Opening Statement by the Defense

MR. WADE: MAY IT PLEASE THE COURT, COUNSEL, MS. HOLMES, AND MEMBERS OF THE JURY. ELIZABETH HOLMES DID NOT GO TO WORK EVERY DAY INTENDING TO LIE, CHEAT, AND STEAL. THE GOVERNMENT WOULD HAVE YOU BELIEVE HER COMPANY, HER ENTIRE LIFE, IS A FRAUD. THAT IS WRONG. THAT IS NOT TRUE. ELIZABETH HOLMES WORKED HERSELF TO THE BONE FOR 15 YEARS TRYING TO MAKE LAB TESTING CHEAPER AND MORE ACCESSIBLE. SHE POURED HER HEART AND HER SOUL INTO THAT EFFORT. NOW, IN THE END, THERANOS FAILED, AND MS. HOLMES WALKED AWAY WITH NOTHING. BUT FAILURE IS NOT A CRIME. TRYING YOUR HARDEST AND COMING UP SHORT IS NOT A CRIME. AND BY THE TIME THIS TRIAL IS OVER, YOU WILL SEE THAT THE VILLAIN THAT THE GOVERNMENT JUST PRESENTED IS ACTUALLY A LIVING, BREATHING, HUMAN BEING WHO DID HER VERY BEST EACH AND EVERY DAY. AND SHE IS INNOCENT. OVER THE COURSE OF THIS TRIAL WE WILL SHOW YOU WHY. LET ME START 25 MILES NORTHWEST OF HERE RIGHT NEAR THE INTERSECTION OF 880 AND HIGHWAY 84.

THERE, ALMOST EXACTLY THREE YEARS AGO TODAY, ELIZABETH HOLMES WALKED OUT OF THE THERANOS FACILITY AT 7373 GATEWAY BOULEVARD IN NEWARK, CALIFORNIA. SHE TOOK THE LAST OF HER PERSONAL ITEMS. SHE PUT THEM IN THE BACK OF HER CAR. SHE SAT DOWN BEHIND THE WHEEL. SHE BUCKLED HER SEAT BELT, AND SHE DROVE AWAY. THAT WAS THE LAST DAY SHE LEFT THERANOS. IT WAS HER LAST DAY WORKING AT A COMPANY THAT SHE HAD FOUNDED 15 YEARS EARLIER. IT WAS HER LAST DAY DEVOTED TO A DREAM THAT SHE HAD SPENT NEARLY HALF OF HER LIFE, HER ENTIRE ADULT LIFE PURSUING. ELIZABETH HOLMES STARTED THERANOS AT THE AGE OF 19. SHE WALKED AWAY FROM A STANFORD EDUCATION AND BET HER COLLEGE SAVINGS ON AN ENGINEERING IDEA THAT SHE THOUGHT WOULD TRANSFORM HEALTH CARE. AND SHE WENT TO WORK OFTEN SEVEN DAYS A WEEK, NEARLY ALWAYS LATE INTO THE NIGHT, FOR 15 YEARS TO THAT VERY LAST DAY. THE HARD WORK MS. HOLMES DID TO BUILD THERANOS IS CENTRAL TO THE PRINCIPAL QUESTIONS THAT YOU HAVE TO ANSWER IN THIS CASE. WAS THAT WORK REAL?

WHY WAS SHE DOING IT? AND DID SHE BELIEVE IN THERANOS'S TECHNOLOGY AS SHE SPOKE ABOUT IT TO HER INVESTORS AND CUSTOMERS? IT WAS REAL. IT WAS INNOVATIVE. AND MS. HOLMES BELIEVED WITH ALL OF HER BEING THAT IT COULD TRANSFORM HEALTH CARE. SHE WAS NOT ALONE IN THAT BELIEF BECAUSE THERANOS WAS NOT JUST ONE PERSON. IT WAS NOT JUST MS. HOLMES. SHE WAS SURROUNDED BY A TEAM OF HIGHLY TALENTED AND EXPERIENCED COWORKERS, ADVISORS, AND MENTORS, AND TOGETHER THEY SPENT 15 YEARS BUILDING THAT COMPANY UP FROM NOTHING. THERANOS PROVIDED HUNDREDS OF JOBS FOR THIS COMMUNITY. JOBS TO SOFTWARE DEVELOPERS, SECURITY GUARDS, AND PRODUCT ENGINEERS, MACHINISTS, ENGINEERING TECHNICIANS, AND JANITORS, CHEMICAL ENGINEERS, EXECUTIVE ASSISTANTS, LAB WORKERS. AND THAT TEAM ACHIEVED MUCH. THERANOS WAS AWARDED 176 PATENTS. THOSE PATENTS HAVE BEEN VALUED AT HUNDREDS OF MILLIONS OF DOLLARS BY EXPERTS. AS RECENTLY AS JULY OF THIS YEAR, THE U.S. GOVERNMENT ISSUED A PATENT FOR WORK THAT OCCURRED AT THERANOS.

THERANOS DEVELOPED MORE THAN 235 SPECIALIZED TESTS THAT COULD BE RUN ON SMALL SAMPLES OF BLOOD. MANY OF THESE TESTS HAD NEVER BEEN DONE THAT WAY BEFORE. THERANOS'S SCIENTISTS VALIDATED ALL OF THOSE TESTS IN ITS RESEARCH AND DEVELOPMENT LABORATORY: TESTS SUCH AS CHOLESTEROL, IRON, AND CALCIUM; TESTS FOR HORMONES LIKE TESTOSTERONE; FOR VITAMINS LIKE B12 AND VITAMIN D; AND FOR DISEASES LIKE THE FLU, LYME DISEASE, AND ZIKA. THERANOS GENERATED NEARLY 8 MILLION TEST RESULTS. IT OFTEN CHARGED PATIENTS A FRACTION OF THE PRICE OF COMPETITORS. MANY WHO NEVER COULD OTHERWISE HAVE AFFORDED A TEST GOT THEIR TEST AT THERANOS WHERE PRICES WERE THE SAME WHETHER YOU HAD HEALTH INSURANCE OR NOT. THERANOS RECEIVED FAVORABLE CUSTOMER REVIEWS FROM DOCTORS AND PATIENTS, LIKE THIS PHYSICIAN WHO TOLD THE COMPANY THAT HE ORDERED A $25 TEST AND GOT THE RESULTS IN FOUR HOURS, SOMETHING THAT A STANFORD PHYSICIAN SAYS WOULD HAVE COST HIM $750 AND TAKEN THREE DAYS AT STANFORD. HE EVEN CROSS-CHECKED THE RESULTS WITH TESTS HE HAD FROM STANFORD AND SAW THAT THEY MATCHED. THIS PATIENT, WHO HAD NO INSURANCE, TOLD THERANOS THAT LOWER PRICES MEANT GREATER ACCESS TO TESTING. THIS MOTHER TOLD THE COMPANY THAT SHE FLEW HER DAUGHTER TO ARIZONA TO GET TESTED, PAID FOR AIRLINE TICKETS AND TAXIS ON TOP OF THE LAB COSTS, AND STILL PAID HALF AS MUCH AS QUEST. THE EVIDENCE WILL SHOW THAT YOU 98.2 PERCENT OF CUSTOMERS SURVEYED SAID THAT THEY WOULD USE THIS SERVICE AGAIN.

MR. WADE: JOHNS HOPKINS UNIVERSITY, STANFORD UNIVERSITY, UCSF, THE MAYO CLINIC AND OTHERS COMMENTED FAVORABLY ON THERANOS'S TECHNOLOGY AND ITS PROMISE. IT WAS REAL. IT WAS INNOVATIVE. AND THERANOS BECAME A VALUABLE COMPANY. THE GOVERNMENT IS RIGHT. MS. HOLMES OWNED ABOUT HALF OF IT. THE VALUE OF HER STOCK ON PAPER GREW SIGNIFICANTLY OVER TIME. FIRST WORTH TENS OF THOUSANDS, AND THEN MILLIONS, AND THEN TENS AND HUNDREDS OF MILLIONS. AND ULTIMATELY, YES, IT WAS WORTH BILLIONS OF DOLLARS. BUT ON THAT DAY IN SEPTEMBER OF 2018 WHEN MS. HOLMES WALKED OUT OF THAT THERANOS FACILITY FOR THE LAST TIME, IT WAS ALL GONE. HER COLLEGE SAVINGS, HER BILLIONS WORTH OF STOCK, THE ENTIRE COMPANY, AND SHE LEFT HAVING NEVER SOLD A SINGLE SHARE OF STOCK. NOT ONE. SHE PASSED ON EVERY OPPORTUNITY TO SELL, ON CHANCES TO MAKE HUNDREDS OF MILLIONS OF DOLLARS. SHE WAS ALL IN ON THERANOS. MOTIVATED BY ITS MISSION, NOT MONEY. COMMITTED TO THAT MISSION UNTIL THAT VERY LAST DAY.

NOW, YOU MIGHT RIGHTLY ASK, GIVEN ALL OF ITS PROMISE AND ACHIEVEMENTS, WHY DID THERANOS FAIL? THERE ARE A LOT OF REASONS COMPANIES FAIL. IT'S NEVER SIMPLE. BUT AS YOU WILL HEAR THE FULL STORY OF WHAT HAPPENED DURING THIS TRIAL, ASK YOURSELF, DID THERANOS FAIL BECAUSE IT WAS A FRAUDULENT SCHEME? WERE THE ENGINEERING, THE INVENTIONS, ALL OF THE ADVANCEMENTS MYTHS AND LIES? OR DID IT FAIL BECAUSE A YOUNG CEO, AND HER COMPANY, CONFRONTED AND COULD NOT OVERCOME BUSINESS OBSTACLES THAT OTHERS SAW BUT SHE NAIVELY UNDERESTIMATED? I WANT TO BE CLEAR AND CANDID WITH YOU TODAY AND THROUGHOUT THIS TRIAL. THERANOS FAILED FOR A LOT OF REASONS, BUT IT FAILED IN PART BECAUSE IT MADE MISTAKES. MS. HOLMES MADE MISTAKES. BUT MISTAKES ARE NOT CRIMES. A FAILED BUSINESS DOES NOT MAKE A CEO A CRIMINAL. HERE THE EVIDENCE IS GOING TO SHOW YOU THAT SHE DID HER LEVEL BEST DAY IN, DAY OUT TO MAKE THERANOS SUCCESSFUL. AND SHE GENUINELY, DEEPLY BELIEVED IT WOULD BE SUCCESSFUL.

BEING THE CEO OF A START-UP COMPANY IN SILICON VALLEY IS A DIFFICULT JOB. NAVIGATING BIG INDUSTRIES, LIKE TECHNOLOGY AND HEALTH CARE, IS CHALLENGING AND COMPLEX. SOMETIMES SUCCESS COMES ONLY AFTER SETBACKS. THE PLAIN TRUTH IS MANY MORE BUSINESSES FAIL, SMALL AND LARGE, THAN SUCCEED. BUT FAILURE IS NOT THE SAME THING AS FRAUD. THE EVIDENCE IN THIS CASE WILL SHOW YOU THAT ELIZABETH HOLMES DID NOT COMMIT CRIMES. SHE COMMITTED HER LIFE TO HER WORK, TO THE COMPANY AND ITS MISSION. SHE SAW AN INDUSTRY CONTROLLED BY TWO OLD CORPORATE GIANTS WHO DIDN'T SEEM TO CARE MUCH ABOUT THEIR PATIENTS, WHO CORNERED THE MARKETS AND SAW LITTLE INCENTIVE TO INNOVATE. SHE SAW AN OPPORTUNITY TO DO BETTER, TO BE DIFFERENT, AND HER CORE IDEA WAS ACTUALLY KIND OF SIMPLE. SHE WANTED TO MAKE IT EASIER TO GET A TEST, AS EASY AS YOUR VISIT TO A PHARMACY OR GROCERY STORE OR MAYBE EVEN IN YOUR OWN HOME. SHE WANTED THE EXPERIENCE OF GETTING A TEST TO BE BETTER. PART OF THAT MEANT ELIMINATING THOSE BIG NEEDLES.

PART OF THAT MEANT MAKING THE LOCATION, THE ENVIRONMENT, MORE COMFORTABLE AND INVITING. SHE WANTED TESTS TO BE CHEAPER, AND SHE DIDN'T THINK YOU SHOULD BE CHARGED MORE BECAUSE YOU DIDN'T HAVE HEALTH INSURANCE. SHE WANTED PRICES TO BE MORE TRANSPARENT. YOU SHOULD KNOW HOW MUCH YOU'RE GOING TO PAY BEFORE YOU GET THE TEST, BECAUSE SHE DIDN'T THINK THERE SHOULD BE ANY SURPRISES WHEN YOU GOT THE BILL IN THE MAIL. BY IMPROVING THE TESTING EXPERIENCE, SHE THOUGHT PEOPLE WOULD GET TESTED MORE OFTEN AND THAT THIS WOULD LEAD TO BETTER INFORMATION ABOUT YOUR HEALTH. THAT WAS HER GOAL. THAT WAS WHAT THERANOS SOUGHT TO ACHIEVE. THAT IS WHAT IT HAD STARTED TO DELIVER. NOW, MS. HOLMES'S BELIEF AND DETERMINATION WERE NO SECRET. IT WAS OBVIOUS TO EVERYONE AROUND HER, TO THE PEOPLE WHO INVESTED IN HER, TO THE PEOPLE WHO PARTNERED WITH HER, TO THE PEOPLE WHO ADVISED HER, AND IT WAS OBVIOUS FROM THE WALLS OF THERANOS ITSELF. THIS CASE IS ABOUT THE STORY OF THERANOS AND OF ELIZABETH HOLMES. THE STORY YOU HEARD FROM THE GOVERNMENT WAS ONLY PART OF THIS STORY. THERE IS ANOTHER PART OF THIS STORY THAT THE GOVERNMENT HAS COMPLETELY IGNORED. KNOWING THAT THE COMPANY ULTIMATELY DID NOT SUCCEED, THE GOVERNMENT HAS PRESENTED THE EVENTS OF THE COMPANY THROUGH A DIRTY LENS, POINTING TO SELECT FACTS TO PORTRAY THE COMPANY UNFAVORABLY AND TO CAST MS. HOLMES AS A VILLAIN. WHEN YOU VIEW THE WORLD THROUGH A DIRTY LENS, EVERYTHING LOOKS DIRTY.

