Elizabeth A. Holmes — Redirect/Recross (Continued)
731 linesSAN JOSE, CALIFORNIA DECEMBER 8, 2021 P R O C E E D I N G S
(COURT CONVENED AT 9:04 A.M.)
(JURY IN AT 9:04 A.M.)
JUDGE DAVILA: WE ARE BACK ON THE RECORD IN THE HOLMES MATTER. ALL LADIES AND GENTLEMEN OF THE JURY ARE PRESENT. ALL COUNSEL ARE PRESENT, AND MS. HOLMES IS PRESENT. IN JUST A MOMENT I'LL ASK MS. HOLMES TO RESUME THE STAND. LADIES AND GENTLEMEN, LET ME ASK YOU, DURING THE EVENING, DID ANY OF YOU MEMBERS OF OUR JURY HAVE CAUSE TO COME ACROSS, DISCUSS, LISTEN TO, READ OR SEE ANYTHING HAVING TO DO WITH THIS CASE? IF SO, PLEASE, RAISE YOUR HAND. THANK YOU. I SEE NO HANDS. THANK YOU VERY MUCH. MS. HOLMES, MAY I INVITE YOU BACK TO THE STAND, PLEASE. PLEASE TAKE A SEAT. MAKE YOURSELF COMFORTABLE AGAIN. I'LL REMIND YOU THAT YOU'RE STILL UNDER OATH.
ELIZABETH A. HOLMES: THANK YOU.
JUDGE DAVILA: YOU'RE WELCOME. IF YOU COULD JUST STATE YOUR NAME, PLEASE.
ELIZABETH A. HOLMES: MY NAME IS ELIZABETH HOLMES.
(DEFENDANT'S WITNESS, ELIZABETH HOLMES, WAS PREVIOUSLY SWORN.)
JUDGE DAVILA: MR. DOWNEY, WOULD YOU LIKE TO CONTINUE?
MR. DOWNEY: YES, YOUR HONOR. THANK YOU. ///
REDIRECT EXAMINATION (RESUMED) BY MR. DOWNEY:
MR. DOWNEY: GOOD MORNING, MS. HOLMES.
ELIZABETH A. HOLMES: GOOD MORNING.
MR. DOWNEY: YOUR HONOR, BEFORE I BEGIN, I'D LIKE TO TAKE CARE OF A HOUSEKEEPING MATTER RELATED TO MS. HOLMES'S EXAMINATION. YOUR HONOR WILL RECALL THAT I MOVED TO ADMIT EXHIBIT 13288, WHICH WAS THE FDA SUBMISSION IN CONNECTION WITH THE THERANOS 4.0 SYSTEM AND THE ASSAY, AND THAT WAS QUITE A LENGTHY DOCUMENT. YOUR HONOR ASKED ME TO REDUCE IT TO ITS ESSENTIAL PARTS, WHICH I'VE DONE AND I'VE SHOWN TO MR. LEACH. I WILL MOVE TO ADMIT IT AS EXHIBIT 13288A AND SUGGEST, WITH THE GOVERNMENT'S CONSENT, REQUEST THE COURT STRIKE ANY PRIOR VERSION OF 13288 OR 13288A.
JUDGE DAVILA: MR. LEACH?
MR. LEACH: YOUR HONOR, I RECEIVED THIS ABOUT 20 MINUTES AGO. I DON'T OBJECT TO IT COMING IN FOR A NONHEARSAY PURPOSE, AND I WOULD JUST LIKE THE OPPORTUNITY TO REVIEW IT IN DUE COURSE TO SEE IF THERE ARE ADDITIONS FROM THE GOVERNMENT'S PERSPECTIVE. BUT SUBJECT TO THE PRIOR LIMITATIONS, I HAVE NO OBJECTION.
MR. DOWNEY: THAT'S FINE OF COURSE, YOUR HONOR.
JUDGE DAVILA: ARE YOU GOING TO REFER TO THIS?
MR. DOWNEY: NO. I JUST WANTED TO --
JUDGE DAVILA: THANK YOU FOR THAT. WE'LL TAKE IT UNDER SUBMISSION FOR ADMISSION. MR. LEACH, I'LL GIVE YOUR TEAM AN OPPORTUNITY TO REVIEW IT, EXCUSE ME, AND FORMALLY INTRODUCE IT. THAT IS BEFORE YOUR CASE ENDS, WE'LL TAKE CARE OF THAT.
MR. LEACH: THANK YOU, YOUR HONOR.
JUDGE DAVILA: ALSO, LET ME DRAW ATTENTION, SINCE WE'RE DOING HOUSEKEEPING HERE, EXHIBIT 14259 WAS A DOCUMENT THAT WAS AN EXHIBIT THAT WAS GOING TO BE INTRODUCED, I THINK. WE HAD SOME DISCUSSION ABOUT THAT. THE COURT MADE A RULING ON IT OUTSIDE OF THE PRESENCE OF THE JURY. ARE YOU SEEKING ADMISSION OF THAT?
MR. DOWNEY: WE ARE, YOUR HONOR. AND I WAS GOING TO HAVE -- JUST DO A BRIEF MOTION TO MOVE THE ADMISSION OF THAT IN A FEW MOMENTS.
JUDGE DAVILA: ALL RIGHT. THAT'S FINE. I JUST WANTED TO REMIND THE PARTIES OF THAT.
BY MR. DOWNEY:
MR. DOWNEY: MS. HOLMES, DO YOU RECALL THAT ON YOUR CROSS-EXAMINATION, MR. LEACH WAS ASKING YOU ABOUT THE STATE OF THERANOS'S RELATIONSHIP WITH WALGREENS IN 2014 AND 2015?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND DO YOU RECALL THAT HE SHOWED YOU AN EMAIL THAT MR. JHAVERI SENT TO MR. BALWANI IN AUGUST OF 2014 THAT IDENTIFIED PATIENT SUCCESS AND SATISFACTION AS ONE OF THE CRITERIA FOR THE PARTNERSHIP GOING FORWARD?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: NOW, I THINK YOU TESTIFIED ON YOUR DIRECT EXAMINATION THAT YOU RECEIVED FEEDBACK ABOUT THERANOS'S PERFORMANCE AT WALGREENS PERIODICALLY.
MR. DOWNEY: LET ME ASK YOU TO LOOK AT AN EXHIBIT, WHICH IS 7586A. YOUR HONOR, MAY I APPROACH THE WITNESS?
JUDGE DAVILA: YES.
BY MR. DOWNEY:
MR. DOWNEY: (HANDING.)
ELIZABETH A. HOLMES: THANK YOU.
MR. DOWNEY: AND DO YOU SEE THAT 7586A IS AN EMAIL FROM SOMEONE NAMED RYAN KARPEL TO YOU FROM AUGUST OF 2015, AND IT ATTACHES -- HAS AN ATTACHMENT TO IT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND IS THIS SOMETHING THAT YOU RECEIVED IN OR AROUND AUGUST OF 2015?
MR. DOWNEY: IS IT SOMETHING THAT YOU REVIEWED AT THAT TIME?
