE.
MR. DOWNEY: YOUR HONOR, I MOVE TO ADMIT 13780.
MR. LEACH: NO OBJECTION.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(DEFENDANT'S EXHIBIT 13780 WAS RECEIVED IN EVIDENCE.)
BY MR. DOWNEY:
MR. DOWNEY: LOOKING AT THE BOTTOM EMAIL HERE, DO YOU SEE THAT THIS IS AN EMAIL FROM TINA NOYES. WAS SHE A THERANOS EMPLOYEE?
MR. DOWNEY: AND DID SHE WORK WITH MS. GANGAKHEDKAR?
ELIZABETH A. HOLMES: SHE DID.
MR. DOWNEY: AND DO YOU SEE IN THAT EMAIL SHE HAD TOLD MS. GANGAKHEDKAR AND ANOTHER INDIVIDUAL THAT SHE WAS WRITING TO ADVISE OF HER RESIGNATION ON SEPTEMBER 5TH?
MR. DOWNEY: AND THE OTHER INDIVIDUAL SHE SENT THIS TO IS A WOMAN NAMED MONA RAMAMURTHY. DO YOU SEE THAT?
MR. DOWNEY: AND WHO IS MONA RAMAMURTHY?
ELIZABETH A. HOLMES: SHE RAN OUR HUMAN RESOURCES.
MR. DOWNEY: OKAY. AND IF YOU GO ABOVE THAT EMAIL, THERE'S AN EMAIL FROM MS. RAMAMURTHY TO YOU. DO YOU SEE THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND IT'S ON THAT SAME DAY, SEPTEMBER 5TH?
MR. DOWNEY: AND DO YOU SEE BELOW IN THE TEXT OF THE EMAIL, THE SECOND SENTENCE READS THAT, "SUREKHA," THAT'S REFERRING TO MS. GANGAKHEDKAR?
MR. DOWNEY: "SUREKHA JUST CAME BY AND SAID SHE BELIEVES TINA IS RESIGNING BECAUSE OF HEALTH REASONS, FAMILY LIFE, AND STRESS. SHE SAID IT IS SIMILAR TO THE REASON SHE IS RESIGNING." DO YOU SEE THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: NOW, DURING THE CONVERSATION THAT YOU HAD WITH MS. GANGAKHEDKAR AROUND SEPTEMBER 5TH, DO YOU RECALL HER RAISING ANY CONCERN ABOUT THE VALIDITY OF THERANOS TECHNOLOGY, WHETHER IT BE ASSAYS OR IN ANY OTHER RESPECT?
MR. DOWNEY: DID YOU TRY TO PERSUADE MS. GANGAKHEDKAR IN THAT CONVERSATION AND THEREAFTER TO REMAIN AT THERANOS?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: DO YOU RECALL DURING THIS TRIAL THAT MS. GANGAKHEDKAR TESTIFIED ABOUT AN EMAIL EXCHANGE THAT SHE HAD HAD WITH MR. BALWANI A FEW DAYS BEFORE THIS SEPTEMBER 5TH, 2013 RESIGNATION?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: LET'S TAKE A MOMENT AND LOOK AT THAT EMAIL EXCHANGE. IF WE CAN BLOW UP THE BOTTOM EMAIL. WELL, ACTUALLY, IF WE CAN -- YEAH, IF WE CAN GO AND BLOW THAT EMAIL UP, IF YOU WOULD, MR. BENNETT.
JUDGE DAVILA: THIS IS EXHIBIT?
MR. DOWNEY: I APOLOGIZE, YOUR HONOR. IT'S EXHIBIT 3962. AND THIS IS IN EVIDENCE PREVIOUSLY.
MR. DOWNEY: DO YOU SEE HERE IT SAYS, "PLEASE NOTE THAT THE SOFTWARE TEAM WAS HERE TILL 3:07 A.M. - AND IS ALREADY HERE NOW AT 10:00
ELIZABETH A. HOLMES: M.," AND THEN HE GOES ON TO DESCRIBE HOW HARD THE SOFTWARE TEAM WAS WORKING. AND HE SAYS, "THE EDISON DEVICES IN THE EVENING WERE ALL SITTING IDLE AND I ALSO DIDN'T SEE ANYONE FROM CARTRIDGE MANUFACTURING IN THE EVENING." AND THEN IN THE LAST PARAGRAPH HE ASKS, "PLEASE ASK THE ELISA TEAM TO ORGANIZE, PLAN AND PUT IN THE HOURS THIS MONTH TO BRING UP ALL ASSAYS AND WORK AROUND ANY CHALLENGES THAT COME OUR WAY." DO YOU SEE THAT? A. YES.
MR. DOWNEY: IS THE ELISA TEAM THE TEAM THAT MS. GANGAKHEDKAR WAS RESPONSIBLE FOR RUNNING?
MR. DOWNEY: AND IF YOU GO ABOVE, DO YOU SEE THAT MS. GANGAKHEDKAR RESPONDS TO THAT EMAIL?
MR. DOWNEY: AND IF YOU LOOK AT THE SECOND EMAIL, DO YOU SEE THAT SHE SAYS THE TEAM HAD BEEN WORKING HARD TOWARDS VALIDATION EFFORTS?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND DO YOU SEE THAT SHE THEN WENT ON TO DESCRIBE SOME OF THE DETAILS OF THAT HARD WORK?
MR. DOWNEY: NOW, YOU'RE COPIED ON THIS EMAIL?
MR. DOWNEY: DO YOU SEE THAT? LOOKING BACK ON THIS NOW AND HAVING HEARD MS. GANGAKHEDKAR'S TESTIMONY, WOULD YOU HANDLE THIS SITUATION DIFFERENTLY?
ELIZABETH A. HOLMES: COMPLETELY.
MR. DOWNEY: WHY DO YOU SAY THAT?
ELIZABETH A. HOLMES: BECAUSE SUREKHA HAD WORKED WITH OUR TEAM AT OUR COMPANY FOR YEARS. SHE HAD DONE GREAT WORK, AND HER TEAM WAS WORKING HARD, AND THIS IS THE WRONG WAY TO TREAT PEOPLE.
MR. DOWNEY: NOW, WHEN MS. GANGAKHEDKAR DEPARTED, WHO REPLACED HER?
ELIZABETH A. HOLMES: DR. SIVARAMAN.
MR. DOWNEY: HOW LONG DID DR. SIVARAMAN REMAIN AT THERANOS?
ELIZABETH A. HOLMES: UNTIL 2017 OR 2018.
MR. DOWNEY: NOW, YOU TESTIFIED ABOUT DR. ROSENDORFF'S -- THE CONVERSATION WITH DR. ROSENDORFF AND YOUR CONVERSATION WITH MS. GANGAKHEDKAR, AND BOTH OF THEM REFERRING BOTH TO STRESS AND DR. ROSENDORFF SAYING HE WASN'T READY TO VALIDATE CERTAIN ASSAYS. TO THE EXTENT THAT THERE WERE THOSE CONCERNS, WHY DIDN'T THERANOS DELAY ITS COMMERCIAL LAUNCH?
ELIZABETH A. HOLMES: WE DID DELAY THE VALIDATION OF ANY TEST OF WHICH THERE WAS A CONCERN.
MR. DOWNEY: DID YOU IMPOSE ANY DEADLINE BY WHICH ASSAYS HAD TO BE VALIDATED?
MR. DOWNEY: WERE YOU CONCERNED IF AN ASSAY HAD TO BE RUN ON A TRADITIONAL SAMPLE FOR A PERIOD OUT OF THE CLIA LAB?
MR. DOWNEY: LET ME TURN FROM TALKING ABOUT THE CLIA LAB TO TALKING ABOUT THE OTHER ASPECTS OF THERANOS'S BUSINESS DURING THIS TIME. WAS THE LAUNCH OF THERANOS SERVICE CENTERS THE FIRST TIME THAT THERANOS WAS REALLY KNOWN TO THE PUBLIC?
MR. DOWNEY: WHAT DID YOU DO TO PLAN TO MAKE THAT ANNOUNCEMENT?
ELIZABETH A. HOLMES: WE WORKED WITH A TEAM OF MARKETING AND PUBLIC RELATIONS ADVISORS ON HOW TO INTRODUCE OUR COMPANY TO THE WORLD.
MR. DOWNEY: OKAY. AND WAS IT THE CASE THAT THE COMMERCIAL LAUNCH OF THERANOS SERVICE CENTERS HAD ORIGINALLY BEEN SCHEDULED FOR MARCH OF 2013?
MR. DOWNEY: AND WAS THAT DATE DELAYED UNTIL SEPTEMBER OF 2013?
ELIZABETH A. HOLMES: IT WAS.
MR. DOWNEY: WHY WAS THAT DATE DELAYED?
ELIZABETH A. HOLMES: BECAUSE WE, THE TEAMS AT THERANOS AND AT WALGREENS, WERE NOT READY TO HIT THE INITIAL LAUNCH DATE. THERE WERE PEOPLE WHO NEEDED TO BE TRAINED IN THE STORES, THERE WERE PROCESSES THAT NEEDED TO BE ESTABLISHED, WE WERE STILL BUILDING THE COURIER AND THE LOGISTICS INFRASTRUCTURE. SO WE PUSHED THE LAUNCH DATE.
MR. DOWNEY: OKAY. WERE YOU ALSO STILL DEVELOPING MARKETING MATERIALS AND BRANDING MATERIALS ASSOCIATED WITH THE LAUNCH?
ELIZABETH A. HOLMES: WE WERE.
MR. DOWNEY: NOW, WHEN THERE WERE ULTIMATELY MARKETING MATERIALS IN PLACE, DID YOU HAVE THE OCCASION TO REVIEW VARIOUS FORMS OF MARKETING THAT THERANOS RELEASED TO THE PUBLIC?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: DID YOU PERSONALLY RESEARCH OR VERIFY EVERY STATEMENT MADE IN THOSE MARKETING MATERIALS?
MR. DOWNEY: DID YOU EVER APPROVE ANY MARKETING MATERIALS THAT YOU THOUGHT WERE INACCURATE?
MR. DOWNEY: IN THE PERIOD BEFORE YOU STARTED WORKING WITH EXPERTS AND CONSULTANTS IN THE AREA OF MARKETING AND BRANDING, HAD THERANOS DEVOTED MUCH MONEY OR THOUGHT TO THE PROCESS OF MARKETING AND BRANDING?
ELIZABETH A. HOLMES: WE HAD NOT.
MR. DOWNEY: WHAT WAS THE PUBLIC PRESENCE OF THERANOS IN THE YEARS 2004 TO 2013?
ELIZABETH A. HOLMES: IT WAS ALMOST NOTHING.
MR. DOWNEY: OKAY. AND WHEN YOU LAUNCHED, YOU WOULD BE LAUNCHING AS PART OF A PARTNERSHIP WITH WALGREENS?
MR. DOWNEY: AND WAS WALGREENS ALREADY A COMPANY THAT WAS WELL ESTABLISHED?
MR. DOWNEY: DID YOU HAVE ANY CONCERNS WITH RESPECT TO THERANOS'S BRAND BASED ON THE FACT THAT YOU WERE LAUNCHING WITH WALGREENS?
ELIZABETH A. HOLMES: WE DID.
MR. DOWNEY: WHAT WAS -- WHAT WERE THE CONCERNS THAT YOU HAD?
ELIZABETH A. HOLMES: WE WANTED THE CHANCE TO ESTABLISH OUR OWN BRAND AND BE ABLE TO BUILD A COMPANY THAT WOULD NOT JUST BE INSIDE OF WALGREENS, BUT THAT HOPEFULLY WOULD BE A PRODUCT THAT COULD BE AVAILABLE TO PEOPLE WIDELY.
MR. DOWNEY: OKAY. NOW, YOU MENTIONED WORKING WITH CONSULTANTS AND SO FORTH. WHO DID YOU HIRE TO HELP THERANOS WITH ITS MARKETING AND BRANDING EFFORTS?
ELIZABETH A. HOLMES: WE HIRED TBWA/CHIAT/DAY, WHICH WAS A MARKETING AND ADVERTISING AGENCY.
MR. DOWNEY: AND IS THAT SOMETIMES CALLED CHIAT/DAY?
MR. DOWNEY: AND TELL US WHAT YOU UNDERSTOOD CHIAT/DAY WAS WHEN YOU HIRED THEM.
ELIZABETH A. HOLMES: I UNDERSTOOD THAT THEY WERE ONE OF THE BEST MARKETING FIRMS, THAT THEY HAD WORKED WITH COMPANIES LIKE APPLE ON THE LAUNCH OF MANY DIFFERENT PRODUCTS AND CREATED AMAZING ADVERTISEMENTS THAT INTRODUCED NEW BRANDS AND COMPANIES TO THE WORLD.
MR. DOWNEY: AND WHAT ROLE DID YOU EXPECT THEM TO PLAY WITH REGARD TO BRANDING AND MARKETING OF THERANOS?
ELIZABETH A. HOLMES: WE ASKED FOR THEIR HELP IN FIGURING OUT HOW TO INTRODUCE THERANOS TO THE WORLD.
MR. DOWNEY: HOW LONG DID CHIAT/DAY AND THERANOS WORK TOGETHER?
ELIZABETH A. HOLMES: OVER A YEAR.
MR. DOWNEY: HOW MUCH DID THERANOS PAY CHIAT/DAY IN CONNECTION WITH ITS EFFORTS TO DEVELOP A BRAND FOR ITS TECHNOLOGY?
ELIZABETH A. HOLMES: MILLIONS OF DOLLARS.
MR. DOWNEY: DID YOU ATTEND ANY MEETINGS YOURSELF WITH CHIAT/DAY?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: LET ME ASK YOU TO LOOK AT EXHIBIT 7755.
ELIZABETH A. HOLMES: I'M NOT SURE IF I HAVE --
JUDGE DAVILA: I DON'T THINK IT'S IN THE BINDER.
ELIZABETH A. HOLMES: 7755?
JUDGE DAVILA: 7755?
MR. DOWNEY: 7755.
MR. DOWNEY: EXCUSE ME A MOMENT, YOUR HONOR.
(DISCUSSION AMONGST DEFENSE COUNSEL OFF THE RECORD.)
BY MR. DOWNEY:
MR. DOWNEY: LET ME PASS 7755, AND WE CAN COME BACK TO THAT. BUT I THINK YOU JUST TESTIFIED THAT YOU MET WITH THEM?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: AND AS A RESULT OF THE MEETINGS THAT YOU HAD WITH THEM, WERE YOU ADVISED TO ENGAGE OTHER CONSULTANTS TO HELP WITH THE PUBLIC LAUNCH OF THERANOS?
MR. DOWNEY: WHAT OTHER TYPES OF CONSULTANTS DID THERANOS ENGAGE TO HELP IT WITH THE PUBLIC LAUNCH OF ITSELF AS A RETAIL COMPANY?
ELIZABETH A. HOLMES: THERE WERE SEVERAL DIFFERENT GROUPS. THE ONE WE SPENT THE MOST TIME WITH WAS A COMPANY CALLED GROW THAT WAS A PUBLIC RELATIONS FIRM.
MR. DOWNEY: AND WHAT KIND OF THINGS DOES GROW DO?
ELIZABETH A. HOLMES: THEY HELP COMPANIES BUILD THEIR BRAND. THEY ADVISE ON HOW TO DO MEDIA APPEARANCES, THEY COMMUNICATE WITH THE MEDIA ABOUT PIECES, AND WORK FOR THE COMPANY ON DOING MEDIA RELATIONS.
MR. DOWNEY: DID THEY DO THAT KIND OF WORK FOR THERANOS WHEN YOU WERE THERE?
ELIZABETH A. HOLMES: THEY DID.
MR. DOWNEY: WHEN THERANOS DECIDED TO ANNOUNCE THE PARTNERSHIP WITH WALGREENS, WHAT DID IT DECIDE WAS THE BEST WAY TO MAKE THE ANNOUNCEMENT THAT THERANOS WAS A COMPANY THAT WAS OUT THERE AND DOING BUSINESS?
ELIZABETH A. HOLMES: THE ADVICE WE GOT WAS TO DO A COMPANY ANNOUNCEMENT AND THEN SEPARATELY ANNOUNCE THE PARTNERSHIP WITH WALGREENS.
MR. DOWNEY: AND WHERE DID YOU DO THE COMPANY ANNOUNCEMENT?
ELIZABETH A. HOLMES: WE DID IT THROUGH A PIECE IN "THE WALL STREET JOURNAL" AND THROUGH THE LAUNCH OF A NEW WEBSITE.
MR. DOWNEY: AND WAS THAT THE PIECE THAT WE'VE SEEN DURING THE COURSE OF THE TRIAL THAT WAS PREPARED BY JOSEPH RAGO?
ELIZABETH A. HOLMES: IT IS.
MR. DOWNEY: AND WHY WAS MR. RAGO THE JOURNALIST WHO WROTE THAT ARGUE?
ELIZABETH A. HOLMES: HE WAS SOMEONE WHO OUR BOARD MEMBERS HAD KNOWN FOR SOME TIME, AND HE FOCUSSED ON HEALTH CARE ECONOMICS, AND WHAT THERANOS REALLY WANTED TO DO WAS TO CHANGE THE COST OF TESTING. SO HE WAS SOMEONE WHO WE COULD TALK TO ABOUT THAT AND ABOUT WHAT THAT WOULD MEAN FOR MEDICARE AND MEDICAID SPECIFICALLY.
MR. DOWNEY: AND WERE YOU INTERVIEWED BY MR. RAGO?
ELIZABETH A. HOLMES: I WAS.
MR. DOWNEY: AND DID GROW MARKETING WORK WITH MR. RAGO IN PREPARATION OF THAT PIECE?
ELIZABETH A. HOLMES: THEY DID.
MR. DOWNEY: DID MR. RAGO SPEAK WITH OTHERS AT THERANOS ABOUT THERANOS'S OPERATIONS AND THERANOS AS A BUSINESS?
MR. DOWNEY: DID HE SPEAK WITH BOARD MEMBERS?
MR. DOWNEY: DID HE SPEAK WITH OTHER EMPLOYEES OF THE COMPANY?
MR. DOWNEY: DID THERANOS HAVE AN OPPORTUNITY TO REVIEW HIS ARTICLE BEFORE IT WAS PUBLISHED?
MR. DOWNEY: WERE YOU THE ONLY PERSON AT THERANOS WHO REVIEWED THAT DRAFT OF MR. RAGO'S ARTICLE?
MR. DOWNEY: NOW, WHEN YOU BEGAN TO BE KNOWN AS A PUBLIC COMPANY, WAS IT SHORTLY AFTER -- WHEN I SAY "PUBLIC COMPANY," WHEN YOU BEGAN TO BE KNOWN IN THE PUBLIC AS A COMPANY, WAS IT SHORTLY AFTER THAT THAT THE WALGREENS PARTNERSHIP WAS ANNOUNCED?
MR. DOWNEY: WITHIN THE COUPLE OF DAYS?
ELIZABETH A. HOLMES: IT WAS.
MR. DOWNEY: AND HOW WAS THAT ANNOUNCEMENT MADE?
ELIZABETH A. HOLMES: THROUGH A JOINT PRESS RELEASE WITH WALGREENS.
MR. DOWNEY: AND WHEN YOU ANNOUNCED THAT PARTNERSHIP, WHAT WERE THE FOCUS OF WHAT WALGREENS AND THERANOS TRIED TO CONVEY ABOUT THAT PARTNERSHIP?
ELIZABETH A. HOLMES: THAT WE HAD A NEW KIND OF LABORATORY SERVICE; THAT WE WANTED TO FOCUS ON MAKING THE EXPERIENCE WONDERFUL FOR PEOPLE; THAT WE WANTED TO CHANGE THE COST OF TESTING, THE CONVENIENCE OF TESTING; THAT WE COULD DO SMALL SAMPLE TESTING; AND THAT WE WERE GOING TO INTRODUCE THIS PARTNERSHIP NATIONWIDE.
MR. DOWNEY: AND WHY DID YOU FOCUS ON SMALL SAMPLES AS PART OF THAT ANNOUNCEMENT?
ELIZABETH A. HOLMES: BECAUSE THIS WAS A UNIQUE INVENTION THAT THERANOS HAD, AND WE WERE GOING TO BE THE FIRST LAB TO MAKE IT POSSIBLE DOING FINGERSTICK INSTEAD OF VENOUS DRAWS WHEN PEOPLE CAME INTO RETAIL.
MR. DOWNEY: OKAY. SO THAT -- WHEN WOULD ALL OF THESE ANNOUNCEMENTS HAVE OCCURRED?
ELIZABETH A. HOLMES: THEY OCCURRED IN SEPTEMBER OF 2013.
MR. DOWNEY: OKAY. NOW, AFTER THE LAUNCH AT WALGREENS OF THERANOS SERVICE CENTERS, DID THERANOS CONTINUE TO WORK WITH THE FDA TO TRY TO MAKE SUBMISSIONS IN CONNECTION WITH ITS TECHNOLOGY?
ELIZABETH A. HOLMES: WE DID.
MR. DOWNEY: AND YOU TESTIFIED THAT THERANOS HAD NOT -- DECIDED NOT TO USE THE 4 SERIES DEVICE IN THAT CLINICAL LABORATORY; CORRECT?
MR. DOWNEY: BUT IT STILL INTENDED TO APPLY TO THE FDA FOR APPROVAL FOR THE 4 SERIES SYSTEM. CORRECT?
ELIZABETH A. HOLMES: YES, WE FOCUSSED THERE.
MR. DOWNEY: AND DID YOU START THE PROCESS IN THE FALL OF 2013 OF ENGAGING WITH THE FDA ABOUT THAT?
MR. DOWNEY: LET ME ASK YOU TO LOOK AT EXHIBIT 15030.
ELIZABETH A. HOLMES: OKAY. I DON'T KNOW THAT I HAVE THAT ONE, EITHER.
MR. DOWNEY: ALL RIGHT. LET ME HAND IT TO YOU IN A MOMENT.
ELIZABETH A. HOLMES: AWESOME.
MR. DOWNEY: YOUR HONOR, I'VE PASSED UP A NEW NOTEBOOK TO YOU AND EXHIBIT 15030 IS IN THERE. MAY I APPROACH THE WITNESS WITH HER COPY?
JUDGE DAVILA: YES. THIS IS VOLUME 3 I BELIEVE. IS THAT RIGHT?
MR. DOWNEY: VOLUME 3 WILL BE WITH YOU ONLY BRIEFLY BECAUSE IT CONSISTS OF SOME VERY LARGE DOCUMENTS, BUT I WILL --
(HANDING.)
ELIZABETH A. HOLMES: WHAT WAS THE EXHIBIT NUMBER ONE MORE TIME.
MR. DOWNEY: IT'S 15030.
ELIZABETH A. HOLMES: OKAY.
BY MR. DOWNEY:
MR. DOWNEY: IS 15030 AN EMAIL FORWARDING A SUBMISSION TO THE FDA IN CONNECTION WITH THERANOS'S TECHNOLOGY?
MR. DOWNEY: YOUR HONOR, I MOVE THE ADMISSION OF 15030.
MR. LEACH: ONE MOMENT, YOUR HONOR.
(PAUSE IN PROCEEDINGS.)
MR. LEACH: NO OBJECTION.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(DEFENDANT'S EXHIBIT 15030 WAS RECEIVED IN EVIDENCE.)
BY MR. DOWNEY:
MR. DOWNEY: LOOK AT THE EMAIL ON THE COVER OF THIS SUBMISSION. THIS IS AN EMAIL FROM YOU IN SEPTEMBER OF 2013 TO A SALLY HOJVAT. WHO IS SALLY HOJVAT?
ELIZABETH A. HOLMES: SHE WAS THE HEAD OF THE MICROBIOLOGY DIVISION AT THE FDA DEVICE CENTER.
MR. DOWNEY: AND IF YOU SEE WHAT APPEARS TO BE AN ATTACHMENT AT THE BOTTOM OF THAT LINE, IT READS, "THERANOS CONFIDENTIAL PRE-SUB REQUEST FOR PRE-SUBMISSION MEETING." DO YOU SEE THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND WHAT WAS THAT?
ELIZABETH A. HOLMES: THIS WAS OUR PRESUBMISSION FOR A SERIES OF TESTS FOR INFLUENZA MEASURING THE ANTIBODIES AND THE PCR TYPE TESTS.
MR. DOWNEY: AND CAN YOU, CAN YOU TURN TO PAGE 13 OF THE ATTACHMENT.
ELIZABETH A. HOLMES: OKAY.
MR. DOWNEY: AND IS THIS PART OF ACTUALLY THE TEXT OF WHAT WAS SUBMITTED TO THE FDA AS PART OF PRESUBMISSION FOR THE THERANOS TECHNOLOGY THAT IS THE SUBJECT OF THIS SUBMISSION?
ELIZABETH A. HOLMES: IT IS.
MR. DOWNEY: AND IF YOU LOOK AT THE FIRST PARAGRAPH HERE, IT DESCRIBES THAT THIS IS A 510(K) PRESUBMISSION FOR AN AUTOMATED SAMPLE PROCESSING AND ANALYSIS SYSTEM, WHICH IT CALLS THE THERANOS SYSTEM. AND IT GOES ON TO SAY THAT THAT IS COMPOSED OF TSPU'S, TLAS, AND TWO ASSAYS. DO YOU SEE THAT?
ELIZABETH A. HOLMES: YES. I THINK IT'S GROUPS OF ASSAYS.
MR. DOWNEY: OKAY. AND THOSE ARE THE THREE COMPONENTS OF THE TECHNOLOGY THAT WE HAVE BEEN TALKING ABOUT THROUGHOUT YOUR TECHNOLOGY?
MR. DOWNEY: THAT IS THE HARDWARE, THE ASSAYS, AND THE SOFTWARE?
ELIZABETH A. HOLMES: EXACTLY.
MR. DOWNEY: AND IS THIS WHAT THERANOS INTENDED TO SUBMIT TO THE FDA FOR REVIEW AND APPROVAL?
ELIZABETH A. HOLMES: THIS IS THE FIRST FILING IN THE PROCESS OF GETTING ULTIMATELY AN FDA APPROVAL.
MR. DOWNEY: OKAY. AND WE WON'T GO THROUGH THIS DOCUMENT, BUT DOES THIS DOCUMENT INCLUDE, AMONG OTHER THINGS, A GOOD DEAL OF DATA DOCUMENTING HOW THE THERANOS SYSTEM HAS PERFORMED IN ANALYZING BLOOD SAMPLES?
ELIZABETH A. HOLMES: WE INCLUDED THAT HERE, YES.
MR. DOWNEY: OKAY. LET ME ASK YOU JUST TO LOOK AT PAGE 17. AND IF YOU LOOK AT FIGURE 2, AND THEN THE DESCRIPTIONS UNDERNEATH. IS FIGURE 2 IN THIS SUBMISSION A DEPICTION OF THE INSIDE AND OUTSIDE OF THE 4.0 SERIES DEVICE?
MR. DOWNEY: NOW, DID YOU BELIEVE AT THE TIME OF THIS SUBMISSION THAT THIS DEVICE HAD THE CAPACITY TO PERFORM ALL FOUR OF THE ASSAY METHODS THAT WE'VE BEEN DISCUSSING?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: IS THAT WHY YOU MADE THIS SUBMISSION, PRESUBMISSION TO THE FDA?
ELIZABETH A. HOLMES: YES, AND I BELIEVED IT WAS READY TO GET FDA APPROVAL.
MR. DOWNEY: AND THE ASSAYS THAT ARE THE SUBJECT OF THIS PARTICULAR PRESUBMISSION, WHAT KIND OF ASSAYS ARE THEY AMONGST THE FOUR METHODS?
ELIZABETH A. HOLMES: THIS PRESUBMISSION HAD A NUMBER OF INFLUENZA TESTS, FOR EXAMPLE, FOR INFLUENZA A, B, LOOKING AT THE ANTIBODIES, AND ALSO THE PCR FOR THOSE TESTS COMBINED.
MR. DOWNEY: AND ARE THOSE IMMUNOASSAYS, CYTOMETRY, WHAT --
ELIZABETH A. HOLMES: IMMUNOASSAYS AND NUCLEIC ACID AMPLIFICATION ASSAYS, THERANOS HAD ITS OWN METHOD FOR PCR, WHICH IS WHY WE CALLED IT NUCLEIC ACID AMPLIFICATION.
MR. DOWNEY: OKAY. IF YOU LOOK AT THE SAME -- IN THE SAME NOTEBOOK AT EXHIBIT 15028. MY QUESTION WILL BE, IS THIS JUST ANOTHER PRESUBMISSION THAT YOU MADE IN CONNECTION WITH THE 4 SERIES SYSTEM TO THE FDA?
ELIZABETH A. HOLMES: IT IS.
MR. DOWNEY: YOUR HONOR, I MOVE THE ADMISSION OF 15028.
MR. LEACH: NO OBJECTION, YOUR HONOR.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(DEFENDANT'S EXHIBIT 15028 WAS RECEIVED IN EVIDENCE.)
BY MR. DOWNEY:
MR. DOWNEY: AND IF YOU LOOK AT EXHIBIT 7380. LET ME KNOW WHEN YOU'RE THERE.
ELIZABETH A. HOLMES: OKAY.
MR. DOWNEY: AND IS THIS A SUBMISSION IN CONNECTION WITH ADDITIONAL ASSAYS MADE TO THE FDA AT THE END OF 2013?
MR. DOWNEY: ULTIMATELY DID THERANOS FILE WITH THE FDA PRESUBMISSION IN CONNECTION WITH ITS 4.0 DEVICE AND ITS SOFTWARE SYSTEM IN CONNECTION WITH ASSAYS IN ALL FOUR CATEGORIES?