MR. WADE: BUT THERE ARE MANY MORE FACTS AND THERE'S A DIFFERENT LENS, A CLEAN LENS, THE LENS OF EVERYDAY LIFE OF A COMPANY IN SILICON VALLEY, AND WHEN YOU CONSIDER ALL OF THE FACTS, ALL OF THEM THROUGH THAT CLEAN LENS, YOU WILL SEE A DIFFERENT PICTURE. THE REALITY OF WHAT HAPPENED AT THERANOS IS FAR, FAR MORE COMPLICATED THAN WHAT YOU HAVE HEARD ABOUT ELIZABETH HOLMES SO FAR. FAR MORE HUMAN AND REAL, AND OFTENTIMES FAR MORE, I HATE TO SAY IT, BUT TECHNICAL AND COMPLICATED AND BORING. IT WILL TAKE MANY WEEKS FOR YOU TO CONSUME THAT EVIDENCE THAT WILL TELL YOU THIS STORY. PLEASE BE PATIENT. PLEASE. WAIT FOR ALL OF THE EVIDENCE. WAIT FOR THE WHOLE PICTURE. I WILL PREVIEW SOME OF THAT EVIDENCE TODAY. TO ASSESS MS. HOLMES'S STATEMENTS TO THERANOS'S INVESTORS AND PATIENTS, YOU NEED CONTEXT. YOU NEED TO UNDERSTAND MS. HOLMES'S BACKGROUND AND EXPERIENCE, HOW SHE CAME TO FOUND THERANOS, HOW THE TECHNOLOGY DEVELOPED OVER TIME, HOW THE BUSINESS GREW. AND, YES, ULTIMATELY WHY IT FAILED.

I'LL GIVE YOU A FRAMEWORK TO CONSIDER THAT EVIDENCE AND SOME QUESTIONS TO ASK ALONG THE WAY. BUT BEFORE I DO, LET ME TOUCH BRIEFLY ON YOUR JOB IN THIS CASE. THERE WILL BE MANY DISAGREEMENTS THAT YOU WILL SEE IN THIS TRIAL, BUT THERE IS SOMETHING ON WHICH ALL OF THE LAWYERS IN THIS ROOM AGREE. YOU HAVE HEARD IT DURING JURY SELECTION, AND IN THE JUDGE'S PRETRIAL INSTRUCTIONS THIS MORNING. MS. HOLMES SITS THERE TODAY IN THIS COURTROOM INNOCENT. SHE IS INNOCENT. AND WHATEVER MAY HAVE BEEN SAID OR WRITTEN ABOUT HER BEFORE TODAY IS GONE. THE SLATE STARTS CLEAN IN THIS COURTROOM, IN THIS TRIAL. AND THAT PRESUMPTION OF INNOCENCE REMAINS THROUGHOUT THE TRIAL. IT CAN ONLY BE REMOVED AFTER THE TRIAL IS COMPLETE, AND THEN ONLY IF YOU ALL AGREE, EACH AND EVERY ONE OF YOU UNANIMOUSLY, THAT THE GOVERNMENT HAS MET ITS HEAVY, HEAVY BURDEN OF PROVING BEYOND A REASONABLE DOUBT THAT MS. HOLMES COMMITTED A CRIME FOR WHICH SHE IS CHARGED. THAT ASSESSMENT MUST WAIT FOR ALL OF THE EVIDENCE TO BE PRESENTED. THEN AND ONLY THEN CAN YOU OBJECT -- CAN YOU CONSIDER ALL OF THAT EVIDENCE FAIRLY AND OBJECTIVELY. AND WHEN YOU DO, YOU WILL SEE THAT THE GOVERNMENT CANNOT MEET ITS BURDEN. MS. HOLMES COMMITTED NO FRAUD, NO CRIMES. SHE IS INNOCENT. YOUR HONOR, NOW MIGHT BE A GOOD TIME FOR OUR BREAK. I KNOW YOU LOOKED AT 11:00 O'CLOCK.

MR. WADE: WELL, BEFORE THE BREAK I TOLD YOU ABOUT THE END OF THE STORY OF THERANOS, AND WHY DON'T I TAKE THIS AS A CHANCE TO BACK UP AND START AT THE BEGINNING. LIKE MANY WHO COME TO THIS AREA FOR SCHOOL OR BUSINESS, MS. HOLMES IS NOT ORIGINALLY FROM HERE, THOUGH SHE HAS SPENT HER ENTIRE ADULT LIFE HERE. AND SHE CURRENTLY LIVES HERE WITH HER PARTNER, BILLY, WHO IS IN THE FRONT ROW HERE TODAY, AND HER CHILD, THEIR CHILD. DURING THIS CASE YOU'LL HEAR EVIDENCE OF MS. HOLMES TALKING ABOUT GOALS FOR HERSELF AND FOR THERANOS, OF CHANGING THE WORLD, OF TRANSFORMING HEALTH CARE, THESE BIG IDEAS. YOU CAN TRACE THOSE IDEAS AND THAT SENSE OF PURPOSE BACK TO HER FAMILY DINNER TABLE WHERE MS. HOLMES WAS ENCOURAGED TO TRY TO DO GREAT THINGS FOR OTHER PEOPLE. HER PARENTS, CHRIS AND NOEL HOLMES, HAD BOTH BEEN PUBLIC SERVANTS. THEY TRIED TO INSTILL IN ELIZABETH A DESIRE TO CHANGE THE WORLD FOR THE BETTER, TO COMMIT HERSELF TO THE PUBLIC GOOD. MS. HOLMES'S MOTHER, NOEL, IS ALSO IN THE COURTROOM HERE TODAY.

MS. HOLMES GRADUATED FROM HIGH SCHOOL IN 2002. WHEN SHE WAS A TEENAGER, YOU MAY RECALL THAT THE INTERNET WAS JUST COMING INTO OUR LIVES AND IT WASN'T YET GLUED TO ALL OF OUR HANDS. REMEMBER IN THIS PERIOD WE HAD SURVIVED THE Y2K WITHOUT THE WORLD CRASHING DOWN. WE HAD MADE IT THROUGH THE DOT COM BOOM, AND A BIT OF THE BUST. CELL PHONES WERE COMMON, BUT THIS WAS LONG BEFORE THE IPHONE. AMAZON EXISTED. BARELY. IT SOLD ONLY BOOKS. MARK ZUCKERBERG HAD STARTED AT COLLEGE, BUT HAD NOT YET STARTED FACEBOOK. IT WAS A DIFFERENT TIME. BUT TECHNOLOGY WAS EMERGING AND THIS AREA WAS THE EPICENTER OF IT, AND IT WAS AN OBVIOUS DESTINATION FOR SOMEONE WITH MS. HOLMES'S INTEREST, AND IT LED HER TO STANFORD UNIVERSITY. SHE ARRIVED THERE IN THE FALL OF 2002, AND SHE WAS SURROUNDED BY STUDENTS AND FACULTY WHO SHARED HER INTERESTS AND PASSIONS, INTERESTS LIKE TECHNOLOGY, ENGINEERING, HEALTH CARE. SHE STARTED STUDYING CHEMICAL ENGINEERING.

SHE MET A PROFESSOR WHO WAS PREEMINENT IN THE FIELD, PROFESSOR CHANNING ROBERTSON. PROFESSOR ROBERTSON HAD BEEN ON THE STANFORD FACULTY FOR OVER 30 YEARS. HE HAD BEEN HONORED AS ONE OF THE 100 PEOPLE WHO HAD CHANGED THE WORLD. HE WAS A LEGEND IN THAT FIELD. MS. HOLMES TOOK A CLASS FROM HIM AND ENDED UP WORKING AS A RESEARCH ASSISTANT IN HIS RESEARCH LAB. IN THIS TIME PERIOD, MANY WERE FOCUSSED ON MAKING THINGS SMALLER, ON MAKING THEM PORTABLE. THE ENGINEERS CALLED THESE CONCEPTS MICRO OR NANO TECHNOLOGIES. LARGE SERVERS MOVED TO THUMB DRIVES. THOUSANDS OF CD'S WE USED TO KEEP ON OUR SHELVES COULD NOW BE ON AN IPOD THAT CAME OUT JUST AS MS. HOLMES CAME TO STANFORD. THESE INNOVATIONS, THINGS THAT WE TAKE FOR GRANTED TODAY, WERE MADE POSSIBLE BY YEARS AND YEARS OF RESEARCH AND DEVELOPMENT. THE EVIDENCE WILL SHOW THAT IN DR. ROBERTSON'S RESEARCH, IN HIS LAB, THEY WERE FOCUSSED ON MICRO TECHNOLOGIES RELATED TO FLUIDS, A SCIENCE OF MICROFLUIDICS. AND MS. HOLMES WAS FASCINATED BY IT.

AND HER INTEREST GREW DEEPER HER FIRST SUMMER OF COLLEGE WHEN SHE WAS ALSO LUCKY ENOUGH TO WORK IN SINGAPORE AT THE GENOME INSTITUTE, A WORLD RENOWNED LAB FOCUSSED ON MICRO TECHNOLOGIES RELATED TO INFECTIOUS DISEASE. THERE MS. HOLMES WORKED ON A NEW METHOD TO DETECT THE SARS VIRUS THAT PROMPTED THE OUTBREAK IN ASIA IN 2003, A PREDECESSOR TO THE SARS COVID-19 VIRUS THAT WE HAVE ALL GROWN TOO FAMILIAR WITH. DON'T GET ME WRONG. IT WAS ENTRY LEVEL WORK. IT WAS NOT GLAMOROUS, BUT SHE LOVED IT. AND THE EXPOSURE TO THESE CONCEPTS PROMPTED HER TO HAVE SOME NEW THOUGHTS AND AN IDEA BEGAN TO CRYSTALLIZE IN HER MIND YOU WILL SEE. SHE STARTED TO SKETCH OUT A SYSTEM THAT WOULD MINIATURIZE LAB TESTS. HER ADVISOR AT THE GENOME INSTITUTE THOUGHT SHE WAS ON TO SOMETHING AND ENCOURAGED HER TO KEEP WORKING. SO WHEN THAT PROGRAM WAS DONE AND SHE HEADED HOME TO HER PARENTS' HOUSE BEFORE HEADING BACK TO COLLEGE, SHE SAT IN HER CHILDHOOD BEDROOM AND SHE DID SOMETHING UNUSUAL FOR SOMEONE WHO IS 19 YEARS OLD. SHE IMMERSED HERSELF IN DENSE ACADEMIC LITERATURE IN THE FIELD OF DIAGNOSTIC TESTING. SHE WORKED ON DRAWINGS, AND SHE STARTED DRAFTING A PATENT APPLICATION THAT DETAILED HER INVENTION. THIS IS THAT APPLICATION. MS. HOLMES FILED IT IN SEPTEMBER OF 2003 WHEN SHE WAS 19 YEARS OLD. IT DESCRIBED A MINIATURIZED SYSTEM THAT WOULD CONDUCT A TEST, COMMUNICATE THE RESULT OVER THE INTERNET, AND THEN PROVIDE TREATMENT BACK TO THE PATIENT.

MR. WADE: WHEN MS. HOLMES RETURNED TO COLLEGE THAT FALL, PROFESSOR ROBERTSON AND OTHERS TOLD HER THAT THEY SAW INCREDIBLE POTENTIAL IN THIS IDEA. AND AS SHE CONTINUED TO DO RESEARCH, MS. HOLMES GREW MORE PASSIONATE. SHE WANTED TO TURN THIS IDEA INTO SOMETHING REAL. SHE WAS 19 YEARS OLD. SHE HAD AN IDEA, A DREAM, AND SHE HAD ACCOMPLISHED SCIENTISTS AND ENGINEERS TELLING HER THAT IT HAD REAL POTENTIAL. SHE SAW THIS AS HER OPPORTUNITY TO MAKE A DIFFERENCE. NO PRODUCT, NO REAL CAPABILITY TO CREATE ONE, NO EXPERIENCE IN BUSINESS. SHE HAD LIMITED RESOURCES AND ONLY ONE YEAR OF COLLEGE UNDER HER BELT. YET SHE DECIDED TO TAKE A LEAP AND PURSUE THAT IDEA. SHE LEFT COLLEGE AND WENT TO WORK FULL TIME BUILDING A COMPANY. SHE PLACED A BIG BET ON THIS IDEA. SHE PUT ALL OF HER MONEY, YOU WILL HEAR, ALL OF HERSELF, HER FUTURE, INTO THIS NEWLY FORMED COMPANY THAT SOON BECAME THERANOS. SHE WAS JUST 19 -- 20 -- HAD JUST TURNED 20 YEARS OLD.