ELIZABETH A. HOLMES: IT IS.
MR. DOWNEY: AND DOES THIS ATTACHMENT CONTAIN -- IS THIS A REDACTED VERSION OF FEEDBACK FROM PATIENTS ABOUT THEIR EXPERIENCES AT WALGREENS?
MR. DOWNEY: YOUR HONOR, I MOVE THE ADMISSION OF 7586A.
MR. LEACH: YOUR HONOR, 401, 403, AND I BELIEVE THIS WAS PART OF AN EARLIER DISCUSSION.
(PAUSE IN PROCEEDINGS.)
JUDGE DAVILA: MR. DOWNEY, I'M GOING TO NEED SOME CONVERSATION WITH YOU ABOUT THIS BEFORE I ADMIT IT. IS IT POSSIBLE FOR YOU TO MOVE TO ANOTHER TOPIC?
MR. DOWNEY: IT CERTAINLY IS, YOUR HONOR. AND WE CAN DO THAT AT A BREAK.
JUDGE DAVILA: THANK YOU.
BY MR. DOWNEY:
MR. DOWNEY: LET ME ASK YOU, THE DOCUMENT THAT IS 7586A IS SOMETHING THAT INFORMED YOUR VIEWS ABOUT CURRENT AND FUTURE PROSPECTS ABOUT A ROLLOUT OF THERANOS SERVICE CENTERS AT WALGREENS STORES?
ELIZABETH A. HOLMES: IT DID.
MR. DOWNEY: NOW, THE TIME PERIOD THAT YOU WERE DISCUSSING WITH MR. LEACH ON YOUR CROSS-EXAMINATION RELATED TO HOW THE PARTNERSHIP WITH WALGREENS WAS GOING WAS THE FALL OF 2014. DO YOU RECALL THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: I'D LIKE TO ASK YOU TO LOOK AT ANOTHER EXHIBIT FROM THAT TIME PERIOD. YOUR HONOR, MAY I APPROACH THE WITNESS AGAIN?
JUDGE DAVILA: YES.
BY MR. DOWNEY:
MR. DOWNEY: (HANDING.)
ELIZABETH A. HOLMES: THANK YOU.
MR. DOWNEY: AND DO YOU SEE WHEN YOU LOOK AT THE ADDRESS ON THE FIRST PAGE OF THIS DOCUMENT THAT IT'S AN EMAIL FROM JEFFREY BLICKMAN?
MR. DOWNEY: AND THAT YOU AND SEVERAL OTHERS AT THERANOS ARE RECIPIENTS OF THE EMAIL?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND CAN -- DO YOU RECOGNIZE THIS DOCUMENT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND WHAT IS THE DOCUMENT?
ELIZABETH A. HOLMES: IT'S A POWERPOINT PRESENTATION THAT WAS SENT TO US SHOWING THE FEEDBACK FROM PEOPLE IN THE STORES, POSITIVE AND NEGATIVE, THAT WAS BEING COLLECTED.
MR. DOWNEY: AND WHO PREPARED AND SENT THIS DOCUMENT TO YOU?
ELIZABETH A. HOLMES: I BELIEVE IT'S ORIGINALLY PREPARED BY THE PROJECT MANAGERS WHO WERE INTERFACING WITH PEOPLE IN ARIZONA, AND THEN JEFF BLICKMAN, WHO IS ANOTHER ONE OF THE PROJECT MANAGEMENT TEAM, SENT IT TO ME.
MR. DOWNEY: OKAY. YOUR HONOR, I MOVE THE ADMISSION OF 7476.
MR. LEACH: SAME OBJECTIONS, 401, 403, AND I THINK THIS IS THE SAME WITH THE PRIOR EXHIBIT.
(PAUSE IN PROCEEDINGS.)
JUDGE DAVILA: MR. DOWNEY, I THINK THE DEFENSE HAD AN EXHIBIT PREVIOUSLY THAT WAS SIMILAR TO THIS.
MR. DOWNEY: THERE WERE SOME EXHIBITS INTRODUCED THROUGH MR. JHAVERI WHO WAS PRIVY TO THE SAME TYPES OF COMMUNICATIONS. I DON'T THINK THE EMAIL THAT IS ON THE FIRST PAGE OF THE EXHIBIT REFLECTING THE TRANSMISSION IS PART OF THE RECORD.
JUDGE DAVILA: RIGHT. I'M TRYING TO -- I JUST DON'T HAVE IT AT MY FINGERTIPS NOW. MAYBE, MR. LEACH, YOU RECALL WHETHER OR NOT THERE WERE SIMILAR DOCUMENTS THAT WERE INTRODUCED AT SOME OTHER TIME. MR. DOWNEY, DO YOU KNOW?
MR. DOWNEY: I THINK MR. JHAVERI'S TESTIMONY IS WHEN SOME SIMILAR DOCUMENTS WITH THE, WITH THE FEEDBACK, FOR EXAMPLE, THERE'S SOME GRAPHIC IMAGES.
JUDGE DAVILA: RIGHT.
MR. DOWNEY: I THINK THAT WAS DURING HIS TESTIMONY BACK SEVERAL MONTHS AGO.
JUDGE DAVILA: MR. LEACH, DO YOU HAVE RECOLLECTION OF THIS?
MR. LEACH: I DON'T, YOUR HONOR. I APOLOGIZE.
JUDGE DAVILA: OKAY. AND THESE WOULD BE INTRODUCED FOR WHAT PURPOSE?
MR. DOWNEY: THIS IS FOR HER UNDERSTANDING OF THE STATE OF THE THERANOS/WALGREENS PARTNERSHIP AT THE TIME THAT -- OTHER DOCUMENTS WERE INTRODUCED YESTERDAY ON THE SAME ISSUE BY MR. LEACH.
JUDGE DAVILA: SO THIS IS NOT INTRODUCED FOR THE TRUTH OF THE MATTERS ASSERTED HERE, BUT YOU'RE SUGGESTING THAT THIS IS -- THE RELEVANCE OF THIS IS TO SHOW WHETHER OR NOT THIS INFORMED MS. HOLMES AS TO HER KNOWLEDGE OF THE WALGREENS ENDEAVOR AT THIS PARTICULAR MOMENT IN TIME?
MR. DOWNEY: THAT'S RIGHT, YOUR HONOR. AND I DON'T HAVE THE EXHIBIT AT MY FINGERTIPS, BUT I ACTUALLY THINK THAT THE ATTACHMENTS, AT LEAST A SUBSTANTIAL PART OF THEM, WAS, AS YOUR HONOR SAYS, ALREADY INTRODUCED, AND I'LL GET THE EXHIBIT NUMBER AT A BREAK. REALLY THE POINT OF THIS IS JUST TO REFLECT THAT IT WAS COMMUNICATED TO MS. HOLMES.