ELIZABETH A. HOLMES: WE DID, YES.
MR. DOWNEY: DID YOU ALSO MEET WITH THE FDA IN THE FALL OF 2013 TO DISCUSS THE BUSINESS MODEL UNDER WHICH THERANOS WAS OPERATING?
MR. DOWNEY: WHY DID YOU DO THAT?
ELIZABETH A. HOLMES: BECAUSE WE WANTED TO SHARE THAT MODEL WITH THEM AND BEGIN THE PROCESS OF WORKING WITH THEM ON TAKING LABORATORY DEVELOPED TESTS AND GETTING THEM FDA APPROVED.
MR. DOWNEY: LET ME ASK YOU TO LOOK IN THE SAME NOTEBOOK AT EXHIBIT 1095.
ELIZABETH A. HOLMES: OKAY.
MR. DOWNEY: IF YOU LOOK AT EXHIBIT 1095, IS THIS ANOTHER EMAIL THAT YOU SENT TO MS. HOJVAT?
MR. DOWNEY: AND AM I RIGHT THAT THIS EMAIL DOESN'T HAVE ANYTHING TO DO WITH ASKING THE FDA TO APPROVE ANY PARTICULAR ASSAYS OR ANY PARTICULAR TECHNOLOGY; IS THAT RIGHT?
ELIZABETH A. HOLMES: NO. I THINK IT WAS A MORE GENERAL COMMUNICATION.
MR. DOWNEY: WAS THIS TO REQUEST A MEETING IN PART ABOUT THERANOS'S BUSINESS MODEL?
MR. DOWNEY: YOUR HONOR, I MOVE THE ADMISSION OF 1095.
MR. LEACH: NO OCTOBER.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(GOVERNMENT'S EXHIBIT 1095 WAS RECEIVED IN EVIDENCE.)
BY MR. DOWNEY:
MR. DOWNEY: DO YOU SEE THE ADDRESS AT THE TOP, DO YOU SEE THAT THIS IS AN EMAIL THAT YOU SENT MS. HOJVAT ON SEPTEMBER THE 6TH OF 2013?
MR. DOWNEY: AND THAT WAS RIGHT AROUND THE TIME THAT THE PARTNERSHIP WITH WALGREENS WAS ANNOUNCED; CORRECT?
MR. DOWNEY: IF YOU LOOK AT THE EMAIL, AND YOU SAY IN THE FIRST PARAGRAPH THAT YOU'RE REQUESTING A MEETING WITH THE FDA?
ELIZABETH A. HOLMES: I AM.
MR. DOWNEY: AND WAS THAT IN CONNECTION WITH DISCUSSING THERANOS'S BUSINESS MODEL?
MR. DOWNEY: NOW, IN THE THIRD PARAGRAPH OF THIS EMAIL, YOU SAY TO MS. HOJVAT AND OTHERS -- WHICH IS SPELLED H-O-J-V-A-T -- THAT "WE HAVE FIGURED OUT HOW TO EFFECTIVELY VIDEOTAPE THE INSIDE OF OUR DEVICES EXECUTING NUCLEIC ACID AMPLIFICATION PROTOCOLS AND HAVE BEEN BUILDING A SECURE WEBSITE TO POST THAT ON FOR YOU TO ACCESS." DO YOU SEE THAT?
MR. DOWNEY: WHAT IS THAT REFERRING TO?
ELIZABETH A. HOLMES: THAT'S REFERRING TO THE FACT THAT WE WOULD VIDEO THE INSIDE OF THE DEVICES ACTUALLY RUNNING THE TESTS FROM END TO END AND WERE SHARING THAT WITH THE FDA.
MR. DOWNEY: AND DID YOU ULTIMATELY USE THAT VIDEO IN CONNECTION WITH THE MEETINGS WITH THE FDA?
MR. DOWNEY: NOW, I THINK YOU TESTIFIED EARLIER TODAY THAT IN CONNECTION WITH A NUMBER OF OTHER AUDIENCES, YOU HAD CONCERNS ABOUT TRADE SECRETS AND SO FORTH IN CONNECTION WITH THERANOS TECHNOLOGY; IS THAT RIGHT?
MR. DOWNEY: WHY WERE YOU WILLING TO SHOW THE FDA HOW THE INSIDE OF A THERANOS DEVICE WORKED WHEN YOU HAD THOSE KINDS OF CONCERNS?
ELIZABETH A. HOLMES: BECAUSE I UNDERSTOOD THAT THEY HAD MEANS TO PROTECT TRADE SECRETS FOR THE COMPANIES THAT WORKED WITH THE FDA.
MR. DOWNEY: DID YOU HAVE ANY CONCERN ABOUT SHARING THESE DETAILS ABOUT THERANOS TECHNOLOGY WITH THE FDA?
MR. DOWNEY: DID YOU THINK THAT THEY MIGHT THINK THAT THE TECHNOLOGY DIDN'T WORK?
MR. DOWNEY: LET ME ASK YOU NEXT TO LOOK AT EXHIBIT 1177.
ELIZABETH A. HOLMES: OKAY.
MR. DOWNEY: DO YOU HAVE THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND DO YOU SEE THAT THIS IS ANOTHER COMMUNICATION WITH THE FDA IN OCTOBER OF 2013?
MR. DOWNEY: AND YOU SENT THIS COMMUNICATION TO THE FDA?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: YOUR HONOR, I MOVE THE ADMISSION OF 1177.
MR. LEACH: NO OBJECTION, YOUR HONOR.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(GOVERNMENT'S EXHIBIT 1177 WAS RECEIVED IN EVIDENCE.)
BY MR. DOWNEY:
MR. DOWNEY: NOW, AS YOU WERE HAVING THESE DISCUSSIONS WITH THE FDA, DID YOU WANT THEM TO CLEARLY UNDERSTAND THAT THERANOS INTENDED TO OPERATE IN TWO PHASES AT WALGREENS?
MR. DOWNEY: DID YOU WANT THEM TO UNDERSTAND THAT IN PHASE I THERANOS WOULD RUN A CENTRAL LABORATORY WHERE SAMPLES WOULD BE ANALYZED?
MR. DOWNEY: DID YOU WANT THEM TO UNDERSTAND THAT IN PHASE II YOU HOPED TO PLACE THERANOS DEVICES IN WALGREENS STORES?
MR. DOWNEY: AND IN CONNECTION WITH THOSE DISCUSSIONS, DID THE FDA ASK YOU TO DETAIL HOW THERANOS WAS OPERATING DURING PHASE I?
ELIZABETH A. HOLMES: YES, WE DETAILED IT FOR THEM.
MR. DOWNEY: OKAY. LET ME ASK YOU TO LOOK AT, FIRST OF ALL, THE COVER EMAIL. THIS IS A COMMUNICATION THAT YOU SENT IN OCTOBER, RIGHT, ABOUT A MONTH OR SO AFTER THE ANNOUNCEMENT?
MR. DOWNEY: AND IF YOU GO TO THE NEXT PAGE, DO YOU SEE IT DENOTES THAT THIS IS AN OVERVIEW OF THE SAMPLE PROCESSING WORKFLOW PREPARED FOR FDA. AND WHAT WERE YOU CONVEYING THERE?
ELIZABETH A. HOLMES: I WAS CONVEYING HOW OUR PHASE I AND PHASE II OPERATIONS WERE PLANNED TO WORK.
MR. DOWNEY: OKAY. GO FORWARD FROM THERE. THERE'S A SLIDE LABELLED PHASE I CURRENT. CAN YOU TELL US WHAT PHASE I CURRENT DESCRIBES?
ELIZABETH A. HOLMES: YES. THIS IS A DESCRIPTION OF PHASE I, WHICH WAS HOW WE WERE CURRENTLY OPERATING, AND THE TEXT IS REALLY HARD TO READ, BUT IT'S ESSENTIALLY SHOWING HOW SAMPLES WERE COLLECTED BY VENIPUNCTURE, FINGERSTICK, OR URINE, PHYSICALLY SHIPPED TO THERANOS, AND THEN RUN IN THERANOS'S LAB EITHER ON CONVENTIONAL ANALYZERS OR ON THE THERANOS -- HERE THEY'RE CALLED TSPU, SAME THING AS MINILAB DEVICES.
MR. DOWNEY: OKAY. AND IF YOU GO TO THE NEXT SLIDE. AND CAN WE BLOW THAT UP A LITTLE BIT FOR EASE OF READING. THIS SLIDE IS TABLED PHASE II: POST-FDA CLEARANCE. DO YOU SEE THAT?
MR. DOWNEY: AND WHAT IS THIS SLIDE CONVEYING?
ELIZABETH A. HOLMES: THIS CONVEYED PHASE II OF OUR PLAN, WHICH AFTER WE GOT FDA CLEARANCE, ON THE LEFT IT DESCRIBES PUTTING THE MINILAB PHYSICALLY INTO THE RETAIL STORE AND THEN TRANSMITTING THE DATA TO OUR CENTRAL LABORATORY WHERE IT COULD BE REVIEWED BY LABORATORIANS, OR STILL PHYSICALLY SHIPPING SAMPLES TO THE THERANOS LAB FOR USE ON TRADITIONAL MACHINES.
MR. DOWNEY: OKAY. AND IF YOU GO BACK TO THE PRIOR SLIDE, THE SLIDE THAT IS LABELLED PHASE I?
MR. DOWNEY: DID YOU HAVE ANY HESITATION ABOUT TELLING THE FDA THAT THERE WERE CONVENTIONAL ANALYZERS BEING USED IN PHASE I OF THERANOS'S OPERATIONS?
MR. DOWNEY: AND THAT IS IN THE BOX THAT IS CONTAINED IN THE UPPER LEFT-HAND CORNER ON THE BOX ON THE RIGHT?
ELIZABETH A. HOLMES: YES. IT SAYS SAMPLES ARE PROCESSED AND RESULTS ARE GENERATED ON CONVENTIONAL ANALYZERS.
MR. DOWNEY: AND DID YOU ALSO CONVEY TO THE FDA IN MORE EXPLICIT DETAIL WHAT TESTS WERE BEING RUN ON WHICH DEVICES?
MR. DOWNEY: LET ME ASK YOU TO LOOK AT EXHIBIT 15029.
ELIZABETH A. HOLMES: OKAY.
MR. DOWNEY: IS 15029 ANOTHER COMMUNICATION FROM YOU TO FDA OFFICIALS IN THE FALL OF 2013?
ELIZABETH A. HOLMES: IT IS.
MR. DOWNEY: YOUR HONOR, I MOVE THE ADMISSION OF 15029.
MR. LEACH: NO OBJECTION, YOUR HONOR.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(DEFENDANT'S EXHIBIT 15029 WAS RECEIVED IN EVIDENCE.)
BY MR. DOWNEY:
MR. DOWNEY: AND THIS EMAIL AGAIN IS FROM YOU TO MS. HOJVAT; CORRECT?
MR. DOWNEY: AND ALSO TO A JOHN PEYTON HOBSON?
MR. DOWNEY: AND WHO WAS MR. HOBSON?
ELIZABETH A. HOLMES: HE WAS ANOTHER OFFICIAL WITHIN THE FDA.
MR. DOWNEY: AND THIS IS SENT OCTOBER 23RD, 2013?
MR. DOWNEY: AND THIS IS ABOUT FIVE WEEKS AFTER THE ANNOUNCEMENT OF THE WALGREENS PARTNERSHIP?
MR. DOWNEY: AND LET'S LOOK AT THE FIRST PARAGRAPH OF THE EMAIL THAT YOU SENT. YOU SAY, "IN FOLLOW UP TO OUR CONVERSATIONS ON WHICH ASSAYS RUN ON THERANOS TSPU'S" -- ARE THERANOS TSPU'S, IS THAT A REFERENCE TO THE 4.0 DEVICE?
ELIZABETH A. HOLMES: IT'S -- IN THIS SPECIFIC CONTEXT, WE'RE TALKING ABOUT THE 3 SERIES. WE GENERALLY USED THESE WORDS INTERCHANGEABLY, WHICH IS A BIT CONFUSING.
MR. DOWNEY: SO WAS ANY HARDWARE DEVICE AT THERANOS KNOWN AS A TSPU?
MR. DOWNEY: AND IT GOES ON TO SAY, "WHICH ASSAYS ARE RUN ON THERANOS TSPU'S IN THERANOS'S CLIA LAB DURING PHASE I OF THERANOS'S OPERATIONS." AND IT SAYS, "PLEASE FIND TWO DOCUMENTS ATTACHED TO THIS EMAIL." DO YOU SEE THAT?
MR. DOWNEY: AND WHAT CONVERSATIONS DID YOU HAVE WITH MS. HOJVAT AND MR. HOBSON THAT LED YOU TO SUBMIT THE LIST OF ASSAYS THAT IS ATTACHED TO THIS EMAIL?
ELIZABETH A. HOLMES: I HAD REACHED OUT TO DR. HOJVAT TO ASK HER WHAT THE BEST WAY TO START WORKING WITH THE FDA WAS. AS WE LAUNCHED OUR SERVICES, WE REQUESTED THE INFORMATIONAL MEETING IN THAT CONTEXT TO SHARE OUR PLANS, AND SHE SUGGESTED THAT I SEND AS MUCH INFORMATION AS I COULD ABOUT HOW WE WERE OPERATING.
MR. DOWNEY: LET'S LOOK AT THE ATTACHMENT TO THE -- WELL, LET'S CONTINUE IN THE EMAIL JUST TO UNDERSTAND THE ATTACHMENT. DO YOU SEE IN THE SECOND PARAGRAPH THAT, "THE FIRST DOCUMENT LISTS ALL TESTS THAT HAVE BEEN RUN ON SAMPLES COLLECTED FROM PATIENTS IN THERANOS WELLNESS CENTERS SINCE THE WELLNESS CENTERS BEGAN OPERATION IN SEPTEMBER." DO YOU SEE THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND THEN IT GOES ON TO SAY, "THE SECOND DOCUMENT LISTS ALL TESTS CURRENTLY PLANNED TO POTENTIALLY BE RUN ON SAMPLES COLLECTED IN THERANOS WELLNESS CENTERS." DO YOU SEE THAT?
MR. DOWNEY: AND THEN IF YOU GO TO THE ATTACHMENT ON TOP, DO YOU SEE THAT THERE'S A DIAGRAM OR A CHART THAT IS LABELLED "TESTS RUN IN THERANOS'S CLIA LABORATORY FROM SAMPLES COLLECTED IN THERANOS WELLNESS CENTERS"? DO YOU SEE THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND THERE ARE THREE COLUMNS?
MR. DOWNEY: AND IN THE LEFT-HAND COLUMN THERE'S A LIST OF ASSAYS OR TESTS?
MR. DOWNEY: AND IN THE MIDDLE THERE'S THE PHRASE CHEMISTRY. DO YOU SEE THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND WHAT DOES THAT REFER TO?
ELIZABETH A. HOLMES: THAT REFERS TO THE ASSAY THAT THERANOS WAS RUNNING.
MR. DOWNEY: OKAY. AND IN THE RIGHT-HAND COLUMN THERE'S A REFERENCE TO DEVICE. WHAT DOES THAT REFER TO?
ELIZABETH A. HOLMES: THE HARDWARE THAT WAS USED TO RUN THAT ASSAY.
MR. DOWNEY: OKAY. AND DO YOU SEE IN SOME OF THE RIGHT-HAND COLUMNS THERE ARE REFERENCES TO TSPU'S? DO YOU SEE THAT?
MR. DOWNEY: AND THOSE ARE THERANOS DEVICES ON WHICH THOSE TESTS WERE BEING RUN?
MR. DOWNEY: AND AT THIS POINT THOSE WERE THREE ASSAYS?
MR. DOWNEY: AND THEN THERE ARE SOME TESTS THAT ARE DESIGNATED AS FDA CLEARED/APPROVED. DO YOU SEE THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: WHAT DOES THAT REFER TO?
ELIZABETH A. HOLMES: THAT REFERS TO TRADITIONAL MACHINES RUNNING TRADITIONAL TESTS.
MR. DOWNEY: OKAY. AND SO IF YOU LOOK IN THE MIDDLE COLUMN AT CHEMISTRY ON THE BOTTOM HALF OF THE LIST STARTING WITH HBA1C?
MR. DOWNEY: AND IN THE MIDDLE COLUMN IT ALSO SAYS FDA CLEARED/APPROVED UNDER CHEMISTRY. WHAT DOES THAT MEAN, "UNDER CHEMISTRY"?
ELIZABETH A. HOLMES: THAT MEANS THAT IT'S AN FDA APPROVED TEST.
MR. DOWNEY: OKAY. SO FOR THESE TESTS, HBA1C, URIC ACID, DHEA-S, TESTOSTERONE, TOTAL AND FREE TESTOSTERONE, ARE THOSE BOTH TESTS THAT WERE BEING RUN ON VENOUS SAMPLES ON COMMERCIAL MACHINES?
MR. DOWNEY: AND THERE ARE THREE TESTS ABOVE THAT THAT ARE TSH, PSA, AND VITAMIN D. DO YOU SEE THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND THOSE ARE RUN ON A THERANOS CHEMISTRY. DO YOU SEE THAT?
MR. DOWNEY: AND DOES THAT MEAN A CHEMISTRY THAT THERANOS DEVELOPED?
ELIZABETH A. HOLMES: IT DOES.
MR. DOWNEY: AND THE DEVICE REFERS TO A THERANOS DEVICE FOR THOSE; CORRECT?
MR. DOWNEY: AND THEN IF YOU GO ABOVE THAT TO THE LIPID AND CMP, THERE'S A REFERENCE TO THERANOS PROTOCOL IN THE CHEMISTRY. DOES THAT MEAN IT WAS A THERANOS ASSAY?
ELIZABETH A. HOLMES: YES. IT MEANS THAT IT'S AN FDA CLEARED ASSAY THAT IS RUNNING WHAT WE CALLED A THERANOS PROTOCOL. SO IT'S RUNNING THE THERANOS FORMULA FOR THE SMALL SAMPLE TESTS.
MR. DOWNEY: AND WHAT DEVICE WERE THOSE SMALL SAMPLES ANALYZED ON?
ELIZABETH A. HOLMES: ON FDA APPROVED MACHINES.
MR. DOWNEY: AND THEN THERE'S A TEST, CBC, AND THE CHEMISTRY IS THERANOS?
MR. DOWNEY: AND THE DEVICE IS FDA CLEARED/APPROVED. DO YOU SEE THAT?
MR. DOWNEY: AND THE CHEMISTRY MEANS THAT THERANOS DEVELOPED THAT ASSAY; CORRECT?
ELIZABETH A. HOLMES: YES, AND ALL OF THE CHEMICALS OR THE REAGENTS THAT WENT INTO IT.
MR. DOWNEY: OKAY. AND THE DEVICE IS A --
ELIZABETH A. HOLMES: THE DEVICE IS AN FDA APPROVED DEVICE.
MR. DOWNEY: OKAY. NOW, WHEN YOU WERE SENDING THIS LIST, TELL US IN PRACTICAL TERMS, WHAT WERE YOU DISCLOSING TO THE FDA ABOUT THE OPERATIONS OF THERANOS'S CLINICAL LABORATORY AS OF THIS DATE?
ELIZABETH A. HOLMES: WE WERE SHARING WITH THE FDA ALL OF THE TESTS THAT HAD BEEN RUN AS OF THAT DATE IN OUR CLIA LABORATORY, WHAT TESTS THEY WERE, WHO MADE THE CHEMISTRY, AND WHAT MACHINE THEY WERE RUN ON.
MR. DOWNEY: OKAY. AND SO YOU WERE FORTHRIGHT WITH THEM THAT SOME OF THE TESTS WERE TRADITIONAL TESTS, VENOUS TESTS BEING RUN ON COMMERCIAL MACHINES?
MR. DOWNEY: AND YOU ALSO DISCLOSED TO THEM, DID YOU, THAT SOME OF THE THERANOS CHEMISTRIES WERE BEING USED ON TRADITIONAL COMMERCIAL MACHINES?
ELIZABETH A. HOLMES: WE DID.
MR. DOWNEY: AND THEN FOR SOME OF THE TESTS, THEY WERE THERANOS DEVELOPED TESTS THAT WERE RUNNING ON THERANOS DEVICES?
ELIZABETH A. HOLMES: EXACTLY.
MR. DOWNEY: AS FAR AS YOU KNOW, IS ALL OF THE INFORMATION IN THIS DOCUMENT ACCURATE?
MR. DOWNEY: AND DID YOU DISCLOSE THE MEANING OF THE VARIOUS TERMINOLOGIES RELATED TO THERANOS PROTOCOL THAT YOU USED IN THE FOOTNOTE?
MR. DOWNEY: WERE THE ASSAYS THAT WERE BEING RUN ON COMMERCIAL DEVICES THAT WERE -- WHERE THE CHEMISTRY AS DENOTED AS THERANOS PROTOCOL, DO YOU SEE THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: ARE THOSE TESTS THAT WERE USED IN CONNECTION WITH EITHER THE ADVIA OR ONE OF THE OTHER COMMERCIAL MACHINES THAT YOU'VE DESCRIBED?
ELIZABETH A. HOLMES: YES. THE CMP AND THE LIPID TEST THAT ARE LABELLED THERANOS PROTOCOL WERE RUNNING ON THE ADVIA.
MR. DOWNEY: OKAY. AND IF WE GO TO THE NEXT PAGE OF EXHIBIT 15029. YOU SEE THAT THIS CONTAINS A FURTHER CHART?
MR. DOWNEY: AND EXPLAIN THIS CHART TO US.
ELIZABETH A. HOLMES: THIS CHART IS SHOWING ALL OF THE TESTS THAT WE PLANNED TO RUN IN OUR CLIA LABORATORY, WHAT THE CHEMISTRY OR THE ASSAY WOULD BE, WHAT DEVICE THE ASSAY WOULD RUN ON, WHAT THE METHOD WAS ACROSS THE FOUR METHODS THAT WE WERE WORKING WITH, AND WHAT TYPE OF SAMPLE WOULD BE USED, WHOLE BLOOD OR URINE, OR OTHERS.
MR. DOWNEY: OKAY. SO, AGAIN, IN SOME INSTANCES HERE, WERE YOU DISCLOSING THE THERANOS PLAN TO USE TRADITIONAL COMMERCIAL DEVICES?
MR. DOWNEY: AND SOMETIMES USED THEM WITH A VENOUS TEST?
MR. DOWNEY: AND SOMETIMES USED THEM RUNNING SMALL SAMPLE TESTS THAT THERANOS HAD DEVELOPED?
MR. DOWNEY: AND THAT THOSE COMMERCIAL DEVICES HAD BEEN MODIFIED TO RUN THOSE TESTS?
MR. DOWNEY: AND YOU WERE ALSO DISCLOSING THAT IN SOME INSTANCES THERANOS WOULD RUN TECHNOLOGY WITH THERANOS ASSAYS THAT WOULD RUN ON A THERANOS DEVICE?
ELIZABETH A. HOLMES: EXACTLY.
MR. DOWNEY: AND AS FAR AS YOU KNOW, ALL OF THE INFORMATION IN THIS SECOND ATTACHMENT IS ACCURATE AS WELL; CORRECT?
MR. DOWNEY: ANY HESITATION ABOUT DISCLOSING THIS TO THE FDA?
MR. DOWNEY: OKAY. DID YOU HAVE SUBSEQUENT CONVERSATIONS IN WHICH YOU DISCUSSED THE INFORMATION IN THESE ATTACHMENTS WITH REPRESENTATIVES OF THE FDA?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: AND AGAIN, WHY WERE YOU COMFORTABLE DOING THAT, BUT NOT WITH WALGREENS, DISCUSSING IT WITH WALGREENS OR OTHERS WHO WE'VE HEARD FROM IN THIS CASE?
ELIZABETH A. HOLMES: AGAIN, I UNDERSTOOD THAT THE FDA IS A GOVERNMENT AGENCY, HAD THE MECHANISMS IN PLACE TO BE ABLE TO PROTECT TRADE SECRETS FOR THE MANY COMPANIES THAT WORK WITH THE FDA.
MR. DOWNEY: OKAY. LET'S TURN TO SOME OF THE OTHER AUDIENCES THAT THERANOS -- WELL, LET'S ACTUALLY TALK FOR A MOMENT ABOUT -- LET'S TALK ABOUT DISCUSSIONS WITHIN THERANOS ABOUT THE USE OF THE VARIOUS FORMS OF DEVICES. AS OF OCTOBER OF 2013, WHO WAS THE NON-EXECUTIVE CHAIR OF THERANOS'S BOARD?
ELIZABETH A. HOLMES: GEORGE SHULTZ.
MR. DOWNEY: AND YOU WERE THE -- ACTUALLY THE CHAIRMAN, THE FORMAL CHAIRMAN OF THE BOARD?
ELIZABETH A. HOLMES: OH, YES, SORRY. HE WAS THE EXECUTIVE CHAIR. I WAS THE FORMAL CHAIRMAN.
MR. DOWNEY: OKAY. HOW DID YOU COME TO KNOW SECRETARY SHULTZ?
ELIZABETH A. HOLMES: THROUGH A PROFESSOR AT STANFORD.
MR. DOWNEY: AND DID YOU ASK SECRETARY SHULTZ AT SOME POINT TO JOIN THE BOARD?
MR. DOWNEY: AND WHY DID YOU ASK HIM TO BECOME A BOARD MEMBER AT THERANOS?
ELIZABETH A. HOLMES: I FIRST LEARNED ABOUT HIS BOOK ON HEALTH CARE ECONOMICS AND WAS REALLY INTERESTED IN HIS INSIGHTS THERE, AND I KNEW THAT HE HAD BEEN A BOARD MEMBER OF GILEAD, WHICH IS A BIOTECH COMPANY I REALLY ADMIRED, AND OTHER GREAT COMPANIES. HE HAD BEEN A LEADER IN PUBLIC SERVICE, AND I THOUGHT I COULD LEARN FROM HIM.
MR. DOWNEY: NOW, WE SPOKE EARLIER ABOUT MR. DON LUCAS. DO YOU RECALL THAT?
MR. DOWNEY: AND HE HAD BEEN THE CHAIRMAN OF THE BOARD FOR A NUMBER OF YEARS?
MR. DOWNEY: AND HE STEPPED BACK FOR HEALTH REASONS FROM THERANOS?
ELIZABETH A. HOLMES: HE DID.
MR. DOWNEY: AND AT THE TIME THAT SECRETARY SHULTZ BECAME THE NON-EXECUTIVE CHAIRMAN, DID HE RECRUIT ADDITIONAL MEMBERS OF -- NEW MEMBERS TO THERANOS'S BOARD?
MR. DOWNEY: WHAT OTHER MEMBERS DID HE RECRUIT TO THERANOS'S BOARD AFTER HE BECAME THE CHAIRMAN?
ELIZABETH A. HOLMES: HE RECRUITED MANY PEOPLE. HE RECRUITED DICK KOVACEVICH FROM WELLS FARGO, GENERAL MATTIS, ADMIRAL ROUGHHEAD, SENATOR SAM NUNN, DR. KISSINGER, DR. BILL PERRY, AND OTHERS.
MR. DOWNEY: WOULD YOU MEET WITH THOSE INDIVIDUALS BEFORE THEY JOINED THE BOARD?
MR. DOWNEY: AND DID THEY JOIN THE BOARD OVER THE COURSE OF 2013?
MR. DOWNEY: AS BOARD MEMBERS, WOULD THERE BE COMPENSATION FOR THEM?
MR. DOWNEY: HOW WERE THEY COMPENSATED?
ELIZABETH A. HOLMES: THEY EACH RECEIVED A SALARY OF $150,000 A YEAR, AS WELL AS HALF A MILLION SHARES IN THE COMPANY. AND SOME OF THEM ALSO RECEIVED CONSULTING SALARIES OF, IN DR. KISSINGER'S CASE, HALF A MILLION DOLLARS A YEAR.
MR. DOWNEY: HOW OFTEN DID THERANOS'S BOARD MEMBERS MEET IN THE PERIOD OF 2013 TO 2015?
ELIZABETH A. HOLMES: FOUR TIMES A YEAR.
MR. DOWNEY: I'D LIKE TO FOCUS YOUR ATTENTION ON SOME SPECIFIC BOARD MEETINGS THAT HAPPENED DURING THOSE YEARS. LET ME ASK YOU TO LOOK AT 4005.
ELIZABETH A. HOLMES: OKAY.
MR. DOWNEY: LET ME ASK YOU, DID THE THERANOS BOARD TYPICALLY MEET IN OCTOBER OF THE YEAR?
MR. DOWNEY: AND DID THE THERANOS BOARD MEET IN OCTOBER 2013?
ELIZABETH A. HOLMES: WE DID.
MR. DOWNEY: AND WAS THAT JUST WEEKS AFTER THE LAUNCH OF THERANOS SERVICE CENTERS HAD BEEN ANNOUNCED?
MR. DOWNEY: AND DO YOU RECALL DISCUSSING AT THAT BOARD MEETING SOME OF THE ISSUES IN CONNECTION WITH THE LAUNCH OF THERANOS SERVICE CENTERS?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: IS EXHIBIT 4005 A COPY OF THE MINUTES OF THE MEETING IN OCTOBER 2013?
MR. DOWNEY: YOUR HONOR, I MOVE THE ADMISSION OF 4005.
MR. LEACH: NO OBJECTION, YOUR HONOR.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(DEFENDANT'S EXHIBIT 4005 WAS RECEIVED IN EVIDENCE.)
BY MR. DOWNEY:
MR. DOWNEY: IF YOU LOOK AT THE FIRST PAGE, DO YOU SEE THAT GIVES THE DATE OF THAT BOARD MEETING AS OCTOBER 8TH, 2013?