AT THE SAME TIME, ELIZABETH RECONNECTED WITH A MAN THAT SHE MET THE SUMMER OF HER SENIOR YEAR OF HIGH SCHOOL, SUNNY BALWANI. SHE MET MR. BALWANI DURING THE SUMMER OF 2002 WHEN SHE WAS ON A TRIP TO CHINA STUDYING LANGUAGE. SHE WAS 18. SHE HAD NOT YET STARTED COLLEGE. MR. BALWANI WAS 37 YEARS OLD. A YEAR AND A HALF LATER, AS SHE WAS TRYING TO FIGURE OUT HOW TO BUILD HER BUSINESS, MR. BALWANI ENCOURAGED HER TO LEAVE SCHOOL AND PURSUE HER IDEA. AND YOU'LL HEAR THAT HE PURSUED A PERSONAL RELATIONSHIP WITH HER AS WELL. IN THIS CASE YOU'LL LEARN THAT CERTAIN ASPECTS OF THAT RELATIONSHIP HAD A BIG IMPACT ON MS. HOLMES. YOU'LL HEAR THAT TRUSTING AND RELYING ON MR. BALWANI AS HER PRIMARY ADVISOR WAS ONE OF HER MISTAKES. NOW, IN THE EARLIEST DAYS OF THE COMPANY, MS. HOLMES AND A SMALL TEAM OF EMPLOYEES FOCUSSED ON RESEARCH AND DEVELOPMENT WORK, WHAT THEY CALLED R&D, TRYING TO MAKE THAT IDEA INTO A REALITY.

YOU'LL HEAR EVIDENCE OF LATE NIGHTS, WEEKENDS, SOMETIMES OFTEN OUT OF NECESSITY, BUT MAYBE JUST AS OFTEN OUT OF EXCITEMENT ABOUT THE PROGRESS THAT THEY WERE MAKING. AND THE TEAM WORKED HARD, AND IT PAID OFF. THEY MADE REAL PROGRESS. THERANOS DEVELOPED TESTS CALLED IMMUNO ASSAYS USING A MUCH SMALLER SAMPLE OF BLOOD THAN EXISTING TESTS AT THAT TIME. SCIENTISTS BELIEVED THE ASSAYS THAT THEY DEVELOPED WERE AMONG SOME OF THE MOST COMPLICATED AND DIFFICULT ASSAYS OUT THERE. NOW, OF COURSE THERE WERE ALSO SETBACKS, AND YOU MAY HEAR ABOUT SOME OF THEM. YOU UNDOUBTEDLY WILL. BUT SETBACKS ARE NOT UNUSUAL FOR A YOUNG COMPANY DOING NEW THINGS. THERANOS CERTAINLY DIDN'T SEE MISTAKES AS CRIMES. THEY SAW THEM AS PART OF THE PATH TO SUCCESS. THE GOVERNMENT MENTIONED THERANOS'S EARLY WORK WITH PHARMACEUTICAL COMPANIES.

THERANOS DID DO WORK WITH SOME OF THE BIGGEST PHARMACEUTICAL COMPANIES AND HOSPITALS IN THE WORLD, COMPANIES LIKE NOVARTIS, AND MERCK, AND ASTRAZENECA AND INSTITUTIONS LIKE STANFORD AND MAYO CLINIC. PEOPLE WITHIN THERANOS THOUGHT THE PROJECTS FOR THE MOST PART WERE SUCCESSFUL. YOU CAN SEE THAT HERE IN A LIST OF COMPLETED SUCCESSES THAT WAS SHARED WITH MS. HOLMES IN 2009. NOW, YOU MAY HEAR DURING THIS CASE THAT THIS WAS NOT A BIG DEAL FOR SOME OF THE LARGER PHARMACEUTICAL COMPANIES IN THE WORLD. YOU MAY HEAR THAT. BUT YOU'LL HEAR THAT IT WAS A REAL BOOST OF CONFIDENCE TO MANY AT THIS YOUNG COMPANY. IT WAS A BIG DEAL. YOU SHOULD ALSO KNOW THAT THERANOS GAINED FEEDBACK AS A RESULT OF THAT BIG WORK ON HOW TO MOVE FORWARD AS A COMPANY AND WHERE TO FOCUS COMMERCIALLY. AND YOU'LL SEE DURING THIS TRIAL THAT THERANOS'S RESEARCH AND DEVELOPMENT TEAMS WERE GOING NONSTOP, ALWAYS WORKING ON DEVELOPING AND EXPANDING AND IMPROVING THE COMPANY'S TECHNOLOGY.

THAT TECHNOLOGY FELL INTO THREE CATEGORIES: ASSAYS, HARDWARE, AND SOFTWARE. YOU'LL SEE DURING THE TRIAL THAT THE GOVERNMENT IS FOCUSSED INTENSELY ON THE DEVICES THAT THERANOS WAS WORKING TO DEVELOP. THAT'S NOT SURPRISING. A DEVICE IS TANGIBLE. YOU CAN TOUCH IT. YOU CAN HOLD IT. BUT THE DEVICE WAS NEVER THE FOUNDATIONAL BUILDING BLOCK OF WHAT THERANOS SET OUT TO ACHIEVE. INSTEAD, THE EVIDENCE WILL SHOW THAT ELIZABETH FOCUSSED ON THE CHEMISTRY OF THE ASSAYS THAT THERANOS WAS DEVELOPING. AN ASSAY, AS MR. LEACH EXPLAINED, IS KIND OF A FANCY WORD FOR A TEST. IT'S A RECIPE THAT YOU USE, YOU TAKE A SAMPLE, YOU MIX IT WITH SOME CHEMICALS, AND THAT CREATES A REACTION. YOU ADD DIFFERENT VARIABLES, LIKE TEMPERATURE AND TIME, AND YOU CAN MEASURE THAT REACTION AND DELIVER A TEST RESULT. THIS IS THE KEY TO LABORATORY TESTING.

MR. WADE: MOST OF US WILL ONLY EXPERIENCE MAYBE 25 TO 40 DIFFERENT KINDS OF ASSAYS DURING OUR LIVES. YOU MAYBE HAVE THEM WHEN YOU WENT TO THE DOCTOR, TESTS THAT MEASURE YOUR GLUCOSE AND SODIUM, POTASSIUM, TESTOSTERONE, CHOLESTEROL, VITAMIN LEVELS, IRON. YOU'LL SEE DURING THIS TRIAL THAT MS. HOLMES WANTED TO BE ABLE TO TAKE THESE ROUTINE TESTS WHENEVER POSSIBLE WITH A SMALL SAMPLE OF BLOOD. THIS WAS NOT COMMON AT THAT TIME. MANY OF THESE TESTS HAD NOT BEEN DONE THAT WAY. MANY THOUGHT IT WAS NOT POSSIBLE. BUT THE ABILITY TO DO THE TESTS WITH SMALL AMOUNTS OF BLOOD WAS CRITICAL TO WHAT MS. HOLMES WANTED TO DO. THIS IS WHERE THERANOS FOCUSSED AND EXCELLED. OVER THE SPAN OF A DECADE, THERANOS DEVELOPED AND VALIDATED MORE THAN 235 NEW SMALL SAMPLE TESTS IN ITS RESEARCH AND DEVELOPMENT LABORATORY. THIS WORK WAS DOCUMENTED ACROSS MORE THAN 10,000 PAGES OF INTERNAL COMPANY DOCUMENTS. IT MEMORIALIZED YEARS OF WORK.

THAT'S THE EQUIVALENT OF 20 REAMS OF PAPER FULL OF THESE VALIDATION REPORTS DOCUMENTING THAT HARD WORK. THE RESULTS WERE IMPRESSIVE. THE ACHIEVEMENTS WERE REAL. NOW, THE GOVERNMENT HAS TALKED A LOT ABOUT THE HARDWARE, AND YOU'LL HEAR A LOT ABOUT THE HARDWARE IN THIS CASE. THE COMPANY ALSO WORKED TO DEVELOP HARDWARE THAT WAS NEW AND IMPRESSIVE. YOU WILL SEE THAT THERANOS'S ENGINEERS MINIATURIZED AND COMBINED TESTING TOOLS INTO A SINGLE DEVICE THAT WAS SMALL AND PORTABLE. IF YOU LOOK INSIDE, YOU CAN SEE THAT THERE'S REAL TECHNOLOGY INSIDE AND THE RESULTS OF THE HARD WORK OF THE RESEARCH AND DEVELOPMENT TEAM. AND THROUGHOUT THIS CASE YOU WILL HEAR ABOUT MANY DIFFERENT VERSIONS OF THIS DEVICE AS THEY WERE CONTINUOUSLY WORKING TO IMPROVE AND BUILD THE NEXT GENERATION PRODUCTS. FOR ALL OF THESE ITEMS, YOU ALSO NEED SOFTWARE TO MAKE IT WORK, AND THERANOS DEVELOPED THIS SOFTWARE FROM SCRATCH. TODAY WE ALL TAKE APPS FOR GRANTED. ADVANCEMENTS HAVE MADE IT A LOT EASIER TO DEVELOP APPS.

TEEN-AGE KIDS ARE DOING IT IN THEIR BEDROOM. BUT BACK THEN APPS WERE NEW AND FAR LESS COMMON, AND IT REQUIRED THERANOS TO INVEST A LOT IN DEVELOPING THOSE -- THAT SOFTWARE SO THAT PATIENTS COULD USE THEM TO GET -- TO ORDER THEIR TESTS AND GET THE RESULTS DELIVERED TO THEM. THE COMPANY ALSO HAD TO BUILD CUSTOM DATABASES THAT CONNECTED TO THE TESTING HARDWARE, COMPUTED AND STORED TESTING RESULTS, AND THEN COMMUNICATED THOSE RESULTS ELECTRONICALLY DIRECTLY TO THE PATIENT OR TO THE PATIENT'S DOCTOR. THAT WAS A LOT OF HARD WORK, A LOT OF EFFORT. NOW, I WANT TO TURN YOUR ATTENTION TO WHAT THE EVIDENCE WILL SHOW WITH RESPECT TO A PERIOD IN 2009 AND '10, A TIME WHEN THERANOS MADE A SIGNIFICANT TECHNOLOGICAL BREAKTHROUGH, ONE THAT WAS THE RESULT OF YEARS OF INCREDIBLY HARD WORK BY THE COMPANY'S SCIENTISTS. YOU WILL LEARN THAT WHEN IT HAPPENED, IT CHANGED THE COMPANY'S PERCEPTION OF WHAT WAS POSSIBLE.

IT OPENED THE DOOR TO NEW BUSINESS OPPORTUNITIES, TO A NEW WAY OF THINKING ABOUT HOW IT COULD IMPACT HEALTH CARE. SO WHAT HAPPENED? WELL, IN 2009 -- BEFORE 2009, THERANOS COULD DO ONE METHOD OF THOSE ASSAYS, IMMUNOASSAYS. BUT AFTER THIS BREAKTHROUGH ON THE ASSAY RESEARCH AND DEVELOPMENT, THEY HAD THE CAPACITY TO DO THREE ADDITIONAL METHODS, FOUR IN TOTAL. ALL, ALL FOUR CATEGORIES COULD USE THE SMALL SAMPLE TECHNOLOGY, THE SMALL SAMPLE APPROACH. THIS WAS A SIGNIFICANT EXPANSION OF POSSIBLE TESTS. AND YOU'LL SEE THAT ELIZABETH WAS TOLD BY THE COMPANY SCIENTISTS THAT THEY COULD DEVELOP HARDWARE TO RUN THESE FOUR CATEGORIES OF SMALL SAMPLE TESTS ON A SINGLE DEVICE. SOMETHING LIKE THIS HAD NEVER BEEN DONE BEFORE. AND YOU WILL LEARN THAT IN THIS SAME PERIOD, THERANOS SCIENTISTS ESTIMATED THAT THE COMPANY COULD COVER 96 PERCENT OF TESTS ORDERED IN THE UNITED STATES BY DEVELOPING 125 TESTS. THIS OPENED UP HUGE NEW OPPORTUNITIES.

IF THE BREAKTHROUGH COULD BE REALIZED, THERANOS COULD PUT A DEVICE WITH THE ABILITY TO RUN A FULL RANGE OF COMMON TESTS IN ALL KINDS OF DIFFERENT PLACES, HOSPITALS, DOCTOR'S OFFICES, PHARMACIES, AIRPORTS, SCHOOLS. SO WHAT DID THERANOS DO IN RESPONSE TO THIS BREAKTHROUGH? YOU'LL HEAR THAT IT MADE A MASSIVE INVESTMENT TO DEVELOP AND VALIDATE THE TECHNOLOGY, AND YOU'LL SEE THE TANGIBLE RESULTS OF THAT INVESTMENT. HUNDREDS OF NEW ASSAYS WERE DEVELOPED USING THE SMALL SAMPLE. HUNDREDS OF PATENTS WORTH MILLIONS UPON MILLIONS OF DOLLARS WERE FILED. THE COMPANY'S HARDWARE AND SOFTWARE TOOK STEPS FORWARD.

MR. WADE: AND YOU'LL ALSO LEARN HOW THIS DEVELOPMENT INFLUENCED THE WAY THAT MS. HOLMES SAW, THOUGHT, AND TALKED ABOUT THE COMPANY AND WHAT IT WAS DOING AND WHERE IT WAS HEADING. YOU'LL SEE HER BELIEFS IN EARLY DISCUSSIONS WITH POTENTIAL RETAILERS WHO IT WANTED TO PARTNER WITH. YOU WILL SEE THEM IN THE PATENTS THAT ARE FILED ON THE COMPANY'S BEHALF. YOU'LL SEE THEM IN WHAT SHE TOLD GOVERNMENT REGULATORS. AND YOU'LL SEE THEM IN THE WAY THAT SHE LATER SPOKE PUBLICLY ABOUT THIS TECHNOLOGY. NOW, ELIZABETH WAS STILL YOUNG. SHE LACKED MANY OF THE SKILLS AND EXPERIENCE NEEDED TO GET ALL OF THIS WORK DONE IN THE SCIENCE, THE ENGINEERING, AND THE BUSINESS. AND SHE KNEW THAT.