JUDGE DAVILA: ALL RIGHT. THANK YOU. I'LL ADMIT IT FOR THAT LIMITED PURPOSE. LADIES AND GENTLEMEN, THE DOCUMENTS THAT YOU'RE ABOUT TO SEE, AND THEY CONSIST OF CHARTS AND GRAPHS AND THINGS, THEY'RE ADMITTED NOT FOR THE TRUTH OF THE MATTER ASSERTED IN THE DOCUMENTS BUT THEIR RELEVANCE, AND THEY'RE ADMITTED ONLY AS TO THE ISSUE OF MS. HOLMES'S KNOWLEDGE, STATE OF MIND AS TO THE MERGER, THE WALGREENS ENGAGEMENT AT THIS PARTICULAR MOMENT IN TIME. AND THEY WILL BE ADMITTED FOR THAT LIMITED PURPOSE. THEY CAN BE PUBLISHED.
(DEFENDANT'S EXHIBIT 7476, LIMITED PURPOSE, WAS RECEIVED IN EVIDENCE.)
MR. DOWNEY: IF WE CAN DISPLAY THE EMAIL ON THE COVER.
MR. DOWNEY: AND IF YOU LOOK, DO YOU SEE THAT THIS IS AN EMAIL THAT MR. BLICKMAN SENT TO YOU IN OCTOBER OF 2014?
MR. DOWNEY: AND DO YOU SEE IN THE FIRST PARAGRAPH HE INDICATES THAT HE'S ATTACHING EXPERIENCE SURVEY RESULTS FOR ESSENTIALLY THE MONTH OF SEPTEMBER?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND THEN IF YOU GO TO THE ATTACHMENTS ON PAGE 2, DO YOU SEE THAT THERE'S AN EXPERIENCE SURVEY SUMMARY?
MR. DOWNEY: AND IN YOUR UNDERSTANDING, DID THIS RESULT FROM PATIENTS GRADING THEIR EXPERIENCE ON A SCALE OF 1 TO 5 FOR VARIOUS FACTORS?
ELIZABETH A. HOLMES: IT DID.
MR. DOWNEY: AND DID YOU UNDERSTAND THAT, AS OF OCTOBER 2014, THAT THIS WAS THE LEVEL OF PATIENT SATISFACTION FOR PATIENTS WHO HAD VISITED DURING THE MONTH OF SEPTEMBER?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: OKAY. YOU CAN TAKE THAT DOWN, MR. BENNETT. DO YOU RECALL EARLIER IN THE TRIAL THAT MS. TOMPKINS TESTIFIED, WHO WAS A PATIENT WHO GOT AN HIV TEST AT A THERANOS SERVICE CENTER?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND DO YOU KNOW WHETHER THE HIV TEST AT THERANOS WAS OFFERED ON THERANOS PROPRIETARY EQUIPMENT OR ON A COMMERCIAL MACHINE?
ELIZABETH A. HOLMES: IT WAS ON A COMMERCIAL MACHINE.
MR. DOWNEY: I'D LIKE TO DISPLAY EXHIBIT -- I'D LIKE TO MOVE EXHIBIT 14259 INTO EVIDENCE, WHICH IS THE EXHIBIT THAT YOUR HONOR MENTIONED EARLIER THIS MORNING.
JUDGE DAVILA: THAT WILL BE ADMITTED.
(DEFENDANT'S EXHIBIT 14259 WAS RECEIVED IN EVIDENCE.)
MR. LEACH: YOUR HONOR, I DON'T OBJECT TO ADMISSION OF THE DOCUMENT. I DO THINK THAT THIS IS BEYOND THE SCOPE OF THE DIRECT -- OF THE CROSS.
MR. DOWNEY: WELL, THAT'S FINE. I WON'T DISPLAY IT. WE CAN DISCUSS IT LATER.
JUDGE DAVILA: THAT'S FINE.
BY MR. DOWNEY:
MR. DOWNEY: NOW, DO YOU RECALL THAT DURING THE CROSS-EXAMINATION THAT YOU -- WHERE YOU AND MR. LEACH HAD A DISCUSSION ABOUT SOME TEXT MESSAGES RELATED TO THE WALGREENS/THERANOS RELATIONSHIP FROM NOVEMBER OF 2014?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND DO YOU REMEMBER THAT ONE OF THOSE TEXT MESSAGES FROM MR. BALWANI SAID TO YOU, "WE CAN'T SCALE WITH WAG"? DO YOU RECALL THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND WAG WAS A REFERENCE THERE TO WALGREENS?
MR. DOWNEY: NOW, DURING THE SAME PERIOD THAT YOU RECEIVED THAT TEXT FROM MR. BALWANI, WERE YOU ALSO IN CONTACT WITH SENIOR EXECUTIVES FROM WALGREENS?
MR. DOWNEY: AND WAS ONE OF THOSE INDIVIDUALS ALEX GOURLAY?
MR. DOWNEY: AND WAS HE AN ULTIMATE DECISION-MAKER WITH REGARD TO THE THERANOS/WALGREENS PARTNERSHIP?
ELIZABETH A. HOLMES: HE WAS.
MR. DOWNEY: AFTER THE DATE OF MR. BALWANI'S TEXT TO YOU ON NOVEMBER 19TH, 2014, DID YOU MEET WITH MR. GOURLAY TO DISCUSS THE STATE OF THE THERANOS/WALGREENS PARTNERSHIP?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: WHEN DID YOU HAVE THAT MEETING?
ELIZABETH A. HOLMES: IN DECEMBER 2014.
MR. DOWNEY: AND CAN YOU DESCRIBE WHAT HAPPENED AT THAT MEETING?
ELIZABETH A. HOLMES: YES. WE DISCUSSED MOVING FORWARD WITH A RENT MODEL IN WHICH THERANOS WOULD TAKE OWNERSHIP OF THE SPACES IN THE STORE SO THAT THEY COULD BE DESIGNED AND CUSTOMIZED FOR THE EXPERIENCE THAT WE WERE TRYING TO BUILD AND PROCEED WITH A NATIONAL ROLLOUT.
MR. DOWNEY: WAS WALGREENS AMENABLE TO THAT PROPOSAL?
MR. DOWNEY: YOU WERE ALSO ASKED IN THE SAME SEQUENCE OF QUESTIONS BY MR. LEACH ABOUT INTERACTIONS THAT MR. BALWANI WAS HAVING WITH CVS. DO YOU RECALL THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND YOU TESTIFIED THAT THAT WAS HAPPENING DURING THE COURSE OF YOUR PARTNERSHIP WITH WALGREENS TO ROLL OUT THERANOS SERVICE CENTERS IN WALGREENS. DO YOU RECALL THAT?
MR. DOWNEY: WAS YOUR -- WERE THE DISCUSSIONS THAT THERANOS WAS HAVING WITH CVS INCONSISTENT WITH ANY OBLIGATIONS THAT THERANOS HAD TO WALGREENS?
MR. DOWNEY: WHY WERE YOU HAVING DISCUSSIONS WITH CVS AT THE SAME TIME THAT YOU WERE IN PARTNERSHIP WITH WALGREENS?