MR. DOWNEY: AND DO YOU RECALL THAT GENERAL MATTIS TESTIFIED IN THIS TRIAL THAT THIS WAS THE FIRST MEETING HE ATTENDED AFTER AN ALL NIGHT CROSS COUNTRY TRIP?
MR. DOWNEY: IF YOU WOULD LOOK AT THE PAGES 2 -- PAGE 2, AND LOOK UNDER STRATEGIC PLAN. IF YOU COULD BLOW THAT UP. DO YOU SEE IN THE FIRST SENTENCE THERE IT SAYS THAT YOU DISCUSSED THE ANNOUNCEMENT OF THE COMPANY'S PARTNERSHIP WITH WALGREENS?
MR. DOWNEY: AND DO YOU RECALL DOING THAT AT THAT MEETING?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND THEN IT SAYS IN THE SECOND SENTENCE, "THE BOARD THEN DISCUSSED THE COMPANY'S APPROACH TO ITS RETAIL LAUNCH AND THE ASSOCIATED STEPS IT WAS TAKING TO BUILD A STRONG FOUNDATION ON WHICH TO GROW FOR THE LONG-TERM." DO YOU RECALL THAT?
MR. DOWNEY: AND WHAT DO YOU RECALL HAPPENING WITH RESPECT TO THAT DISCUSSION?
ELIZABETH A. HOLMES: I RECALL TALKING TO THE BOARD MEMBERS AND ASKING FOR THEIR ADVICE ON HOW WE SET UP THIS BUSINESS TO BE SUCCESSFUL FOR THE LONG-TERM, WHAT THINGS I SHOULD BE FOCUSSED ON INTERNALLY IN ORDER TO DO SO.
MR. DOWNEY: DO YOU SEE IN THE NEXT SENTENCE IT SAYS, "MS. HOLMES THEN REVIEWED WITH THE BOARD THE TRADE SECRET ELEMENTS OF THE COMPANY'S WORK. CERTAIN MATTERS DISCUSSED WITH THE BOARD WHICH THE COMPANY NEEDED TO PROTECT FROM PUBLIC DISCLOSURE FOR COMPETITIVE REASONS WERE HIGHLIGHTED." DO YOU SEE THAT?
MR. DOWNEY: WHAT DO YOU RECALL ABOUT THE DISCUSSION THAT IS MENTIONED IN THOSE TWO SENTENCES?
ELIZABETH A. HOLMES: THAT WE WERE SHARING WITH THE BOARD THAT WE HAD THESE TRADE SECRET INVENTIONS, THAT THEY WERE INVENTIONS THAT WE THOUGHT WERE A BIG DEAL AND THAT WE NEEDED TO PROTECT BECAUSE IF OTHER BIG COMPANIES IN THE INDUSTRY FOUND OUT ABOUT THEM, THEY COULD PUT US OUT OF BUSINESS AND --
MR. DOWNEY: WHAT INVENTIONS WERE YOU -- SPECIFICALLY WERE YOU DISCUSSING WITH THE BOARD AT THIS OCTOBER 2013 BOARD MEETING?
ELIZABETH A. HOLMES: THE INVENTION THAT WE COULD TAKE A SMALL SAMPLE AND BE ABLE TO RUN THAT SAMPLE ON A TRADITIONAL MACHINE.
MR. DOWNEY: AND I THINK I INTERRUPTED YOUR ANSWER, BUT DO YOU RECALL MORE ABOUT THAT DISCUSSION OF TRADE SECRETS AT THE BOARD MEETING IN OCTOBER OF 2013?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: TELL US WHAT YOU RECALL OF THAT DISCUSSION.
ELIZABETH A. HOLMES: I RECALL DISCUSSING WITH THE BOARD WHETHER THIS INVENTION SHOULD, IN FACT, BE TREATED AS A TRADE SECRET OR WHETHER WE SHOULD FILE IT THROUGH PUBLIC PATENTS, THE DECISION TO PRESERVE IT AS A TRADE SECRET, AND TALKING ABOUT THE ACTIONS THAT WOULD BE REQUIRED TO ACTUALLY MAINTAIN TRADE SECRET PROTECTION.
MR. DOWNEY: AND WAS THERE DISCUSSION AMONGST BOARD MEMBERS REGARDING THAT ISSUE?
ELIZABETH A. HOLMES: THERE WAS.
MR. DOWNEY: AND WHAT DO YOU RECALL ABOUT THAT?
ELIZABETH A. HOLMES: I RECALL THAT DAVID BOIES, WHO WAS OUR COUNSEL, SPOKE WITH THE BOARD ABOUT THE TRADE SECRET RECOMMENDATION, AND THAT ANOTHER ONE OF OUR BOARD MEMBERS, SENATOR NUNN, HAD BEEN ON THE COCA-COLA BOARD AND HE TALKED WITH US ABOUT THE COCA-COLA FORMULA AND HOW IT WAS PROTECTED AS A TRADE SECRET AND SOME OF THE MEASURES THAT WENT INTO PROTECTING TRADE SECRETS SO THAT PEOPLE DIDN'T FIND OUT ABOUT THE INVENTION.
MR. DOWNEY: NOW, IN CONNECTION WITH BOARD MEETINGS, WAS IT TYPICAL FOR THE MANAGEMENT THAT THERANOS, YOURSELF OR OTHERS, TO CIRCULATE TO BOARD MEMBERS PACKETS OF INFORMATION SO THAT THEY COULD REVIEW THAT IN ADVANCE?
ELIZABETH A. HOLMES: WE DID SOMETIMES.
MR. DOWNEY: WAS THAT DONE TO YOUR KNOWLEDGE IN ADVANCE OF THE OCTOBER 2013 MEETING?
ELIZABETH A. HOLMES: I KNOW WE HAD A PACKET OF INFORMATION THAT WE SHARED WITH THEM. I'M NOT SURE WHEN WE SHARED IT.
MR. DOWNEY: OKAY. LET ME ASK YOU TO LOOK AT A DOCUMENT THAT IS ALREADY IN EVIDENCE, WHICH IS MARKED EXHIBIT 10516.
ELIZABETH A. HOLMES: OKAY.
MR. DOWNEY: DO YOU SEE THAT EXHIBIT 10516 IS TITLED AN INTELLECTUAL PROPERTY PORTFOLIO STATUS REPORT?
MR. DOWNEY: IS THIS A DOCUMENT THAT WAS PROVIDED TO THE BOARD OF DIRECTORS IN CONNECTION WITH THE OCTOBER 2013 MEETING?
ELIZABETH A. HOLMES: IT IS.
MR. DOWNEY: AND IF YOU GO TO THE ATTACHMENTS TO THIS, I'D LIKE TO GO FORWARD IN THESE TO PAGE 53. AND CAN YOU EXPLAIN TO US WHAT THIS LIST IS ON PAGE 53 OF EXHIBIT 10516?
ELIZABETH A. HOLMES: THIS IS A LIST OF ALL OF OUR PATENTS AND PATENT APPLICATIONS AT THAT POINT IN TIME.
MR. DOWNEY: OKAY. AND IF YOU LOOK AT THE -- I GUESS ABOUT MAYBE ALMOST HALFWAY DOWN, DO YOU SEE THE -- THAT IN THE FAR RIGHT-HAND COLUMN THERE ARE A NUMBER OF, THERE ARE A NUMBER OF DATES. DO YOU SEE THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND THEY'RE ALL UNDER THE COLUMN FILING DATE?
MR. DOWNEY: AND DO YOU SEE THAT THERE APPEAR TO BE A NUMBER OF FILING DATES THAT ARE FROM SEPTEMBER OF 2013. DO YOU SEE THAT?
MR. DOWNEY: AND IF YOU GO TO THE NEXT PAGE. I DON'T KNOW IF IT CONTINUES OR NOT ACTUALLY. YEAH, IF YOU HIGHLIGHT THE NEXT SEVERAL ON THE NEXT PAGE. GO UP TO THERE. AND IN THAT RIGHT-HAND COLUMN THERE APPEAR TO BE SEVERAL DOZEN PATENTS WHICH WERE FILED IN SEPTEMBER 2013. DO YOU SEE THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND IF YOU LOOK IN THE SECOND COLUMN, THERE'S A COLUMN THAT IS DENOTED TITLE. DO YOU SEE THAT?
MR. DOWNEY: AND UNDER THAT ARE THE -- ARE THOSE THE NAMES THAT HAD BEEN USED IN CONNECTION WITH THE PATENT APPLICATIONS?
MR. DOWNEY: CAN YOU EXPLAIN WHAT ALL OF THESE PATENTS ARE THAT WERE FILED IN -- PATENT APPLICATIONS THAT WERE FILED IN SEPTEMBER 2013 BY THERANOS?
ELIZABETH A. HOLMES: YES. THEY'RE PATENTS THAT ARE ASSOCIATED WITH THE TECHNOLOGIES FOR THE LAUNCH OF OUR SERVICES AT WALGREENS. I CAN GO THROUGH A COUPLE OF THEM IF YOU WANTED.
MR. DOWNEY: WELL, JUST TELL US GENERALLY, WITHOUT GOING THROUGH THEM INDIVIDUALLY, WHAT KINDS OF TECHNOLOGIES ARE THEY PATENTS FOR?
ELIZABETH A. HOLMES: THEY ARE PATENTS FOR THE COLLECTION DEVICES FOR DOING FINGERSTICK OR VENOUS DRAWS IN THE STORE; THEY'RE PATENTS FOR THE SYSTEMS THAT WE WOULD RUN IN THE LABORATORY AND SOME OF THE SOFTWARE WE WERE USING FOR LABORATORY OVERSIGHT; AND THEY'RE PATENTS FOR THE TESTING METHODS IN THE LABORATORY.
MR. DOWNEY: OKAY. AND DO ANY OF THESE PATENT APPLICATIONS RELATE TO THE INVENTIONS THAT YOU HAD DESCRIBED EARLIER TODAY WITH RESPECT TO COMMERCIAL MACHINES AND SMALL SAMPLES?
MR. DOWNEY: CAN YOU IDENTIFY THE PATENT APPLICATIONS THAT WERE ASSOCIATED WITH THAT?
ELIZABETH A. HOLMES: THE FIRST ONE HERE IS DEVICES, METHODS, AND SYSTEMS FOR REDUCING SAMPLE VOLUMES. THAT HAD TO DO WITH THE INVENTION THAT WOULD ALLOW US TO TAKE A REALLY SMALL AMOUNT OF FLUID AND RUN THAT SAMPLE ON A TRADITIONAL MACHINE.
MR. DOWNEY: WHY WERE YOU SHARING THIS SUMMARY WITH THE BOARD OF DIRECTORS IN OCTOBER OF 2013?
ELIZABETH A. HOLMES: WE SHARED UPDATES ON OUR PATENTS AT EVERY MEETING, AND HERE WE WERE TALKING ABOUT THESE INVENTIONS THAT WERE ASSOCIATED WITH THE LAUNCH AT WALGREENS, THE TECHNOLOGIES THAT WE WERE GOING TO BE USING, AND IN THE CASE OF THAT INVENTION, THE DECISION TO FILE IT AS A NONPUBLIC APPLICATION AS WE SOUGHT TO MAINTAIN TRADE SECRET PROTECTION.
MR. DOWNEY: HOW LONG WOULD BOARD MEETINGS TYPICALLY BE AT THERANOS?
ELIZABETH A. HOLMES: A FULL DAY, AND SOMETIMES DINNERS THE NIGHT BEFORE AND AFTER.
MR. DOWNEY: IF YOU WOULD IN THAT SAME NOTEBOOK, WOULD YOU GO TO THE EXHIBIT THAT HAS BEEN MARKED AS EXHIBIT 1172.
ELIZABETH A. HOLMES: YES. OKAY.
MR. DOWNEY: IS THIS A SLIDE DECK THAT WAS PROVIDED TO THE BOARD OF DIRECTORS FOR PURPOSES OF THAT OCTOBER 2013 MEETING?
ELIZABETH A. HOLMES: IT IS.
MR. DOWNEY: I JUST WANT TO FOCUS YOU, WITHOUT GOING INTO DETAIL, I'M GOING TO BE DRAWING YOUR ATTENTION TO CERTAIN PAGES IN THE EXHIBIT THAT BEGIN AROUND PAGE 146. IF YOU COULD REVIEW THAT. YOUR HONOR, I'LL MOVE THE ADMISSION OF EXHIBIT 1172.
MR. LEACH: NO OBJECTION, YOUR HONOR.
JUDGE DAVILA: IT'S ADMITTED.
MR. DOWNEY: I SHOULD SAY FOR PURPOSES OF CLARITY AND THE RECORD, WE PREVIOUSLY ADMITTED 1172A. I'M ADMITTING THE BALANCE OF 1172, AND FOR OUR PURPOSES, 1172 CAN REPLACE 1172A, WHICH WAS A PROVISIONAL EXHIBIT.
JUDGE DAVILA: ANY OBJECTION TO THAT?
MR. LEACH: NO, YOUR HONOR.
JUDGE DAVILA: ALL RIGHT. THANK YOU. WE'LL THEN REPLACE -- THIS WILL BE ADMITTED WITHOUT OBJECTION. IT WILL REPLACE 1172A.
(GOVERNMENT'S EXHIBIT 1172 WAS RECEIVED IN EVIDENCE.)
MR. DOWNEY: IF WE CAN PUBLISH THIS.
MR. DOWNEY: IS THIS THE SLIDE DECK THAT WAS USED TO HELP DIRECT DISCUSSION AT THE OCTOBER 2013 BOARD MEETING?
ELIZABETH A. HOLMES: IT IS.
MR. DOWNEY: I'D LIKE YOU TO GO FORWARD IN THAT EXHIBIT TO PAGE 146. DO YOU HAVE THAT? WE CAN JUST PUT THAT UP ON THE SCREEN.
MR. DOWNEY: AND DO YOU SEE THAT THAT IS A SLIDE LABELED CLINICAL DATA?
ELIZABETH A. HOLMES: IT IS.
MR. DOWNEY: AND IF YOU JUST PAGE THROUGH THAT GOING FORWARD, DO YOU SEE THAT THIS IS SEVERAL PAGES OF CHARTS OF PROVIDING WHAT SEEMS TO BE SOME FORM OF DATA?
MR. DOWNEY: AND WHAT IS THAT?
ELIZABETH A. HOLMES: THESE ARE WHAT WE CALLED CLINICAL CORRELATIONS, WHICH IS ACTUAL HUMAN SAMPLES RUN ON THE THERANOS TEST AND THE TRADITIONAL TEST, AND COMPARING THE RESULTS.
MR. DOWNEY: WHY DID YOU PROVIDE THIS CLINICAL DATA TO THE BOARD OF DIRECTORS AT THERANOS?
ELIZABETH A. HOLMES: BECAUSE WE WANTED THEM TO SEE THE ACTUAL DATA ON THE PERFORMANCE OF THE TESTS WE'D DEVELOPED.
MR. DOWNEY: AFTER THIS OCTOBER 2013 MEETING, DID YOU TRY TO RECRUIT BOARD MEMBERS WHO HAD EXPERTISE IN THE MEDICAL AND BIOTECH AREAS?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: AND WERE THOSE MEMBERS PRESENT AT THIS OCTOBER 2013 MEETING?
MR. DOWNEY: WHO WERE THE MEMBERS THAT YOU RECRUITED SUBSEQUENT TO THIS MEETING?
ELIZABETH A. HOLMES: DR. BILL FOEGE AND DR. BILL FRIST.
MR. DOWNEY: WHO WAS DR. FOEGE?
ELIZABETH A. HOLMES: DR. FOEGE HAD RAN THE CDC AND HAD BEEN AWARDED THE MEDAL OF FREEDOM FOR HIS WORK IN HELPING TO ERADICATE SMALLPOX.
MR. DOWNEY: AND WHO IS DR. FRIST?
ELIZABETH A. HOLMES: DR. FRIST IS A SURGEON. HE HAD BEEN A SENATOR AND HE WAS AT THAT POINT A VENTURE CAPITAL INVESTOR IN A NUMBER OF HEALTH CARE TECHNOLOGY COMPANIES.
MR. DOWNEY: AS OF THE 2013 MEETING -- STRIKE THAT. AT THE 2013 MEETING, DID THE DIRECTORS DISCUSS OR ASK QUESTIONS ABOUT THE CLINICAL DATA THAT HAD BEEN PROVIDED?
ELIZABETH A. HOLMES: WE PRESENTED IT. THERE WERE NOT QUESTIONS ASKED ABOUT IT.
MR. DOWNEY: WHAT WERE THE DISCUSSIONS -- WHAT WAS THE USUAL SUBJECT OF DISCUSSIONS AT THERANOS BOARD MEETINGS IN 2013?
ELIZABETH A. HOLMES: THE DIRECTORS MOSTLY FOCUSSED ON STRATEGIC QUESTIONS LIKE SHOULD WE FOCUS ON WORK IN HOSPITALS OR IN RETAIL, CERTAIN INTERNATIONAL PLANS THEY THOUGHT WE SHOULD CONSIDER, AND OTHER PROJECTS THEY THOUGHT MIGHT BE IMPORTANT FOR THE COMPANY.
MR. DOWNEY: OKAY. DID -- AT SOME POINT AFTER THE OCTOBER 2013 BOARD MEETING -- WELL, LET ME, BEFORE I GET TO THAT, LET ME ASK YOU, AFTER THE LAUNCH OF THE THERANOS SERVICE CENTERS, WAS THE PLAN AT THAT TIME THAT THERE WOULD BE A NATIONAL ROLLOUT OF THERANOS SERVICE CENTERS IN WALGREENS STORES?
MR. DOWNEY: AND DID YOU HAVE AN AGREEMENT WITH THERANOS IN PLACE AT THE TIME THAT THE PARTNERSHIP WAS PUBLICLY ANNOUNCED AS TO HOW THAT WOULD GO?
ELIZABETH A. HOLMES: WITH WALGREENS, YES.
MR. DOWNEY: AND DID YOU BEGIN TO HAVE DISCUSSIONS WITH THEM AROUND THE TIME OF THAT LAUNCH AS TO HOW TO MODIFY THE AGREEMENTS IN PLACE SO THAT YOU COULD AGREE IN MORE SPECIFIC TERMS AS TO HOW A ROLLOUT WOULD GO?
ELIZABETH A. HOLMES: YES, AND SPECIFICALLY TO REALIZE OUR GOAL OF NATIONAL EXPANSION FASTER.
MR. DOWNEY: OKAY. LET ME SHOW YOU A DOCUMENT WHICH IS ALREADY IN EVIDENCE, WHICH IS EXHIBIT 7312.
ELIZABETH A. HOLMES: OKAY.
MR. DOWNEY: AND DO YOU SEE THAT THIS IS AN EMAIL THAT YOU SENT TO MR. MIQUELON IN AUGUST OF 2013?
MR. DOWNEY: AND WAS MR. MIQUELON AT THIS TIME THE CHIEF FINANCIAL OFFICER AT WALGREENS?
ELIZABETH A. HOLMES: HE WAS.
MR. DOWNEY: AND DO YOU SEE THAT IN THIS EMAIL YOU DISCUSS WITH HIM WHAT YOU BELIEVE TO BE THE MOST EFFECTIVE ROLLOUT STRATEGY FOR THERANOS STORES IN -- THERANOS SERVICE CENTERS IN WALGREENS STORES?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: LET'S GO TO PAGE 10 OF THIS EXHIBIT. DO YOU SEE PAGE 10?
ELIZABETH A. HOLMES: I DO, YES.
MR. DOWNEY: AND TELL US WHAT PAGE 10 IS DEPICTING ON THIS ROLLOUT PLAN PROPOSAL THAT YOU SENT TO WALGREENS IN AUGUST OF 2013?
ELIZABETH A. HOLMES: THIS IS DEPICTING THE PLAN THAT WE HAD FOR THE FOURTH QUARTER OF 2014 AS TO HOW MANY STATES WE'D BE IN TO BEGIN MAKING UP THIS NATIONAL FOOTPRINT.
MR. DOWNEY: SO ARE THE STATES THAT ARE IN GREEN ON THIS CHART THE STATES WHERE YOU THOUGHT THERANOS SERVICE CENTERS WOULD BE IN WALGREENS STORES?
ELIZABETH A. HOLMES: BY THAT TIME, YES.
MR. DOWNEY: OKAY. AND HOW MANY WALGREENS LOCATIONS DID YOU PROPOSE THAT THERANOS SERVICE CENTERS WOULD BE IN BY THE FOURTH QUARTER OF 2014?
ELIZABETH A. HOLMES: JUST OVER 6,000.
MR. DOWNEY: AND YOU MADE THIS PROPOSAL IN AUGUST OF 2013?
MR. DOWNEY: NOW, DID YOU, AFTER THE TIME THAT YOU MADE THIS PROPOSAL, BEGIN TO NEGOTIATE WITH WALGREENS ABOUT THE NUMBER OF WALGREENS STORES IN WHICH THERANOS SERVICE CENTERS WOULD OPERATE IN 2014 AND 2015?
MR. DOWNEY: AND DID YOU SUBSEQUENTLY REACH AN AGREEMENT WITH WALGREENS AS TO HOW THE ROLLOUT WOULD WORK OF THERANOS SERVICE CENTERS?
MR. DOWNEY: AND DURING WHAT PERIOD WERE YOU NEGOTIATING THAT AGREEMENT?
ELIZABETH A. HOLMES: THE FALL TO DECEMBER OF 2013.
MR. DOWNEY: OKAY. AND DID YOU ULTIMATELY REACH AN AGREEMENT AT THE END OF 2013?
ELIZABETH A. HOLMES: WE DID.
MR. DOWNEY: AND DID YOU COME TO AN AGREEMENT AS TO THE NUMBER OF STORES IN WHICH THERANOS WOULD OPERATE IN 2014 AND 2015?
MR. DOWNEY: AND WHAT NUMBER DID THERANOS AND WALGREENS AGREE TO AT THE END OF 2013?
ELIZABETH A. HOLMES: I REMEMBER IT AS AT LEAST 3,000 STORES OVER THE NEXT TWO YEARS.
MR. DOWNEY: AND FOR WALGREENS COMMITMENT TO LAUNCH THERANOS SERVICE CENTERS, WHAT DID WALGREENS GET IN RETURN?
ELIZABETH A. HOLMES: WALGREENS GOT A PROMISE OF EXCLUSIVITY, WHICH MEANT THAT WE WOULD NOT WORK WITH CERTAIN COMPETITORS THAT THEY HAD IDENTIFIED WITHOUT THEIR PERMISSION.
MR. DOWNEY: OKAY. AND IN THE FIRST HALF OF 2014, WHAT DID YOU UNDERSTAND ABOUT HOW THAT ROLLOUT BETWEEN WALGREENS AND THERANOS WAS GOING?
ELIZABETH A. HOLMES: I UNDERSTOOD IT WAS GOING WELL.
MR. DOWNEY: DID YOU UNDERSTAND THAT THERE WERE ISSUES WITH IT?
ELIZABETH A. HOLMES: I UNDERSTOOD THAT ISSUES WERE COMING UP, YES.
MR. DOWNEY: AND DID YOU HEAR AT SOME POINTS ABOUT THE NUMBER OF VENOUS DRAWS THAT WERE BEING REQUIRED IN SERVICE CENTERS, THERANOS SERVICE CENTERS AT WALGREENS STORES.
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: AND DID YOU EVER UNDERSTAND THAT THAT WAS SOMETHING THAT WOULD PREVENT OR SLOW DOWN THE ROLLOUT OF THERANOS SERVICE CENTERS?
MR. DOWNEY: NOW, YOU'RE AWARE THAT BY THE END OF 2014, ONLY 40 THERANOS SERVICE CENTERS HAD OPENED IN WALGREENS STORES?
MR. DOWNEY: AND DID YOU BELIEVE THAT THAT WOULD SLOW THE PACE OF THE NATIONAL ROLLOUT IN THE COMING YEARS?
ELIZABETH A. HOLMES: I DID NOT.
MR. DOWNEY: WHAT HAPPENED INSIDE OF WALGREENS IN THE MIDDLE OF 2014 THAT CHANGED TO SOME EXTENT THE RELATIONSHIP DYNAMICS WITH WALGREENS?
ELIZABETH A. HOLMES: WALGREENS ACQUIRED A COMPANY CALLED BOOTS, AND THE BOOTS LEADERSHIP ENDED UP REPLACING THE WALGREENS LEADERSHIP.
MR. DOWNEY: AND WHAT HAPPENED TO MR. MIQUELON IN AUGUST OF 2014 WITH REGARD TO A ROLE AT WALGREENS?
ELIZABETH A. HOLMES: HE LEFT WALGREENS.
MR. DOWNEY: AND WHO BECAME THE PRINCIPAL SENIOR EXECUTIVE RESPONSIBLE FOR MANAGING THE RELATIONSHIP BETWEEN THERANOS AND WALGREENS AT WALGREENS?
ELIZABETH A. HOLMES: ALEX GOURLAY.
MR. DOWNEY: AND DID YOU ENGAGE WITH MR. GOURLAY DURING 2014 ABOUT THE ROLLOUT OF THERANOS SERVICE CENTERS?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: TELL US ABOUT THOSE DISCUSSIONS.
ELIZABETH A. HOLMES: I WORKED WITH ALEX GOURLAY ON HOW TO ACHIEVE OUR GOALS OF A NATIONAL ROLLOUT, AND ULTIMATELY ON THE IDEA THAT WE COULD RENT SPACE WITHIN THE WALGREENS STORES TO BE ABLE TO ACHIEVE THAT GOAL FASTER.
MR. DOWNEY: NOW, YOU'RE AWARE THAT MR. JHAVERI TESTIFIED THAT THERE WERE ONLY -- THAT ONLY 40 SERVICE CENTERS OR SO HAD ROLLED OUT BY AUGUST. DO YOU RECALL THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND DO YOU RECALL THAT HE TESTIFIED THAT WALGREENS WAS NO LONGER COMMITTED TO ROLLING OUT IN 3,000 STORES AT SOME POINT BETWEEN JULY OF 2014 AND OCTOBER OF 2014?
ELIZABETH A. HOLMES: I HEARD THAT.
MR. DOWNEY: WAS THE TESTIMONY THAT MR. JHAVERI GAVE IN THIS CASE ON THE ISSUE OF THE NUMBER OF STORES THAT WOULD HAVE THERANOS SERVICE CENTERS, WAS THAT CONSISTENT WITH THE CONVERSATIONS THAT YOU WERE HAVING WITH MR. GOURLAY IN THE SECOND HALF OF 2014?
MR. DOWNEY: WAS THERE EVER A TIME THAT YOU UNDERSTOOD BY THE END OF 2014 THAT WALGREENS WOULD NOT AGREE TO OPEN ADDITIONAL THERANOS SERVICE CENTERS?
ELIZABETH A. HOLMES: THERE WAS NOT.
MR. DOWNEY: DID MR. JHAVERI EVER TELL YOU THAT WALGREENS PLANNED TO SLOW ITS ROLLOUT OF STORES?
ELIZABETH A. HOLMES: HE DID NOT.
MR. DOWNEY: DID MR. BALWANI EVER TELL YOU THAT HE BELIEVED THAT THERANOS WOULD NOT CONTINUE TO ROLL OUT SERVICE CENTERS IN WALGREENS STORES?
MR. DOWNEY: TO THE EXTENT THAT WALGREENS HAD MADE A DECISION TO THAT EFFECT, WOULD YOU HAVE EXPECTED MR. GOURLAY OR OTHERS AT WALGREENS TO COMMUNICATE THAT TO YOU?
ELIZABETH A. HOLMES: DEFINITELY, YES.
MR. DOWNEY: NOW, OVER THE COURSE OF THE TIME THAT THERANOS SERVICE CENTERS WERE OPERATING IN WALGREENS STORES, DID YOU RECEIVE REPORTS OF THERANOS'S PERFORMANCE IN THOSE WALGREENS SERVICE CENTERS?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: AND DID YOU RECEIVE UPDATES ABOUT CUSTOMER REACTION?
MR. DOWNEY: HOW OFTEN DID YOU RECEIVE THAT KIND OF FEEDBACK?
ELIZABETH A. HOLMES: ON A REGULAR BASIS.
MR. DOWNEY: AND HOW DID YOU RECEIVE THAT FEEDBACK?
ELIZABETH A. HOLMES: THROUGH EMAILS FROM OUR TEAMS, AND ALSO MEETINGS WITH OUR TEAMS.
MR. DOWNEY: DID YOU REVIEW THAT FEEDBACK WHEN YOU RECEIVED IT?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: AND DID THAT IMPACT YOUR UNDERSTANDING OF THE WALGREENS RELATIONSHIP?
MR. DOWNEY: AND DID IT IMPACT YOUR UNDERSTANDING OF WHETHER VENOUS DRAWS WERE IMPORTANT IN THE CONSIDERATION -- IN WALGREENS'S CONSIDERATION OF WHETHER IT WOULD CONTINUE TO ROLL OUT THERANOS SERVICE CENTERS?
MR. DOWNEY: AND WHAT DID IT MAKE YOU CONCLUDE WITH REGARD TO THAT?
ELIZABETH A. HOLMES: WE LAUNCHED THINKING THAT FINGERSTICK WAS GOING TO BE A REALLY BIG DEAL FOR CONSUMERS, AND WHAT WE LEARNED FROM THE DATA THAT WAS COMING BACK IN WAS THAT THE PRICE WAS FAR MORE SIGNIFICANT TO THE PEOPLE WHO WERE COMING TO VISIT US.
MR. DOWNEY: DO YOU RECALL LEARNING THROUGH ANY OF THE FEEDBACK THAT WAS SENT TO YOU THAT THERE WERE INACCURATE TEST RESULTS AS PART OF THIS REGULAR FEEDBACK ABOUT WHAT WAS HAPPENING AT THERANOS SERVICE CENTERS?