SO SHE RECRUITED AND HIRED AN INCREDIBLY TALENTED GROUP OF PEOPLE WITH FAR GREATER EXPERTISE TO ASSUME A LOT OF THESE IMPORTANT ROLES, A TEAM THAT WAS UNUSUALLY STRONG FOR A COMPANY OF THIS AGE, OF THIS SIZE, AND ONE THAT CONTINUED TO STRENGTHEN OVER TIME, A SLEW OF SCIENTISTS, ENGINEERS, BUSINESS PEOPLE, AND LEGAL ADVISORS, AND A WIDE RANGE OF OTHER TALENTED EMPLOYEES: 52 SCIENTISTS WITH PH.D.'S; 10 MEDICAL DOCTORS WORKED THERE; 37 EMPLOYEES WITH MASTER'S DEGREES IN SCIENCE OR TECHNOLOGY; AND AN ARMY OF HUNDREDS OF OTHER DEDICATED EMPLOYEES; SEASONED VETERANS FROM TOP COMPANIES IN GOVERNMENT, SOME OF THE BEST LAW FIRMS IN THE COMPANY TO ADVISE IT. THE ACHIEVEMENTS OF THERANOS CAME FROM THIS TEAM THAT MS. HOLMES ASSEMBLED. THE DESIRE TO TRANSFORM HEALTH CARE AND THE COMMITMENT TO A BROADER MISSION AND PURPOSE YOU WILL HEAR EXTENDED BEYOND HER. AS THE COMPANY GREW, SOME OF THE SCIENTIFIC EXECUTIVES PUSHED MS.

HOLMES TO ADD A MORE EXPERIENCED BUSINESS EXECUTIVE TO GUIDE OPERATIONS ON A DAY-TO-DAY BASIS. MR. BALWANI REENTERED THE PICTURE. THE EVIDENCE WILL SHOW THAT ELIZABETH BELIEVED MR. BALWANI TO BE THE BEST BUSINESS EXECUTIVE THAT SHE KNEW. SHE HAD BEEN RELYING ON HIS ADVICE IN THE BACKGROUND FOR YEARS AS SHE WAS BUILDING THERANOS AND AS IT WAS GROWING. AND SO WHEN SHE WAS ENCOURAGED TO BRING IN AN EXPERIENCED EXECUTIVE, SHE THOUGHT MR. BALWANI WOULD BE A GOOD FIT. YOU WILL HEAR HOW MR. BALWANI'S RELENTLESS DRIVE HELPED PUSH THE COMPANY FORWARD. HE WAS THE SENIOR MANAGER WHO WAS RESPONSIBLE FOR MANY AREAS OF THE COMPANY'S OPERATIONS LIKE THE FINANCIAL MODELING AND THE CLINICAL LABORATORY WHERE PATIENT TESTING OCCURRED. YOU WILL ALSO HEAR THAT MR. BALWANI WAS HARD CHARGING. HE DEMANDED DEVOTION AND HARD WORK AND EXPECTED LONG HOURS FROM THOSE WORKING WITH HIM. HE EXPECTED THIS FROM HIMSELF AND FROM EVERYONE, INCLUDING MS.

HOLMES, BECAUSE TO HIM EVERY PROBLEM HAD A SOLUTION IF EVERYONE WORKED HARD ENOUGH TO SOLVE IT. NOW, YOU'LL LEARN THAT MR. BALWANI SOMETIMES DID NOT TAKE WELL TO PEOPLE WHO DISAGREED WITH HIM. YOU WILL HEAR THAT SOMETIMES HE HAD A TEMPER, COULD LASH OUT, AND DID NOT ALWAYS TREAT PEOPLE KINDLY. YOU WILL LEARN HOW HE TESTED THE LIMITS OF SOME EMPLOYEES AND PROMPTED OTHERS TO LEAVE THE COMPANY, OFTENTIMES ON BAD TERMS. AND I MENTIONED BEFORE THAT MR. BALWANI HAD A PERSONAL RELATIONSHIP WITH MS. HOLMES. THERE WAS A SIDE OF THAT RELATIONSHIP THAT MANY PEOPLE SAW AND MAY TALK ABOUT DURING THIS CASE. BUT LIKE WITH MANY PERSONAL RELATIONSHIPS, THERE WAS ANOTHER SIDE TO IT THAT MOST PEOPLE NEVER SAW. YOU WILL HAVE TO WAIT FOR ALL OF THE EVIDENCE AND THEN DECIDE HOW TO FAIRLY VIEW THAT RELATIONSHIP IN ITS FULL. LET ME RETURN TO THE BUSINESS AND HOW IT CONTINUED TO DEVELOP IN 2009 AND 2010. TODAY YOU CAN GO TO A PHARMACY AT CVS OR SAFEWAY OR WAL-MART AND GET MUCH MORE THAN A PRESCRIPTION.

YOU CAN GET A FLU SHOT OR A VACCINE, A COVID VACCINE. MANY OF US GOT THEM THERE. YOU CAN EVEN GET YOUR BLOOD DRAWN IN SOME LOCATIONS TODAY. IN 2009, THIS WAS STILL A NEW CONCEPT, BUT RETAIL COMPANIES WERE LOOKING FOR THESE OPPORTUNITIES. THEY WERE LOOKING FOR THE ABILITY TO PROVIDE NEW HEALTH CARE SERVICES IN THEIR STORES. THERANOS STARTED LOOKING TO BRING ITS TESTING TECHNOLOGY TO CONSUMERS BY PARTNERING WITH RETAIL PHARMACIES AND IT MET, YOU'LL HEAR, SOME OF THE BIGGEST RETAIL PHARMACIES AND GROCERY STORES IN THE COUNTRY TO EXPLORE PARTNERSHIPS, COMPANIES LIKE CVS AND WAL-MART AND TARGET. PROGRESS WAS SLOW. THERANOS HAD NO RETAIL EXPERIENCE, NO LAB EXPERIENCE. ITS PRODUCT WAS STILL MATURING. IT HAD NO FORMAL REGULATORY APPROVALS. MS. HOLMES HAD THIS IDEA ABOUT HOW SHE COULD TRANSFORM TESTING, BUT SHE WAS THEN ONLY 25 YEARS OLD AND HAD NO MEANINGFUL BUSINESS EXPERIENCE.

MR. WADE: MOST OF THESE SOPHISTICATED RETAILERS COULD SEE THAT, COMPANIES LIKE WAL-MART AND CVS. THEY SAID, NICE IDEA, MAYBE LATER. BUT SOME BIG AND EXPERIENCED RETAILERS WERE MORE DARING, OR MAYBE MORE DESPERATE, TO GO AFTER THESE KINDS OF SERVICES. WALGREENS AND SAFEWAY DECIDED THAT THEY WOULD NOT PASS ON THIS OPPORTUNITY TO PARTNER WITH THERANOS. NOW, THESE TWO COMPANIES HAD NOT SURVIVED FOR DECADES IN BUSINESS BY IGNORING RISK. WALGREENS AND SAFEWAY INVESTIGATED, RESEARCHED, AND QUESTIONED THERANOS AND TURNED IT UPSIDE DOWN, ALL IN AN EFFORT TO ASSESS THOSE RISKS, AND YOU WILL HEAR ABOUT THAT EVIDENCE IN THIS CASE. IN CORPORATE AMERICA, IT'S CALLED DUE DILIGENCE, AND THEY PERFORMED A LOT OF IT. THESE COMPANIES BROUGHT IN ARMIES OF EXECUTIVES, CONSULTANTS, SCIENTISTS, AND LAWYERS TO VET THE BENEFITS AND THE RISKS OF THIS PARTNERSHIP. YOU WILL HEAR THEY IDENTIFIED MANY RISKS, BUT THEY WANTED A DEAL WITH THERANOS BECAUSE OF WHAT THEY THOUGHT THERANOS COULD PROVIDE IT.

BUT YOU WILL LEARN THEY ALSO HAD GOOD LAWYERS. AND IN THE DEAL DOCUMENTS, THEY MADE SURE THAT THEY COULD WALK AWAY FROM THERANOS OR CHANGE THE DEAL IF THEY WERE NOT HAPPY WITH HOW IT WAS GOING. WITH WALGREENS, THE SHARED GOAL WAS TO PUT A THERANOS DEVICE IN EVERY WALGREENS STORE. AND THIS WAS CRITICAL TO ELIZABETH'S VISION AND WHAT SHE WANTED TO ACCOMPLISH IN TRANSFORMING LAB TESTING. YOU TAKE A SMALL SAMPLE OF BLOOD AND TEST IT ON A PROPRIETARY DEVICE THAT WAS LOCATED IN THE RETAIL STORE NEAR THE PATIENTS. BUT THEN WALGREENS THREW A WRENCH IN THE DEAL. IT WOULD NOT PUT THERANOS'S DEVICE IN ITS STORES UNTIL THEY HAD CERTAIN FDA APPROVALS. THERANOS HAD A CHOICE. THEY COULD EITHER WALK AWAY FROM 18 MONTHS OF WORK WITH WALGREENS OR THEY COULD FIND A NEW SOLUTION TO SATISFY WALGREENS. THEY FOUND A SOLUTION, A TWO-PHASE ROLLOUT. YOU'LL HEAR ABOUT THIS IN THIS CASE. IN PHASE I, THERANOS WOULD CONDUCT ALL OF THE TESTING IN A CENTRALIZED CLINICAL LAB.

THE SAMPLES WOULD BE COLLECTED OUT AT WALGREENS LOCATIONS AND THEN SHIPPED TO THERANOS. IN PHASE II, THEY WOULD DEPLOY A THERANOS DEVICE IN THE WALGREENS STORE. THIS WOULD ACHIEVE THAT VISION, BUT IT WOULD ONLY COME AFTER CERTAIN FDA APPROVALS WERE IN PLACE. THIS WAS THE NEW PLAN. WHAT YOU HEARD THE GOVERNMENT CRITICIZE ABOUT THE OPERATIONS OF THE LAB IS PHASE I, WHEN THEY'RE OPERATING LIKE A CENTRAL LAB. BUT CONTRARY TO EVERYTHING THAT THE GOVERNMENT SUGGESTED, PHASE I WAS ALWAYS VIEWED AS A TEMPORARY SOLUTION. THERANOS KNEW THAT, WALGREENS KNEW THAT, AND THE INVESTORS KNEW THAT. PHASE II WAS ALWAYS THE GOAL. THERANOS NEVER STOPPED WORKING TO GET THOSE FDA APPROVALS. THERANOS ACTUALLY RECEIVED ITS FIRST FDA APPROVAL FOR ITS DEVICE IN AN ASSAY IN 2015. AND THE COMPANY EXPECTED OTHER APPROVALS WOULD SOON FOLLOW. BUT YOU'LL SEE THAT -- AS THE EVIDENCE COMES IN IN THIS CASE, YOU WILL SEE THAT THERANOS BECAME DISTRACTED BY PHASE I. ITS FOCUS WAS DIVERTED.

IT WAS SUPPOSED TO BE A SHORT TERM SOLUTION, AN EASY DIVERSION TO FILL THAT GAP BEFORE FDA APPROVALS, BUT IT WASN'T. IT TOOK THERANOS FROM BEING A TECHNOLOGY COMPANY TO A COMPANY THAT RAN A CENTRAL LAB. IT TURNED IT INTO A COMPANY THAT WAS MUCH TOO LIKE THOSE TWO CORPORATE BEHEMOTHS THAT IT WAS TRYING TO DISPLACE. YOU ALSO HEARD THE GOVERNMENT CRITICIZE THE FACT THAT THERANOS DID NOT EXCLUSIVELY USE ONE OF THESE WHEN IT STARTED PROCESSING TESTING SERVICES TO THE PUBLIC USING ITS CENTRAL LAB (INDICATING). THERANOS DID NOT HIDE THE USE OF THOSE BIG COMMERCIAL TESTING DEVICES THAT THE GOVERNMENT SHOWED YOU PICTURES OF. IT WAS OPEN WITH THE GOVERNMENT ABOUT EXACTLY WHAT IT WAS DOING. YOU WILL LEARN THAT THERANOS SHARED ITS TWO-PHASED APPROACH WITH TWO CRITICAL REGULATORS, THE REGULATORS THE GOVERNMENT MENTIONED, THE FDA AND CMS. LOOK AT THIS DOCUMENT WHICH WAS SENT IN 2013 TO THE FDA JUST AS THE COMPANY BEGAN OPERATIONS IN WALGREENS.

IT SHOWED PHASE I, THE CENTRAL LAB MODEL THAT I JUST WENT THROUGH, AND IT SET FORTH THE DEVICES IN WHICH IT WOULD OPERATE IN THAT MODEL, INCLUDING CONVENTIONAL, COMMERCIAL ANALYZERS. THIS IS WHAT THE GOVERNMENT SAYS WAS HIDDEN IN THE DOCUMENT THAT WENT TO THE FDA AND CMS. YOU WILL ALSO LEARN THAT THERANOS TOLD REGULATORS EXACTLY WHAT TESTS IT WAS RUNNING AND WAS PLANNING TO RUN ON EACH DEVICE. NOW, YOU'RE GOING TO LEARN DURING THIS CASE AS THE EVIDENCE COMES IN THAT THERANOS'S PARTNERSHIP WITH WALGREENS HAS A LOT OF SIGNIFICANCE. WE AGREE WITH THE GOVERNMENT ABOUT THAT, BUT FOR A DIFFERENT REASON.