ELIZABETH A. HOLMES: THAT PARTICULAR DISCUSSION, I THINK, HAD TO DO WITH THE DEPLOYMENT FOR BLUE CROSS BLUE SHIELD INSURANCE CONTRACT THAT WE HAD IN PENNSYLVANIA, AND WALGREENS DID NOT WANT TO OPEN STORES IN THAT GEOGRAPHY, SO WE WERE PROCEEDING WITH CVS ACCORDING TO THE TERMS OF OUR CONTRACT WITH WALGREENS.
MR. DOWNEY: AND DID YOU DISCLOSE THAT TO WALGREENS?
MR. DOWNEY: I WANT TO TURN FROM TALKING ABOUT WALGREENS TO TALKING ABOUT THE PROCESS OF DEVELOPING THE 4.0 SERIES DEVICE AT THERANOS AND THE QUESTIONS THAT MR. LEACH ASKED YOU ABOUT THAT. DO YOU RECALL THAT MR. LEACH SHOWED YOU THE DOCUMENT THAT I HAD SHOWED YOU ON DIRECT EXAMINATION, WHICH WAS A PRESENTATION THAT DR. GIBBONS GAVE IN FEBRUARY OF 2010?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND DO YOU RECALL THAT MR. LEACH ASKED YOU, WAS THAT THE MONTH PRIOR TO THE TIME THAT YOU HAD MET WITH WALGREENS AND SAFEWAY, AND YOU ANSWERED THAT IT WAS?
MR. DOWNEY: WAS THE PRESENTATION THAT YOU RECEIVED FROM DR. GIBBONS THE FIRST TIME THAT THERE WAS A DISCUSSION INSIDE OF THERANOS ABOUT EXPANDING THE CAPABILITIES OF THERANOS SYSTEMS?
MR. DOWNEY: WAS THERE A PROCESS THAT WAS ONGOING AS OF FEBRUARY 2010?
ELIZABETH A. HOLMES: THERE WAS.
MR. DOWNEY: HOW LONG HAD THAT PROCESS BEEN ONGOING AT THERANOS AT THAT TIME?
ELIZABETH A. HOLMES: SINCE 2008.
MR. DOWNEY: NOW, MR. LEACH MENTIONED THE CONVERSATIONS THAT YOU HAD IN CLOSE PROXIMITY TO THE POWERPOINT PRESENTATION BY DR. GIBBONS. I'D LIKE TO ASK YOU WHETHER YOU TALKED TO SCIENTISTS AND ENGINEERS AT WALGREENS BEFORE YOU MET WITH THOSE ENTITIES TO UNDERSTAND WHAT COULD AND COULD NOT BE REPRESENTED. DID YOU DO THAT?
ELIZABETH A. HOLMES: SCIENTISTS AND ENGINEERS AT THERANOS?
MR. DOWNEY: YES.
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: I'D LIKE TO BRING UP EXHIBIT 7100, WHICH IS ALREADY IN EVIDENCE. AND I DIRECT YOUR ATTENTION TO THE BOTTOM EMAIL, WHICH IS AN EMAIL FROM YOU TO DR. GIBBONS AND MR. BALWANI AND MR. FRENZEL WAS COPIED. DR. GIBBONS AND MR. FRENZEL WERE TWO OF THE PEOPLE WORKING ON THE 4.0 SYSTEM?
MR. DOWNEY: AND IN THE FIRST PARAGRAPH YOU SAY, "HERE'S THE GENERAL CHEMISTRY PANEL WE WANT TO HAVE," AND THEN YOU LIST A SERIES OF TESTS. DO YOU RECALL SENDING THAT TO DR. GIBBONS AND MR. FRENZEL?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND WHAT WAS YOUR PURPOSE IN SENDING THESE EMAILS TO THEM?
ELIZABETH A. HOLMES: THESE WERE TESTS WE WANTED TO DISCUSS WITH OUR RETAIL PARTNERS, AND I WANTED TO MAKE SURE BEFORE SAYING WE COULD DO THEM THAT OUR SCIENTISTS AND ENGINEERS BELIEVED WE COULD ON THE TIMEFRAME THAT WE WERE DISCUSSING WITH THE RETAIL PARTNERS.
MR. DOWNEY: AND LET'S LOOK AT THE RESPONSE TO THAT ABOVE. AND DO YOU SEE THAT DR. GIBBONS RESPONDED TO YOU IN THIS EMAIL FROM FEBRUARY OF 2010?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND DO YOU SEE THE FIRST PARAGRAPH WHERE HE RESPONDED, "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." DO YOU SEE THAT?
MR. DOWNEY: AND DID THAT INFORM REPRESENTATIONS THAT YOU SUBSEQUENTLY MADE TO WALGREENS AND SAFEWAY ABOUT THE CAPABILITIES THAT THERANOS WOULD BE ABLE TO DEVELOP?
MR. DOWNEY: LET ME ALSO ASK YOU TO LOOK AT EXHIBIT 15004, WHICH IS ALREADY IN EVIDENCE. AND I WANT TO DIRECT YOUR ATTENTION TO THE EMAIL IN THE MIDDLE OF THE PAGE. DO YOU SEE THAT THIS IS AN EMAIL, AND IF YOU LOOK AT THE TOP OF THE PAGE, ON THIS EXCHANGE ARE YOURSELF AND THEN DR. YOUNG, AND MR. FRENZEL, AND DR. GIBBONS, AND OTHERS?
MR. DOWNEY: OKAY. LET'S RETURN TO THE MIDDLE. AND THEN DO YOU SEE THAT YOU'VE LANDED AND YOU DIRECT A QUESTION TO THAT GROUP AND SAY, "I WILL WANT TO HIGHLIGHT AND QUANTIFY NUMERICALLY AS POSSIBLE." AND YOU ASK A SERIES OF QUESTIONS. DO YOU SEE THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND DO YOU SEE THE FIRST QUESTION IS, "WHY AND HOW OUR PLATFORM WILL BE CAPABLE OF THE FULL RANGE OF ASSAYS AND BE AT LEAST AS GOOD AS THE CRO." DO YOU SEE THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND WHAT IS THE CRO?
ELIZABETH A. HOLMES: IT'S THE CONTRACT RESEARCH ORGANIZATION. IN THIS CASE IT'S THE TRADITIONAL LAB THAT WOULD OTHERWISE BE USED.
MR. DOWNEY: OKAY. AND THEN IF WE LOOK ABOVE THAT EMAIL, DO YOU SEE THAT DR. GIBBONS RESPONDED TO THAT QUESTION?
MR. DOWNEY: AND DO YOU THINK -- DO YOU SEE THAT IN THE FIRST SENTENCE HE SAYS, "I THINK WE HAVE DEMONSTRATED CAPABILITIES FULLY EQUIVALENT TO LAB METHODS IN AREAS WHERE WE HAVE DONE ASSAY DEVELOPMENT"?
MR. DOWNEY: AND DO YOU SEE THAT HE THEN GOES ON TO COMPARE THE THERANOS 4.0 SYSTEM FAVORABLY TO OTHER LABS AT THAT TIME?
MR. DOWNEY: AND DO YOU SEE THE SUBJECT MATTER HERE IS GSK?