ELIZABETH A. HOLMES: NO, NOT IN THOSE UPDATES.
MR. DOWNEY: AND THOSE WERE THE WEEKLY UPDATES OR BIWEEKLY UPDATES?
ELIZABETH A. HOLMES: I THINK THEY WERE AT LEAST WEEKLY.
MR. DOWNEY: OKAY. WHEN DID THERANOS AND WALGREENS ULTIMATELY TERMINATE THEIR PARTNERSHIP?
ELIZABETH A. HOLMES: IN 2016.
MR. DOWNEY: AND MR. MIQUELON HAD BEEN THE INDIVIDUAL WHO YOU HAD ORIGINALLY HAD THE RELATIONSHIP, ALONG WITH DR. ROSAN; IS THAT RIGHT?
ELIZABETH A. HOLMES: HE WAS.
MR. DOWNEY: AND DID YOU CONTINUE TO STAY IN TOUCH WITH MR. MIQUELON AFTER 2016?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: AND DID YOU CONTINUE TO STAY IN TOUCH WITH DR. ROSAN AFTER 2016?
MR. DOWNEY: I WANT TO TURN NOW FROM TALKING ABOUT THE WALGREENS RELATIONSHIP TO TALKING ABOUT THERANOS'S RELATIONSHIP WITH CERTAIN OF ITS INVESTORS.
ELIZABETH A. HOLMES: OKAY.
MR. DOWNEY: DO YOU RECALL WE SPOKE EARLIER IN YOUR TESTIMONY ABOUT THE OFFERING THAT THERANOS HAD DONE OF STOCK TO INVESTORS IN 2006?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND IS IT ACCURATE THAT THERANOS HAD DONE ANOTHER OFFERING OF STOCK IN 2010?
MR. DOWNEY: WHO INVESTED IN THE 2010 ROUND OF THERANOS STOCK?
ELIZABETH A. HOLMES: STRATEGIC ENTITIES, FOR LACK OF A BETTER WORD, INCLUDING BLUE CROSS BLUE SHIELD, AND AN INVESTOR THAT WAS AFFILIATED WITH INTERMOUNTAIN, A BIG HOSPITAL SYSTEM.
MR. DOWNEY: AND WHEN WAS THE NEXT TIME AFTER 2010 THAT THERANOS DID AN OFFERING OF STOCK?
ELIZABETH A. HOLMES: 2010? I THINK THE NEXT ONE WAS IN 2013.
MR. DOWNEY: AND WAS THAT AFTER THE LAUNCH OF THERANOS SERVICE CENTERS IN WALGREENS STORES?
ELIZABETH A. HOLMES: IT WAS, YES.
MR. DOWNEY: AND AS OF DECEMBER 2013, DID THERANOS NEED CAPITAL BY THE END OF 2013?
ELIZABETH A. HOLMES: WE HAD RECEIVED $75 MILLION IN CAPITAL FROM WALGREENS, SO WE DID NOT NEED CAPITAL AFTER THAT.
MR. DOWNEY: AND DID YOU NEVERTHELESS MAKE AN OFFERING AT THAT TIME TOWARDS THE END OF 2013?
ELIZABETH A. HOLMES: WE DID.
MR. DOWNEY: AND WHY DID YOU -- WHO DID YOU INCLUDE IN THAT OFFERING OF STOCK?
ELIZABETH A. HOLMES: WE INCLUDED ALL OF OUR EXISTING SHAREHOLDERS IN CASE THEY WANTED TO BE ABLE TO BUY MORE SHARES.
MR. DOWNEY: THESE WERE PEOPLE WHO HAD ALREADY INVESTED AT SOME PRIOR POINT IN THERANOS?
ELIZABETH A. HOLMES: EXACTLY.
MR. DOWNEY: LET ME ASK YOU TO LOOK AT EXHIBIT 5143. THIS IS ALREADY IN EVIDENCE, YOUR HONOR. HOLD ON. THIS IS ALREADY IN EVIDENCE?
JUDGE DAVILA: YES, I THINK IT IS.
ELIZABETH A. HOLMES: OKAY.
BY MR. DOWNEY:
MR. DOWNEY: DO YOU SEE THE EMAILS THAT ARE AT THE TOP OF PAGE 1 OF EXHIBIT 5143?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND DO YOU SEE THAT THIS IS AN EMAIL THAT IS DENOTED AS BEING FROM THERANOS TO CHRISTOPHER LUCAS? DO YOU SEE THAT?
MR. DOWNEY: AND TO ANA AT BD VENTURES?
MR. DOWNEY: AND IS ANA A REFERENCE TO ANNA QUINTANA?
MR. DOWNEY: AND SHE WAS A COWORKER WITH MR. LUCAS AT BD VENTURES?
ELIZABETH A. HOLMES: SHE WAS.
MR. DOWNEY: AND THAT WAS HIS VENTURE CAPITAL FIRM, BLACK DIAMOND?
MR. DOWNEY: AND WAS THIS A COMMUNICATION THAT WAS SENT NOT ONLY TO MR. CHRIS LUCAS IN DECEMBER OF 2013, BUT ALSO TO -- WERE THERE OTHER COMMUNICATIONS TO OTHER SHAREHOLDERS ABOUT AN OFFERING IN DECEMBER OF 2013?
ELIZABETH A. HOLMES: THERE WERE.
MR. DOWNEY: OKAY. LET'S LOOK DOWN AT PAGE 2. AND IF YOU BLOW UP THAT UNDER THERANOS CONFIDENTIAL. IF YOU LOOK AT THE FIRST PAGE, DO YOU SEE THERE'S A -- AT THE FIRST PARAGRAPH RATHER, UNDER "DEAR THERANOS STOCKHOLDER," YOU'RE WRITING AT THIS TIME TO THE EXISTING SHAREHOLDERS; RIGHT?
MR. DOWNEY: AND THIS IS BECAUSE YOU'RE GOING TO MAKE AVAILABLE TO THEM THE OPPORTUNITY TO PURCHASE SHARES?
MR. DOWNEY: ADDITIONAL SHARES IN THERANOS?
MR. DOWNEY: OKAY. AND IN THAT PARAGRAPH, IN THE LAST SENTENCE YOU SAY, "AS WE PREPARE FOR 2014 AND CLOSING YEAR END, WE ARE ACTIVELY INVESTING IN INFRASTRUCTURE TO BUILD THIS NEW INDUSTRY THAT WE HAVE CREATED." DO YOU SEE THAT?
MR. DOWNEY: AND YOU GO ON IN THE NEXT SENTENCE -- OR PARAGRAPH, AND THEN YOU SAY, "AS PART OF THIS INITIATIVE, WE ARE COMPLETING A SERIES OF FINANCIAL TRANSACTIONS WITH STRATEGIC PARTNERS," IN ORDER TO ACCELERATE OUR GROWTH. DO YOU SEE THAT?
MR. DOWNEY: AND WHAT WAS THERANOS REFERRING TO WHEN IT WAS SAYING "WE ARE COMPLETING A SERIES OF FINANCIAL TRANSACTIONS WITH STRATEGIC PARTNERS"?
ELIZABETH A. HOLMES: THE CONTRACT WAS WITH WALGREENS, AND WE WERE ALSO AT THAT TIME WORKING TO COMPLETE AN INVESTMENT FROM A HOSPITAL SYSTEM CALLED DIGNITY.
MR. DOWNEY: AND DID DIGNITY ULTIMATELY INVEST IN THERANOS?
ELIZABETH A. HOLMES: THEY DID.
MR. DOWNEY: OKAY. NOW, DID YOU SEE DURING MR. LUCAS'S TESTIMONY THAT HE HAD ASKED -- HE TESTIFIED THAT HE HAD ASKED FOR THE IDENTITY OF THOSE STRATEGIC PARTNERS IN CONVERSATIONS WITH YOU IN LATE DECEMBER OF 2013?
MR. DOWNEY: AND THAT HE HAD RAISED THAT QUESTION BECAUSE SOME OF THE INVESTORS IN HIS FUND HAD RAISED THAT QUESTION WITH HIM?
MR. DOWNEY: AND DO YOU RECALL THAT HE TESTIFIED THAT YOU WOULD NOT PROVIDE THE IDENTITY OF THE STRATEGIC PARTNERS TO HIM?
MR. DOWNEY: AND WHY WAS IT THAT YOU DID NOT IDENTIFY THE STRATEGIC PARTNERS WHEN MR. LUCAS ASKED YOU FOR THAT INFORMATION?
ELIZABETH A. HOLMES: BECAUSE WE HAD CONFIDENTIALITY AGREEMENTS WITH THOSE COMPANIES WHO HAD ASKED US NOT TO DISCLOSE THAT WE WERE DOING THE TRANSACTIONS.
MR. DOWNEY: AND IN THE NEXT SENTENCE YOU SAY, "WE ARE ALSO COMPLETING EQUITY TRANSACTIONS WITH STRATEGIC ENTITIES WHO HAD PREVIOUSLY INVESTED IN THERANOS AND HAD THE OPTION TO INVEST ADDITIONAL EQUITY IN THE COMPANY THROUGH THE END OF FISCAL 2013." DO YOU SEE THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND WHAT DOES THAT REFER TO?
ELIZABETH A. HOLMES: I THINK THAT'S REFERRING TO THE WALGREENS CONTRACT AMENDMENT WHERE THEY HAD THE OPPORTUNITY TO INVEST ADDITIONAL EQUITY WITHIN THAT TIME PERIOD.
MR. DOWNEY: OKAY. AND THEN YOU GO ON IN THE NEXT PARAGRAPH AND SAY -- YOU PROVIDE SOME DETAILS WITH REGARD TO A STOCK SPLIT; IS THAT RIGHT?
MR. DOWNEY: AND THEN YOU SAY THAT THE OFFERING HERE WILL BE AT $15 A SHARE. DO YOU SEE THAT?
MR. DOWNEY: NOW, DO YOU RECALL TESTIMONY FROM MR. EISENMAN IN THIS CASE; CORRECT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND YOU RECALL TESTIMONY FROM MR. TOLBERT IN THIS CASE; CORRECT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND YOU RECALL TESTIMONY FROM MR. CHRIS LUCAS; CORRECT?
MR. DOWNEY: AND ALL THREE OF THEM RECEIVED THIS COMMUNICATION BECAUSE, IN THE CASE OF MR. EISENMAN AND MR. LUCAS, THEY HAD PREVIOUSLY BEEN INVESTORS; RIGHT?
MR. DOWNEY: AND IN MR. TOLBERT'S CASE, HE HAD INVESTED IN MR. LUCAS'S FUND IN THERANOS; IS THAT RIGHT?
ELIZABETH A. HOLMES: HE DID.
MR. DOWNEY: NOW, THE SECTION THAT WE READ ABOVE SAID IN THE LAST SENTENCE THAT "WE ARE ACTIVELY INVESTING IN INFRASTRUCTURE TO BUILD THIS NEW INDUSTRY." DO YOU SEE THAT?
MR. DOWNEY: WHAT DID THAT MEAN?
ELIZABETH A. HOLMES: THAT MEANT THAT WE WERE INVESTING IN EVERY PART OF OUR BUSINESS AS WE TRIED TO GROW THE COMPANY.
MR. DOWNEY: AND YOU PRICED THE STOCK AT THIS $15 PER SHARE PRICE. DO YOU SEE THAT?
MR. DOWNEY: AND WHY WAS THAT THE PRICE?
ELIZABETH A. HOLMES: BECAUSE THAT WAS THE PRICE THAT WAS SET IN OUR AGREEMENTS WITH WALGREENS AND SAFEWAY.
MR. DOWNEY: AND WERE THERE SUBSEQUENTLY OFFERINGS OF STOCK IN THERANOS SHORTLY THEREAFTER IN 2014 AT WHICH THE STOCK PRICE WAS $17 A SHARE?
MR. DOWNEY: WITH RESPECT TO THE $15 SHARE PRICE, WAS THAT A SHARE PRICE THAT YOU DECIDED ON OR, OR HOW WAS THAT APPROVED WITHIN THERANOS?
ELIZABETH A. HOLMES: IT WAS SET BY THE RETAILERS AND REVIEWED AND APPROVED BY OUR BOARD.
MR. DOWNEY: LET ME ASK YOU TO LOOK AT EXHIBIT 10682.
JUDGE DAVILA: MR. DOWNEY, SHOULD WE TAKE OUR BREAK BEFORE WE DO THAT?
MR. DOWNEY: SURE.
JUDGE DAVILA: LET'S DO THAT.
MR. DOWNEY: YES. THANK YOU, YOUR HONOR. YES.
JUDGE DAVILA: LET'S DO THAT. LET'S TAKE 30 MINUTES, LADIES AND GENTLEMEN, 30 MINUTES.
(RECESS FROM 1:35 P.M. UNTIL 2:12 P.M.)
JUDGE DAVILA: THANK YOU. WE'RE BACK ON THE RECORD. MS. HOLMES IS ON THE STAND. OUR JURY IS PRESENT. MR. DOWNEY, YOU'D LIKE TO CONTINUE?
MR. DOWNEY: YES, YOUR HONOR. BEFORE I BEGIN WITH MS. HOLMES, YOUR HONOR, JUST WHILE WE HAVE THE PRESENCE OF OUR JURY, JUST A FEW HOUSEKEEPING ISSUES WITH EXHIBITS.
JUDGE DAVILA: SURE.
MR. DOWNEY: I WANTED TO MOVE THE ADMISSION OF 7751, WHICH IS SIMPLY A COLOR VERSION OF 1177, WHICH THE COURT ADMITTED, BUT IT MIGHT BE EASIER FOR PEOPLE TO READ IN THE FUTURE.
JUDGE DAVILA: OKAY. ANY OBJECTION TO THAT?
MR. LEACH: NO, YOUR HONOR. THAT'S FINE.
JUDGE DAVILA: IT'S ADMITTED.
(DEFENDANT'S EXHIBIT 7751 WAS RECEIVED IN EVIDENCE.)
MR. DOWNEY: AND I WANTED TO MOVE THE ADMISSION OF 7380, WHICH WE HAD DISCUSSED A FOUNDATION FOR.
JUDGE DAVILA: ALL RIGHT. THAT WAS DISCUSSED. YOU DID NOT MOVE IT INTO EVIDENCE. I NOTED THAT. ANY OBJECTION? THIS IS ADDITIONAL ASSAYS AND PRESUBMISSION.
MR. LEACH: NO OBJECTION, YOUR HONOR.
JUDGE DAVILA: THAT'S ADMITTED AT THIS TIME.
MR. DOWNEY: THANK YOU, YOUR HONOR.
(DEFENDANT'S EXHIBIT 7380 WAS RECEIVED IN EVIDENCE.)
BY MR. DOWNEY:
MR. DOWNEY: MS. HOLMES, BEFORE THE BREAK WE WERE TALKING ABOUT THE PRICE THAT WAS OFFERED IN CONNECTION WITH THE DECEMBER 2013 OFFERING OF THERANOS SHARES, AND I WANTED TO ASK YOU ABOUT THE ROLE OF THERANOS'S BOARD OF DIRECTORS IN CONNECTION WITH THAT OFFERING IF I MIGHT.
MR. DOWNEY: LET ME ASK YOU TO LOOK AT EXHIBIT 10682.
ELIZABETH A. HOLMES: OKAY.
MR. DOWNEY: NOW, IN CONNECTION WITH ANY OFFERING OF THERANOS SHARES, IS THAT SOMETHING THAT THE BOARD WOULD HAVE TO CONSIDER AND APPROVE?
MR. DOWNEY: AND WAS THAT DONE IN CONNECTION WITH THE DECEMBER 31ST, 2013 CLOSING TRANSACTION?
MR. DOWNEY: DO YOU RECALL THAT THERE WAS TESTIMONY IN THE CASE WHERE A NUMBER OF INVESTORS TESTIFIED THAT THERE WAS A SHORT PERIOD WITHIN WHICH THEY HAD TO CONSIDER THAT OFFERING. DO YOU RECALL THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND WE LOOKED BEFORE THE BREAK AT THE COMMUNICATION THAT THERANOS SENT TO SHAREHOLDERS ANNOUNCING THE OFFERING. AND DO YOU RECALL THAT WAS ON DECEMBER 15TH?
MR. DOWNEY: AND DO YOU RECALL THAT THAT OFFERING CLOSED ON DECEMBER 31ST?
MR. DOWNEY: SO THAT WAS A PERIOD OF JUST OVER -- A LITTLE OVER TWO WEEKS AT THE END OF THE YEAR AND THE HOLIDAY SEASON; CORRECT?
ELIZABETH A. HOLMES: IT WAS.
MR. DOWNEY: WHAT WAS THE EXPLANATION FOR THAT SHORT WINDOW FOR THAT SHARE OFFERING?
ELIZABETH A. HOLMES: WE WERE DOING THIS DEAL WITH WALGREENS, WHICH WE HAD BEEN NEGOTIATING. WE LEARNED AT THAT POINT THAT WE WOULD BE CLOSING THE DEAL BY DECEMBER 31ST, WHICH MEANT THAT THERE WAS A WINDOW FOR SHAREHOLDERS TO BE ABLE TO INVEST, THAT WAS THE WINDOW, AND WE WANTED TO SHARE IT WITH THEM WHEN WE KNEW.
MR. DOWNEY: WAS IT PRESENTED TO THERANOS'S BOARD OF DIRECTORS THAT THE OFFERING OF STOCK WOULD CLOSE BY DECEMBER 31ST AFTER BEING OFFERED ON DECEMBER 15TH?
MR. DOWNEY: AND DID THEY APPROVE THAT?
ELIZABETH A. HOLMES: THEY DID.
MR. DOWNEY: WITH RESPECT TO 10682, IS THIS THE RECORD OF AN ACTION BY THE BOARD OF DIRECTORS OF THERANOS IN CONNECTION WITH THAT DECEMBER 31ST, 2013 STOCK CLOSING?
ELIZABETH A. HOLMES: IT IS.
MR. DOWNEY: YOUR HONOR, I MOVE THE ADMISSION OF 10682.
MR. LEACH: NO OBJECTION, YOUR HONOR.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(DEFENDANT'S EXHIBIT 10682 WAS RECEIVED IN EVIDENCE.)
BY MR. DOWNEY:
MR. DOWNEY: WOULD YOU LOOK AT THE FIRST PAGE OF THIS DOCUMENT? DO YOU SEE THAT IT'S DESCRIBED AS AN ACTION BY THE UNANIMOUS WRITTEN CONSENT OF THE BOARD OF DIRECTORS?
MR. DOWNEY: AND DOES THAT MEAN AN ACTION THAT THE BOARD OF DIRECTORS TAKES WITHOUT BENEFIT OF A BOARD MEETING AND VOTE?
ELIZABETH A. HOLMES: YES, NORMALLY FOLLOWING SOME TYPE OF MEETING OR DISCUSSION.
MR. DOWNEY: OKAY. AND WAS THERE A MEETING AND DISCUSSION IN CONNECTION WITH THIS DECEMBER 2013 OFFERING?
MR. DOWNEY: LET ME ASK YOU TO LOOK AT PAGE 8 OF THIS DOCUMENT. AND IF YOU LOOK UNDER THIS SECTION THAT IS ON THE BOTTOM HALF OF THE PAGE LABELLED AMENDMENTS TO THE AMENDED AND RESTATED C-1 PREFERRED STOCK PURCHASE AGREEMENT. DO YOU SEE THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND DO YOU SEE THAT'S JUST REFERENCE SIMPLY TO THE WAY IN WHICH THE TERMS OF THE AGREEMENT WOULD BE SET FOR OFFERING WITH SHAREHOLDERS?
MR. DOWNEY: IN THE FIRST PARAGRAPH IT SAYS, "WHEREAS," AND IT GOES ON FROM THERE. IT REFERS TO A PRICE OF $15 PER SHARE. DO YOU SEE THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND IS THAT A REFERENCE TO THE $15 A SHARE PRICE THAT THE BOARD WAS CONSIDERING IN CONNECTION WITH THIS OFFERING?
MR. DOWNEY: AND IF YOU GO DOWN TO PAGE 9 THEREAFTER, WHICH IS THE NEXT PAGE AND YOU LOOK AT THE FIRST PARAGRAPH THAT IS -- THE FIRST TWO PARAGRAPHS. IF YOU LOOK AT THE SECOND PARAGRAPH WITHIN THAT, WHICH IS RESOLVED FURTHER, DO YOU SEE THAT THE BOARD APPROVED THE SALE AND ISSUANCE AT $15 PER SHARE?
MR. DOWNEY: NOW, DID YOU -- YOU MENTIONED THAT THERE WERE SIMULTANEOUS NEGOTIATIONS WITH WALGREENS GOING ON AT THE SAME TIME AS YOU WERE DOING THIS SHARE OFFERING; IS THAT RIGHT?
ELIZABETH A. HOLMES: THERE WERE.
MR. DOWNEY: AND WERE THOSE THE NEGOTIATIONS THAT RELATED TO HOW THE ROLLOUT PLAN WOULD WORK?
MR. DOWNEY: AND WHAT DATE DID THAT TRANSACTION ULTIMATELY CLOSE?
ELIZABETH A. HOLMES: ON DECEMBER 31ST.
MR. DOWNEY: AND IS THAT THE SAME TIME THAT THIS OFFERING OF SHARES ALSO CLOSED?
ELIZABETH A. HOLMES: IT IS.
MR. DOWNEY: AND DID YOU UNDERSTAND THAT THAT WAS NECESSARY UNDER THERANOS'S AGREEMENTS WITH WALGREENS?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: I WANT TO ASK YOU ABOUT SOME OF THE PARTICULAR INVESTMENTS THAT WERE MADE IN CONNECTION WITH THAT DECEMBER 2013 OFFERING. FIRST, LET ME JUST ASK YOU, DID YOU AT THERANOS REFER TO THAT INVESTMENT ROUND AS THE C-1 INVESTMENT ROUND?
MR. DOWNEY: AND THAT'S THE ROUND IN WHICH MR. LUCAS AND MR. EISENMAN AND MR. HALL INVESTED; IS THAT RIGHT?
MR. DOWNEY: LET'S TALK ABOUT MR. LUCAS FIRST. MR. LUCAS'S FIRM WAS CALLED BLACK DIAMOND VENTURES?
ELIZABETH A. HOLMES: IT WAS, YES.
MR. DOWNEY: AND DO YOU RECALL THAT YOU TESTIFIED ON FRIDAY ABOUT MR. LUCAS'S INVESTMENT IN THERANOS IN 2006?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: BETWEEN 2006 AND 2013, CAN YOU DESCRIBE THE INTERACTIONS THAT YOU HAD WITH MR. LUCAS AROUND THERANOS?
ELIZABETH A. HOLMES: YES. I WOULD SEE MR. LUCAS WITH HIS UNCLE, DON LUCAS, WHO WAS OUR CHAIRMAN, OFTEN IN FAMILY GATHERINGS, AND MR. LUCAS ALSO CAME TO WORK FOR THE COMPANY IN OUR FINANCE DEPARTMENT.
MR. DOWNEY: AND DO YOU KNOW WHEN HE CAME TO WORK AT THERANOS IN CONNECTION WITH THE FINANCE DEPARTMENT?
ELIZABETH A. HOLMES: I THINK IT WAS AROUND 2008.
MR. DOWNEY: AND AFTER 2008, DID YOU HAVE PERIODIC CONTACT WITH MR. CHRIS LUCAS?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: WHY HAD MR. LUCAS BEEN INVOLVED IN PREPARING FINANCIAL PROJECTIONS FOR THE COMPANY IN 2008 OR SO?
ELIZABETH A. HOLMES: OUR BOARD DID NOT THINK THAT I HAD THE RIGHT EXPERTISE TO DO THAT, AND THEY WANTED TO HAVE SOMEONE WHO WAS SOPHISTICATED IN THOSE MATTERS INTERNALLY, SO THEY ASKED AND SUGGESTED THAT CHRIS COME IN TO HELP US BUILD PROJECTIONS.
MR. DOWNEY: NOW, IN 2013 WHEN THIS OFFERING OF SHARES WAS MADE, DID YOU HAVE THE CHANCE TO SPEAK ONE-ON-ONE WITH MR. LUCAS ABOUT THIS OPPORTUNITY TO INVEST?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: AND CAN YOU TELL US WHAT THOSE DISCUSSIONS WERE ABOUT.
ELIZABETH A. HOLMES: HE HAD A FEW QUESTIONS ABOUT WHO ELSE WAS DOING DEALS WITH US AT THAT TIME THAT HAD BEEN RELAYED TO HIM FROM HIS INVESTORS, AND HE ALSO WANTED TO TALK TO ME ABOUT MR. HALL INVESTING DIRECTLY IN THERANOS AS OPPOSED TO THROUGH HIM.
MR. DOWNEY: AND WHAT DID YOU DISCUSS ABOUT MR. HALL INVESTING DIRECTLY IN THERANOS?
ELIZABETH A. HOLMES: IF MR. HALL DID THAT, IT WOULD MEAN THAT WE WOULD HAVE AN ADDITIONAL SHAREHOLDER, AND I SAID THAT WE WOULD, WE WOULD DO THAT IF THAT'S WHAT HE WANTED.
MR. DOWNEY: OKAY. DID MR. LUCAS ASK YOU ANY QUESTIONS ABOUT THERANOS'S TECHNOLOGY IN THOSE CONVERSATIONS?
MR. DOWNEY: DID HE ASK YOU ANY QUESTIONS ABOUT THERANOS'S BUSINESS PLAN?
MR. DOWNEY: LET'S TALK ABOUT MR. HALL FOR A MOMENT. MR. HALL ALSO PARTICIPATED IN THE 2013 C-1 ROUND?
ELIZABETH A. HOLMES: HE DID.
MR. DOWNEY: AND WHAT DID YOU UNDERSTAND ABOUT MR. HALL AS OF THE TIME HE MADE THAT INVESTMENT IN DECEMBER OF 2013?
ELIZABETH A. HOLMES: THAT HE WAS A VERY SUCCESSFUL BUSINESS PERSON AND INVESTOR WHO HAD INVESTED IN A NUMBER OF COMPANIES. I UNDERSTOOD HE WAS THE LARGEST SHAREHOLDER OF AMERICAN AIRLINES, AND ALSO OWNED A LARGE AMOUNT OF REAL ESTATE.
MR. DOWNEY: WE HEARD A RECORDING DURING THE COURSE OF THIS CONVERSATION OF A CALL THAT YOU HAD WITH, AMONG OTHERS, MR. TOLBERT. DO YOU RECALL THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND DID MR. TOLBERT WORK FOR MR. HALL?
MR. DOWNEY: PRIOR TO THE TIME OF THE CONVERSATION WHICH MR. TOLBERT RECORDED IN DECEMBER OF 2013, WHEN IS THE LAST TIME THAT YOU HAD SPOKEN TO MR. TOLBERT?
ELIZABETH A. HOLMES: I THINK IN 2006.
MR. DOWNEY: AND HOW MUCH, IF ANY, COMMUNICATION DID YOU HAVE WITH EITHER MR. HALL OR MR. TOLBERT BETWEEN 2006 AND 2013?
ELIZABETH A. HOLMES: I DON'T THINK I HAD COMMUNICATION WITH THEM.
MR. DOWNEY: DID YOU HAVE ANY DISCUSSIONS THAT YOU RECALL WITH MR. HALL AROUND THE TIME OF THE INVESTMENT?
MR. DOWNEY: DID MR. HALL ASK ANY QUESTIONS ABOUT THE TECHNOLOGY THAT YOU RECALL IN THAT CONVERSATION?
ELIZABETH A. HOLMES: HE DID NOT.
MR. DOWNEY: WHAT WERE YOUR CONVERSATIONS WITH MR. HALL ABOUT?
ELIZABETH A. HOLMES: HE ASKED TO SPEAK WITH ME TO ASK IF WE WOULD ACCEPT HIM AS A DIRECT INVESTOR IN THERANOS, AS OPPOSED TO AN INVESTOR IN CHRIS LUCAS'S FUND.
MR. DOWNEY: AND WAS THAT THE PRINCIPAL SUBJECT OF THE DISCUSSION AS YOU RECALL IT?
ELIZABETH A. HOLMES: IT WAS.
MR. DOWNEY: YOU ALSO RECALL THAT MR. EISENMAN TESTIFIED THAT HE INVESTED AS PART OF THIS C-1 ROUND?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND YOU RECALL THAT YOU TESTIFIED ON FRIDAY THAT HE HAD INVESTED IN 2006?
MR. DOWNEY: DID YOU SPEAK TO MR. EISENMAN IN 2013 ABOUT MAKING AN INVESTMENT IN THERANOS AS PART OF THE C-1 ROUND?
MR. DOWNEY: DID YOU LEARN AT SOME POINT THAT MR. EISENMAN HAD DECIDED TO INVEST IN THAT C-1 ROUND?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: DO YOU RECALL HOW YOU LEARNED THAT?
ELIZABETH A. HOLMES: THROUGH SUNNY BALWANI.
MR. DOWNEY: WHAT WAS YOUR REACTION WHEN YOU LEARNED THAT MR. EISENMAN HAD DECIDED TO INVEST AS PART OF THE C-1 ROUND?
ELIZABETH A. HOLMES: I WAS SURPRISED.
MR. DOWNEY: WHY DO YOU SAY YOU WERE SURPRISED?