MR. WADE: INVESTORS INVESTED WITH THERANOS LARGELY BECAUSE THEY SAW THE WALGREENS PARTNERSHIP AS AN ENDORSEMENT OF THIS YOUNG COMPANY. BUT YOU WILL LEARN THAT THE TWO-PHASED APPROACH REQUIRED THERANOS TO DO TOO MUCH TOO FAST AND TOO FAR BEYOND ITS EXPERTISE. A MISTAKE, NOT A FRAUD. NOW, AS THESE PARTNERSHIPS WERE TAKING ROOT AND THEY BEGAN OPERATING, WALGREENS AND SAFEWAY PUSHED THERANOS TO MARKET ITSELF PUBLICLY AND ITS SERVICES. SO AT THE SUGGESTION OF A BOARD MEMBER, MS. HOLMES CALLED THE BEST MARKETING FIRM IN THE BUSINESS, CHIAT/DAY. IT WAS A FIRM THAT SPECIALIZED IN DISRUPTION. CHIAT WAS RESPONSIBLE FOR SOME OF THE BEST AD CAMPAIGNS IN HISTORY. THEY LAUNCHED AND DEFINES A LITTLE COMPANY ABOUT FIVE MILES TO THE WEST CALLED APPLE, FIRST WITH THIS FAMOUS 1984 SUPERBOWL AD, AND LATER WITH THEIR "THINK DIFFERENT" CAMPAIGN. IT WAS AN IMPRESSIVE AND EXPERIENCED MARKETING FIRM. AND THE CHIAT/DAY TEAM TOLD ELIZABETH THE WAY TO MARKET THERANOS WAS FOR IT TO BE DISRUPTIVE.

THEIR APPROACH FIT WELL WITH HOW ELIZABETH SAW HER COMPANY AND WHAT SHE THOUGHT IT COULD DO TO TRANSFORM THE LAB TESTING EXPERIENCE AND HOW IT COULD BE DIFFERENT FROM THESE TWO OLD CORPORATE BEHEMOTHS THAT HAD OCCUPIED THE LAB TESTING INDUSTRY FOR DECADES. CHIAT HELPED PRODUCE AND PUBLICLY LAUNCH THERANOS WITH A CAMPAIGN THAT DEFINED THE COMPANY AS UNIQUE AND INDEPENDENT. THEY SOUGHT TO DEFINE THERANOS'S SERVICES AS DIFFERENT, NOT JUST THE TYPICAL LAB. AND ALONG THE WAY, THEY CREATED IMAGES AND TAG LINES THAT WERE DISTINCTIVE AND IMPACTFUL. THE GOAL WAS NOT TO EXPLAIN THE PRECISE TESTS OR SERVICES THAT THERANOS WAS PROVIDING AT ANY GIVEN TIME. THE GOAL WAS TO PIERCE THE CLUTTER OF PEOPLE'S DAILY LIVES AND GET THEM TO CONNECT WITH THIS COMPANY, TO THINK DIFFERENTLY ABOUT THE COMPANY, AND TO IDENTIFY WITH THERANOS AS A COMPANY THAT COULD POSITIVELY IMPACT THEIR LIVES. THIS WORK WAS POWERFUL. THESE BRANDING EXPERTS HAD A HAND, OR A VOICE AT LEAST, IN NEARLY EVERYTHING THAT THE COMPANY COMMUNICATED IN THE YEARS TO FOLLOW, INCLUDING MANY OF THE STATEMENTS THAT THE GOVERNMENT MAY WELL FOCUS ON IN THIS CASE, LIKE THE WEBSITE IMAGES AND PRINT ADS, THE INTERIOR DESIGN OF TESTING LOCATIONS, THE MEDIA INTERVIEWS, THE SPEECHES, AND THE COMMERCIALS. COMMERCIALS LIKE THIS ONE.

MR. WADE: THIS WAS NOT, AS THE GOVERNMENT SUGGESTED, MS. HOLMES ABANDONING THE PROJECT. IT WAS SEEN AS ESSENTIAL TO THE COMPANY'S GROWTH AND SUCCESS IN MOVING FORWARD. SOME OF CHIAT'S CAMPAIGN DID FOCUS ON MS. HOLMES AS A FEMALE FOUNDER IN SILICON VALLEY. THAT IS SOMETHING THAT WAS, AND STILL IS, CONSIDERED FAR TOO RARE. BUT MUCH, MUCH MORE OF THAT WORK WAS UNRELATED TO ELIZABETH OR EVEN THE TECHNOLOGY. IT FOCUSSED ON LOW PRICES, EASY ACCESS, EARLY DETECTION, AND PHYSICAL COMFORT, ALL IMPORTANT ASPECTS OF THE COMPANY'S MISSION AS YOU'LL LEARN DURING THIS CASE. NOW, WITH THE PUBLICITY OF THE COMPANY ALSO CAME GREATER INTENTION TO PROTECTING THERANOS'S CONFIDENTIAL BUSINESS INFORMATION AND TRADE SECRETS FROM PUBLIC DISCLOSURE, ITS INTELLECTUAL PROPERTY. YOU'RE GOING TO HEAR ABOUT HOW THE COMPANY TOOK A LOT OF EFFORTS TO TRY TO PROTECT THEIR INTELLECTUAL PROPERTY.

THEY SPENT MILLIONS ON LAWYERS TO FILE THE PATENTS, AND THEY IMPLEMENTED PROTECTIONS TO ENSURE THAT THESE VALUABLE ASSETS THAT IT HAD DEVELOPED REMAINED PROTECTED. LET ME TURN SPECIFICALLY TO THE INVESTORS AND THE PATIENTS THAT THE GOVERNMENT HAS FOCUSSED US ON HERE TODAY. THERANOS'S VISION IN BRANDING WE WERE JUST TALKING ABOUT ALSO CAUGHT THE EYES OF INVESTORS, BIG INVESTORS, SOPHISTICATED PEOPLE WHO THOUGHT THAT THERANOS WOULD BE THE NEXT BIG THING, THE NEXT UNICORN INVESTMENT, ONE THAT MIGHT MAKE THEM A LOT OF MONEY. AND YOU'LL SEE THAT THE INVESTORS WERE IMPRESSED BY MS. HOLMES'S VISION AND THEY DECIDED TO MAKE A WAGER. BUT AS WITH MANY BETS, THIS ONE CAME WITH RISKS. AND THEY ASSESSED THOSE RISKS. YOU'LL HEAR ABOUT IT. BUT THEY WERE EAGER TO INVEST IN A TECH COMPANY, AND THEY DECIDED THAT THE RISKS DID NOT OUTWEIGH THE POTENTIAL FOR PROFITS. MOST INVESTORS WHO INVESTED IN 2013 AND 2014 INVESTED BECAUSE THERANOS HAD SUCCESSFULLY ENTERED INTO AN AGREEMENT WITH WALGREENS.

WALGREENS TOUTED THAT PARTNERSHIP IN A BOLD PUBLIC PRESS RELEASE ANNOUNCING A PLANNED NATIONAL ROLLOUT. WALGREENS MADE OTHER POSITIVE PUBLIC STATEMENTS ABOUT THE PARTNERSHIP THAT YOU'LL LEARN ABOUT DURING THIS CASE. NOW, THE GOVERNMENT EVIDENTLY DOES NOT THINK THAT THE INVESTORS RELIED ON THESE PUBLIC ASSERTIONS FROM ONE OF THE BIGGEST NAMES IN CORPORATE AMERICA OR THE VISION THAT MS. HOLMES SPELLED OUT. INSTEAD, THE GOVERNMENT HAS FOCUSSED YOU ON WHAT THEY WANT YOU TO BELIEVE, THAT THESE INCREDIBLY SOPHISTICATED INVESTORS WERE DEFRAUDED BY ISOLATED PHRASES AND BULLET POINTS FROM MEDIA ARTICLES AND SPEECHES, OR 250-PAGE SLIDE PRESENTATIONS, A COUPLE OF WHICH THEY SHOWED YOU HERE TODAY. BUT YOU HAVE TO LOOK AT THE BIGGER PICTURE. OVER THE YEARS, MS. HOLMES INTERACTED WITH INVESTORS ALL OF THE TIME. SHE TALKED ABOUT A LOT OF THINGS THAT COULD HAPPEN WITH THERANOS'S TECHNOLOGY, THINGS THAT MIGHT HAPPEN, THINGS THAT SHE HOPED WOULD HAPPEN.

SHE TALKED ABOUT THE ABILITY TO DO BLOOD TESTING MORE FREQUENTLY, TO SEE SMALL CHANGES OVER TIME. THE WAY THAT THERANOS'S TECHNOLOGY MIGHT HELP MONITOR AND PREVENT THE SPREAD OF INFECTIOUS DISEASES DURING OUTBREAKS. SHE TALKED WITH INVESTORS ABOUT THE POTENTIAL USES OF THEIR TECHNOLOGY TO HELP SAVE AND TREAT SOLDIERS ON THE BATTLE FIELD. SHE TALKED ABOUT HOW THE TECHNOLOGY MIGHT BE USED IN DEVELOPING COUNTRIES TO HELP PEOPLE WHO COULD NOT OTHERWISE ACCESS TESTING. SHE TALKED ABOUT ALL OF THOSE THINGS AND MANY, MANY, MANY OTHER THINGS. AND YOU WILL HEAR IN THE EVIDENCE THAT THE THREAD THAT RUNS THROUGH ALL OF THOSE COMMUNICATIONS IS HER VISION FOR THE IMPACT SHE THOUGHT THERANOS WOULD HAVE ON PATIENTS, ON PEOPLE IN THEIR DAILY LIVES, AND ON THE LAB TESTING INDUSTRY AS A WHOLE, THE WAY THAT IT COULD BE DISRUPTED. THOSE BIG DREAMS.

SO AS YOU STEP BACK AND LOOK AT THE GOVERNMENT'S ALLEGATIONS IN THIS CASES WITH RESPECT TO THESE INVESTORS, CONSIDER THE FOLLOWING CONTEXT THAT WILL COME THROUGH IN THE EVIDENCE. I'M GOING TO FOCUS ON TWO THINGS: FIRST, THE EVIDENCE IS GOING TO SHOW YOU THAT THE INVESTORS IN THIS CASE ARE INCREDIBLY SOPHISTICATED PEOPLE WHO KNEW THE RISKS. TO INVEST IN THERANOS, YOU NEEDED TO BE AT LEAST A MULTIMILLIONAIRE, AND IN MANY CASES THEY WERE BILLIONAIRES. THEY WERE SOME OF THE WEALTHIEST AND MOST SUCCESSFUL PEOPLE IN THE WORLD. PEOPLE LIKE MEDIA TYCOON RUPERT MURDOCH, THE HEIRS TO THE WAL-MART FORTUNE, THE DEVOS FAMILY WHO MADE BILLIONS FOUNDING AMWAY, AND PFM, A MAJOR HEDGE FUND THAT MANAGED BILLIONS OF DOLLARS AND HAD DECADES OF SPECIALIZED EXPERTISE IN HEALTH CARE INVESTMENTS.

MR. WADE: THESE WERE SOPHISTICATED PEOPLE, AND THEY KNEW WHAT THEY WERE BUYING. HOW DO WE KNOW? WELL, THE EVIDENCE WILL SHOW THAT THE RISKS WERE APPARENT TO THESE INVESTORS. THE INVESTORS THEMSELVES ACKNOWLEDGED IN WRITING THE RISKS IN THE AGREEMENTS THAT THEY SIGNED DOCUMENTING THEIR INVESTMENTS. IN THOSE AGREEMENTS, THEY HAD TO CONFIRM THAT THEY COULD PROPERLY ASSESS THE MERITS AND THE RISKS OF INVESTING IN A STARTUP LIKE THERANOS. IT'S RIGHT THERE IN THE LANGUAGE OF THE AGREEMENT. THEY ALSO HAD TO CONFIRM THAT THEY RECOGNIZED THAT THERANOS WAS A SPECULATIVE INVESTMENT. THE EVIDENCE WILL SHOW YOU THAT THESE SOPHISTICATED INVESTORS FACTORED THESE RISKS FACING THE COMPANY INTO THEIR DECISIONS. THEY CONSIDERED BUSINESS RISKS. THEY WAS A YOUNG START-UP COMPANY. IT WAS MAKING A TRANSITION FROM BEING AN R&D COMPANY TO ONE WITH A NATIONAL RETAIL PRESENCE. NEITHER MS. HOLMES NOR MR. BALWANI HAD ANY PRIOR EXPERIENCE IN RETAIL OPERATIONS. THERANOS HAD NEVER OPERATED A LARGE-SCALE LABORATORY.