MR. DOWNEY: AND THAT'S A REFERENCE TO THE PHARMACEUTICAL COMPANY?
ELIZABETH A. HOLMES: IT IS.
MR. DOWNEY: AND DO YOU RECALL DISCUSSING GSK IN CONNECTION WITH THE LOGO ISSUE YESTERDAY?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND WAS THIS A PRESENTATION THAT YOU WERE MAKING TO THEM AT THAT TIME?
MR. DOWNEY: YOU CAN PUT THAT ASIDE. I JUST WANT TO MAKE SURE THAT WE PROPERLY DATE SOME OF THE DOCUMENTS THAT YOU WERE ASKED ABOUT YESTERDAY DURING YOUR CROSS-EXAMINATION ABOUT WHEN TESTS WERE OFFERED IN THE LAB. DO YOU RECALL HAVING DISCUSSION WITH MR. LEACH ABOUT THE DATES ON WHICH TESTS REFERRED TO AS ISE'S BEGAN TO BE OFFERED IN THE LAB?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND THE ISE'S WERE SODIUM, CALCIUM, AND POTASSIUM?
ELIZABETH A. HOLMES: I THINK SO, YES.
MR. DOWNEY: AND HE SHOWED YOU A REPORT FROM DR. YOUNG. DO YOU RECALL THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND THAT REPORT WAS FROM OCTOBER. DO YOU RECALL THAT?
MR. DOWNEY: WERE THOSE ASSAYS ULTIMATELY VALIDATED TO RUN ON THE THERANOS PROPRIETARY ANALYZER?
ELIZABETH A. HOLMES: ON ONE OF OUR METHODS, YES.
MR. DOWNEY: LET ME SHOW YOU EXHIBIT 9086, WHICH IS ALREADY IN EVIDENCE. AND DO YOU RECOGNIZE THIS AS A VALIDATION REPORT FOR THE CALCIUM ASSAY?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND THIS CALCIUM ASSAY WAS TO BE RUN ON THE MODIFIED DEVICE. DO YOU SEE THAT?
MR. DOWNEY: AND THEN BELOW DO YOU SEE SIGNATURES BY DR. YOUNG AND DR. ROSENDORFF AT THE BOTTOM?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND DO YOU SEE THAT THOSE ARE -- APPEAR TO BE DATED NOVEMBER 7TH, 2013?
MR. DOWNEY: SO WOULD THE CALCIUM ASSAY HAVE BEEN OFFERED ON THE SIEMENS ANALYZER AT SOME POINT AFTER THAT DATE?
ELIZABETH A. HOLMES: IT WOULD HAVE.
MR. DOWNEY: LET ME ASK YOU TO LOOK NEXT AT EXHIBIT 9098. AND DO YOU SEE THIS IS A VALIDATION REPORT FOR CHLORIDE?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND DO YOU SEE THAT AT THE BOTTOM IT'S ALSO SIGNED BY DR. YOUNG AND DR. ROSENDORFF?
MR. DOWNEY: AND DO YOU SEE THAT THE LATER SIGNATURE IS DR. YOUNG'S ON NOVEMBER 8TH?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND WAS THIS ALSO VALIDATED AT THIS DATE FOR RUNNING ON THE MODIFIED SIEMENS MACHINES?
ELIZABETH A. HOLMES: IT WAS.
MR. DOWNEY: AND TO YOUR KNOWLEDGE, NO ASSAYS WERE RUN PRIOR TO THE TIME THAT THEY WERE VALIDATED BY DR. ROSENDORFF AT THIS TIME; IS THAT RIGHT?
ELIZABETH A. HOLMES: CORRECT.
MR. DOWNEY: AND NO ASSAYS WERE EVER OFFERED IN THE CLIA LAB THAT WEREN'T VALIDATED BY THE LAB DIRECTOR; CORRECT?
ELIZABETH A. HOLMES: THAT'S RIGHT.
MR. DOWNEY: AND IN EACH INSTANCE, A REVIEWER OR A RESEARCH AND DEVELOPMENT PERSON LIKE DR. YOUNG WOULD ALSO REVIEW AND APPROVE THE OFFERING OF THE ASSAY; IS THAT RIGHT?
MR. DOWNEY: LET'S LOOK AT POTASSIUM NEXT AT EXHIBIT 9098. THIS IS ALREADY IN EVIDENCE ALSO. IF WE COULD DISPLAY THE FIRST PAGE.
JUDGE DAVILA: WHAT IS THE EXHIBIT NUMBER?
MR. DOWNEY: 9098.
JUDGE DAVILA: THAT'S NOT WHAT WE WERE JUST LOOKING AT?
MR. DOWNEY: NO. I'M SORRY, YOUR HONOR. I THINK THAT'S MY MISTAKE. I THINK THAT'S WHAT WE WERE JUST LOOKING AT.
JUDGE DAVILA: I THOUGHT SO, YES.
MR. DOWNEY: ALL RIGHT.
MR. DOWNEY: LET ME JUST ASK YOU A FEW QUESTIONS ABOUT MR. PARLOFF.
MR. DOWNEY: DO YOU RECALL MR. LEACH ASKING YOU ABOUT THE STATEMENT IN MR. PARLOFF'S ARTICLE THAT THERANOS DID NOT BUY THIRD PARTY ANALYZERS FROM OTHERS?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: DID YOU EVER SAY TO MR. PARLOFF THAT THERANOS NEVER IN ANY CONTEXT BOUGHT THIRD PARTY ANALYZERS?
MR. DOWNEY: DID YOU SAY TO HIM THAT THERANOS INTENDED TO SEEK APPROVAL FROM THE FDA FOR ITS 4 SERIES SYSTEM?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: DID YOU TELL HIM THAT ALL OF THE TESTS THAT WOULD BE PART OF THOSE FDA SUBMISSIONS WOULD BE DEVELOPED AND MANUFACTURED BY THERANOS?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: DID YOU TELL HIM THAT THE ANALYZER THAT WOULD BE PART OF THOSE FDA SUBMISSIONS WOULD BE DEVELOPED AND MANUFACTURED BY THERANOS?
MR. LEACH: LEADING, YOUR HONOR.
JUDGE DAVILA: THEY ARE LEADING IN THE FORM OF THE QUESTION. I'LL ALLOW YOU TO ANSWER THE QUESTION, MS. HOLMES. YOU CAN ANSWER THE LAST QUESTION.
ELIZABETH A. HOLMES: OKAY. YES, I DID.
MR. DOWNEY: LET ME ASK THE QUESTION DIFFERENTLY.
MR. DOWNEY: WHAT DID HE TELL YOU -- WHAT DID YOU TELL HIM AS TO HOW THE ANALYZER WOULD BE -- THAT WAS BEING USED IN CONNECTION WITH FDA SUBMISSIONS WOULD BE DEVELOPED AND MANUFACTURED?
ELIZABETH A. HOLMES: I TOLD HIM THAT WE WERE COMPLETELY VERTICALLY INTEGRATED, THAT IT WAS ALL MANUFACTURED IN HOUSE BY THERANOS.