ELIZABETH A. HOLMES: WE HAD FOR YEARS BEEN COMMUNICATING WITH MR. EISENMAN ABOUT SOME OF HIS QUESTIONS. HE SEEMED TO HAVE A VERY LARGE AMOUNT OF QUESTIONS HAVING TO DO WITH THE VALUATION OF HIS STOCK SO THAT HE COULD POTENTIALLY SELL IT AT DIFFERENT POINTS IN TIME. WE HAD TRIED TO COMMUNICATE TO HIM THAT WE WERE NOT ABLE TO CONVEY MUCH OF THE INFORMATION THAT HE WAS ASKING FOR. AND WE HAD A LOT OF FRUSTRATIONS AROUND THOSE INTERACTIONS, AND I KNOW HE HAD A LOT OF FRUSTRATIONS AROUND THOSE INTERACTIONS.
MR. DOWNEY: BUT YOU LEARNED THAT HE ULTIMATELY INVESTED?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: NOW, AFTER DECEMBER 31ST OF 2013, DID THERANOS GO FORWARD AND OFFER ANOTHER ROUND OF INVESTMENT IN 2014?
MR. DOWNEY: AND WAS THAT KNOWN AS THE C-2 ROUND?
ELIZABETH A. HOLMES: IT WAS.
MR. DOWNEY: AND WHAT IS THE SIGNIFICANCE OF THESE NUMBERS AND LETTERS, C-1 AND C-2 IN CONNECTION WITH THESE STOCK OFFERINGS?
ELIZABETH A. HOLMES: C-1 AND C-2, IN TERMS OF HOW THEY WERE STRUCTURED, WERE ESSENTIALLY EXTENSIONS OF THE SERIES C ROUND. SO EARLIER ON WE HAD DONE AN A, A B, AND A C. AND INSTEAD OF DOING A WHOLE NEW ROUND, WE JUST ALLOWED PEOPLE TO CONTINUE TO INVEST UNDER THE EXISTING DOCUMENTS.
MR. DOWNEY: IN CONNECTION WITH THE C-2 OFFERING IN 2014, DID THERANOS SOMETIMES PROVIDE SETS OF SLIDES TO POTENTIAL INVESTORS?
MR. DOWNEY: DO YOU RECALL DOING THAT IN CONNECTION, FOR EXAMPLE, WITH MR. MOSLEY?
MR. DOWNEY: AND WERE THOSE SLIDES THE ONLY MEANS BY WHICH INVESTORS LEARNED ABOUT THERANOS AS PART OF THE C-2 OFFERING?
MR. DOWNEY: WERE THE SLIDES INTENDED TO GIVE POTENTIAL INVESTORS A COMPREHENSIVE AND THOROUGH OVERVIEW OF THERANOS?
MR. DOWNEY: WHY WERE THE SLIDES USED?
ELIZABETH A. HOLMES: WE USED THEM IN MEETINGS TO SUPPORT DIFFERENT DISCUSSION POINTS BASED ON THE QUESTIONS THAT AN INVESTOR OR ANYONE WE WERE MEETING WITH WOULD HAVE.
MR. DOWNEY: NOW, THOSE SETS OF SLIDES, YOU RECALL THAT WE HAVE SEEN SOME OF THOSE IN EVIDENCE DURING THE COURSE OF THIS CASE?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: ARE THOSE DOCUMENTS THAT YOU CREATED FROM SCRATCH AT THE TIME THAT YOU WERE SENDING THEM?
MR. DOWNEY: WHAT WAS THE PROCESS FOR THE CREATION OF THESE SLIDE DECKS THAT WERE USED IN CONNECTION WITH INVESTORS IN 2014?
ELIZABETH A. HOLMES: IT DATES BACK ALMOST TO THE WORK THAT WE WERE DOING WITH PHARMA COMPANIES. WE HAD A SET OF SLIDES THAT WE DEVELOPED THERE, AND WE KEPT ADDING TO THEM OVER THE YEARS. WE REFERRED TO OUR DECK AS OUR INTERNAL DECK, AND AS THE BUSINESS GREW AND WE HAD NEW CONTENT, WE WOULD ADD IT TO THE DECK AND MAINTAIN IT ON A DRIVE AT THERANOS.
MR. DOWNEY: AND WERE THE DECKS USED ONLY WITH INVESTORS OR POTENTIAL INVESTORS?
MR. DOWNEY: WHO ELSE WERE THE DECKS USED WITH?
ELIZABETH A. HOLMES: ANYONE WITH WHOM WE WERE MEETING. IT COULD BE A BUSINESS PARTNER LIKE A HOSPITAL SYSTEM. IT COULD BE BUSINESS PARTNERS LIKE THE RETAILERS, THE INSURANCE COMPANIES. ANY MEETING WE WERE DOING.
MR. DOWNEY: WHO WAS INVOLVED IN DEVELOPING THE CONTENT THAT WENT INTO THE SLIDE DECKS?
ELIZABETH A. HOLMES: OUR SCIENTISTS AND ENGINEERS. WE PUT ALL OF OUR CLINICAL DATA INTO THOSE DECKS. OUR PROJECT MANAGERS, PRODUCT MANAGERS, SOME OF THE PEOPLE ON THE BUSINESS DEVELOPMENT SIDE AND THE OPERATION SIDE.
MR. DOWNEY: NOW, YOU RECALL THAT THERE WAS TESTIMONY LAST WEEK FROM MR. GROSSMAN?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND HE WAS A REPRESENTATIVE OF THE INVESTMENT FUND PFM?
MR. DOWNEY: AND WAS PFM ONE OF THE FIRMS THAT INVESTED IN THERANOS AS PART OF THE C-2 OFFERING?
ELIZABETH A. HOLMES: THEY WERE.
MR. DOWNEY: AT THE TIME THAT YOU DID THE C-2 OFFERING, WERE HEDGE FUNDS THE TYPE OF INVESTORS THAT THERANOS WAS SEEKING FOR INVESTMENT?
MR. DOWNEY: WHAT TYPE OF PARTNERS WERE YOU HOPING WOULD INVEST IN THERANOS AS PART OF THE C-2 OFFERING IN 2014?
ELIZABETH A. HOLMES: I HOPED WE'D GET INVESTORS WHO WOULD HOLD OUR STOCK FOR A LONG TIME AND BE WITH US TO HELP BUILD THE COMPANY FOR THE LONG-TERM.
MR. DOWNEY: WHY DID YOU WANT THAT?
ELIZABETH A. HOLMES: BECAUSE WHAT WE WERE TRYING TO DO WAS A REALLY LONG-TERM MISSION, AND IT WAS GOING TO TAKE A HUGE AMOUNT OF WORK, AND TO REALLY REALIZE OUR VISION, IT WAS GOING TO TAKE A LONG TIME.
MR. DOWNEY: DID YOU PERSONALLY MEET WITH MR. GROSSMAN AND OTHER REPRESENTATIVES OF PFM?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: HOW MANY TIMES DID YOU MEET WITH THEM?
ELIZABETH A. HOLMES: TWICE.
MR. DOWNEY: AND WHAT WAS THE FIRST TIME THAT YOU MET WITH THEM?
ELIZABETH A. HOLMES: IN DECEMBER OF 2013.
MR. DOWNEY: AND WHAT DO YOU RECALL ABOUT THAT MEETING WITH MR. GROSSMAN AND OTHERS FROM PFM IN DECEMBER OF 2013?
ELIZABETH A. HOLMES: I RECALL IT WAS AN INTRODUCTORY MEETING. WE INTRODUCED OURSELVES. THEY INTRODUCED THEMSELVES. I SHARED MY VISION FOR THERANOS, AND THEY SHARED THEIR EXPERIENCE IN HEALTH CARE, THEIR DESIRE TO BE PART OF NEW TECHNOLOGY COMPANIES, AND THEIR COMMITMENT TO BEING A LONG-TERM INVESTOR.
MR. DOWNEY: AFTER THAT THAT INITIAL MEETING IN DECEMBER OF 2013, WAS THERE A SECOND MEETING BETWEEN THERANOS AND PFM?
ELIZABETH A. HOLMES: THERE WAS.
MR. DOWNEY: WHEN WAS THAT?
ELIZABETH A. HOLMES: IN JANUARY OF 2014.
MR. DOWNEY: AND DID YOU PARTICIPATE IN THAT MEETING?
ELIZABETH A. HOLMES: JUST THE BEGINNING OF IT.
MR. DOWNEY: AND WHAT DO YOU RECALL HAPPENING AT THE BEGINNING OF THAT JANUARY 2014 MEETING WITH PFM?
ELIZABETH A. HOLMES: I RECALL THAT PFM HAD A SERIES OF QUESTIONS THAT THEY HAD PREPARED THAT THEY WANTED US TO ANSWER FOCUSSED ON DIFFERENT ASPECTS OF OUR BUSINESS, AND THAT WE WENT THROUGH THOSE QUESTIONS.
MR. DOWNEY: OKAY. AND AFTER THAT SECOND MEETING WITH PFM, DID THERANOS MEET WITH PFM AGAIN?
ELIZABETH A. HOLMES: PEOPLE FROM THERANOS DID, YES.
MR. DOWNEY: DID YOU MEET WITH ANYONE FROM PFM BETWEEN THE TIME OF THE SECOND JANUARY 2014 MEETING AND THEIR INVESTMENT?
ELIZABETH A. HOLMES: I DID NOT.
MR. DOWNEY: WHO WAS THE PRIMARY CONTACT BETWEEN PFM AND THERANOS IN THE PERIOD BETWEEN THE SECOND MEETING AND THE TIME OF PFM'S INVESTMENT?
ELIZABETH A. HOLMES: SUNNY BALWANI.
MR. DOWNEY: AND IN JANUARY -- WHEN DID THAT C-2 ROUND -- OR WHEN DID THAT C-2 OFFERING OF STOCK CLOSE FOR PFM IF YOU KNOW?
ELIZABETH A. HOLMES: I DO KNOW BECAUSE IT WAS MY BIRTHDAY. FEBRUARY 3RD OF THAT YEAR.
MR. DOWNEY: OKAY. NOW, YOU ALSO RECALL THAT WE HEARD TESTIMONY FROM MR. MOSLEY DURING THE COURSE OF THIS CASE?
MR. DOWNEY: AND DID MR. MOSLEY INVEST IN THERANOS IN 2014?
ELIZABETH A. HOLMES: HE DID.
MR. DOWNEY: WHAT DID YOU UNDERSTAND ABOUT MR. MOSLEY WHEN YOU MET HIM IN 2014?
ELIZABETH A. HOLMES: I UNDERSTOOD THAT HE WAS A VERY EXPERIENCED LAWYER. HE HAD WORKED WITH OUR LAWYER, DAVID BOIES, AT A FIRM CALLED CRAVATH, WHICH I UNDERSTOOD TO BE ONE OF THE BEST LAW FIRMS IN THE WORLD, AND I KNEW HE WAS DR. KISSINGER'S LAWYER.
MR. DOWNEY: HOW DID YOU COME TO MEET MR. MOSLEY?
ELIZABETH A. HOLMES: THROUGH DR. KISSINGER.
MR. DOWNEY: NOW, AFTER YOU MET WITH MR. MOSLEY, DID HE SUBSEQUENTLY INTRODUCE YOU TO OTHER POTENTIAL INVESTORS IN THERANOS?
ELIZABETH A. HOLMES: HE DID.
MR. DOWNEY: AND DID YOU PROVIDE INFORMATION TO -- ABOUT THERANOS FOR MR. MOSLEY TO REVIEW?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: AND CAN YOU DESCRIBE WHAT INFORMATION YOU PROVIDED TO MR. MOSLEY TO REVIEW IN CONNECTION WITH THERANOS?
ELIZABETH A. HOLMES: INFORMATION ABOUT THE COMPANY IN THE FORM OF SOME OF OUR INTERNAL SLIDE DECK AND OTHER BACKGROUND MATERIALS ON THE COMPANY.
MR. DOWNEY: OKAY. NOW, WE SAW DURING THE COURSE OF THE TRIAL THAT MR. MOSLEY PREPARED A SUMMARY DOCUMENT CONCERNING THERANOS. DO YOU RECALL THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: WERE YOU INVOLVED IN THE PREPARATION OF THE SUMMARY THAT MR. MOSLEY PREPARED?
MR. DOWNEY: DID YOU EVER DISCUSS THAT SUMMARY WITH MR. MOSLEY?
MR. DOWNEY: HAD YOU EVER SEEN THAT SUMMARY PRIOR TO THIS CASE?
ELIZABETH A. HOLMES: I HAD NOT.
MR. DOWNEY: AT SOME POINT DID YOU -- WERE YOU INTRODUCED TO HIM OVER THE TELEPHONE?
ELIZABETH A. HOLMES: I WAS.
MR. DOWNEY: AND DID YOU COME TO MEET HIM IN PERSON?
MR. DOWNEY: AND WHERE DID YOU MEET HIM?
ELIZABETH A. HOLMES: AT A CONFERENCE CALLED THE BDT CONFERENCE IN CHICAGO.
MR. DOWNEY: AND WHAT WAS THE BDT CONFERENCE?
ELIZABETH A. HOLMES: IT WAS A CONFERENCE FOR FAMILIES THAT RAN FAMILY CONTROLLED BUSINESSES AND OTHER PRIVATE EQUITY INVESTORS.
MR. DOWNEY: AND WHAT WERE YOU DOING AT THAT BDT CONFERENCE?
ELIZABETH A. HOLMES: DR. TOBY COSGROVE AT THE CLEVELAND CLINIC ASKED ME TO COME SPEAK THERE.
MR. DOWNEY: AND DURING THE COURSE OF BEING AT THAT CONFERENCE -- WHEN DID THAT CONFERENCE TAKE PLACE?
ELIZABETH A. HOLMES: IN THE FALL OF 2014, I THINK SEPTEMBER OF 2014, MAYBE OCTOBER.
MR. DOWNEY: DURING THE COURSE OF BEING AT THAT CONFERENCE, DID YOU MEET WITH OTHER POTENTIAL INVESTORS IN THERANOS?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: WHO COORDINATED YOUR MEETINGS WITH OTHER POTENTIAL INVESTORS IN THERANOS?
ELIZABETH A. HOLMES: MR. MOSLEY.
MR. DOWNEY: WHAT OTHER POTENTIAL INVESTORS DID YOU MEET WITH DURING THE COURSE OF THE BDT CONFERENCE IN THE FALL OF 2014?
ELIZABETH A. HOLMES: I MET WITH JERRY TUBERGEN, WHO WAS THE FUNDS MANAGER FOR THE DEVOS FAMILY; AND I MET WITH ALEX TAYLOR, WHO WAS ONE OF THE FAMILY MEMBERS FOR THE COX FAMILY.
MR. DOWNEY: AND WHAT DO YOU RECALL ABOUT THOSE MEETINGS WITH MR. TUBERGEN AND MR. TAYLOR?
ELIZABETH A. HOLMES: I RECALL THAT WE SPENT A LOT OF TIME TALKING ABOUT THE CHANGE WE WERE TRYING TO MAKE IN HEALTH CARE, WHAT IT WOULD TAKE, AND WHY OUR INVENTIONS COULD REALIZE THAT VISION.
MR. DOWNEY: DID MR. MOSLEY PARTICIPATE IN THOSE MEETINGS?
ELIZABETH A. HOLMES: HE DID.
MR. DOWNEY: WHEN THAT CONFERENCE CONCLUDED, DID YOU CONTINUE TO MEET WITH OTHER REPRESENTATIVES OF THE COX FAMILY AND THE DEVOS FAMILY?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: DID MR. MOSLEY CONTINUE TO PARTICIPATE IN THOSE DISCUSSIONS?
MR. DOWNEY: OVER TIME, DID MR. MOSLEY INTRODUCE YOU TO OTHER POTENTIAL INVESTORS IN THERANOS?
ELIZABETH A. HOLMES: HE DID.
MR. DOWNEY: WHAT OTHER POTENTIAL INVESTORS IN THERANOS DID HE INTRODUCE YOU TO?
ELIZABETH A. HOLMES: HE INTRODUCED US TO ALICE WALTON IN THE WALTON FAMILY; TO JOHN ELKANN, WHO WAS PART OF THE FIAT FAMILY; TO HANK SLACK, WHO WAS PART OF THE OPPENHEIMER FAMILY; AND TO ANDREAS DRACOPOULOS, WHO WAS PART OF THE NIARCHOS FAMILY.
MR. DOWNEY: AND WHAT WAS YOUR UNDERSTANDING AS TO WHY MR. MOSLEY WAS INTRODUCED YOU TO THESE POTENTIAL INVESTORS IN THERANOS?
ELIZABETH A. HOLMES: SOME OF THEM WERE PEOPLE THAT DR. KISSINGER KNEW THAT HE RECOMMENDED WE CONNECT WITH. OTHERS WERE CLIENTS OF MR. MOSLEY'S WHO MR. MOSLEY THOUGHT WOULD BE INTERESTED IN THERANOS.
MR. DOWNEY: AND DID YOU UNDERSTAND THAT MR. MOSLEY WAS HAVING COMMUNICATIONS WITH REPRESENTATIVES OF THOSE POTENTIAL INVESTORS WHICH YOU WERE NOT PART OF?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: AND WHAT DID YOU UNDERSTAND AS TO THE ROLE THAT HE WAS PLAYING WITH RESPECT TO THE INVESTMENTS OF THOSE OTHER POTENTIAL INVESTORS?
ELIZABETH A. HOLMES: I UNDERSTOOD HE WAS AN ADVISOR TO THEM.
MR. DOWNEY: LET ME ASK YOU ABOUT THE TESTIMONY THAT MR. MOSLEY GAVE CONCERNING THE CONTENT OF THE REPORT THAT HE PREPARED.
MR. DOWNEY: DO YOU RECALL THAT HE SAID THAT HE PREPARED THAT OUT OF MATERIALS THAT HAD BEEN SENT TO HIM BY THERANOS?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND DO YOU RECALL THAT HE SAID HE FORWARDED THAT REPORT TO DR. KISSINGER?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: DID HE ASK YOU IN ANY WAY, EVEN IF HE DIDN'T SHOW YOU THE REPORT, DID HE ASK YOU IN ANY WAY TO REVIEW OR CONSIDER ANYTHING THAT HE WAS SAYING IN THAT REPORT?
ELIZABETH A. HOLMES: HE DID NOT.
MR. DOWNEY: OKAY. I WANT TO GO BACK FOR A MOMENT AND RETURN TO THE SUBJECT OF MARKETING, WHICH WE HAD DISCUSSED, BUT I NEGLECTED TO SHOW YOU ONE OF THE DOCUMENTS THAT I WANTED TO SHOW YOU IN CONNECTION WITH THAT SUBJECT, WHICH IS EXHIBIT 7755.
ELIZABETH A. HOLMES: OKAY. OKAY.
MR. DOWNEY: IS EXHIBIT 7755 A DOCUMENT THAT YOU CAN IDENTIFY?
ELIZABETH A. HOLMES: IT IS, YES.
MR. DOWNEY: AND WHAT IS EXHIBIT 7755?
ELIZABETH A. HOLMES: IT IS A PRESENTATION MADE TO THERANOS, AND TO ME, BY CHIAT/DAY ON THEIR RECOMMENDATIONS FOR HOW TO LAUNCH OUR COMPANY.
MR. DOWNEY: YOUR HONOR, I MOVE THE ADMISSION OF 7755.
MR. LEACH: NO OBJECTION, YOUR HONOR.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(DEFENDANT'S EXHIBIT 7755 WAS RECEIVED IN EVIDENCE.)
BY MR. DOWNEY:
MR. DOWNEY: IS THE CONTENT THAT IS IN THIS EXHIBIT CONTENT THAT WAS PREPARED BY CHIAT/DAY?
MR. DOWNEY: AND DO YOU SEE IT REFERENCES THE DATE OF SEPTEMBER 12TH, 2011?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: DID YOU MEET WITH REPRESENTATIVES OF CHIAT/DAY AROUND SEPTEMBER 12TH, 2011?
MR. DOWNEY: WHERE DID THAT MEETING TAKE PLACE?
ELIZABETH A. HOLMES: I THINK THIS WAS IN L.A.
MR. DOWNEY: IS THAT WHERE CHIAT/DAY WAS -- THE CHIAT/DAY OFFICE THAT YOU WERE WORKING WITH WAS LOCATED?
ELIZABETH A. HOLMES: IT IS.
MR. DOWNEY: AND WERE THERE REPRESENTATIVES OF -- SEVERAL REPRESENTATIVES OF CHIAT/DAY PRESENT?
MR. DOWNEY: AND WHO DO YOU RECALL BEING PRESENT FROM CHIAT/DAY?
ELIZABETH A. HOLMES: I REMEMBER CARISA BIANCHI, WHO WAS THE PERSON -- I THINK SHE WAS LEADING CHIAT/DAY AT THAT POINT, AND THE PERSON WHO WAS THE POINT ON THE PROJECT.
MR. DOWNEY: LET'S LOOK AT THE SLIDES THAT ARE PART OF THIS PRESENTATION, AND LET ME ASK YOU TO GO TO THE SECOND SLIDE. AND DO YOU SEE HERE THERE'S A REFERENCE TO OUR PHILOSOPHY?
MR. DOWNEY: AND THAT'S APPARENTLY CHIAT/DAY'S PHILOSOPHY?
MR. DOWNEY: AND THEN THEY MAKE A REFERENCE TO BRAND BELIEF AND BRAND BEHAVIOR?
MR. DOWNEY: ARE THOSE CONCEPTS THAT YOU DISCUSSED WITH CHIAT/DAY AT THIS MEETING IN 2011?
ELIZABETH A. HOLMES: THEY ARE.
MR. DOWNEY: AND ARE THEY CONCEPTS THAT YOU DISCUSSED WITH THEM AFTER THIS MEETING IN SEPTEMBER OF 2011?
MR. DOWNEY: AND WHAT DID YOU UNDERSTAND WAS MEANT BY BRAND BELIEF?
ELIZABETH A. HOLMES: I UNDERSTOOD BRAND BELIEF IS A SYMBOL FOR WHAT YOU BELIEVE IN AS A COMPANY AND A SYMBOL FOR WHAT YOU'RE TRYING TO DO, TRYING TO CHANGE IN THE WORLD.
MR. DOWNEY: AND WAS THAT SOMETHING THAT CHIAT/DAY THOUGHT WAS IMPORTANT IN BRANDING AND MARKETING A COMPANY?
MR. DOWNEY: AND DO YOU SEE THAT THERE'S A REFERENCE TO BRAND BEHAVIOR?
MR. DOWNEY: AND WHAT DID YOU UNDERSTAND CHIAT/DAY MEANT BY BRAND BEHAVIOR?
ELIZABETH A. HOLMES: I UNDERSTOOD THAT THESE WERE THE KEY TENETS OF HOW A BRAND OR A COMPANY OR A PRODUCT OPERATES TO REALIZE THAT BELIEF OR THAT SYMBOL OF WHAT YOU'RE TRYING TO DO.
MR. DOWNEY: AND WHAT RECOMMENDATIONS DID CHIAT/DAY MAKE TO THERANOS AS TO HOW IT SHOULD TREAT ITS BRAND BELIEF AND BRAND BEHAVIOR?
ELIZABETH A. HOLMES: THEY RECOMMENDED THAT WE TRY TO SIMPLIFY WHAT WE WERE DOING AND CONVEY IT IN IMAGES AND IN VERY FEW WORDS THAT WOULD ALLOW PEOPLE TO GRASP THE CHANGE THAT WE WERE TRYING TO MAKE.
MR. DOWNEY: AND IS THAT A RECOMMENDATION THAT THERANOS TRIED TO CARRY OUT IN DEVELOPING MARKETING AND BRANDING MATERIAL?
ELIZABETH A. HOLMES: IT IS.
MR. DOWNEY: IF YOU SEE UNDER BRAND BELIEF IT SAYS, "DISRUPTION DEFINES A STRATEGY FOR GROWTH. WE ARTICULATE THIS AS A BRAND BELIEF. IT SERVES AS A NORTH STAR FOR THE BRAND, AND HELPS TO GROUND EVERYONE WHO TOUCHES THE BRAND." DO YOU SEE THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND IS THAT -- WAS THERE A SPECIFIC RECOMMENDATION AS TO HOW THERANOS SHOULD EXPRESS ITS BRAND BELIEF?
ELIZABETH A. HOLMES: YES, IN IMAGES OR SYMBOLS OF WHAT WE WANTED TO CHANGE AND HOW WE WOULD CHANGE IT.
MR. DOWNEY: OKAY. AND UNDER BRAND BEHAVIOR, IT SAYS THE BRAND BEHAVIOR IS THE WAY THAT -- DEFINES THE WAY IN WHICH A BRAND BEHAVES TO HONOR THIS BELIEF. "THIS CAN AND SHOULD INFLUENCE ALL ASPECTS OF A BRAND, INCLUDING MARKETING AND ADVERTISING, PACKAGING, PRODUCT DEVELOPMENT AND INNOVATION." DO YOU SEE THAT?
MR. DOWNEY: AND WHAT SPECIFIC RECOMMENDATIONS DID CHIAT/DAY MAKE TO THERANOS ABOUT BRAND BEHAVIOR?
ELIZABETH A. HOLMES: AGAIN, THAT WE SHOULD SIMPLIFY THE KEY TENETS ASSOCIATED WITH OUR BRAND AND COMMUNICATE THEM, BE CONSISTENT ABOUT THEM IN EVERY ASPECT OF WHAT WE DID. SO OUR BELIEF WAS IN PROVIDING ACCESS TO TESTING. ONE OF THOSE KEY TENETS WAS IN PRICING AND LOW COST, WHICH MEANT THAT IN EVERY ASPECT OF WHAT WE DID AS A COMPANY, WE WERE TRYING TO REALIZE LOW COST TESTING FOR PATIENTS, AND WE TRIED TO BE CONSISTENT WITH THAT ACROSS THE BOARD.
MR. DOWNEY: HAVE YOU SEEN THE EXHIBITS THAT HAVE BEEN INTRODUCED IN THIS CASE WHICH CONTAIN IMAGES OF A SMALL SAMPLE OF BLOOD?
ELIZABETH A. HOLMES: I HAVE.
MR. DOWNEY: DO THOSE RELATE IN ANY WAY TO THESE RECOMMENDATIONS ABOUT BRAND BELIEF AND BRAND BEHAVIOR?
ELIZABETH A. HOLMES: YES. THOSE WERE THE SYMBOLS OF THE PRODUCT THAT WE WERE TRYING TO BUILD.
MR. DOWNEY: OKAY. NOW, I WANT TO TALK ABOUT THE FACT THAT YOU WOULD BE LAUNCHING IN SEPTEMBER OF 2013. THIS MEETING SEEMS TO HAVE BEEN IN SEPTEMBER OF 2011. DID THERANOS ULTIMATELY BEGIN TO WORK WITH CHIAT/DAY IN SEPTEMBER OF 2012?
ELIZABETH A. HOLMES: WE DID.
MR. DOWNEY: AND WAS THERE ANY ADVICE THAT CHIAT/DAY GAVE YOU ABOUT LAUNCHING AS PART OF A -- AS BEING A SERVICE CENTER THAT WAS PART OF WALGREENS STORES?
MR. DOWNEY: AND WHAT ADVICE DID THEY GIVE YOU?
ELIZABETH A. HOLMES: WE TALKED A LOT ABOUT THIS BECAUSE THERE ARE A LOT OF COMPANIES OR TECHNOLOGIES THAT BECOME GENERICS WITHIN A PHARMACY, AND IT WAS REALLY IMPORTANT FOR THERANOS RIGHT OUT OF THE GATE TO BE ABLE TO ESTABLISH ITS OWN BRAND AND ITS OWN IDENTITY. WE WERE WORRIED ABOUT BECOMING JUST A LAB OFFERING WITHOUT REALLY BEING ABLE TO BUILD A TOTALLY DIFFERENT EXPERIENCE FOR PEOPLE. AND SO THEY GAVE US ADVICE ON HOW TO BUILD A STAND-ALONE BRAND AS OPPOSED TO ONE THAT WOULD BE COPIED OR GENERICIZED OR EMBEDDED IN SOME OTHER COMPANY.
MR. DOWNEY: WELL, WALGREENS WAS A PARTNER WITH THERANOS AT THIS POINT?
ELIZABETH A. HOLMES: THEY WERE.
MR. DOWNEY: DID YOU HAVE ANY -- DID YOU HAVE CONCERN ABOUT BEING ASSOCIATED WITH A NATIONAL BRAND LIKE THAT?
ELIZABETH A. HOLMES: NO. WE WERE, WE WERE INCREDIBLY EXCITED TO BE ASSOCIATED WITH A NATIONAL BRAND, BUT WE ALSO KNEW THAT WALGREENS COULD EASILY REPLACE US.
MR. DOWNEY: AND DID YOU HAVE SPECIFIC CONCERNS ABOUT HOW THAT MIGHT HAPPEN?
ELIZABETH A. HOLMES: THEY HAD TALKED AT CERTAIN POINTS ABOUT OPENING THEIR OWN LABORATORIES AND OFFERING THOSE THROUGHOUT THE STORE, OR WORKING WITH OTHER LABORATORY COMPANIES.
MR. DOWNEY: OKAY. DID THE TEAM FROM CHIAT/DAY HELP THERANOS TO DEVELOP SOME OF THE SPECIFIC MATERIALS THAT IT USED IN CONNECTION WITH ITS MARKETING?
MR. DOWNEY: DID THOSE INCLUDE WEBSITE MATERIALS?
MR. DOWNEY: DID THEY INCLUDE OTHER MARKETING MATERIALS?
MR. DOWNEY: AND DID CERTAIN IMAGES RECUR THROUGHOUT THOSE FORMS OF MARKETING?
MR. DOWNEY: AND WERE INDEED THOSE -- SOME OF THESE MATERIALS INCLUDED IN THE SLIDE DECKS THAT WE WERE TALKING ABOUT FOR USE IN CONNECTION WITH POTENTIAL INVESTORS AND OTHERS?