THERANOS WOULD FACE COMPETITION FROM TWO GOLIATHS IN THE INDUSTRY THAT CONTROLLED THE INDUSTRY THUS FAR. AND AT THE TIME MANY PEOPLE INVESTED, THERANOS HAD NO TESTING LOCATIONS. NONE. WHEN THREE OF THE GOVERNMENT'S WITNESSES INVESTED IN LATE 2013 AND 2014, THERANOS WAS TESTING IN THREE LOCATIONS. NOW, THEY TALKED ABOUT A GOAL OF MORE THAN 8,000 LOCATIONS NATIONWIDE. THEY HAD THREE, AND THEY WERE ALL LISTED ON THE COMPANY'S WEBSITE. THE EVIDENCE WILL SHOW THAT SOME OF THESE QUESTIONS WERE ADDRESSED NOT BY THERANOS, BUT BY WALGREENS, BECAUSE YOU'RE GOING TO HEAR THAT INVESTORS RELIED ON WALGREENS'S STATEMENTS TO GET COMFORTABLE WITH THEIR INVESTMENTS. AND SOME OF THEM EVEN SPOKE DIRECTLY TO WALGREENS ABOUT THEIR INVESTMENTS. THE INVESTORS ALSO CONSIDERED THE REGULATORY RISK. I THINK WE PROBABLY ALL KNOW, MANY OF US KNOW THAT THE HEALTH CARE SPACE IS HIGHLY REGULATED. THERE ARE A LOT OF RULES. WE TALKED A LITTLE BIT ABOUT THE FDA.

THERANOS CLEARLY SAID TO INVESTORS THAT IT WAS SEEKING FDA APPROVAL OF ALL OF ITS DEVICES. BUT AT THE TIME EVERYONE INVESTED, EVERY SINGLE ONE OF THEM, THEY ALL KNEW THAT THERANOS HAD NO FDA APPROVALS. NONE. AND THERE WAS ALWAYS A RISK THAT APPROVALS COULD TAKE TIME AND SLOW THE COMPANY'S PLANS DOWN. YOU'LL SEE EVIDENCE OF THEIR AWARENESS OF THAT RISK. THERE WERE ALSO TWO AGENCIES THAT REGULATED THERANOS'S CLINICAL LABORATORIES. THE FIRST WAS CMS. THE SECOND WAS THE CALIFORNIA DEPARTMENT OF PUBLIC HEALTH. THERE WAS ALWAYS A RISK THAT A NEW COMPANY WITH NO PRIOR LAB EXPERIENCE MAY HAVE SOME ISSUES WITH LAB REGULATORS AS THEY'RE GETTING STARTED AND RUNNING. INVESTORS ALSO KNEW AND THOUGHT ABOUT THE TECHNOLOGY RISK. IT WAS WELL-KNOWN THAT THERANOS WAS NOT YET UP AND RUNNING ITS TESTS ON DEPLOYED DEVICES IN WALGREENS LOCATIONS. EVERYONE KNEW THAT. IT WAS IN PHASE I. IT DIDN'T HAVE FDA APPROVAL. AND USE OF COMMERCIAL MACHINES IN PHASE I WAS NO SECRET.

YOU SAW THE PRESENTATION TO THE FDA THAT LAID IT OUT. THAT WAS ALSO SHARED WITH CMS, THE LAB REGULATOR. YOU WILL HEAR TESTIMONY THAT PEOPLE SAW THOSE MACHINES AND KNEW THAT THEY WERE BEING USED IN CLIA LABORATORIES. INDEED, THEY WOULD BE PRETTY HARD TO HIDE. THERE WERE ALSO PUBLIC DOCUMENTS THAT TALKED ABOUT HOW THERANOS WAS USING THOSE VENOUS DRAWS THAT THE GOVERNMENT SPOKE ABOUT IN ITS OPENING, DRAWS FROM THE VEIN AND NOT THE FINGER. MANY PUBLIC DOCUMENTS THAT YOU'LL SEE IN THIS CASE THAT DESCRIBE THAT. DRAWS FOR COMMERCIAL ANALYZERS AT WALGREENS LOCATIONS. AND, OF COURSE, THERE'S THE FACT THAT MANY INVESTORS THEMSELVES, YOU'LL HEAR THEM RIGHT UP THERE, THEY RECEIVED VENOUS DRAWS WHEN THEY WENT TO LOOK AT THERANOS'S SERVICES, THE TRADITIONAL METHOD DESIGNED FOR THE TRADITIONAL MACHINES. SO AS YOU LISTEN TO THE GOVERNMENT EVIDENCE AND CONSIDER, WHO ARE IN THESE INVESTOR MEETINGS THAT THEY'RE DESCRIBING, ASK YOURSELF IF YOU REALLY THINK THAT THERE'S A FRAUD AFOOT IN THESE INTERACTIONS. ALSO ASK, IF MS. HOLMES INTENDED TO DEFRAUD THESE INCREDIBLY WEALTHY INVESTORS TO GET THEIR MONEY, AS THE GOVERNMENT ALLEGES, DON'T YOU THINK SHE MIGHT SELL SOME OF HER STOCK TO TAKE ADVANTAGE OF THAT FRAUD? TRY TO CASH IN? OF COURSE SHE NEVER DID. NOW, THE SECOND ISSUE WITH RESPECT TO INVESTORS THAT I WANT YOU TO FOCUS ON IS THE FACT THAT ALMOST ALL OF THE PEOPLE WHO ARE GOING TO COME UP AND TESTIFY IN THIS TRIAL ARE INVESTORS WHO PUSHED OTHER PEOPLE TO INVEST MONEY IN THERANOS.

MR. WADE: SOME OF THE MOST SUCCESSFUL PEOPLE WHO YOU JUST SAW ON THAT SLIDE WON'T BE MENTIONED IN THIS TRIAL. INSTEAD, NEARLY EVERY ONE OF THE INVESTOR WITNESSES CALLED ANALYZED THERANOS AS AN INVESTMENT FOR THEMSELVES, AND THEN THEY ENCOURAGED THEIR FRIENDS, FAMILY, OR CLIENTS TO INVEST SIGNIFICANT SUMS OF MONEY INTO THERANOS BASED ON THEIR ADVICE. NOW, THOSE FRIENDS AND FAMILY NEVER HAD, OR HAD VERY LIMITED INTERACTION WITH MS. HOLMES OR ANYONE ELSE AT THERANOS. SO CONSIDER THE MOTIVES OF SOME OF THESE INVESTOR WITNESSES AS THEY LOOK BACK AT THEIR INTERACTIONS WITH THE COMPANY. LET ME GIVE YOU ONE EXAMPLE. THE GOVERNMENT MENTIONED IN THE OPENING BRIAN GROSSMAN OF PFM, RUNS A HEDGE FUND. BASED ON HIS HEDGE FUND'S DUE DILIGENCE AND BALANCING OF RISK, PFM GOT DOZENS OF SECONDARY INVESTORS TO BUY INTO THERANOS, INCLUDING THE HEDGE FUND'S CLIENTS, MR. GROSSMAN'S FRIENDS, AND SEVERAL FAMILY MEMBERS. WHEN THE INVESTMENT WENT SOUTH, DID HE WANT IT TO BE HIS MISS? HIS BAD BET?

HIS FAILURE TO ASSESS THE RISK? OR ELIZABETH HOLMES'S? OR MR. BALWANI'S? OR ANYONE ELSE'S? ASK THESE QUESTIONS AS YOU CONSIDER THIS EVIDENCE WHEN IT COMES BEFORE YOU IN THIS CASE. YOU WILL SEE THIS DYNAMIC WITH MANY OTHER INVESTORS AND A FULL AIRING OF THE EVIDENCE WILL SHOW THAT WHILE INVESTORS SAW OBVIOUS PROMISE IN THIS COMPANY, THEY ALSO KNEW THE RISK. THEY KNEW IT WAS A GAMBLE. THEY WEREN'T MISLED OR CHEATED BY MS. HOLMES OR ANYONE ELSE. LET ME SHIFT TO THE PATIENTS. I TOLD YOU I WANTED YOU TO SEE THE FULL PICTURE, TO SEE IT FAIRLY. I WANT TO BE CANDID WITH YOU, AND SO I WILL TELL YOU THIS: THERE WERE PROBLEMS WITH THERANOS'S CLINICAL LABORATORY. THERE WERE. THERE WERE PROCESSES AND PROCEDURES IN PLACE THAT WERE NOT FOLLOWED, AND SOME OF THE TESTS THAT THERANOS OFFERED IN HINDSIGHT WERE NOT PERFORMING AS WELL AS EXPECTED. YOU'RE GOING TO HEAR ABOUT THAT IN THIS TRIAL. AND IT'S TRUE.

WE ACTUALLY EXPECT THE GOVERNMENT IS GOING TO CALL 20 WITNESSES, AS MANY AS 20 WITNESSES, THERANOS'S CUSTOMERS OR DOCTORS TO TALK ABOUT THIS. WE EXPECT THAT THEY'RE GOING TO EACH TESTIFY TO AN INCIDENT WHERE THEY BELIEVED THEY RECEIVED AN INACCURATE LAB TEST FROM THERANOS. RECEIVING AN INACCURATE TEST OR RESULT IS A MISTAKE. IT'S A MISTAKE. AND IT'S SOMETHING THAT EVERY LABORATORY TRIES TO AVOID. NO LAB, NO LAB WANTS TO MAKE THESE KINDS OF MISTAKES. BUT THE EVIDENCE WILL SHOW YOU THAT INACCURATE RESULTS ARE GENERATED EVERY DAY IN LABORATORIES ACROSS AMERICA. THE GOVERNMENT MAY ALSO CALL REGULATORS FROM CMS AND THERANOS EMPLOYEES AS WITNESSES TO SAY THAT THERANOS'S CLINICAL LABORATORY WAS NOT RUN PROPERLY. AGAIN, THEY MAY SPEND DAYS OR EVEN WEEKS ON THESE FACTS. AND IF WHAT THE GOVERNMENT IS TRYING TO SHOW IS THAT THERANOS'S CLINICAL LABORATORY WAS NOT WELL RUN FROM LATE 2013 UNTIL 2016, WE'RE LIKELY GOING TO AGREE WITH WHAT THEY HAVE TO SAY.

THERE'S NO NEED FOR THE GOVERNMENT TO SPEND SO MUCH TIME PRESENTING YOU ALL OF THAT EVIDENCE. THAT VERY POINT IS SOMETHING THAT MS. HOLMES HERSELF HAS SAID PUBLICLY ON NUMEROUS OCCASIONS. POOR OPERATIONS IN THE LAB WAS PROBABLY ONE OF THERANOS'S BIGGEST FAILS, ITS BIGGEST MISTAKE. BUT IT WAS NOT A FRAUD. LET ME BE CLEAR ABOUT WHAT THE ISSUE IS HERE, WHERE WE DO DISAGREE WITH THE GOVERNMENT. MS. HOLMES IS ACCUSED OF KNOWING THAT THERANOS'S CLINICAL LABORATORY WAS INCAPABLE OF PROVIDING ACCURATE AND RELIABLE RESULTS AT THE TIME THOSE RESULTS WERE BEING OFFERED TO CUSTOMERS. THAT IS SIMPLY NOT TRUE. SHE SPENT HER ENTIRE ADULT LIFE TRYING TO TRANSFORM HEALTH CARE IN A WAY THAT WOULD HELP PATIENTS, AND THE IDEA THAT SHE KNOWINGLY PROVIDED THEM WITH INACCURATE RESULTS IS FALSE. THE ALLEGATION FINDS NO SUPPORT IN THE EVIDENCE. THE EVIDENCE WILL SHOW THAT MR. BALWANI HAD MANAGEMENT OVERSIGHT AT THE LABORATORY DURING THIS PERIOD, AND IT WILL SHOW THAT MR.

BALWANI WORKED CLOSELY WITH THERANOS'S LABORATORY DIRECTOR, DR. ADAM ROSENDORFF AND ITS TOP SCIENTIST, DR. YOUNG. WERE THERE DISAGREEMENTS? ABSOLUTELY. MR. BALWANI, DR. ROSENDORFF, AND DR. YOUNG OFTEN DISAGREED, AND YOU'LL HEAR ABOUT IT. WITH THESE THREE MEN, YOU HAD AN EXPERIENCED BUSINESS EXECUTIVE, A MEDICAL DOCTOR WITH LABORATORY EXPERIENCE, AND A BIOSCIENTIST WITH A PH.D. FROM THE MASSACHUSETTS INSTITUTE OF TECHNOLOGY, ONE OF THE GREATEST SCIENTIFIC UNIVERSITIES IN THE WORLD. THAT IS A POWERFUL GROUP, A KNOWLEDGEABLE GROUP, AN EXPERIENCED GROUP. AND SOMETIMES THEY DID NOT SEE EYE TO EYE.

MR. WADE: SHOULD MS. HOLMES HAVE TAKEN A MORE ACTIVE ROLE OR GOTTEN SOMEONE ELSE WITH MORE EXPERIENCE RUNNING OPERATIONS INVOLVED IN THAT LAB? IN HINDSIGHT, THAT'S THE EASIEST QUESTION TO ANSWER. BUT THE EVIDENCE WILL SHOW THAT AT THE TIME, SHE HAD EVERY REASON TO BELIEVE THAT THE LAB OPERATIONS WERE UNDER CONTROL AND THAT AN APPROPRIATE SYSTEM WAS IN PLACE. SO AS YOU CONSIDER THE GOVERNMENT'S ALLEGATIONS WITH RESPECT TO THE PATIENTS IN THE LAB, KEEP SIGHT ON THE EVIDENCE RELATING TO THESE TWO ISSUES. DID MS. HOLMES BELIEVE THAT THE TESTS WERE ACCURATE AND RELIABLE WHEN OFFERED TO PATIENTS? AND UNDER FEDERAL STATE -- I'M SORRY -- UNDER STATE AND FEDERAL LAB REGULATIONS, WHO IS RESPONSIBLE FOR ENSURING THAT THE TESTS ARE ACCURATE, RELIABLE, AND SAFE FOR PATIENT USE? LET ME START WITH THE EASIEST ONE. DID MS. HOLMES BELIEVE THE TESTS WERE ACCURATE AND RELIABLE? IN A WORD: YES. AND HER ACTIONS ARE THE BEST EVIDENCE OF THAT BECAUSE YOU'LL LEARN THAT SHE USED THE TEST HERSELF.