MR. DOWNEY: AND THAT WAS -- WAS THAT REFERRING TO THE THERANOS PROPRIETARY ANALYZER?
MR. DOWNEY: I'D LIKE YOU ALSO TO LOOK AT THE DOCUMENT THAT MR. LEACH SHOWED YOU THAT WAS EXHIBIT 5727. ON THE FIRST PAGE, DO YOU SEE THAT THIS IS THE EMAIL WHICH THERANOS TRANSMITTED TO INVESTORS IN THERANOS A COPY OF PARLOFF ARTICLE?
ELIZABETH A. HOLMES: I THINK SO, YES.
MR. DOWNEY: I'D LIKE TO ASK YOU TO LOOK NOW AT THE SECOND PAGE OF THAT EXHIBIT, I BELIEVE. AND UNDER THE -- IN THE TEXT DO YOU SEE THAT THE -- IN THE SECOND PARAGRAPH THAT BEGINS, "WITH THIS EMAIL"?
MR. DOWNEY: DO YOU SEE THAT YOU SHARE IN THE FIRST SENTENCE THE "FORTUNE" MAGAZINE STORY?
MR. DOWNEY: AND THEN IN THE SECOND SENTENCE IT READS, "FORTUNE DID IN-DEPTH RESEARCH TO UNDERSTAND THE IMPACT OUR WORK WILL HAVE ON THE WORLD." DO YOU SEE THAT?
MR. DOWNEY: AND IN THE SECOND PART YOU SAY, "WE SELECTIVELY SHARED MORE OF OUR WORK FOR THIS PIECE." DO YOU SEE THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND I'D LIKE TO ASK YOU ABOUT BOTH PIECES OF THAT. WHAT DID YOU UNDERSTAND WAS MEANT BY THE IMPACT THAT THERANOS'S WORK WOULD HAVE ON THE WORLD?
ELIZABETH A. HOLMES: HOW OUR SYSTEMS COULD HELP PEOPLE AND THE IMPACT IT WOULD MAKE IN HEALTH CARE.
MR. DOWNEY: AND WAS THAT SOMETHING THAT YOU WANTED YOUR INVESTORS TO KNOW ABOUT?
ELIZABETH A. HOLMES: VERY MUCH SO.
MR. DOWNEY: AND THEN YOU REFERENCE SELECTIVELY SHARING MORE OF THERANOS'S WORK FOR THE PIECE. DO YOU SEE THAT?
MR. DOWNEY: AND WHAT DID THAT MEAN IN THIS CONTEXT?
ELIZABETH A. HOLMES: THAT OVER TIME WE HAD PLANNED TO INTRODUCE MORE AND MORE OF OUR TECHNOLOGY AND PROCESSES, AND FOR THIS PIECE WE HAD DISCUSSED SOME OF THEM, WHICH WE WOULD NOW BE SHARING PUBLICLY, BUT NOT ALL OF THEM.
MR. DOWNEY: ALL RIGHT. LET ME TURN TO ASKING YOU ABOUT THE INSPECTION IN 2013 THAT MR. LEACH ASKED YOU ABOUT YESTERDAY.
MR. DOWNEY: IS IT THE CASE THAT CMS INSPECTS LABORATORIES EVERY TWO YEARS?
ELIZABETH A. HOLMES: THAT'S MY UNDERSTANDING.
MR. DOWNEY: AND WAS THIS INSPECTION PART OF THAT REGULAR CYCLE?
MR. DOWNEY: AND AT THE TIME THAT THIS INSPECTION TOOK PLACE, THERANOS WAS OPERATING AS A CLINICAL LAB SERVING PATIENTS; IS THAT RIGHT?
MR. DOWNEY: MR. LEACH ASKED YOU WHETHER THE INSPECTOR EVER SAW A 3.5 DEVICE. DO YOU RECALL THAT?
MR. DOWNEY: I'D LIKE TO ASK YOU TO LOOK AT EXHIBIT 7368, WHICH IS ALREADY IN EVIDENCE. AND DO YOU SEE THAT THIS IS THE DOCUMENT WHERE DR. YOUNG SENT YOU NOTES FROM HIS PARTICIPATION IN THAT AUDIT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND IF YOU GO TO THE SECOND PAGE, THE NUMBERED 5, IF WE COULD BLOW THAT UP. AND DO YOU SEE THAT IT REFERS TO THE AUDITOR?
MR. DOWNEY: AND IT SAYS, "THE AUDITOR ASKED IF WE HAVE ANY NEW TESTS OFFERED SINCE THE LAST AUDIT"?
MR. DOWNEY: AND WAS THE LAST AUDIT IN 2011?
ELIZABETH A. HOLMES: IT WAS.
MR. DOWNEY: AND THAT WAS THE -- WAS THAT THE AUDIT THAT YOU AND I DISCUSSED ON DIRECT EXAMINATION WHERE THERE WERE NO DEFICIENCIES IN THE THERANOS LAB?
MR. DOWNEY: AND THEN IT SAYS, "ADAM." DOES THAT REFER TO DR. ROSENDORFF?
MR. DOWNEY: AND IT SAYS, "SAID YES AND SPOKE ABOUT ALL OF THE LDT'S." DO YOU SEE THAT?
MR. DOWNEY: AND HE "MENTIONED EDISON 3.5, FLOW CYTOMETER, ADVIA, AND NORMANDY LAB." DO YOU SEE THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND IS THAT A REFERENCE TO ALL OF THE LDT'S IN THERANOS'S LABS?
ELIZABETH A. HOLMES: IT IS.
MR. DOWNEY: AND DO YOU KNOW ONE WAY OR ANOTHER WHETHER THE AUDITOR, IN RESPONSE TO BEING INFORMED OF THESE, ASKED TO SEE THOSE TECHNOLOGIES?
ELIZABETH A. HOLMES: I DON'T.
MR. DOWNEY: AND DO YOU KNOW, FROM REVIEW OF THE NOTES, THAT THE AUDITOR DID ASK TO SEE VALIDATION REPORTS AND DATA ABOUT THEIR PERFORMANCE?
MR. DOWNEY: DID YOU UNDERSTAND THAT AN INSPECTOR WHO IS CONDUCTING AN INSPECTION FOR CMS CAN ASK TO LOOK AT ANYTHING IN A LAB THAT THEY WANT?
ELIZABETH A. HOLMES: OF COURSE.
MR. DOWNEY: I WANT TO ASK YOU JUST BRIEFLY ABOUT THE QUESTIONS THAT MR. LEACH ASKED YOU LAST WEEK ABOUT YOUR RELATIONSHIP WITH MR. BALWANI. DO YOU RECALL THOSE QUESTIONS?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND DO YOU RECALL THAT HE ASKED YOU A LARGE NUMBER OF QUESTIONS ABOUT WHETHER, WHEN MR. BALWANI TOLD YOU SOMETHING, HE WAS HIDING SOMETHING FROM YOU? DO YOU RECALL THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: DID MR. BALWANI FREQUENTLY SHARE IDEAS WITH YOU?
MR. DOWNEY: AND DID HE DO THAT BY TEXT?