ELIZABETH A. HOLMES: THEY WERE.
MR. DOWNEY: OKAY. LET ME MOVE NEXT TO TALKING ABOUT THERANOS'S RELATIONSHIP WITH SAFEWAY IN THE YEARS BETWEEN 2010 AND 2015. TELL US FIRST HOW YOU CAME TO -- WAS SAFEWAY A RETAIL STORE THAT THERANOS WAS INTERESTED IN PARTNERING WITH IN 2010?
MR. DOWNEY: AND HOW DID THERANOS COME TO BE IN CONTACT WITH SAFEWAY IN 2010?
ELIZABETH A. HOLMES: DON LUCAS, OUR CHAIRMAN, WAS ON A BOARD WITH ROBERT EDWARDS, WHO WAS THEN THE CFO OF SAFEWAY.
MR. DOWNEY: AND DID MR. LUCAS ASK MR. EDWARDS TO CONSIDER A POTENTIAL RETAIL PARTNERSHIP?
ELIZABETH A. HOLMES: HE DID.
MR. DOWNEY: AND DID YOU BECOME INVOLVED IN DISCUSSIONS WITH SAFEWAY ABOUT A POTENTIAL PARTNERSHIP IN 2010?
MR. DOWNEY: NOW, THOSE DISCUSSIONS WERE IN THE FIRST QUARTER OR SO OF 2010; IS THAT RIGHT?
MR. DOWNEY: AND AT THE TIME OF THOSE DISCUSSIONS, WAS THE IDEA THAT THEY WOULD LAUNCH SERVICE CENTERS IN SAFEWAY STORES?
MR. DOWNEY: DID THERANOS EVER END UP LAUNCHING TESTING SERVICES OR SERVICE CENTERS IN SAFEWAY STORES?
ELIZABETH A. HOLMES: WE DID NOT.
MR. DOWNEY: WHEN DID THE PARTNERSHIP WITH SAFEWAY END?
ELIZABETH A. HOLMES: IN 2016.
MR. DOWNEY: AND WHY DID THERANOS NEVER LAUNCH SERVICE CENTERS IN SAFEWAY STORES?
ELIZABETH A. HOLMES: ULTIMATELY WHEN THERANOS RAN INTO LABORATORY AND REGULATORY ISSUES, WE TERMINATED THE RELATIONSHIP WITH SAFEWAY.
MR. DOWNEY: WERE THERE THINGS THAT HAPPENED IN THE PERIOD BETWEEN 2010 AND 2016 THAT PRESENTED CHALLENGES IN THE RELATIONSHIP BETWEEN SAFEWAY AND THERANOS?
MR. DOWNEY: AND WHAT WERE THOSE?
ELIZABETH A. HOLMES: A BIG ONE WAS STEVE BURD'S DEPARTURE FROM SAFEWAY IN 2013, WHICH SORT OF RESET THE RELATIONSHIP IN MANY WAYS.
MR. DOWNEY: OKAY. AND BETWEEN 2010 AND THE MIDDLE OF 2013, WAS MR. BURD THE CEO?
ELIZABETH A. HOLMES: HE WAS.
MR. DOWNEY: AND WAS HE THE INDIVIDUAL AT SAFEWAY WITH WHOM YOU FREQUENTLY DISCUSSED THE PARTNERSHIP?
MR. DOWNEY: LET'S TALK ABOUT THE EARLY INTERACTIONS THAT YOU HAD WITH MR. BURD PRIOR TO THE TIME THAT THERE WAS AN AGREEMENT.
MR. DOWNEY: DO YOU RECALL HAVING A MEETING WITH HIM IN 2010?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND DID YOU -- DID HE MAKE ANY REQUESTS OF YOU IN CONNECTION WITH EVALUATING THERANOS AS A POTENTIAL PARTNER?
MR. DOWNEY: AND WHAT DID HE ASK?
ELIZABETH A. HOLMES: HE WANTED TO DO DILIGENCE ON THERANOS AND OUR TECHNOLOGY.
MR. DOWNEY: AND WHAT DID HE ASK YOU TO DO TO ALLOW HIM TO CONDUCT DILIGENCE ON THERANOS AND ITS TECHNOLOGY?
ELIZABETH A. HOLMES: HE WANTED US TO MEET WITH UCSF TO REVIEW THE TECHNOLOGY.
MR. DOWNEY: AND DID YOU MEET WITH UCSF?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: WERE YOU PERSONALLY INVOLVED IN THOSE MEETINGS?
ELIZABETH A. HOLMES: I WAS.
MR. DOWNEY: WHO AT UCSF DID YOU MEET WITH?
ELIZABETH A. HOLMES: I MET WITH SUE DESMOND-HELLMANN, WHO I THINK WAS THE CHANCELLOR AT THAT POINT IN TIME.
MR. DOWNEY: AND WHAT WAS DR. DESMOND-HELLMANN'S BACKGROUND?
ELIZABETH A. HOLMES: SHE HAD BEEN AN EXECUTIVE AT GENENTECH AND WAS RESPONSIBLE FOR HELPING WITH THE DEVELOPMENT OF SEVERAL AMAZING DRUGS.
MR. DOWNEY: WHAT DO YOU RECALL ABOUT YOUR MEETING WITH DR. DESMOND-HELLMANN IN 2010?
ELIZABETH A. HOLMES: I REMEMBER REVIEWING THE DESIGNS FOR OUR TECHNOLOGY, REVIEWING OUR DATA, BRINGING A DEVICE TO RUN THERE AND RUN A SAMPLE AT UCSF FOR HER, AND DISCUSSING WHAT THE TECHNOLOGY COULD DO.
MR. DOWNEY: PRIOR -- DID YOU ULTIMATELY SIGN AN AGREEMENT WITH SAFEWAY IN 2010?
MR. DOWNEY: AND PRIOR TO THE TIME THAT YOU SIGNED THAT AGREEMENT, DID MR. BURD ASK YOU TO DO ANYTHING ELSE WITH UCSF IN THAT WINDOW?
ELIZABETH A. HOLMES: I DON'T THINK SO.
MR. DOWNEY: DID SAFEWAY ALSO PERFORM FINANCIAL DUE DILIGENCE ON THERANOS IN THE PERIOD IT WAS CONSIDERING A PARTNERSHIP WITH THERANOS IN 2010?
MR. DOWNEY: WHAT DO YOU RECALL ABOUT THAT FINANCIAL DUE DILIGENCE PROCESS?
ELIZABETH A. HOLMES: THAT MR. EDWARDS HAD A SERIES OF MEETINGS WITH DON LUCAS, OUR CHAIRMAN, AND THERE WERE EXECUTIVES WITHIN SAFEWAY WHO HAD MEETINGS WITH SUNNY BALWANI TO DO FINANCIAL DILIGENCE AND DEVELOP A MODEL OR A SERIES OF PROJECTIONS FOR WHAT WE COULD DO WITH SAFEWAY.
MR. DOWNEY: LET ME ASK YOU TO LOOK IN THAT THIRD VOLUME AT THE EXHIBIT THAT IS MARKED AS 10539.
ELIZABETH A. HOLMES: OKAY.
MR. DOWNEY: IS EXHIBIT 10539 AN EMAIL FROM MR. BALWANI TO CERTAIN INDIVIDUALS AT SAFEWAY THAT YOU WERE COPIED ON?
MR. DOWNEY: AND DOES THIS RELATE TO THE FINANCIAL DUE DILIGENCE THAT SAFEWAY WAS PERFORMING BEFORE ENTERING A DEAL WITH THERANOS?
MR. DOWNEY: YOUR HONOR, I MOVE THE ADMISSION OF 10539.
MR. LEACH: NO OBJECTION, YOUR HONOR.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(DEFENDANT'S EXHIBIT 10539 WAS RECEIVED IN EVIDENCE.)
BY MR. DOWNEY:
MR. DOWNEY: LOOK AT THE EMAIL. IT'S MR. BALWANI WRITING TO AN INDIVIDUAL NAMED BRAD WOLFSEN. AND WHO WAS MR. WOLFSEN?
ELIZABETH A. HOLMES: HE WAS AN EXECUTIVE AT SAFEWAY.
MR. DOWNEY: AND HE SAYS IN THE EMAIL COMMUNICATION IN THE THIRD PARAGRAPH THAT -- HE SAYS, "WE TOOK YOUR FINANCIAL MODEL BASED ON SAFEWAY'S PROJECTIONS AND ADDED 3 MORE ROWS TO THE RETAIL RX TAB." DO YOU SEE THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND IS THIS AN EXERCISE THAT MR. BALWANI AND THE EXECUTIVES AT SAFEWAY WERE GOING THROUGH REGARDING HOW TO PROJECT REVENUES FROM THERANOS SERVICE CENTERS IN SAFEWAY STORES?
MR. DOWNEY: WHO AT THERANOS WAS PRINCIPALLY RESPONSIBLE FOR SHEPHERDING THAT FINANCIAL DUE DILIGENCE IN THE PERIOD BEFORE THE SAFEWAY AGREEMENT WAS SIGNED?
ELIZABETH A. HOLMES: SUNNY BALWANI WAS.
MR. DOWNEY: NOW, WE DISCUSSED THIS MORNING THE DEVELOPMENT OF THERANOS'S TECHNOLOGY IN THE PERIOD BETWEEN 2010 AND 2013. DO YOU RECALL THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND DO YOU RECALL THAT YOU TESTIFIED THAT THERANOS WAS WORKING TO EXPAND THE NUMBER OF ASSAYS IT WOULD HAVE AVAILABLE IN THE PERIOD OF 2010 AND IN THE YEARS THEREAFTER?
MR. DOWNEY: WHEN YOU MET WITH SAFEWAY IN 2010, WHAT DID YOU TELL THEM ABOUT THERANOS'S TECHNOLOGY?
ELIZABETH A. HOLMES: I TOLD THEM THAT WE HAD DEVELOPED TECHNOLOGY IN THE PAST TO BE ABLE TO RUN ASSAYS ON OUR DEVICES, AND THAT WE COULD RUN ADDITIONAL ASSAYS WITH THE TECHNOLOGY WE WERE DEVELOPING TO BE ABLE TO REALIZE THE GOAL OF DOING BROADER TESTS.
MR. DOWNEY: AND WAS THAT A REFERENCE TO THE SERIES 4.0 TECHNOLOGY THERANOS WAS DEVELOPING AS OF 2010?
MR. DOWNEY: AND DID YOU ULTIMATELY ENTER INTO AN AGREEMENT WITH SAFEWAY?
MR. DOWNEY: AND DID YOU PLAY A ROLE IN NEGOTIATING THAT AGREEMENT?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: AND DID YOU NEGOTIATE WITH MR. BURD IN THAT AGREEMENT, IN THAT DISCUSSION OF THE AGREEMENT?
MR. DOWNEY: AND DID YOU HEAR THE TESTIMONY FROM MR. BURD DURING THIS TRIAL THAT HE FELT IT WAS STRANGE THAT YOU DID NOT HAVE LEGAL COUNSEL PRESENT WITH YOU DURING THE COURSE OF THOSE NEGOTIATIONS?
MR. DOWNEY: WHY DID YOU HANDLE THOSE NEGOTIATIONS ON YOUR OWN AND NOT HAVE LAWYERS PRESENT?
ELIZABETH A. HOLMES: THIS WAS A REALLY IMPORTANT RELATIONSHIP TO US. I WANTED TO TALK TO HIM DIRECTLY AND DO WHATEVER WE COULD TO MAKE THE RELATIONSHIP HAPPEN IN THE CONTEXT OF AGREEING TO THINGS IN THE NEGOTIATION, AND WE DIDN'T HAVE THE MONEY TO BE ABLE TO HAVE A LOT OF LAWYERS. WE WERE A SMALL COMPANY AT THAT POINT.
MR. DOWNEY: AND WERE YOU ULTIMATELY ABLE TO EXECUTE AN AGREEMENT WITH SAFEWAY?
ELIZABETH A. HOLMES: WE WERE.
MR. DOWNEY: LET ME ASK YOU TO LOOK AT EXHIBIT 387, WHICH IS ALREADY IN EVIDENCE. AND I'LL SHOW YOU THE FIRST PAGE. DO YOU SEE THAT THIS IS THE AGREEMENT THAT WAS ENTERED INTO BETWEEN THERANOS AND SAFEWAY IN 2010?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: I WANT TO DIRECT YOUR ATTENTION TO PAGE 8. AND I WANT TO DIRECT YOUR ATTENTION SPECIFICALLY TO NUMBER 3, THE PROGRAM PHASES. IF YOU COULD JUST HIGHLIGHT THAT. WAS THE THERANOS-SAFEWAY RELATIONSHIP SET TO OPERATE IN PHASES AT THE TIME THAT YOU SIGNED THIS AGREEMENT?
MR. DOWNEY: WHAT WERE THE PHASES OF THE SAFEWAY AGREEMENT?
ELIZABETH A. HOLMES: THERE WERE THREE. THERE WAS WHAT WAS CALLED HERE THE PRE-PILOT PERIOD; THERE WAS A PILOT; AND THEN THERE WAS A BROAD ROLLOUT OR LAUNCH PERIOD.
MR. DOWNEY: AND WHAT WAS TO HAPPEN DURING THE PRE-PILOT PERIOD?
ELIZABETH A. HOLMES: A LOT OF WORK TO DO, INCLUDING WE HAD AGREED TO CUSTOMIZE OUR DEVICES AND TESTS FOR SAFEWAY AND TO BUILD CUSTOM SOFTWARE FOR THEM. WE HAD TO CONTRACT WITH INSURANCE COMPANIES, GET THE CONTRACTS, NEGOTIATE PRICING RATES, BUILD THE SOFTWARE TO BE ABLE TO INTERFACE WITH THEM AND THE ELECTRONIC MEDICAL RECORDS WE WERE TALKING ABOUT EARLIER, AND BUILD THE ORGANIZATION TO MEET SERVICE STANDARDS THAT SAFEWAY WAS GOING TO SET FOR RETAIL, WHICH INCLUDED CUSTOMER SUPPORT, CUSTOMER SERVICE, AND OTHER ORGANIZATIONS.
MR. DOWNEY: DO YOU SEE THAT UNDER THE AGREEMENT THE OBLIGATIONS DURING THE PRE-PILOT PERIOD WERE IMPOSED ON SAFEWAY, OR ON THERANOS RATHER?
MR. DOWNEY: AND WHAT WOULD HAPPEN IF THERANOS DID NOT MEET THOSE CONDITIONS?
ELIZABETH A. HOLMES: SAFEWAY COULD TERMINATE THE AGREEMENT.
MR. DOWNEY: AND WAS THERANOS PAID UNDER THE AGREEMENT?
MR. DOWNEY: WHAT HAPPENED TO THE PAYMENT THAT THERANOS GOT UNDER THE AGREEMENT IF SAFEWAY TERMINATED THE AGREEMENT?
ELIZABETH A. HOLMES: SAFEWAY GOT THE PAYMENT BACK.
MR. DOWNEY: LET ME ASK YOU TO FOCUS SPECIFICALLY ON SOME OF THE LANGUAGE OF THE REQUIREMENTS ON THIS PRE-PILOT PERIOD. DO YOU SEE THAT NUMBER I REFERS TO THAT "THERANOS WILL SECURE THE REGULATORY APPROVALS," AND IT GOES ON FROM THERE?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: DO YOU SEE THAT? AND WHAT REGULATORY APPROVALS IS THAT REFERRING TO?
ELIZABETH A. HOLMES: IT'S REFERRING TO WHATEVER REGULATORY APPROVALS WE NEEDED TO BE ABLE TO LAUNCH A PILOT.
MR. DOWNEY: DO YOU SEE THE SECOND ENTRY THAT SAYS, "THERANOS WILL CUSTOMIZE THE THERANOS SYSTEMS FOR SAFEWAY," AND THEN IT GOES ON FROM THERE?
MR. DOWNEY: AND SO DID THERANOS HAVE AN OBLIGATION TO CUSTOMIZE ITS SYSTEM TO SATISFY WHATEVER SAFEWAY'S REQUIREMENTS WERE DURING THE PRE-PILOT PERIOD?
ELIZABETH A. HOLMES: WE DID.
MR. DOWNEY: AND DID SAFEWAY DURING THE PRE-PILOT PERIOD MAKE REQUESTS AS TO HOW THERANOS SYSTEMS 4.0 SHOULD BE CUSTOMIZED?
MR. DOWNEY: AND WERE SOME OF THOSE CUSTOMIZATION REQUIREMENTS DIFFICULT FOR THERANOS TO IMPLEMENT?
MR. DOWNEY: LET'S -- LET ME ASK YOU TO LOOK AT EXHIBIT 7174.
ELIZABETH A. HOLMES: OKAY.
MR. DOWNEY: NOW, LET ME FIRST ASK YOU, AS OF 2010, WAS THE 4 SERIES DEVICE ENVISIONED TO BE THE DEVICE, THE SINGLE DEVICE THAT WE LOOKED AT EARLIER TODAY?
MR. DOWNEY: AND DID SAFEWAY MAKE REQUESTS FOR MODIFICATION OF THAT?
MR. DOWNEY: WHAT DO YOU RECALL WERE THE MODIFICATIONS THAT SAFEWAY REQUESTED OF THAT HARDWARE?
ELIZABETH A. HOLMES: THERE WERE SEVERAL. THE FIRST WAS THAT INSTEAD OF PROCESSING ONE SAMPLE AT A TIME, THEY ASKED THAT WE BUILD A DEVICE THAT COULD PROCESS SIX SAMPLES AT A TIME. THEY WANTED THE DEVICE TO BE WITHIN VERY SPECIFIC DIMENSIONS THAT COULD FIT WITHIN CABINETRY THAT THEY WERE BUILDING IN THEIR STORES, AND THERE WAS SPECIFIC VENTILATION AND HEAT REQUIREMENTS AROUND THAT.
MR. DOWNEY: AND WAS THAT A DEVICE THAT THERANOS HAD BEEN WORKING ON PRIOR TO ITS RELATIONSHIP WITH SAFEWAY?
MR. DOWNEY: LET ME ASK YOU, IS EXHIBIT 7174 AN EMAIL FROM MR. BURD TO YOU CONCERNING THE THERANOS-SAFEWAY RELATIONSHIP?
MR. DOWNEY: YOUR HONOR, I MOVE TO ADMIT 7174.
MR. LEACH: NO OBJECTION, YOUR HONOR.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(DEFENDANT'S EXHIBIT 7174 WAS RECEIVED IN EVIDENCE.)
BY MR. DOWNEY:
MR. DOWNEY: DO YOU SEE THAT MR. BURD SENT THIS EMAIL TO YOU IN MAY OF 2011?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND DO YOU SEE IN THE FIRST SENTENCE HE SAYS, "THE FIRST ATTACHMENT LABELLED MINILAB IS A CRUDE SKETCH OF WHAT I AM SUGGESTING"?
MR. DOWNEY: AND THEN HE GOES ON TO SAY, "IGNORE THE SCREEN IN FRONT. I WOULD PREFER TO MOUNT THE SCREEN ON THE WALL TO THE LEFT OF THE UNIT." DO YOU SEE THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND LET'S LOOK AT WHAT IS ATTACHED TO THIS EMAIL IN 7174. LET'S LOOK AT THIS PAGE AND SEE IF WE CAN SPLIT IT WITH THE NEXT PAGE. ARE THESE THE ATTACHMENT DRAWINGS THAT MR. BURD SENT TO YOU?
MR. DOWNEY: CAN YOU EXPLAIN WHAT YOU UNDERSTOOD MR. BURD WAS REQUESTING WITH REGARD TO THE THERANOS SYSTEM 4.0 WHEN HE SENT THESE DRAWINGS TO YOU?
ELIZABETH A. HOLMES: YES. THESE WERE THE DEVICES THAT HE WANTED US TO BUILD, WITH SOME DETAILS ON THE KIND OF MATERIALS THAT HE THOUGHT WE SHOULD BE USING FOR USE OF THE DEVICES IN HIS STORES.
MR. DOWNEY: AND CAN YOU SPECIFICALLY GO THROUGH THE DRAWINGS AND EXPLAIN HOW THEY WERE DESIGNED TO WORK, AT LEAST AS HE EXPLAINED IT?
ELIZABETH A. HOLMES: I CAN, YES. ON THE LEFT WHERE YOU SEE THE CABINETRY, THERE'S A DRAWING OF A SINGLE DEVICE THAT HAS A TOUCHSCREEN IN THE MIDDLE, AND THERE'S LITTLE BAYS THERE. DO YOU SEE THE BLOCKS THAT ARE LITTLE RECTANGLES? EACH ONE OF THOSE IS INTENDED TO REFLECT WHERE YOU WOULD PUT IN A CARTRIDGE. SO HE'S TALKING ABOUT A SINGLE DEVICE HERE THAT COULD PROCESS 12 CARTRIDGES AT THE SAME TIME THAT WOULD FIT WITHIN A CABINET LIKE THAT THAT WOULD NEED TO BE VENTILATED FOR THAT TYPE OF TECHNOLOGY. HIS COMMENTS IN THE EMAIL ABOUT WOOD AND STAINLESS STEEL GET INTO THE MATERIALS THAT HE WANTED TO MATCH THE CABINETRY. AND ON THE RIGHT YOU CAN SEE HIS OTHER SUGGESTION FOR THE DESIGN, WHICH WAS TO MAKE THE DEVICE LIKE A KIOSK WHERE, AGAIN, YOU HAVE A SINGLE TOUCHSCREEN, YOU HAVE 12 BAYS FOR INSERTING 12 DIFFERENT CARTRIDGES, AND THE DEVICE WOULD STAND ON ITS OWN.
MR. DOWNEY: AND DID HE COMMUNICATE TO YOU THAT IT WAS IMPORTANT FOR HIM FOR THESE MODIFICATIONS TO BE MADE?
MR. DOWNEY: DID MAKING THESE MODIFICATIONS PRESENT ANY CHALLENGE TO THERANOS IN CONNECTION WITH ITS TECHNOLOGY?
ELIZABETH A. HOLMES: THIS IS A WHOLE NEW PRODUCT.
MR. DOWNEY: AND WHAT WOULD BE INVOLVED IN RECONFIGURING THE THERANOS SYSTEM TO BE ABLE TO MEET THE REQUIREMENTS THAT HE WAS ASKING FOR IN THIS COMMUNICATION?
ELIZABETH A. HOLMES: WE'D HAVE TO FIGURE OUT HOW TO PROCESS IN THIS CASE 12 SAMPLES AT A TIME. WE ULTIMATELY SPLIT THIS INTO TWO DEVICES THAT COULD EACH DO SIX SAMPLES AT A TIME. THIS ENDED UP BEING VERY CHALLENGING BECAUSE THE SIX SAMPLES ARE IN THE SAME DEVICE, AND ONE OF THE KEYS TO OUR CHEMISTRY FORMULA IS THE TEMPERATURE AT WHICH YOU RUN THE CHEMISTRY. MANAGING THE THERMAL PROPERTIES OF THIS DEVICE WHEN YOU'RE RUNNING SIX SAMPLES AT A TIME IS VERY COMPLEX.
MR. DOWNEY: OKAY. DID THERANOS NEVERTHELESS ATTEMPT TO BUILD THESE DEVICES?
ELIZABETH A. HOLMES: WE DID.
MR. DOWNEY: AND DID YOU, IN FACT, EXPERIENCE CHALLENGES WHILE BUILDING THEM?
ELIZABETH A. HOLMES: WE DID.
MR. DOWNEY: DID YOU COMMUNICATE WITH MR. BURD THAT THERE WERE THESE CHALLENGES?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: AND DID MR. BURD OFFER THAT SAFEWAY WOULD ATTEMPT TO HELP THERANOS IN CONNECTION WITH MEETING THE CHALLENGES IT WAS EXPERIENCING?
ELIZABETH A. HOLMES: HE DID.
MR. DOWNEY: AND DID YOU TAKE HIM UP ON THAT OFFER?
ELIZABETH A. HOLMES: FOR SOME PROBLEMS, YES. FOR SOME PROBLEMS, NO.
MR. DOWNEY: AND FOR THOSE YOU DIDN'T TAKE HIM UP ON THAT OFFER, WHY WAS THAT?
ELIZABETH A. HOLMES: STEVE HAD SUGGESTED THAT SOME OF THE ENGINEERS WHO WORKED ON THE CONSTRUCTION OF HIS SPACES COULD HELP US WITH BUILDING THESE DEVICES, AND OUR ENGINEERS INTERNALLY FELT THAT WE HAD THE EXPERTISE, WE JUST NEEDED TO TRIAGE AND DEAL WITH THE ISSUES.
MR. DOWNEY: WAS THERANOS ULTIMATELY ABLE TO BUILD A MULTI CARTRIDGE DEVICE?
ELIZABETH A. HOLMES: WE DID.
MR. DOWNEY: AND WHEN DID THERANOS COMPLETE THAT DEVICE?
ELIZABETH A. HOLMES: I THINK IN 2012.
MR. DOWNEY: NOW, I WANT TO TURN FROM TALKING ABOUT THE TECHNOLOGY UNDER THE AGREEMENT TO TALKING ABOUT THERANOS'S MARKETING EFFORTS WITH SAFEWAY. DID MR. BURD ENCOURAGE THERANOS TO PUT MORE FOCUS ON MARKETING AND BRANDING IN THE PERIOD BETWEEN 2010 AND 2012?
ELIZABETH A. HOLMES: HE DID.
MR. DOWNEY: WAS THAT YOUR PRIORITY IN THAT PERIOD BETWEEN 2010 AND 2012?
MR. DOWNEY: WHY WAS THAT?
ELIZABETH A. HOLMES: BECAUSE WE HAD A VERY SIGNIFICANT AMOUNT OF WORK THAT WE NEEDED TO DO ON THE PRODUCT AND ON THE OPERATIONS TO GET READY TO LAUNCH THE SERVICE.
MR. DOWNEY: AND DID YOU COMMUNICATE THAT TO MR. BURD?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: DID THERANOS ULTIMATELY AGREE TO LAUNCH A PROGRAM WITH SAFEWAY WHERE THERANOS PROVIDED BLOOD TESTING SERVICES WITHIN THE SAFEWAY CORPORATE HEADQUARTERS?
MR. DOWNEY: AND WHERE ARE THOSE HEADQUARTERS LOCATED?
ELIZABETH A. HOLMES: IN PLEASANTON, CALIFORNIA.
MR. DOWNEY: OKAY. DID SUCH A SERVICE CENTER OPEN WITHIN THAT HEADQUARTERS?
MR. DOWNEY: DO YOU RECALL WHEN THAT LAB SERVICE OPENED?
ELIZABETH A. HOLMES: I THINK IT WAS IN 2012.
MR. DOWNEY: OKAY. NOW, WHEN THERANOS WAS OPERATING THAT SERVICE CENTER IN THE CORPORATE HEADQUARTERS OF SAFEWAY, WAS IT USING THE TECHNOLOGY THAT THERANOS WAS DEVELOPING AS PART OF SERIES 4.0?
MR. DOWNEY: WHY NOT?
ELIZABETH A. HOLMES: THE REQUEST FROM SAFEWAY WAS TO BE ABLE TO PROVIDE LAB SERVICES AT THE PRICE POINTS WITH WHICH WE WERE CONTRACTING WITH INSURERS, WHICH AT THAT TIME IT WAS 30 PERCENT OF THE COST OF MEDICARE. SO WE AGREED THAT THERANOS WOULD PROVIDE A TRADITIONAL LAB SERVICE IN ORDER TO DO THAT BECAUSE WE WERE NOT READY TO LAUNCH OUR TECHNOLOGY.
MR. DOWNEY: LET ME ASK YOU TO LOOK AT EXHIBIT 7250.
ELIZABETH A. HOLMES: OKAY.
MR. DOWNEY: IS THIS ANOTHER EMAIL BETWEEN YOU AND MR. BURD CONCERNING THE RELATIONSHIP BETWEEN SAFEWAY AND THERANOS?
MR. DOWNEY: I WOULD MOVE TO ADMIT THE EXHIBIT 7250, YOUR HONOR.
MR. LEACH: NO OBJECTION, YOUR HONOR.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(DEFENDANT'S EXHIBIT 7250 WAS RECEIVED IN EVIDENCE.)
BY MR. DOWNEY:
MR. DOWNEY: DO YOU SEE THAT THIS IS AN EMAIL THAT YOU SENT TO MR. BURD IN SEPTEMBER OF 2012?
MR. DOWNEY: AND LET ME ASK YOU TO LOOK AT THE EMAIL THAT WAS SENT AT 1:03 -- I'M SORRY, 3:03 A.M. ON SEPTEMBER 12TH.
ELIZABETH A. HOLMES: OKAY.
MR. DOWNEY: I'D LIKE YOU TO FOCUS ON THE LANGUAGE THAT SAYS -- YOU SAY AT THE BEGINNING, "I THINK THAT'S FANTASTIC AS YOU KNOW. I'LL SEND YOU WHAT WE'RE CURRENTLY WORKING WITH." AND THEN YOU SAY, "THE DINOSAUR LAB DOES NOT DO 100 PERCENT OF ALL TESTS YET. OF COURSE WITH OUR SYSTEMS IT'S A WHOLE DIFFERENT GAME ON TIME - WE'LL HAVE DATA OUT WITHIN 30 MINUTES OF SAMPLE BEING PROCESSED AS YOU ALSO KNOW." DO YOU SEE THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND DO YOU SEE IN THE EMAIL BELOW THAT, WHICH MR. BURD HAD SENT TO YOU, THAT HE REFERENCES A DINOSAUR LAB?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND WHEN YOU WERE REFERRING TO A DINOSAUR LAB IN THESE COMMUNICATIONS BACK AND FORTH WITH MR. BURD, WHAT WERE YOU REFERRING TO?