SHE SENT HER FAMILY MEMBERS TO BE TESTED. WHAT BETTER EVIDENCE OF HER BELIEF IN THE ACCURACY AND RELIABILITY OF THOSE TESTS CAN YOU GIVE THAN THAT? AND HER BELIEF CAME WITH GOOD REASON. THERANOS WAS OFFERING ITS PROPRIETARY TEST IN A CLINICAL LABORATORY THAT WAS INSPECTED AND CERTIFIED PURSUANT TO FEDERAL CLIA LAB REGULATIONS. AND THE INDIVIDUAL TESTS, EACH TEST THAT WAS OFFERED IN THE LAB WAS VALIDATED UNDER THOSE REGULATIONS BY A HIGHLY TRAINED AND QUALIFIED STAFF MEMBER BEFORE THAT TEST COULD BE OFFERED TO PATIENTS. BY VALIDATING THAT TEST, THAT EXPERIENCED LAB STAFF WAS CERTIFYING THAT THE TESTS ARE SUFFICIENTLY ACCURATE AND RELIABLE FOR PATIENT USE. SO IF A LAB TEST MADE IT THROUGH THE VALIDATION AND COULD BE OFFERED TO PATIENTS, IT WAS BECAUSE THE INTERNAL EXPERTS CONCLUDED THAT IT WAS SAFE AND ACCURATE AND RELIABLE FOR USE. IT'S REALLY THAT SIMPLE.

NOW, THE GOVERNMENT SEEMS TO SUGGEST THAT IT WAS ELIZABETH HOLMES WHO MADE THE DECISION AS TO WHETHER A TEST WAS APPROPRIATE FOR PATIENT USE, OR THAT SHE WAS THE ONE WHO SHOULD DECIDE WHETHER A TEST THAT WASN'T FUNCTIONING PROPERLY SHOULD BE PAUSED OR STOPPED. THAT'S JUST NOT SO. SHE PLAYED NO ROLE IN THAT DECISION. MR. BALWANI OVERSAW THE CLINICAL LAB FROM A MANAGEMENT STANDPOINT DURING THE RELEVANT TIME PERIOD, AND HE WAS WORKING WITH THE INTERNAL EXPERTS TO ENSURE THAT IT WAS RUNNING PROPERLY. YOU WILL SEE THAT MS. HOLMES RELIED ON MR. BALWANI AND THOSE INTERNAL EXPERTS TO ENSURE THAT THINGS WERE BEING DONE PROPERLY. THE EVIDENCE WILL ALSO SHOW THAT SHE WASN'T DIRECTING PATIENT TESTING. SHE DIDN'T MAKE THOSE JUDGMENTS. THAT'S NOT HOW LABORATORIES WORK. LAB COMPANIES DON'T HAVE THEIR CEO'S DECIDING WHETHER A TEST IS FIT TO OFFER OR NOT UNLESS THAT CEO IS QUALIFIED AND AN EXPERT AND CAN LAWFULLY SERVE AS A LABORATORY DIRECTOR. MS.

HOLMES DIDN'T HAVE THOSE QUALIFICATIONS, NOT EVEN CLOSE. SO THAT PROMPTS THE SECOND QUESTION: WHO IS RESPONSIBLE FOR ENSURING THAT THE TESTS ARE ACCURATE AND RELIABLE AND SAFE FOR PATIENT USE? UNDER STATE AND FEDERAL REGULATION, IT IS THE LAB DIRECTOR WHO IS RESPONSIBLE LEGALLY FOR THE OPERATIONS OF THE LAB. AND IT IS THE LAB DIRECTOR WHO GETS TO DECIDE WHETHER TESTS ARE SUFFICIENTLY ACCURATE AND RELIABLE TO BE OFFERED TO PATIENTS. LET ME TALK A LITTLE BIT ABOUT WHAT YOU'LL LEARN ABOUT HOW THAT WORKS. BEING A LAB DIRECTOR REQUIRES A DEEP UNDERSTANDING OF BLOOD TESTING, CHEMISTRY, BIOLOGY, AND MANY OTHER THINGS. UNDER FEDERAL LAW, THAT PERSON MUST BE A MEDICAL DOCTOR OR HAVE A PH.D. IN A LAB SCIENCE. NOW, MS. HOLMES, OF COURSE, HAD NEITHER. SHE HAD ABOUT A YEAR OF COLLEGE, AND SHE KNEW SHE WASN'T QUALIFIED TO BE A LAB DIRECTOR. EVERYONE KNEW THAT. SO THERANOS HIRED QUALIFIED LAB DIRECTORS. YOU WILL HEAR FROM SOME OF THEM DURING THIS TRIAL.

OF PARTICULAR IMPORTANCE, IT WAS THE LAB DIRECTOR WHO WAS RESPONSIBLE FOR DECIDING WHEN THERANOS TESTS WERE ACCURATE AND RELIABLE TO BE OFFERED IN THE CLIA LAB. THE FEDERAL REGULATIONS THAT GOVERN LAB OPERATIONS SET OUT VERY SPECIFIC REQUIREMENTS THAT MAKE ABSOLUTELY CLEAR THAT IT IS THE LAB DIRECTOR WHO IS RESPONSIBLE FOR VALIDATING THE TEST. AS YOU CAN SEE RIGHT THERE IN THE LANGUAGE OF THE REGULATIONS THAT IT IS THE LAB DIRECTOR WHO IS RESPONSIBLE FOR ENSURING THE ACCURACY AND RELIABILITY OF TESTS, THE VERY THINGS THAT THE GOVERNMENT IS COMPLAINING ABOUT IN THIS CASE. SO AT THERANOS, THE LABORATORY DIRECTOR'S DECISION REGARDING THE RELIABILITY AND ACCURACY OF A TEST WAS DOCUMENTED IN A VALIDATION REPORT.

MR. WADE: HERE'S AN EXAMPLE OF THAT REPORT. YOU CAN SEE SIGNATURES FROM THERANOS'S SCIENTISTS AND APPROVED BY THE LAB DIRECTOR. FIVE DIFFERENT SIGNATURES ON THIS DOCUMENT. NOT ONE OF THOSE SIGNATURES BELONGED TO MS. HOLMES, NOT ON ANY OF THE VALIDATION REPORTS FOR ANY OF THE TESTS THAT WERE OFFERED IN THE LAB, NOT A SINGLE ONE. THERE WERE ALWAYS COMPANY SCIENTISTS AND LAB PERSONNEL, THE INTERNAL EXPERTS, BECAUSE THEY WERE RESPONSIBLE FOR ESTABLISHING AND ENSURING THE ACCURACY AND RELIABILITY OF THE TESTS. NOW, WE ANTICIPATE, BASED ON THE GOVERNMENT'S OPENING STATEMENT, THAT YOU'LL HEAR A LOT ABOUT DR. ADAM ROSENDORFF DURING THIS CASE. HE JOINED THE COMPANY IN 2013. HE WAS THE LAB DIRECTOR WHEN THERANOS LAUNCHED ITS COMMERCIAL TESTING BUSINESS WITH WALGREENS IN THE FALL OF 2013. AND HE SERVED IN THAT ROLE UNTIL DECEMBER OF 2014. DR. ROSENDORFF HAD IMPRESSIVE QUALIFICATIONS AND EXPERIENCE. YOU'LL LEARN ABOUT IT. THE EVIDENCE WILL SHOW THAT DR.

ROSENDORFF SIGNED VALIDATION REPORTS FOR NEARLY ALL OF THE TESTS AT ISSUE IN THIS CASE AND THAT HE NEVER SIGNED, NOR FELT PRESSURED TO SIGN, A VALIDATION REPORT THAT HE WAS NOT COMFORTABLE WITH. NOW, ONCE A TEST IS VALIDATED AND BEING PERFORMED IN THE LABORATORY, THE REGULATIONS ALSO PROVIDE THAT ONGOING PERFORMANCE AND QUALITY ARE THE LAB DIRECTOR'S RESPONSIBILITY. THE EVIDENCE WILL SHOW THAT DR. ROSENDORFF NEVER AUTHORIZED THE REPORTING OF A TEST RESULT HE BELIEVED TO BE INACCURATE. THE EVIDENCE WILL SHOW THAT IF DR. ROSENDORFF HAD A QUESTION ABOUT A PARTICULAR RESULT OR PERFORMANCE OF AN ASSAY, HE DIDN'T HESITATE TO PULL THE ASSAY, STOP OFFERING IT IN THE LAB, OR NOT REPORT RESULTS. THAT'S EXACTLY WHAT IS SUPPOSED TO HAPPEN WHEN A PROBLEM ARISES IN THE LAB, BECAUSE WHO IS RESPONSIBLE FOR DEALING WITH PROBLEMS IN THE LAB WHEN AN ISSUE ARISES? THE GOVERNMENT SUGGESTS MS. HOLMES. IT'S NOT. AGAIN, IT'S THE LAB DIRECTOR.

THE REGULATIONS RECOGNIZE, YOU'LL LEARN IN THIS CASE, THAT ALL LABS HAVE ERRORS SOMETIMES. IT'S NOT A PERFECT BUSINESS. THE REGULATIONS CONTEMPLATE, THEY EXPECT THAT THERE WILL BE PROBLEMS. SO THEY REQUIRE LABORATORIES TO SET UP PROCEDURES TO IDENTIFY, INVESTIGATE, AND REMEDY PROBLEMS. THE GOAL UNDER THE REGULATIONS IS FOR CONTINUOUS IMPROVEMENT OF LABORATORY OPERATIONS. THE LAB SHOULD DOCUMENT ITS MISTAKES AND LEARN FROM THEM. AND THERANOS HAD POLICIES AND PROCEDURES DESIGNED TO IDENTIFY, INVESTIGATE, AND RESOLVE ANY POTENTIAL ISSUES AS THEY AROSE. AND THE LAB DIRECTOR AND HIS TEAM WERE EMPOWERED TO ENACT AND ENFORCE THESE REGULATIONS. THE EVIDENCE WILL SHOW THAT NOT ONLY THAT THIS STRUCTURE EXISTED, BUT THAT MS. HOLMES ACTED APPROPRIATELY IN DEFERENCE TO THIS STRUCTURE. SHE KNEW THE LAB HAD BEEN SET UP TO MEET CLIA REQUIREMENTS AND HAD BEEN INSPECTED AND THEN CERTIFIED AS A HIGH COMPLEXITY LAB, AND THAT IT WAS ROUTINELY AUDITED.

SHE DEFERRED TO THE PEOPLE WHO WERE QUALIFIED TO DICTATE THE SUBSTANTIVE RESPONSE AND DECISION ABOUT WHETHER TO OFFER A PARTICULAR TEST. THE EVIDENCE WILL SHOW THAT TO THE EXTENT THAT MS. HOLMES WAS INFORMED OF ISSUES WITH TESTS, SHE ENCOURAGED THOSE ISSUES TO BE INVESTIGATED AND ALLOWED THERANOS'S PROCESS TO PLAY ITSELF OUT. AND THE USE OF THIS PROCESS REINFORCED HER CONFIDENCE THAT THE SYSTEM WAS WORKING AS IT SHOULD. NOW, THERE WILL BE NO EVIDENCE THAT MS. HOLMES INSTRUCTED THAT ANY ASSAY THAT WAS NOT VALIDATED SHOULD BE RUN IN A LABORATORY. NONE. THE SCIENTISTS, AND ULTIMATELY THE LAB DIRECTOR, DETERMINED WHEN A TEST SATISFIED THOSE ACCURACY AND RELIABILITY STANDARDS. THERE WILL BE NO EVIDENCE THAT MS. HOLMES PURPORTED TO OVERRULE ANY SCIENTIST'S RECOMMENDATION REGARDING WHETHER A TEST COULD BE OFFERED. THERE WILL BE NO EVIDENCE THAT A LAB DIRECTOR SAID NO AND MS. HOLMES INSISTED, DO IT ANYWAY. AS A RESULT OF ALL OF THIS, MS.

HOLMES BELIEVED THAT THERANOS'S TESTS WERE ACCURATE AND RELIABLE BECAUSE THE LAB EXPERTS WHO HAD GREATER EXPERTISE, WHO HAD RESPONSIBILITY UNDER THE REGULATIONS, SAID THAT THE TESTS WERE ACCURATE AND RELIABLE ENOUGH TO BE OFFERED TO PATIENTS. PLAIN AND SIMPLE. ONE LAST POINT ABOUT THE TESTS THAT WERE PROVIDED TO PATIENTS. NOW, WE DON'T KNOW EXACTLY HOW MANY PATIENTS OR DOCTOR WITNESSES THAT THE GOVERNMENT WILL OFFER IN THIS CASE. WE WILL SEE DURING THE WEEKS TO COME. BUT YOU ALL HAVE NOTEBOOKS, AND SO WHEN YOU SEE ONE, MAKE A TALLY IN THE BOOK. COUNT. BUT, PLEASE, WHEN YOU DO SO, DO IT NEXT TO THIS NUMBER: 8 MILLION.