MR. DOWNEY: DID HE DO IT ORALLY AS WELL?
ELIZABETH A. HOLMES: HE DID.
MR. DOWNEY: AND DID HE ON OCCASION VENT HIS FRUSTRATION ABOUT EVENTS AT THERANOS?
ELIZABETH A. HOLMES: HE DID.
MR. DOWNEY: DID HE DO THAT BY TEXT?
MR. DOWNEY: AND DID HE DO THAT IN PERSON ORALLY ON SOME OCCASIONS?
ELIZABETH A. HOLMES: HE DID.
MR. DOWNEY: DID HE CRITICIZE INDIVIDUALS AT THERANOS AS BEING INCOMPETENT?
ELIZABETH A. HOLMES: HE DID.
MR. DOWNEY: DID HE CRITICIZE YOU IN YOUR PERFORMANCE?
MR. DOWNEY: WE SAW SEVERAL INSTANCES IN WHICH MR. LEACH SHOWED YOU WHERE MR. BALWANI RAISED AN ISSUE ABOUT A PROBLEM OR AN ISSUE THAT HE SAW AT THERANOS, AND IN RESPONSIVE TEXTS YOU SEEMED TO AGREE WITH HIM. DO YOU RECALL THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: I WANT TO JUST SHOW YOU A FEW OF THOSE BACK AND FORTHS TO GIVE YOU AN OPPORTUNITY TO COMMENT ON WHAT WAS GOING ON. SO I'D LIKE TO PUT UP 5387D, WHICH WAS INTRODUCED BY THE GOVERNMENT, AND SHOW YOU ONE OF THOSE EXCHANGES. IF WE GO TO PAGE 24, AND WE BLOW UP SORT OF THE TOP HALF THERE. DO YOU SEE THAT THIS IS A SERIES OF EXCHANGES BETWEEN YOU AND MR. BALWANI WHERE HE'S TALKING ABOUT THE CALL CENTER MANAGER, AND THE CALL CENTER TEAM? DO YOU SEE THAT?
MR. DOWNEY: AND WHAT IS THE CALL CENTER AT THERANOS?
ELIZABETH A. HOLMES: THE CALL CENTER SUPPORTED THE CLINICAL LAB AND WAS A PLACE FOR PATIENTS AND PHYSICIANS TO CALL IF THEY HAD QUESTIONS OR WANTED TO SPEAK WITH SOMEONE IN THE LABORATORY.
MR. DOWNEY: AND WAS THAT A FUNCTION THAT YOUR BROTHER WAS INVOLVED WITH AT THIS TIME?
ELIZABETH A. HOLMES: HE WAS.
MR. DOWNEY: ALL RIGHT. AND DO YOU SEE THAT HE BEGINS BY SAYING, "WE NEED THE CALL CENTER MANAGER, NEW CALL CENTER TEAM, GET RECURRENT CREW OUT OF DOCS FACING COMMUNICATIONS"? DO YOU SEE THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND DO YOU SEE A COUPLE TEXTS DOWN HE SAYS, "FUNDAMENTALLY WE NEED TO STOP FIGHTING FIRES BY NOT CREATING THEM"? DO YOU SEE THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND THEN YOU AGREE AND SAY, "YES." AND THEN THERE'S MORE DISCUSSION ABOUT THE CALL CENTER. DO YOU SEE THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND THEN IF WE GO DOWN TO 5:52 A.M., THERE'S A TEXT FROM YOU TO HIM WHERE YOU SAY, "FUNDAMENTALLY WE NEED TO STOP FIGHTING FIRES BY NOT CREATING THEM." CAN YOU EXPLAIN THAT EXCHANGE WHERE YOU'RE REPEATING WHAT IT LOOKS LIKE WORD FOR WORD WHAT MR. BALWANI HAD TEXT YOU ABOUT 45 MINUTES BEFORE?
ELIZABETH A. HOLMES: YES. SUNNY WOULD OFTEN BLOW OFF STEAM OR VENT THROUGH TEXTS, AND I TRIED TO NOT IGNITE HIM IN THE WAY THAT I RESPONDED. AND I KNEW THAT REPEATING BACK TO HIM THINGS THAT HE HAD SAID TO ME SHOWED THAT I WAS PAYING ATTENTION, THAT I WAS LISTENING TO HIM, AND I WOULD DO THAT TO SHOW HIM THAT I UNDERSTOOD THE POINT THAT HE WAS MAKING, I'M PAYING ATTENTION, I'M LISTENING.
MR. DOWNEY: OKAY. I THINK JUST FOR THE -- IN THE INTEREST OF CLARITY OF THE RECORD, I SAID 45 MINUTES LATER AND I THINK IT'S ABOUT 3 MINUTES LATER. DO YOU SEE THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: OKAY. LET ME ASK YOU, WERE THERE SITUATIONS AFTER HE VENTED A CONCERN THAT HE WOULD TALK ABOUT WHAT HE WOULD DO IN RESPONSE TO THAT CONCERN?
MR. DOWNEY: AND WHAT DID HE TYPICALLY SAY?
ELIZABETH A. HOLMES: THAT HE WAS GOING TO PERSONALLY TAKE OVER WHATEVER AREA HE WAS UPSET ABOUT AND OWN IT AND FIX WHATEVER PROBLEMS EXISTED.
MR. DOWNEY: AND DID YOU GENERALLY ACCEPT THAT IF HE MADE THAT PROPOSAL?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: LET'S LOOK AT PAGE 9 OF THE SAME EXHIBIT, 5387D. I WANT TO LOOK AT THE SECOND TEXT HERE WHICH BEGINS ON MAY 9TH AT 1:13:39 A.M. DO YOU SEE THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND DO YOU SEE THERE'S A TEXT FROM MR. BALWANI TO YOU THAT SAYS, "I NEED ABOUT A MONTH OF TOTAL FREE TIME TO TAKE OVER DEVICE COMPLETELY AND MOVE IT 100 PERCENT TO .NET." DO YOU SEE THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND DO YOU SEE THAT THIS IS DATED MAY 2012?
MR. DOWNEY: AND IS .NET, WHAT IS THAT A REFERENCE TO?
ELIZABETH A. HOLMES: IT'S A SOFTWARE. HE'S TALKING ABOUT REWRITING ALL OF THE SOFTWARE ON THE DEVICE.
MR. DOWNEY: AND IS THE DEVICE SOMETHING THAT YOU HAD BEEN INVOLVED IN MANAGING THE PROCESS RELATED TO IT?
MR. DOWNEY: AND WHAT WAS HE PROPOSING AT THIS POINT?
ELIZABETH A. HOLMES: THAT HE TAKE IT OVER AND, AS PART OF DOING THAT TRANSITION, THE SOFTWARE THAT WE WERE USING TO NEW SOFTWARE.
MR. DOWNEY: AND IF YOU LOOK AT THREE TEXTS DOWN FROM THAT, THE TEXT THAT BEGINS, "I AM EXHAUSTED."