ELIZABETH A. HOLMES: A TRADITIONAL LAB RUNNING TRADITIONAL TECHNOLOGY.
MR. DOWNEY: AND WAS THERANOS DOING THAT WITHIN THIS PERIOD OF 2012?
MR. DOWNEY: AND WAS THAT SOMETHING THAT YOU HAD DISCUSSED WITH MR. BURD?
MR. DOWNEY: AND IT WAS SOMETHING THAT YOU BELIEVED THAT HE UNDERSTOOD WHEN YOU WERE DISCUSSING IT WITH HIM?
MR. DOWNEY: DID MR. BURD RAISE ANY QUESTIONS ABOUT THE ACCURACY OF THE TESTS THAT THERANOS RAN IN THAT SERVICE CENTER IN THE CORPORATE HEADQUARTERS OF SAFEWAY?
ELIZABETH A. HOLMES: HE DID NOT.
MR. DOWNEY: DO YOU RECALL HIM RAISING SOME COMPLAINTS?
MR. DOWNEY: AND WHAT DO YOU RECALL HIS COMPLAINTS WERE?
ELIZABETH A. HOLMES: HE WAS VERY FRUSTRATED ABOUT THE TURNAROUND TIME OF THE RESULTS, HOW FAST THOSE RESULTS WERE GOING BACK TO PATIENTS, AND HE THOUGHT THAT THAT MADE FOR A POOR PATIENT EXPERIENCE.
MR. DOWNEY: OKAY. NOW, I WANT TO FOCUS ON THE TIME PERIOD SHORTLY BEFORE MR. BURD LEFT SAFEWAY AND FOCUS ON DISCUSSIONS YOU HAD WITH HIM IN THE TIME PERIOD PRECEDING THAT. FIRST OF ALL, DO YOU RECALL THAT MR. BURD TESTIFIED THAT HIS DEPARTURE FROM SAFEWAY WAS ANNOUNCED TOWARDS THE VERY END OF 2012?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND DO YOU RECALL THAT MR. BURD DISCUSSED A SERIES OF EMAILS BETWEEN YOU AND HIM IN THE FALL OF 2012 TALKING ABOUT A POTENTIAL LAUNCH DATE AT SAFEWAY?
MR. DOWNEY: LET'S LOOK AT AN EMAIL IN WHICH MR. BURD COMMUNICATES WITH YOU IN DECEMBER OF 2012, EXHIBIT 718, WHICH IS ALREADY IN EVIDENCE.
ELIZABETH A. HOLMES: OKAY.
MR. DOWNEY: DO YOU SEE HERE THAT MR. BURD WRITES TO YOU ON DECEMBER 18TH AND SAYS HE WOULD LIKE TO HAVE A PHONE CALL SO HE COULD GET A BETTER SENSE FOR A POSSIBLE LAUNCH DATE?
MR. DOWNEY: AND HE SAYS HE IS NOT LOOKING FOR A FIRM DATE BECAUSE THAT MAY BE PREMATURE?
MR. DOWNEY: DO YOU SEE THAT? ALL RIGHT. NOW, LET'S GO DOWN TO THE NEXT PARAGRAPH TO THE SENTENCE -- TO THE PHRASE THAT BEGINS, "IT IS CRYSTAL CLEAR THAT EITHER THE RECENTLY COMMITTED DATES WERE FAR TOO AMBITIOUS OR THERE HAVE BEEN SOME OVERWHELMING SURPRISES ALONG THE WAY. I ALSO WORRY THAT THE DEMANDS OF YOUR CORE BUSINESS OR THE NEWLY ACQUIRED DOD BUSINESS ARE CONSUMING RESOURCES THAT WOULD OTHERWISE BE COMMITTED TO LAUNCH." DO YOU SEE THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: NOW, THERE'S A REFERENCE IN THAT SENTENCE THAT MR. BURD MAKES TO YOUR CORE BUSINESS.
MR. DOWNEY: AND WHAT DID YOU UNDERSTAND MR. BURD TO BE REFERRING TO WHEN HE REFERRED TO YOUR CORE BUSINESS?
ELIZABETH A. HOLMES: TO OUR WORK WITH WALGREENS.
MR. DOWNEY: AND WHAT WAS HAPPENING IN THE WALGREENS RELATIONSHIP IN THE FALL OF 2012?
ELIZABETH A. HOLMES: WE HAD MOVED TO THE PHASE I, PHASE II MODEL THAT WE TALKED ABOUT EARLIER, AND THERANOS WAS WORKING TO BUILD THE CENTRAL LAB TO BE ABLE TO LAUNCH WITH SAMPLES BEING SHIPPED TO A CENTRAL LAB INSTEAD OF PUTTING DEVICES IN THE STORES.
MR. DOWNEY: AND AS BETWEEN SAFEWAY AND WALGREENS, THOUGH, WHICH OF THE TWO PARTNERS WAS DEVOTING MORE RESOURCES TO ALLOW THERANOS TO LAUNCH IN ITS STORES?
ELIZABETH A. HOLMES: WALGREENS WAS.
MR. DOWNEY: BETWEEN AUGUST OF 2012 AND DECEMBER OF 2012, DID MR. BURD PUSH FOR THERANOS TO LAUNCH SERVICE CENTERS IN SAFEWAY STORES?
ELIZABETH A. HOLMES: HE DID.
MR. DOWNEY: DID YOU EXPLAIN TO MR. BURD THAT THERE WERE ISSUES FOR THERANOS WITH PURSUING THAT MODEL IMMEDIATELY?
MR. DOWNEY: AND WHAT ISSUES DID YOU SEE FOR THERANOS OF LAUNCHING THERANOS SERVICE CENTERS IN SAFEWAY STORES?
ELIZABETH A. HOLMES: THE FIRST WAS THAT WE WERE NOW BUILDING OUR WHOLE BUSINESS AROUND THIS PHASE I, PHASE II MODEL, AND IF WE WERE GOING TO DO THAT WITH WALGREENS, WE HAD TO DO THAT WITH SAFEWAY BECAUSE WE COULDN'T BE INCONSISTENT BETWEEN THOSE TWO. ALSO, WE WERE NOT YET LAUNCHING WITH WALGREENS, AND SO WE COULDN'T BE LAUNCHING WITH SAFEWAY IF WE WERE LAUNCHING BEFORE WALGREENS. AND THERE WERE QUESTIONS FROM A REGULATORY PERSPECTIVE ABOUT WHAT THE RIGHT THING TO DO WAS.
MR. DOWNEY: AND WERE THOSE ALL CONCEPTS THAT YOU EXPLAINED TO MR. BURD?
MR. DOWNEY: AND DID HE ENGAGE WITH YOU ON THOSE ISSUES?
ELIZABETH A. HOLMES: HE DID.
MR. DOWNEY: AND WHAT WAS HIS REACTION?
ELIZABETH A. HOLMES: HE REALLY WANTED TO PUSH FORWARD TO LAUNCH.
MR. DOWNEY: DID HE TELL YOU WHY HE WANTED TO LAUNCH?
MR. DOWNEY: WHAT WAS THE REASON THAT HE GAVE YOU?
ELIZABETH A. HOLMES: THAT HE WOULD BE RETIRING FROM SAFEWAY SOON AND REALLY WANTED TO LAUNCH BEFORE HIS RETIREMENT. HE ALSO COMMUNICATED THAT SAFEWAY'S STOCK WAS SUFFERING AND HE THOUGHT THAT THIS ANNOUNCEMENT COULD REALLY HELP SAFEWAY'S STOCK PRICE.
MR. DOWNEY: DID YOU SEE IN EXHIBIT 718 THE REFERENCE TO NEWLY ACQUIRED DOD BUSINESS?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND DID YOU SEE THAT MR. BURD WAS REFERENCING THAT IN THE DECEMBER 18, 2012?
MR. DOWNEY: NOW, WAS THERE A NEWLY ACQUIRED BUSINESS WITH DOD THAT HAD BEEN ACQUIRED IN OR AROUND DECEMBER OF 2012?
MR. DOWNEY: AND WHAT WAS THAT?
ELIZABETH A. HOLMES: OUR CONTRACTS WITH SOCOM, CENTCOM, AND I THINK THIS MAY HAVE BEEN AROUND THE TIME THAT WE WERE ALSO STARTING TO WORK WITH AFRICOM.
MR. DOWNEY: AND DID THERANOS INTEND TO DEVOTE RESOURCES TO DEVELOPING TECHNOLOGIES FOR USE IN CONNECTION WITH THOSE PROGRAMS?
ELIZABETH A. HOLMES: WE DID.
MR. DOWNEY: DID YOU ALSO EXPLAIN THAT TO MR. BURD?
MR. DOWNEY: ULTIMATELY DID MR. BURD LEAVE SAFEWAY?
MR. DOWNEY: AND YOU HEARD HIS TESTIMONY DURING THIS TRIAL, DID YOU NOT?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: WERE YOU TRYING TO IGNORE OR HIDE ISSUES WITH RESPECT TO THE TECHNOLOGY IN YOUR COMMUNICATIONS WITH MR. BURD?
MR. DOWNEY: WAS LAUNCHING TEST SERVICES COMPLICATED FOR THERANOS AND SAFEWAY?
MR. DOWNEY: AND WHAT KIND OF CHALLENGES WERE YOU FACING TO GET THAT OFF THE GROUND?
ELIZABETH A. HOLMES: WE HAD MANY. THERE WAS THE TECHNOLOGY WORK AND BRINGING THE TESTS UP THAT HAD TO HAPPEN; THERE WAS THE INSURANCE COMPANY CONTRACTING THAT HAD TO HAPPEN; THE SOFTWARE, THE ELECTRONIC MEDICAL RECORDS, A WHOLE SUITE OF SOFTWARE FOR THE STORE, THE CHECK-IN PROCESS, ELIGIBILITY OF SCANNING THE INSURANCE CARDS AND MAKE SURE THAT WE COULD CONNECT ELECTRONICALLY; THE MARKETING WORK. I COULD GO ON.
MR. DOWNEY: OKAY. DO YOU FEEL THAT YOU WERE TRANSPARENT WITH MR. BURD THAT YOU HAD AGREED TO THIS PHASE I, PHASE II RELATIONSHIP?
MR. DOWNEY: LET ME ASK YOU TO LOOK BACK AT 715 ALREADY IN EVIDENCE. DO YOU SEE THE EMAIL FROM YOU TO MR. BURD AT 8:30 P.M.?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND DO YOU SEE IN THE THIRD PARAGRAPH WHERE YOU SAY, "WHILE WE HAVE NEVER WANTED TO BE IN THE TRADITIONAL LAB BUSINESS, WE DECIDED RECENTLY TO GET INTO IT AS WE DISCUSSED." WHAT WAS THAT A REFERENCE TO?
ELIZABETH A. HOLMES: TO THE FACT THAT WE WERE MOVING FORWARD WITH THIS PHASE I MODEL AS THE WAY THAT WE WERE GOING TO LAUNCH OUR SERVICES AT RETAIL OPERATING AS A CENTRAL LAB OURSELVES EVEN THOUGH THAT WAS NOT WHAT WE WANTED TO DO WITH OUR TECHNOLOGY. IT WASN'T THE PURPOSE OF OUR TECHNOLOGY.
MR. DOWNEY: WAS MR. BURD AMENABLE TO A MODEL WHERE THE SERVICE CENTERS COLLECTED SAMPLES AND SENT THEM TO A CENTRAL LAB AT THERANOS?
ELIZABETH A. HOLMES: HE DID NOT LIKE IT LIKE HE LIKED PUTTING A DEVICE IN THE STORE.
MR. DOWNEY: OKAY. I WANT TO TALK ABOUT WHAT HAPPENED IN THE SAFEWAY-THERANOS RELATIONSHIP AFTER MR. BURD ANNOUNCED HIS RETIREMENT IN LATE 2012. AFTER THAT POINT, DID THERE BEGIN TO BE SOME DISPUTES BETWEEN THERANOS AND SAFEWAY?
MR. DOWNEY: AND DID MR. BALWANI BEGIN TO TAKE AN ACTIVE ROLE WITH REGARD TO DISCUSSIONS WITH SAFEWAY?
ELIZABETH A. HOLMES: HE DID.
MR. DOWNEY: PRIOR TO THAT TIME, HAD YOU BEEN THE PRINCIPAL PERSON AT THERANOS DEALING WITH SAFEWAY?
ELIZABETH A. HOLMES: I WAS WITH MR. BURD.
MR. DOWNEY: OKAY. AND WHO AT SAFEWAY BECAME THE PRINCIPAL PERSON DEALING WITH DISCUSSIONS BETWEEN SAFEWAY AND THERANOS AFTER JANUARY OF 2013?
ELIZABETH A. HOLMES: ROBERT EDWARDS AND PEOPLE WHO WERE WORKING FOR HIM.
MR. DOWNEY: AND DID THERANOS REMAIN INTERESTED IN LAUNCHING ITS TESTING SERVICES IN 2013?
MR. DOWNEY: WOULD THERANOS HAVE BEEN ABLE TO LAUNCH IN SAFEWAY STORES IN THE FALL OF 2013 AS IT DID IN WALGREENS STORES?
ELIZABETH A. HOLMES: WE COULD HAVE, YES.
MR. DOWNEY: DID THERE COME A TIME WHEN THE OWNERSHIP OF SAFEWAY CHANGED?
MR. DOWNEY: AND WHO WERE THE NEW OWNERS?
ELIZABETH A. HOLMES: A PRIVATE EQUITY FUND CALLED CERBERUS.
MR. DOWNEY: AND WHAT EFFECT, IF ANY, DID THAT HAVE ON THE RELATIONSHIP BETWEEN THERANOS AND SAFEWAY?
ELIZABETH A. HOLMES: IT SEEMED TO COMPLICATE IT. ROBERT EDWARDS, THE SAFEWAY CEO, WAS IN DISCUSSIONS WITH CERBERUS ABOUT THEIR PRIORITIES, AND I COULDN'T QUITE UNDERSTAND WHAT DECISIONS HE WAS MAKING OR NOT MAKING BASED ON THOSE INTERACTIONS.
MR. DOWNEY: OKAY. ULTIMATELY I BELIEVE YOU TESTIFIED A BIT AGO THERE WERE NEVER THERANOS SERVICE CENTERS IN SAFEWAY STORES?
ELIZABETH A. HOLMES: THERE WERE NOT.
MR. DOWNEY: OKAY. I WANT TO TAKE A MOMENT AND ASK YOU ABOUT VARIOUS FINANCIAL PROJECTIONS THAT WERE SHOWN IN DOCUMENTS THAT WERE SHARED WITH THE BOARD OF DIRECTORS OF THERANOS AND INVESTORS AND OTHERS. DO YOU RECALL TESTIMONY FROM MS. PETERSON ABOUT RECEIVING CERTAIN FINANCIAL PROJECTIONS CONCERNING THERANOS?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: LET ME ASK YOU, WAS THERE A PROCESS FOR PREPARING FINANCIAL DOCUMENTS AT THERANOS?
MR. DOWNEY: AND WHO WAS IN CHARGE OF PREPARATION OF FINANCIAL DOCUMENTS AND PROJECTIONS AT THERANOS?
ELIZABETH A. HOLMES: SUNNY BALWANI.
MR. DOWNEY: WERE FINANCIAL UPDATES, INCLUDING PROJECTIONS, SOMETIMES PROVIDED TO THERANOS'S BOARD?
ELIZABETH A. HOLMES: THEY WERE.
MR. DOWNEY: TYPICALLY HOW OFTEN WERE SUCH PROJECTIONS PROVIDED TO THERANOS'S BOARD?
ELIZABETH A. HOLMES: FOUR TIMES A YEAR AT EACH BOARD MEETING.
MR. DOWNEY: OKAY. LET ME ASK YOU TO LOOK AT EXHIBIT 15032.
ELIZABETH A. HOLMES: OKAY.
MR. DOWNEY: IS EXHIBIT 15032 A PACKET OF MATERIALS THAT WAS PREPARED FOR THE BOARD OF DIRECTORS OF THERANOS IN JULY OF 2014?
ELIZABETH A. HOLMES: IT IS.
MR. DOWNEY: YOUR HONOR, I MOVE THE ADMISSION OF 15032.
MR. LEACH: NO OBJECTION, YOUR HONOR.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(DEFENDANT'S EXHIBIT 15032 WAS RECEIVED IN EVIDENCE.)
MR. DOWNEY: YOUR HONOR, I SHOULD NOTE FOR THE RECORD THAT I'M NOT SURE THAT 15032 INCLUDES ALL OF THE MATERIALS IN THIS PACKET. I HAVE NO OBJECTION TO THOSE BEING ADDED, AND I'LL CONFER WITH MR. LEACH AND SEE IF HE HAS ANY DESIRE TO DO THAT. I'M ONLY GOING TO REFER TO A VERY SMALL PORTION OF THIS.
JUDGE DAVILA: ALL RIGHT. THIS SECTION ENDS AT BATES 541870?
MR. DOWNEY: THAT'S CORRECT, YOUR HONOR.
JUDGE DAVILA: ALL RIGHT. IT'S ADMITTED. IT MAY BE PUBLISHED. THANK YOU.
BY MR. DOWNEY:
MR. DOWNEY: LET ME GO TO -- DO YOU SEE THAT THESE ARE BOARD MATERIALS FOR THAT JULY MEETING?
MR. DOWNEY: IF YOU GO TO THE NEXT PAGE, DO YOU SEE THAT THERE'S AN AGENDA SET FORTH FOR THIS MEETING?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND WOULD THERE TYPICALLY BE AN AGENDA FOR BOARD OF DIRECTORS MEETINGS AT THERANOS?
MR. DOWNEY: AND WOULD A FINANCIAL PLAN OR A FINANCIAL STRUCTURE FOR THE COMPANY TYPICALLY BE ONE ITEM THAT WOULD BE DISCUSSED WITH THE BOARD OF DIRECTORS?
MR. DOWNEY: AND DO YOU SEE THAT THERE WAS AN ENTRY FOR, ON THE AGENDA FOR A FINANCIAL PLAN AND STRUCTURE DISCUSSION BETWEEN 1:30 AND 3:00 P.M. AT THIS PARTICULAR BOARD MEETING?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: LET ME ASK YOU TO GO FORWARD TO PAGE 5 OF THIS DOCUMENT. AND DO YOU SEE THAT THIS DOCUMENT IS LABELLED PROJECTED STATEMENT OF INCOME?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: WHAT IS THIS DOCUMENT?
ELIZABETH A. HOLMES: THIS IS THE OUTPUT OF A MODEL SUNNY HAD WITH PROJECTIONS ON WHAT OUR INCOME COULD BE FOR 2014 AND 2015.
MR. DOWNEY: AND WAS THIS PROVIDED TO THE BOARD OF DIRECTORS FOR PURPOSES OF DISCUSSION AT THAT MEETING?
ELIZABETH A. HOLMES: IT WAS.
MR. DOWNEY: I'D LIKE TO ASK YOU TO LOOK AT THE ITEMS NEXT TO THE -- DO YOU SEE ON THE LEFT-HAND COLUMN THERE'S A REVENUE COLUMN?
MR. DOWNEY: AND DO YOU SEE UNDER THAT AT THE BOTTOM OF THAT SECTION THERE'S TOTAL REVENUE?
MR. DOWNEY: AND DO YOU SEE IT PROJECTS $140 MILLION IN TOTAL REVENUE FOR 2014?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND DO YOU SEE THAT IT PROJECTS $990 MILLION FOR 2015?
MR. DOWNEY: AND IS THIS A PROJECTED INCOME STATEMENT FOR 2014 AND '15?
MR. DOWNEY: LET ME ASK YOU TO LOOK NEXT AT PAGE 7 OF THE DOCUMENT. AND DO YOU SEE THAT ON PAGE 7 -- WHAT IS PAGE 7?
ELIZABETH A. HOLMES: PAGE 7 LOOKS LIKE A BALANCE SHEET FOR THERANOS AS OF JULY OF 2014.
MR. DOWNEY: AND DO YOU SEE UNDER THE -- ABOUT TWO-THIRDS OF THE WAY DOWN THERE'S A LINE ITEM FOR DEFERRED REVENUE AND CUSTOMERS' DEPOSITS?
MR. DOWNEY: AND DO YOU SEE THE AMOUNT LISTED THERE?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND WHAT IS THAT AMOUNT?
ELIZABETH A. HOLMES: 168 MILLION.
MR. DOWNEY: IF YOU GO BACK TO PAGE 5, DO YOU SEE THAT THE -- WITHIN TOTAL REVENUE THERE APPEARS TO BE A PROJECTION OF $140 MILLION --
MR. DOWNEY: -- FOR THE BALANCE -- FOR THE YEAR END 2014?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND YEAR END 2014 WOULD BE ABOUT SIX MONTHS OR SO AFTER THIS MEETING?
MR. DOWNEY: DO YOU KNOW IF SOME OF THE REVENUE THAT WOULD BE -- CONSTITUTE PART OF THE $140 MILLION WOULD BE THAT $168 MILLION THAT IS ON THE BALANCE SHEET?
ELIZABETH A. HOLMES: I UNDERSTOOD IT WAS, YES.
MR. DOWNEY: DID YOU HAVE AN UNDERSTANDING WHEN AND HOW DEFERRED REVENUE COULD BE RECOGNIZED?
ELIZABETH A. HOLMES: NOT SPECIFICALLY, JUST THAT THESE WERE MONIES THAT WE HAD ALREADY RECEIVED FROM CUSTOMERS.
MR. DOWNEY: AND HAD THERANOS RECOGNIZED SOME PORTION OF THAT $168 MILLION, WOULD IT HAVE BEEN ABLE TO MEET THE PROJECTION FOR $140 MILLION THAT'S CONTAINED IN THIS DOCUMENT?
MR. DOWNEY: NOW, I BELIEVE YOU TESTIFIED A MOMENT AGO THAT MR. BALWANI PREPARED THESE DOCUMENTS.
ELIZABETH A. HOLMES: HE DID.
MR. DOWNEY: LET ME SHOW YOU -- ASK YOU TO LOOK AT EXHIBIT 15031.
ELIZABETH A. HOLMES: OKAY.
MR. DOWNEY: AND IS THIS AN EMAIL FROM MR. BALWANI TO YOU?
ELIZABETH A. HOLMES: IT IS.
MR. DOWNEY: YOUR HONOR, I MOVE THE ADMISSION OF 15031.
MR. LEACH: NO OBJECTION, YOUR HONOR.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(DEFENDANT'S EXHIBIT 15031 WAS RECEIVED IN EVIDENCE.)
BY MR. DOWNEY:
MR. DOWNEY: THIS IS AN EMAIL WITH AN ATTACHMENT SENT BY YOU -- SENT TO YOU BY MR. BALWANI. DO YOU SEE THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND IF YOU LOOK AT THE ATTACHMENT BEGINNING ON PAGE 2 OF THE DOCUMENT, DO YOU SEE PAGE 2?
MR. DOWNEY: AND DO YOU SEE THAT THE ATTACHMENT TO THIS DOCUMENT IS THE SAME CONTENT THAT IS THE FINANCIAL OR PROJECTED STATEMENT OF INCOME CONTAINED WITHIN EXHIBIT 15032?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: IN OTHER WORDS, THIS IS THE SAME CONTENT THAT WAS USED IN CONNECTION WITH THE BOARD OF DIRECTORS MEETING?
MR. DOWNEY: BUT AS YOU UNDERSTOOD IT, DID MR. BALWANI PREPARE THIS?
ELIZABETH A. HOLMES: HE DID.
MR. DOWNEY: NOW, I WOULD ASK YOU TO ALSO TAKE A MOMENT AND LOOK AT EXHIBIT 1853, WHICH HAS ALREADY BEEN ADMITTED INTO EVIDENCE. AND DO YOU REMEMBER THAT 1853 IS A DOCUMENT THAT MS. PETERSON DISCUSSED DURING HER TESTIMONY HERE?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: IF YOU LOOK AT THIS, IS THIS ALSO A PROJECTED STATEMENT OF INCOME?
MR. DOWNEY: AND IT HAS HANDWRITING ON THE DOCUMENT. DO YOU SEE THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND OTHER THAN THIS HANDWRITING, IS THIS DOCUMENT IDENTICAL TO THE DOCUMENT THAT MR. BALWANI SENT TO YOU AND THE DOCUMENT THAT WAS SHARED WITH THE BOARD OF DIRECTORS OF THERANOS IN JULY OF 2014?
ELIZABETH A. HOLMES: IT IS.
MR. DOWNEY: WHEN WAS YOUR MEETING WITH THE DEVOS FAMILY OR REPRESENTATIVES OF THE DEVOS FAMILY, INCLUDING MS. PETERSON?
ELIZABETH A. HOLMES: I THINK IT WAS SEPTEMBER OF 2014, OR MAYBE OCTOBER OF 2014.
MR. DOWNEY: OKAY. AND DID THE THERANOS BOARD MEET AGAIN IN OCTOBER OF 2014?
MR. DOWNEY: AND LET ME ASK YOU TO LOOK AT EXHIBIT 15033.
ELIZABETH A. HOLMES: OKAY.
MR. DOWNEY: IS THIS ANOTHER SET OF MATERIALS GIVEN TO THE BOARD?
ELIZABETH A. HOLMES: IT IS.
MR. DOWNEY: I MOVE THE ADMISSION OF 15033.
MR. LEACH: NO OBJECTION, YOUR HONOR.
JUDGE DAVILA: IT'S ADMITTED.
(DEFENDANT'S EXHIBIT 15033 WAS RECEIVED IN EVIDENCE.)
BY MR. DOWNEY:
MR. DOWNEY: DO YOU SEE THAT THIS IS DATED OCTOBER 21ST, 2014?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND IF YOU GO TO THE NEXT PAGE. DO YOU SEE ON THE AGENDA THERE'S ANOTHER SCHEDULED DISCUSSION OF FINANCIAL PLAN AND STRUCTURE?
MR. DOWNEY: AND IF YOU GO TO PAGE 5, DO YOU SEE THAT THERE'S ANOTHER PROJECTED STATEMENT OF INCOME AS OF OCTOBER, 2014?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND DO YOU SEE THAT IN THIS PROJECTED STATEMENT OF INCOME THAT THE TOTAL REVENUE THAT IS BEING PROJECTED FOR 2014 IS ABOUT $126,000? DO YOU SEE THAT?
ELIZABETH A. HOLMES: YES. I THINK IT'S 126 MILLION.
MR. DOWNEY: I'M SORRY, $126 MILLION. AND THAT'S A LITTLE BIT LESS THAN WE HAD SEEN IN JULY?
MR. DOWNEY: BUT THAT WAS -- WAS THAT STILL LESS THAN THE AMOUNT OF DEFERRED REVENUE THAT WAS SITTING ON THE COMPANY'S BOOKS?
ELIZABETH A. HOLMES: IT IS.
MR. DOWNEY: NOW, DO YOU SEE IN THE RIGHT-HAND COLUMN HERE THAT THERE IS ALSO A PROJECTION OF FINANCIAL PERFORMANCE FOR 2015?
MR. DOWNEY: AND DID YOU SEE THAT THERE WERE PROJECTED PERFORMANCES FOR 2015 IN THE OTHER DOCUMENTS THAT WE LOOKED AT IN EXHIBIT 15 -- I'M SORRY, IN EXHIBIT 1853, THE DOCUMENT WITH -- GIVEN TO MS. PETERSON?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: AND IN EXHIBIT 15032, WHICH WERE THE PACKET GIVEN FOR THE JULY 2014 BOARD MEETING?
MR. DOWNEY: WHO PREPARED THOSE PROJECTIONS FOR 2015?
ELIZABETH A. HOLMES: MR. BALWANI.
MR. DOWNEY: AND DID YOU HAVE AN UNDERSTANDING AS TO THE PROCESS HE WENT THROUGH TO PREPARE THOSE PROJECTIONS?
ELIZABETH A. HOLMES: I DID GENERALLY.
MR. DOWNEY: CAN YOU DESCRIBE YOUR GENERAL UNDERSTANDING?
ELIZABETH A. HOLMES: YES. HE BUILT A MODEL WITH A NUMBER OF ASSUMPTIONS ABOUT HOW MANY STORES THERANOS WOULD ROLL OUT TO AND OTHER WORK WITH PHYSICIANS OR HOSPITAL SYSTEMS SENDING US SAMPLES. AND BASED ON THOSE ASSUMPTIONS, THESE WERE THE PROJECTIONS FOR THAT MODEL.
MR. DOWNEY: AND DID YOU UNDERSTAND THAT HE WOULD ADJUST THE PROJECTIONS BASED ON CHANGES IN ASSUMPTIONS?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: AND WERE THOSE NUMBERS GENERATED BY THAT MODEL TYPICALLY THE NUMBERS OF PROJECTED INCOME THAT WERE SHARED WITH INVESTORS WHEN THEY ASKED FOR SUCH PROJECTIONS?
ELIZABETH A. HOLMES: YES. I UNDERSTOOD HE ACTUALLY SHOWED THE MODEL ALSO AND ITS OUTPUTS.
MR. DOWNEY: OKAY. HOW DID YOU UNDERSTAND THAT?
ELIZABETH A. HOLMES: BECAUSE HE TOLD ME THAT.
MR. DOWNEY: LET ME TURN FROM THE SUBJECT OF PROJECTED STATEMENTS OF INCOME TO THE SUBJECT OF THE DEPARTMENT OF DEFENSE.
ELIZABETH A. HOLMES: OKAY.