MR. WADE: THERANOS GENERATED NEARLY 8 MILLION TEST RESULTS FOR PATIENTS. THE GOVERNMENT HAS BEEN INVESTIGATING THIS CASE FOR NEARLY FIVE YEARS. IT HAS HAD A TEAM OF AGENTS WHO HAVE BEEN ACTIVELY LOOKING FOR PATIENTS OR DOCTORS WHO HAD BAD EXPERIENCES. SO HOW MANY HAS THE GOVERNMENT FOUND? 10,000? 1,000? WE THINK ABOUT 20, DOCTORS OR PATIENTS WHO MAY DESCRIBE ABOUT 20 RESULTS. SO WHAT PERCENTAGE OF 8 MILLION IS 20 RESULTS? I HAD TO LOOK UP HOW TO SAY THIS: TWO AND A HALF TEN THOUSANDTHS OF 1 PERCENT. I WANT TO BE CLEAR, I DON'T MEAN TO BELITTLE IN ANY WAY OR BE OFFENSIVE TO THOSE PATIENTS WHO MAY HAVE GOTTEN AN INACCURATE RESULT. GETTING AN ERRONEOUS RESULT IS A MISTAKE AND NO ONE WANTS THAT TO HAPPEN. IT SHOULDN'T HAPPEN. WE KNOW THAT. AND AS THOSE PEOPLE COME IN AND TESTIFY, WE WILL LOOK AT WHAT HAPPENED WITH THEIR TESTS AND WHY. BUT THE QUESTION HERE IN THIS COURTROOM IS, WHAT IS THE EVIDENTIARY SIGNIFICANCE OF 20 RESULTS IN THE FACE OF 8 MILLION RESULTS PERFORMED?

HOW DOES THAT COMPARE TO TYPICAL ERROR RATES WITHIN A LAB? IS THAT REALLY MEANINGFUL EVIDENCE OF FRAUD? KEEP SIGHT OF THESE QUESTIONS AS YOU HEAR FROM THE PATIENTS DURING THIS TRIAL. IT'S ALSO INTERESTING THAT THE GOVERNMENT ALLEGES FRAUD WITH RESPECT TO TESTING, BUT IT DOES NOT EVEN ALLEGE DEFICIENCIES WITH RESPECT TO THE OVERWHELMING MAJORITY OF THERANOS'S ASSAYS. THERANOS PERFORMED 226 DIFFERENT ASSAYS IN ITS CLINICAL LAB. THE GOVERNMENT'S ALLEGATIONS IDENTIFY ONLY 23 AS DEFICIENT. SO THE GOVERNMENT IS SUGGESTING THAT THERANOS'S TESTS WERE CONSISTENTLY UNRELIABLE AND INACCURATE, YET THEY ONLY TAKE ISSUE WITH ABOUT 10 PERCENT OF THE ASSAYS THERANOS PERFORMED. AND WITH RESPECT TO THOSE ASSAYS, IT'S NOT EVEN CLEAR THAT THE GOVERNMENT KNOWS THAT MUCH ABOUT THAT. HOW MANY OF THERANOS'S PATIENTS HAD EACH OF THESE 23 ASSAYS? WHAT TECHNOLOGY WAS USED TO PERFORM PARTICULAR TESTS? WHEN WERE THE TESTS DONE? WHICH THERANOS LAB PERFORMED THE TEST? THERE WERE A COUPLE OF LABS.

WAIT AND SEE IF YOU GET AN ANSWER TO THESE QUESTIONS AND CONSIDER HOW SIGNIFICANT THAT DATA IS TO THIS CASE. NOW, YOU HEARD FROM THE GOVERNMENT ABOUT THERANOS'S RESPONSE TO CRITICISMS FROM REGULATORS AND THE MEDIA IN LATE 2015. THE GOVERNMENT WANTS YOU TO THINK THAT THIS IS EVIDENCE OF A CRIME. IT'S NO SUCH THING. THERANOS PUSHED BACK AGAINST CERTAIN JOURNALISTS AND REGULATORS BECAUSE IT BELIEVED IN GOOD FAITH IN THE WAY THAT IT WAS ACTING IN CONDUCTING BUSINESS. IT BELIEVED THOSE PEOPLE WERE WRONG. IT WOULD BE MORE CONCERNING IF THEY SAID, "YOU'VE GOT US." INSTEAD, THEY DEFENDED THEMSELVES IN THEIR TECHNOLOGY. BUT ALTHOUGH MS. HOLMES BELIEVED STRONGLY IN THE INTEGRITY OF HER COMPANY, SHE REMAINED OPEN MINDED. THAT'S THE SIDE OF THIS THAT THE GOVERNMENT DIDN'T FOCUS ON. IN CONNECTION WITH EXPANSIVE INQUIRIES FROM GOVERNMENT REGULATORS, THE COMPANY STARTED LOOKING AT THE ISSUES THAT WERE RAISED.

SHE WORKED WITH A TEAM OF PEOPLE TO DIG DEEPER AND DEEPER INTO DIFFERENT CORNERS OF THE COMPANY, AND SHE LEARNED THAT THERE WERE AREAS OF CONCERN THAT SHE WAS PREVIOUSLY UNAWARE OF, THAT THE INTERNAL EXPERTS HAD NOT PREVIOUSLY FOCUSSED ON. SHE SAW ENOUGH THAT SHE DECIDED SHE NEEDED TO BRING IN A LARGE GROUP OF EXPERTS, INCLUDING OUTSIDE EXPERTS, TO ENGAGE WITH REGULATORS TO FULLY ASSESS THE COMPANY AND TO ENSURE THAT EVERYTHING WAS ON SOUND FOOTING GOING FORWARD. AND SHE BROUGHT IN A SLEW OF OUTSIDE LAB EXPERTS, INCLUDING THREE NEW LAB DIRECTORS WHO CAME IN AND SCOURED THE COMPANY, EVERYTHING THAT THE COMPANY HAD DONE, SCIENTIFIC AND TECHNICAL EXPERTS FROM ACROSS THE COUNTRY TO REVIEW THERANOS'S ASSAY AND HARDWARE TECHNOLOGY AND GUIDE THE COMPANY MOVING FORWARD. SHE ENCOURAGED AND WELCOMED THOSE WHO WERE SKEPTICAL OF WHAT THERANOS HAD BUILT. SHE BROUGHT MEDICAL AND TECHNOLOGY EXPERTS ON TO THE BOARD OF DIRECTORS AND ELEVATED THE MOST EXPERIENCED SCIENTISTS FROM HER PRIOR BOARD, A PRESIDENTIAL MEDAL OF FREEDOM WINNER WHO IS THE FORMER DIRECTOR OF THE CDC. SHE HIRED NEW SCIENTIFIC AND TECHNICAL EXPERTS, PEOPLE FROM SOME OF THE BEST HEALTH CARE COMPANIES IN THE COUNTRY. MR. BALWANI, WHO HAD SUPERVISED THE LAB, WAS REMOVED FROM THE COMPANY. ELIZABETH HOLMES ENCOURAGED THESE EXPERTS TO DIG IN AND REVIEW EVERYTHING THAT THEY NEEDED TO REVIEW, NO LIMITS, TO HELP THE COMPANY ADDRESS THE SITUATION AND FIX WHATEVER THEY FOUND.

MR. WADE: AS YOU CONSIDER ALLEGATIONS ABOUT MS. HOLMES AND THE EVIDENCE IN THIS CASE, THINK ABOUT ALL OF THESE PEOPLE WHO SHE'S BRINGING IN TO LOOK INTO THINGS AND CONSIDER WHETHER A PERSON WHO HAD BEEN COMMITTING THE GRAND FRAUD THAT THE GOVERNMENT SUGGESTS WOULD HIRE SO MANY OUTSIDE EXPERTS TO COME IN AND START TURNING OVER ROCKS. CONSIDER WHETHER INSTEAD THESE ARE ACTIONS, WHETHER THESE ACTIONS ARE EVIDENCE OF SOMEONE WHO BELIEVES THAT THEY HAVE NOTHING TO HIDE, SOMEONE WHO BELIEVES THAT SHE'S ALWAYS ACTED IN GOOD FAITH, SOMEONE WHO IS PREPARED AND WILLING TO ADDRESS WHATEVER ISSUES THE EXPERTS MAY FIND. I WANT TO PAY PARTICULAR FOCUS ON DR. KINGSHUK DAS WHO MR. LEACH MENTIONED THIS MORNING. YOU'RE GOING TO HEAR FROM DR. DAS IN THIS CASE. WE EXPECT THE GOVERNMENT IS GOING TO CALL HIM AS A WITNESS. AND WE EXPECT THAT YOU'RE GOING TO HEAR DR. DAS CRITICIZE THE PERFORMANCE OF THERANOS'S CLINICAL LABORATORY BEFORE HE ARRIVED. HE'S GOING TO CRITICIZE PRIOR LAB DIRECTORS AND THEIR PERFORMANCE.

HE MAY SAY THOSE LAB DIRECTORS WERE ASLEEP AT THE WHEEL IN CERTAIN RESPECTS. HE MAY SAY THAT THERE WERE SOME PROBLEMS WITH RESPECT TO THERANOS'S TESTS. HERE'S THE THING THAT YOU NEED TO KEEP IN MIND ABOUT DR. DAS AS YOU HEAR THAT EVIDENCE: IT WAS ELIZABETH HOLMES WHO HIRED DR. DAS. IT WAS MS. HOLMES WHO ASKED HIM TO COME IN AND START TURNING OVER THOSE ROCKS TO GET TO THE BOTTOM OF EVERY ISSUE, AND IT WAS MS. HOLMES WHO WAS SURPRISED WHEN SHE LEARNED ABOUT THE DEPTH OF SOME OF THE PROBLEMS IN THE LAB IN 2016 AFTER TESTING HAD STOPPED. AND LET'S BE CLEAR, THIS IS A VERY TOUGH MOMENT FOR MS. HOLMES. IT WAS PAINFUL. SHE HAD DEVOTED HER ENTIRE LIFE SINCE SHE WAS 19 YEARS OLD TO THIS COMPANY. BUT SHE WAS STILL WILLING TO LISTEN AND LEARN AND WORK HER WAY FORWARD. REMEMBER THE QUOTE FROM MICHAEL JORDAN THAT HAD BEEN ON THE WALL OF THERANOS FOR ALL OF THOSE YEARS BEFORE SHE ENCOUNTERED THOSE PROBLEMS.

SHE DIDN'T JUST PUT IT ON THE WALL, SHE LIVED IT AND LEARNED FROM THERANOS'S MISTAKES AND CONTINUED TO TRY TO SUCCEED AND GROW FROM THE FAILURES. BUT THIS PERIOD, AND IN PARTICULAR THE FEEDBACK FROM SOME OF THOSE EXPERTS, ALSO REINFORCED MS. HOLMES'S BELIEF THAT HER VISION, HER LONG-TERM VISION FOR THERANOS AND ITS TECHNOLOGY WERE VALID. IT REINFORCED THAT THE APPROACH TO A TESTING SYSTEM, ASSAYS, THE HARDWARE, THE SOFTWARE WERE SOUND. THESE EXPERTS SAW REAL ACCOMPLISHMENT. THEY SAW POTENTIALLY LIFE SAVING APPLICATIONS THAT A THERANOS DEPLOYABLE DEVICE COULD HAVE. SO IN 2016, AND '17, AND '18, MS. HOLMES AND HER NEWLY IMPROVED TEAM DID NOT WALLOW. THEY WORKED DAY AND NIGHT TO TRY TO PUSH THERANOS FORWARD. SHE MAINTAINED HER BELIEF THAT THEY COULD FINISH WHAT THEY STARTED AND HAVE THE IMPACT THAT THEY HAD HOPED FOR. NOW, SADLY, YOU ALREADY KNOW THAT THE ENDING WAS AN UNHAPPY ONE. NOTWITHSTANDING ALL OF THOSE EFFORTS AND HARD WORK TO TURN THERANOS AROUND, IT WASN'T ENOUGH.

THE PROGRESS, INVESTMENT, AND GROWTH OF THE COMPANY SUFFERED UNDER THE INTENSE GLARE OF MEDIA SPOTLIGHT. YET NOTWITHSTANDING THIS, YOU'LL LEARN, YOU'LL HEAR IN THIS CASE THAT TO THIS DAY THE INNOVATIONS AND INTELLECTUAL PROPERTY THAT THERANOS DEVELOPED ARE WORTH HUNDREDS OF MILLIONS OF DOLLARS AND THEY MAY WELL STILL SERVE AS THE TECHNOLOGICAL INFORMATION OF FUTURE TRANSFORMATION OF TESTING IN THE LABORATORY INDUSTRY. COMPANIES TODAY ARE BUILDING ON INNOVATIONS THAT THERANOS PIONEERED. AND YOU'LL ALSO SEE THAT MS. HOLMES REMAINED STEADFAST IN HER BELIEF IN THIS TECHNOLOGY THROUGHOUT THE TIME OF THE EVENTS THAT YOU'LL BE FOCUSSED ON IN THIS CASE, ON THAT DAY IN HER CAR IN NEWARK IN SEPTEMBER OF 2018, AND STILL TODAY. SO AFTER THE EVIDENCE IS COMPLETE IN THIS TRIAL, WE WILL COME BACK BEFORE YOU FOR CLOSING STATEMENTS. AND WHEN WE DO, WE'RE GOING TO ASK YOU TO VALIDATE HER HARD WORK, HER GOOD FAITH, AND HER COMMITMENT TO PUT MISSION OVER MONEY BY CONFIRMING HER INNOCENCE WITH A VERDICT OF NOT GUILTY. THANK YOU FOR YOUR TIME AND ATTENTION THIS AFTERNOON. THANK YOU, YOUR HONOR.