MR. DOWNEY: DO YOU RECALL THAT MR. EDLIN TESTIFIED ABOUT THERANOS'S RELATIONSHIP WITH CERTAIN PARTS OF THE DEPARTMENT OF DEFENSE?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND DO YOU RECALL GENERAL MATTIS TESTIFIED ON THAT SUBJECT AS WELL?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: YESTERDAY WHEN WE WERE TALKING ABOUT THE DEPARTMENT OF DEFENSE, I ASKED YOU ABOUT THERANOS EXPLORING A RELATIONSHIP WITH AN ENTITY CALLED TATRC. DO YOU REMEMBER THAT?
MR. DOWNEY: AND I THINK YOU TESTIFIED THAT THAT NEVER MATERIALIZED INTO ANY KIND OF A RELATIONSHIP.
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: AFTER 2010, WAS THERANOS WORKING ON ITS 4.0 SYSTEM?
ELIZABETH A. HOLMES: WE WERE.
MR. DOWNEY: AND DID THERANOS BEGIN TO TALK AGAIN TO REPRESENTATIVES OF VARIOUS PARTS OF THE DEPARTMENT OF DEFENSE ABOUT POTENTIALLY ENTERING INTO PARTNERSHIPS?
MR. DOWNEY: WHAT WERE SOME OF THE OFFICES OR COMMANDS WITHIN THE DEPARTMENT OF DEFENSE WHERE THERANOS PURSUED RELATIONSHIPS?
ELIZABETH A. HOLMES: AGAIN, THERE WERE SEVERAL. THE THREE THAT WE FOCUSSED THE MOST ON WERE CENTRAL COMMAND, SPECIAL OPERATIONS COMMAND, AND AFRICA COMMAND.
MR. DOWNEY: AND YOU MENTIONED YESTERDAY THAT YOU HAD ESTABLISHED A RELATIONSHIP THROUGH YOUR EFFORTS WITH TATRC WITH AN ARMY PHYSICIAN NAMED DR. KEVIN CHUNG; IS THAT RIGHT?
ELIZABETH A. HOLMES: YES, YES.
MR. DOWNEY: AND WAS HE SOMEONE THAT YOU MET IN 2008 OR SO?
ELIZABETH A. HOLMES: I THINK SO.
MR. DOWNEY: AND DID THERANOS ULTIMATELY AGREE TO ENTER INTO A PARTNERSHIP WITH DR. CHUNG?
MR. DOWNEY: AND CAN YOU DESCRIBE WHAT WAS THE SUBJECT MATTER OF THE PARTNERSHIP THAT DR. CHUNG AND THERANOS WERE WORKING ON TOGETHER?
ELIZABETH A. HOLMES: YES. THAT PARTNERSHIP WAS FOCUSSED ON BURN PATIENTS WHO HAD UNDERGONE TRAUMA AND THE ABILITY TO PREDICT THE ONSET OF INFECTION IN THOSE PATIENTS AND HOW WELL AN INFECTION COULD BE MANAGED BASED ON PUTTING FILTERS INTO THEIR KIDNEYS.
MR. DOWNEY: AND WHAT ROLE DID DR. CHUNG WANT THERANOS TO PLAY WITH REGARD TO HIS STUDY?
ELIZABETH A. HOLMES: DR. CHUNG ASKED US TO MEASURE SEVERAL MARKERS OF INFLAMMATION ON VERY SMALL SAMPLES TO HELP QUANTIFY HOW WELL THE KIDNEY FILTERS WERE WORKING.
MR. DOWNEY: AND WHERE WAS DR. CHUNG OPERATING THIS STUDY OUT OF?
ELIZABETH A. HOLMES: HE RAN IT OUT OF THE ARMY INSTITUTE FOR SURGICAL RESEARCH IN TEXAS.
MR. DOWNEY: AND WERE OTHER HOSPITALS INVOLVED IN THAT STUDY OTHER THAN THE ARMY INSTITUTE FOR SURGICAL RESEARCH?
MR. DOWNEY: NOW, TO PARTICIPATE IN THAT STUDY WITH DR. CHUNG AND THE ARMY INSTITUTE, DID THERANOS HAVE TO DEVELOP SPECIFIC CARTRIDGES THAT WOULD BE REQUIRED FOR THE STUDY TO BE RUN?
ELIZABETH A. HOLMES: WE DID.
MR. DOWNEY: AND DID THE COMPANY DO THAT?
MR. DOWNEY: AND DID DR. CHUNG PROCEED WITH THE STUDY OF BURN PATIENTS AT SOME POINT AFTER 2010?
ELIZABETH A. HOLMES: HE DID.
MR. DOWNEY: HOW LONG DID THAT STUDY TAKE TO CONDUCT?
ELIZABETH A. HOLMES: SEVERAL YEARS.
MR. DOWNEY: CAN YOU TELL US THE ROLE THAT THERANOS DEVICES PLAYED WITHIN THE SITES WHERE THAT STUDY WAS BEING CONDUCTED?
ELIZABETH A. HOLMES: WE PLACED THERANOS DEVICES IN BURN HOSPITALS ACROSS THE U.S.
MR. DOWNEY: AND WOULD THOSE DEVICES BE USED TO PERFORM BLOOD TESTS ON PATIENTS, BURN PATIENTS WHO WERE THE OBJECT OF THE STUDY?
ELIZABETH A. HOLMES: THEY WERE.
MR. DOWNEY: HOW LONG DID THAT STUDY CONTINUE FOR?
ELIZABETH A. HOLMES: I WANT TO SAY FOUR YEARS. I'M NOT QUITE SURE, BUT IT WAS SEVERAL YEARS.
MR. DOWNEY: AND WHO WAS RESPONSIBLE FOR MANAGING THAT PROJECT AT THERANOS?
ELIZABETH A. HOLMES: IT MIGHT HAVE BEEN SIX YEARS. IT WAS MANAGED BY DR. YOUNG ON THE SCIENTIFIC SIDE AND BY DAN EDLIN ON THE PROGRAM MANAGEMENT SIDE.
MR. DOWNEY: AND DID DR. CHUNG ULTIMATELY PREPARE THE RESULTS OF HIS STUDY IN A PAPER?
ELIZABETH A. HOLMES: HE DID.
MR. DOWNEY: AND DID HE PUBLISH THE RESULTS OF THAT STUDY?
MR. DOWNEY: AND WHAT DID YOU UNDERSTAND ABOUT THERANOS, THE ROLE -- WHAT DID YOU UNDERSTAND ABOUT THERANOS'S TECHNOLOGY AS A RESULT OF THAT STUDY?
ELIZABETH A. HOLMES: I UNDERSTOOD THAT OUR SYSTEMS HAD PERFORMED WELL. I UNDERSTOOD ALSO THAT BECAUSE IT IS SO HARD TO ENROLL BURN PATIENTS INTO CLINICAL STUDIES, WE NEEDED MORE PATIENTS TO BE ABLE TO REALLY SEE TRENDS IN THESE MARKERS TO PREDICT HOW WELL THE KIDNEY FILTERS WERE WORKING, AND THAT MORE STUDIES WOULD BE REQUIRED. BUT WE HAD BEEN RUNNING THE STUDY FOR SEVERAL YEARS, AND SO DR. CHUNG MADE THE DECISION TO COMPLETE THE STUDY AT SOME POINT.
MR. DOWNEY: NOW, WERE THE DEVICES THAT DR. CHUNG USED IN CONNECTION WITH THAT STUDY, WERE THEY 4 SERIES DEVICES OR 3 SERIES DEVICES?
ELIZABETH A. HOLMES: THEY WERE 3 SERIES DEVICES.
MR. DOWNEY: AND WHY WAS THAT?
ELIZABETH A. HOLMES: BECAUSE THE TECHNOLOGY THAT WE NEEDED TO MONITOR THE MARKERS THAT DR. CHUNG WANTED TO MONITOR COULD BE DONE WITH THE 3 SERIES DEVICE.
MR. DOWNEY: AND WAS THERANOS PAID FOR THIS STUDY?
MR. DOWNEY: AND DID THERANOS CONTINUE TO SEEK TO WORK WITH DR. CHUNG IN OTHER CONTEXTS WITHIN DOD?
ELIZABETH A. HOLMES: WE DID.
MR. DOWNEY: ALL RIGHT. AT SOME POINT DID THERANOS BEGIN TO PURSUE A RELATIONSHIP WITH THE UNITED STATES AFRICAN COMMAND?
MR. DOWNEY: AND THAT'S SOMETIMES REFERRED TO AS AFRICOM?
MR. DOWNEY: WHEN DO YOU -- DID THERANOS FIRST BEGIN TALKING TO AFRICOM ABOUT A POTENTIAL PARTNERSHIP?
ELIZABETH A. HOLMES: I THINK IT WAS IN 2012.
MR. DOWNEY: OKAY. AND CAN YOU EXPLAIN WHAT AFRICOM IS, OR WHAT THAT ABBREVIATION STANDS FOR?
ELIZABETH A. HOLMES: I UNDERSTAND IT TO BE THE UNITED STATES COMMAND FOR OPERATIONS IN AFRICA.
MR. DOWNEY: DID YOU HAVE AN UNDERSTANDING OF WHAT THE U.S. -- WHAT KINDS OF OPERATIONS THE U.S. MILITARY WAS RUNNING IN AFRICA AT THAT TIME?
ELIZABETH A. HOLMES: I UNDERSTOOD THERE WERE SPECIAL OPERATIONS IN AFRICA.
MR. DOWNEY: WHO WAS THE PRIMARY PERSON FROM AFRICOM WHO YOU BEGAN TO DISCUSS THIS PROJECT WITH?
ELIZABETH A. HOLMES: COLONEL GIVENS.
MR. DOWNEY: COLONEL GIBBONS?
ELIZABETH A. HOLMES: GIVENS.
MR. DOWNEY: AND WHO WAS COLONEL GIVENS?
ELIZABETH A. HOLMES: SHE WAS A -- I THINK SHE LED THE MEDICAL COMMAND FOR SPECIAL OPERATIONS IN AFRICA.
MR. DOWNEY: AND HOW WERE YOU FIRST INTRODUCED TO HER?
ELIZABETH A. HOLMES: I THINK THROUGH OTHERS THAT WE HAD BEEN INTERACTING WITH IN SPECIAL OPERATIONS COMMAND.
MR. DOWNEY: AND DID COLONEL GIVENS INDICATE TO YOU OR OTHERS AT THERANOS THAT SHE WAS INTERESTED IN TESTING THERANOS'S TECHNOLOGY IN AFRICA?
ELIZABETH A. HOLMES: SHE DID.
MR. DOWNEY: AND DID YOU HAVE AN UNDERSTANDING AS TO WHAT SHE WANTED TO TEST ABOUT THE DEVICE?
MR. DOWNEY: AND WHAT DID SHE WANT TO TEST?
ELIZABETH A. HOLMES: SHE WANTED TO TEST HOW WELL THE DEVICE COULD BE TRANSPORTED INTO VERY REMOTE AREAS, HOW WELL IT COULD WITHSTAND VERY EXTREME TEMPERATURES AS HIGH AS 120 DEGREES, AND WHETHER WE COULD BUILD AN APPLICATION OF SOFTWARE THAT COULD RUN ON THE TOUCHSCREEN TO HELP PEOPLE WHO WERE NOT MEDICAL PERSONNEL DIAGNOSE CONDITIONS IN REMOTE AREAS.
MR. DOWNEY: AND DID YOU ULTIMATELY ENTER INTO AN AGREEMENT WITH AFRICOM TO RUN THAT TEST?
MR. DOWNEY: LET ME ASK YOU TO LOOK AT EXHIBIT 12251. THIS IS ALREADY IN EVIDENCE. AND DO YOU SEE THAT THIS IS AN EMAIL THAT DR. GIVENS SENT TO YOU AND OTHERS AT THERANOS IN MAY OF 2012?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND DO YOU SEE THAT SHE DESCRIBES IN THAT EMAIL THAT SHE IS SENDING YOU A SHELL OF A PROTOCOL?
MR. DOWNEY: AND WAS THIS THE PROTOCOL THAT WAS DESIGNED TO, TO GOVERN THE TEST THAT DR. GIVENS WOULD RUN IN AFRICA?
MR. DOWNEY: LET ME ASK YOU TO LOOK AT PAGE 3 OF THIS EXHIBIT. AND DO YOU SEE THAT THE PROTOCOL NAME WAS THE "UTILITY OF PORTABLE ENHANCED LABORATORY DEVICE TO SUPPORT SOF FORCES IN AUSTERE ENVIRONMENTS ON THE AFRICAN CONTINENT"?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND WHAT DID YOU UNDERSTAND SOF TO BE A REFERENCE TO?
ELIZABETH A. HOLMES: SPECIAL OPERATIONS.
MR. DOWNEY: AND THERE'S A RESEARCH SITE IDENTIFIED UNDERNEATH THAT?
MR. DOWNEY: AND DO YOU SEE THAT IT IDENTIFIES MULTIPLE LOCATIONS WITHIN THE SOC AFRICA AREA?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND IS THAT ANOTHER WAY OF DENOTING AFRICOM?
MR. DOWNEY: AND DO YOU SEE THAT IT SAYS RESEARCH SITES WILL BE REMOTE AREAS OCCUPIED BY AFRICOM?
MR. DOWNEY: AND IT NOTES THAT THOSE AREAS WILL NOT HAVE THE ENDEMIC MEDICAL FACILITIES THAT MEET WESTERN STANDARDS. DO YOU SEE THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND SO DID YOU UNDERSTAND THAT THESE WERE THE PROTOCOLS AND THE CONDITIONS UNDER WHICH THAT EVALUATION WOULD BE RUN?
MR. DOWNEY: NOW, LET ME ASK YOU TO GO TO THE BOTTOM OF THAT SAME PAGE. IF WE CAN BLOW THIS PROSE UP. I WANT TO DIRECT YOUR ATTENTION TO THE SECOND PARAGRAPH UNDER BACKGROUND. AND DO YOU SEE THAT THAT PARAGRAPH SAYS "BECAUSE UNITS IN AFRICA HAVE MINIMAL MEDICAL SUPPORT (MOST OFTEN A TEAM MEDIC) IT IS NOT UNUSUAL FOR A PATIENT TO BE TRANSPORTED SIGNIFICANT DISTANCES TO UNDERGO DIAGNOSTIC TESTS AND RECEIVE CARE." DO YOU SEE THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND THEN IT GOES ON TO DISCUSS WHAT THE EFFECTS OF TRYING TO MOVE THOSE PATIENTS ARE. DO YOU SEE THAT?
MR. DOWNEY: AND WHAT DID YOU UNDERSTAND WERE THE CHALLENGES THAT WERE FACING THE UNITS THAT THE AMERICAN MILITARY THAT WERE SERVING IN AFRICA WITH REGARD TO MEDICAL SUPPORT?
ELIZABETH A. HOLMES: I UNDERSTOOD THAT WHEN PEOPLE WERE SERVING IN REMOTE AREAS, IF A MEDICAL ISSUE HAPPENED, THEY WOULD OFTEN HAVE TO BE EVACUATED OUT OF CONTINENT, AND THERE WAS NOT EFFECTIVE LOCAL TRIAGE AND DIAGNOSTIC CAPABILITY TO HELP TAKE CARE OF THEM.
MR. DOWNEY: OKAY. AND IF YOU LOOK AT THE SENTENCE THAT BEGINS, "CURRENTLY" TOWARDS THE BOTTOM OF THAT PAGE. DO YOU SEE THAT IT READS, "CURRENTLY, SOC AFRICA PRACTICE IS TO EVACUATE PERSONNEL WHO REQUIRE CONFIRMATORY LABORATORY TESTING WHEN A CERTIFIED HOST NATION LABORATORY IS NOT AVAILABLE." DO YOU SEE THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND DID YOU UNDERSTAND THAT THIS WAS SOMETHING WHICH UNFORTUNATELY WAS REQUIRED FREQUENTLY?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: LET'S GO TO PAGE 4 OF THIS PROTOCOL THAT DR. GIVENS SENT TO THERANOS IN 2012. AND I'D LIKE TO LOOK AT THE LAST PARAGRAPH THERE THAT IS SHOWN ON THE SCREEN THAT BEGINS "THE INTENT OF THIS STUDY." DO YOU SEE THAT PARAGRAPH?
MR. DOWNEY: AND IT SAYS, "THE INTENT OF THIS STUDY IS TO ESTABLISH OPERATIONAL FUNCTIONALITY OF THERANOS LABORATORY SYSTEMS AND QUANTIFY IMPACTS OF UTILIZING THESE SYSTEMS AT FORWARD DEPLOYED LOCATIONS. IF THERANOS SYSTEMS ARE SHOWN TO BE OPERATIONALLY EFFECTIVE AND HAVE THE CAPACITY TO IMPROVE PATIENT CARE, REDUCE COSTS, AND MITIGATE RISKS, SERVICE MEMBERS THROUGHOUT THE ORGANIZATION WILL BENEFIT." DO YOU SEE THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: SO IS THAT THE GOAL OF THE PROGRAM THAT THERANOS WAS WORKING WITH DR. GIVENS TO DEVELOP IN AFRICA?
MR. DOWNEY: AND DID THIS PROGRAM HAVE A HYPOTHESIS?
ELIZABETH A. HOLMES: THE HYPOTHESIS WAS THAT IF WE COULD ENABLE TESTING IN REALLY REMOTE AREAS, WE COULD MAKE A REAL IMPACT ON SURVIVAL.
MR. DOWNEY: NOW, FOR PURPOSES OF THE STUDY THAT YOU WERE DISCUSSING WITH DR. GIVENS, DID SHE INTEND TO ACTUALLY USE THERANOS DEVICES IN AFRICA AT THIS TIME FOR DIAGNOSTIC TESTING?
ELIZABETH A. HOLMES: NOT IN OUR FIRST STUDY.
MR. DOWNEY: OKAY. AND WAS THAT A SUBJECT OF DISCUSSION BETWEEN YOU AND DR. GIVENS?
ELIZABETH A. HOLMES: IT WAS.
MR. DOWNEY: DID THE COMPANY AND DR. GIVENS AGREE TO GO FORWARD WITH THIS STUDY IN AFRICA?
MR. DOWNEY: AND IN CONNECTION WITH GETTING READY TO CONDUCT THAT STUDY, DID THERANOS CUSTOMIZE DEVICES THAT COULD BE USED?
MR. DOWNEY: AND DID, IN FACT, DR. GIVENS TAKE THERANOS DEVICES TO AFRICA FOR PURPOSES OF CONDUCTING A STUDY?
MR. DOWNEY: HOW LONG DID IT TAKE FROM THE TIME THAT YOU BEGAN DISCUSSING THE POSSIBILITY OF THIS STUDY IN 2012, HOW LONG DID IT TAKE FROM THEN UNTIL THE ACTUAL TRANSPORT OF THE DEVICES TO AFRICA FOR STUDY?
ELIZABETH A. HOLMES: ABOUT A MONTH, I THINK.
MR. DOWNEY: SO WAS THERANOS READY TO DO THAT STUDY?
ELIZABETH A. HOLMES: WE, WE GOT READY, YES.
MR. DOWNEY: WHY WERE YOU ABLE TO MOVE SO QUICKLY WITH RESPECT TO THIS PARTICULAR ENGAGEMENT WITH DOD?
ELIZABETH A. HOLMES: BECAUSE THIS ENGAGEMENT DID NOT REQUIRE TESTING ACTUAL HUMAN SAMPLES, WHICH WOULD HAVE LED TO A WHOLE SERIES OF ADDITIONAL REVIEW BOARD AND OTHER APPROVALS.
MR. DOWNEY: AND CAN YOU TELL US WHAT YOU UNDERSTOOD DR. GIVENS WAS TRYING TO EVALUATE ABOUT THE DEVICE?
ELIZABETH A. HOLMES: I UNDERSTOOD SHE WAS TRYING TO EVALUATE HOW WELL IT WOULD FUNCTION IN AN EXTREME ENVIRONMENT IN WHICH MOST EQUIPMENT SHUT DOWN.
MR. DOWNEY: DID THE THERANOS DEVICE HAVE TO BE CUSTOMIZED IN ORDER TO ALLOW IT TO PREPARE -- TO PARTICIPATE IN THIS STUDY?
ELIZABETH A. HOLMES: IT DID.
MR. DOWNEY: AND WHAT CUSTOMIZATION HAD TO BE MADE TO THE DEVICE?
ELIZABETH A. HOLMES: WE HAD TO DO WORK IN ENSURING THE DEVICE COULD PERFORM WITH EXTREME HEAT AND ENSURING THE DEVICE COULD HANDLE VIBRATION THAT WAS SIGNIFICANT.
MR. DOWNEY: AFTER THE STUDY WAS CONCLUDED, DID YOU LEARN WHAT THE RESULTS OF THAT STUDY WERE?
MR. DOWNEY: DID YOU LEARN THOSE FROM DR. GIVENS?
MR. DOWNEY: AND WHAT DID SHE REPORT?
ELIZABETH A. HOLMES: SHE REPORTED THAT THE DEVICE HELD UP WELL. SHE HAD FEEDBACK ON THE TOUCHSCREEN, THAT THE TOUCHSCREEN ITSELF WAS DIFFICULT TO USE.
MR. DOWNEY: OKAY. YOUR HONOR, I'M GOING TO START A NEW SECTION. IT'S ABOUT FIVE MINUTES TO 4:00. I'M HAPPY TO START THAT AND FINISH ON TUESDAY WITHIN THAT SAME SECTION, BUT I WOULD LEAVE IT TO YOUR HONOR?
JUDGE DAVILA: WHY DON'T WE, WHY DON'T WE BREAK NOW. THANK YOU. LET'S DO THAT. LADIES AND GENTLEMEN, WE'LL HAVE OUR LONG RECESS NOW, OUR THANKSGIVING RECESS NOW. PLEASE RECALL THAT WE'LL RETURN ON THE 29TH, MONDAY, THE 29TH. I ANTICIPATE WE WON'T BE ABLE TO START UNTIL PROBABLY 10:00 TO 10:30, SO IF YOU COULD COLLECT YOURSELVES ACCORDINGLY. MY SENSE IS THAT BY 10:30 WE WILL BE ABLE TO START. MS. HOLMES, YOU WILL HAVE TO COME BACK FOR THAT ALSO. LADIES AND GENTLEMEN, LET ME REMIND YOU OF THE ADMONITION. PLEASE, DURING THIS LONG BREAK, DO NOT READ, LISTEN TO, TALK TO ANYONE OR IN ANY WAY TRY TO LEARN ANYTHING ABOUT THIS CASE. DO NOT FORM ANY OPINIONS ABOUT ANYTHING IN THIS CASE. WE'RE GOING TO HAVE THANKSGIVING IN THE NEXT COUPLE OF DAYS, AND I REALIZE THAT MEANS STRONG FELLOWSHIP WITH FAMILIES, GETTING TOGETHER WITH FAMILIES AND FRIENDS. I JUST WANTED TO SAY, AT LEAST IN MY MIND, ONE OF THE OBVIOUS THINGS IS THAT YOU'RE GOING TO SEE FAMILY MAYBE YOU HAVEN'T SEEN FOR QUITE SOME TIME AND THEY MIGHT ASK YOU, GEE, WHAT HAVE YOU BEEN UP TO?
(LAUGHTER.)
JUDGE DAVILA: AND IT CALLS UPON YOU TO REMEMBER, PLEASE, THE ADMONITION. YOU MAY BE ASKED QUESTIONS ABOUT THAT, AND DO THE BEST YOU CAN TO PASS THE MASHED POTATOES AND NOT ENGAGE ANY CONVERSATION WITH ANYONE. YOU HAVE TO DO THAT. I DON'T MEAN TO BE FLIP, BUT IT'S IMPORTANT THAT YOU DISENGAGE. AS I TOLD YOU IN THE PRELIMINARY INSTRUCTIONS, YOU'RE PERMITTED TO TELL YOUR FAMILY, FRIENDS, AND EMPLOYERS THAT YOU'RE IN A -- YOU'RE SERVING ON A JURY. BUT YOU MAY NOT, YOU MAY NOT DISCUSS ANYTHING ABOUT YOUR SERVICE HERE. IT MAY BE THAT INDIVIDUALS TRY TO SPEAK TO YOU AND OFFER OPINIONS AND THESE TYPES OF THINGS. I WOULD ENCOURAGE YOU, YOU JUST NEED TO WALK AWAY AS BEST YOU CAN. AND MY SENSE IS THAT YOUR FRIENDS AND FAMILY WILL RESPECT YOUR STATEMENTS WHEN YOU TELL THEM YOU CAN'T DISCUSS THE CASE. SO PLEASE BE CAREFUL ABOUT THAT. ONE OTHER THING, TOO. WE ARE STILL IN A PANDEMIC SITUATION, AND WE'RE GETTING INTO THE FLU SEASON, SO PLEASE BE SAFE. MAKE GOOD CHOICES, ALL OF US. THAT GOES TO ALL OF US. PLEASE, PLEASE BE SAFE. MAKE GOOD CHOICES. DO WHAT YOU CAN TO AVOID ANY POSSIBLE CONTACT WITH ANYTHING. STAY HEALTHY. WE WANT TO SEE YOU AGAIN MONDAY NEXT. AND, AGAIN, WE'LL START ABOUT 10:00, 10:30, SOMETHING LIKE THAT. SO DO ENJOY YOUR TIME WITH YOUR FAMILY AND YOUR FRIENDS. HAVE A GOOD LONG WEEKEND. ENJOY. WE'LL SEE YOU NEXT WEEK. THANK YOU.
(JURY OUT AT 3:59 P.M.)
JUDGE DAVILA: YOU CAN STAND DOWN. THANK YOU, MS. HOLMES. PLEASE BE SEATED. THANK YOU. THE RECORD SHOULD REFLECT THAT OUR JURY HAS LEFT FOR THE WEEKEND. ALL COUNSEL AND MS. HOLMES ARE PRESENT. COUNSEL, ANYTHING ELSE TO DISCUSS BEFORE WE BREAK?
MR. LEACH: NOT FROM THE GOVERNMENT, YOUR HONOR.
MR. DOWNEY: YOUR HONOR, TWO QUICK THINGS. ONE IS THAT WE'RE GOING TO BE FILING A MOTION TO ADMIT SOME EVIDENCE WHICH IS NOT OF AN URGENT NATURE AT ALL, BUT JUST BECAUSE WE'RE NEAR COMPLETED WITH IT, WE MAY FILE IT TOMORROW, AND I ASSUME WE'LL TAKE IT UP AROUND ONE OF THE SESSIONS THAT WE HAVE EITHER NEXT WEEK OR WHENEVER THE COURT DAYS CONTINUE. SECOND, IN LIGHT OF THE HOLIDAY, I WANTED TO NOT ONLY WISH THE COURT A HAPPY THANKSGIVING, BUT WE RECOGNIZE THAT THIS PROCEEDING HAS BEEN AN EXTRAORDINARILY BURDEN FOR THE COURTHOUSE STAFF AND FOR THE COURTROOM STAFF, AND I KNOW THE GOVERNMENT TEAM JOINS US IN THANKING THE COURTROOM STAFF AND THANKING THE COURTHOUSE STAFF FOR THE MANY EXTRAORDINARY EFFORTS THAT HAVE BEEN ONGOING DURING THIS UNUSUAL CASE AT THIS UNUSUAL TIME.
JUDGE DAVILA: WELL, THANK YOU. THANK YOU FOR THAT. AND THANK YOU FOR RECOGNIZING STAFF. YOU KNOW, IT'S NO SECRET, I'M BLESSED WITH THE BEST STAFF IN THE BUILDING, AND I DON'T KNOW HOW THAT HAPPENED. I JUST FELL VERY LUCKILY AND FORTUNATELY INTO IT. EVERYTHING THAT WE DO HERE, EVERYTHING THAT I DO TO SERVE THE PUBLIC AND THE JOB I HAVE IS JUST BENEFITTED, I COULDN'T DO IT WITHOUT THIS WONDERFUL STAFF. THANK YOU FOR RECOGNIZING THEM. I APPRECIATE THAT. AND ON BEHALF OF THE STAFF, WE WISH ALL OF YOU A HAPPY THANKSGIVING. BE WITH YOUR FAMILIES. I KNOW SOME PEOPLE ARE TRAVELLING IN THIS CASE, AND OTHERS, I HOPE YOU CAN GET BACK TO SEE FAMILY. I HOPE IT'S NOT A ZOOM THANKSGIVING, BUT SOMETHING A LITTLE RICHER THAN THAT. BUT NONETHELESS, ENJOY. LET ME JUST EXTEND A THANKS, TOO, TO OUR FRIENDS WHO ARE HERE VISITING WITH THE LAPTOPS. AGAIN, I'VE -- THOSE OF YOU WHO HAVE KEPT YOUR LAPTOPS QUIET AND HAVE TRIED TO KEEP YOUR TYPING DOWN, THANK YOU SO MUCH FOR THAT. I REALLY APPRECIATE THAT. AND I'M SPEAKING ON BEHALF OF THE JURY PRIMARILY. THEY ARE FOCUSSING, AND THEY DO, THROUGH MS. KRATZMANN, HAVE INDICATED THAT THEY REALLY APPRECIATE THE EFFORTS. SO THOSE WHO HAVE DONE THAT, I'M GRATEFUL ON THEIR BEHALF. THOSE OF YOU WHO HAVE A BIT TO GO, PLEASE MODEL YOURSELF AFTER YOUR COLLEAGUES. ENJOY THE HOLIDAY EVERYONE. WE'LL SEE YOU NEXT WEEK. THANK YOU.
COURT CLERK: COURT IS ADJOURNED.
(COURT ADJOURNED AT 4:02 P.M.)