MR. DOWNEY: AND DO YOU SEE THAT HE SAYS, "I AM EXHAUSTED TRYING TO ENCOURAGE MEDEI AND LOREN" -- WHO ARE THEY?
ELIZABETH A. HOLMES: TWO OF OUR SOFTWARE DEVELOPERS.
MR. DOWNEY: -- "TO GET THE JOB DONE." AND HE MENTIONS TWO OTHER INDIVIDUALS. WHO ARE THEY?
ELIZABETH A. HOLMES: TWO MORE SOFTWARE DEVELOPERS.
MR. DOWNEY: AND THEN IN THE LAST LINE HE SAYS, "WE WILL BE DONE IN A MONTH WITH THIS." DO YOU SEE THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND THEN YOU RESPOND "AMAZING"? DO YOU SEE THAT?
MR. DOWNEY: AND THEN "MY JOB IS TO HELP YOU SPEND THE TIME ON THAT." DO YOU SEE THAT?
MR. DOWNEY: AND WHAT WERE YOU COMMUNICATING TO HIM ON THAT?
ELIZABETH A. HOLMES: I WAS TRYING TO BE SUPPORTIVE AND SAY, GREAT, LET ME HELP YOU SPEND TIME ON THAT SO YOU CAN SOLVE WHATEVER PROBLEMS YOU SEE AND GET IT DONE WITHIN A MONTH.
MR. DOWNEY: OKAY. NOW, LET ME ASK YOU SPECIFICALLY ABOUT THE TEXTS THAT MR. BALWANI SENT TO YOU THAT MR. LEACH SHOWED TO YOU RELATED TO MR. ROSENDORFF'S DEPARTURE AND ISSUES AROUND THE NORMANDY LAB AT THAT TIME. DO YOU RECALL THAT EXCHANGE WITH MR. LEACH?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: LET ME GO TO PAGE 29 OF THESE TEXTS. AND DO YOU SEE WHERE HE SAYS, "NORMANDY LAB IS A DISASTER ZONE," MORE OR LESS HE SAYS THAT, AND THEN HE SAYS, "GLAD I CAME HERE. WILL WORK ON FIXING THIS"? DO YOU SEE THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND THEN YOUR RESPONSE WAS, "MEANT TO BE THAT YOU'RE THERE APPARENTLY -- WHAT HAPPENED." DO YOU SEE THAT?
MR. DOWNEY: AND THEN HE GOES DOWN A COUPLE TEXTS DOWN AND SAYS HE'S "IN NORMANDY." AND THAT'S A REFERENCE TO THE LAB; IS THAT RIGHT?
ELIZABETH A. HOLMES: IT IS.
MR. DOWNEY: AND THEN HE SAYS HE'LL CALL WHEN HE LEAVES?
MR. DOWNEY: AND A COUPLE LINES DOWN FROM THAT, HE SAYS, "I WILL GET TINA OUT." WHO WAS TINA?
ELIZABETH A. HOLMES: SHE WAS A PERSON IN PRODUCT MANAGEMENT.
MR. DOWNEY: AND WAS THAT SOMEBODY -- WAS SHE PLAYING A ROLE WITH REGARD TO THE CLINICAL LAB?
ELIZABETH A. HOLMES: SHE WAS. SHE WAS ASSIGNED TO THE LABORATORY DEVELOPED TESTS.
MR. DOWNEY: AND THEN IN THE SECOND SENTENCE HE SAYS, "WE NEED A SOFTWARE PERSON RUNNING THIS." DO YOU SEE THAT?
MR. DOWNEY: AND SOFTWARE PEOPLE WERE PEOPLE WHO WORKED FOR MR. BALWANI; IS THAT RIGHT?
ELIZABETH A. HOLMES: THEY WERE.
MR. DOWNEY: WERE THEY TYPICALLY PEOPLE THAT HE HAD HIRED INTO THERANOS?
MR. DOWNEY: AND THEN HE SAYS, "BETWEEN TINA AND MAX WE HAVE A MESS." IS THAT MAX FOSQUE?
MR. DOWNEY: IS THIS A POINT WHERE MR. BALWANI BEGAN TO TAKE A MORE ACTIVE ROLE AT THE LAB?
ELIZABETH A. HOLMES: HE DID.
MR. DOWNEY: LET ME SHOW YOU ONE MORE SERIES OF TEXTS FROM APRIL OF 2015. THIS IS ON PAGE 59 ON 5387D. DO YOU SEE THIS BEGINS WITH MR. BALWANI TEXTING YOU SAYING, "IT IS MOST MADDENING THERE IS NO FOCUS ON ANY CHEM TEAMS AND NO PRODUCT COMING OUT." WHAT IS CHEM TEAMS A REFERENCE TO?
ELIZABETH A. HOLMES: HE'S TALKING ABOUT ONE OF THE R&D CHEMISTRY TEAMS.
MR. DOWNEY: AND IS R&D A FUNCTION THAT YOU HAD BEEN IN CHARGE OF HISTORICALLY AT THE COMPANY?
ELIZABETH A. HOLMES: IT IS.
MR. DOWNEY: AND HE'S CRITICIZING THE FOCUS WITHIN THAT TEAM?
MR. DOWNEY: AND YOU RESPONDED, "I KNOW. "LEADERSHIP."
MR. DOWNEY: AND HE SAYS, "I AM TAKING OVER ALL CHEM TEAMS PER DISCUSSION AND WILL BEGIN DOING DAILY MEETINGS." DO YOU SEE THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND IS THIS ANOTHER AREA WHERE HE TOOK CONTROL AT THIS TIME AFTER COMPLAINING ABOUT THE PERFORMANCE OF THE PEOPLE WORKING IN THE AREA?
ELIZABETH A. HOLMES: HE DID.
MR. DOWNEY: NOW, I WANT TO ASK YOU ABOUT THE SERIES OF QUESTIONS THAT MR. LEACH ASKED YOU ABOUT WHETHER MR. BALWANI WAS OPEN WITH YOU. DO YOU RECALL THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND, OF COURSE, WHEN YOU HEARD HE HAD A CONCERN, YOU UNDERSTOOD THE CONCERN THAT HE WAS EXPRESSING; IS THAT RIGHT?
ELIZABETH A. HOLMES: I THINK SO.
MR. DOWNEY: BUT DO YOU KNOW WHETHER AT THE TIME HE WAS TELLING YOU OF EVERY ISSUE THAT HE SAW?
MR. DOWNEY: DO YOU KNOW WHETHER HE WAS TELLING YOU OF EVERY ISSUE THERE WAS UNDER HIS LEADERSHIP?
MR. DOWNEY: DID HE TEND TO BE SELF-CRITICAL IN CONNECTION WITH HIS MANAGEMENT OF AREAS?
ELIZABETH A. HOLMES: HE WAS NOT.
MR. DOWNEY: DID YOU EVENTUALLY LEARN THAT CONDITIONS IN SOME OF HIS FUNCTIONS WERE WORSE THAN YOU HAD BELIEVED FOR MOST OF HIS TIME AT THERANOS?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: WERE SOME OF THOSE IN CONNECTION WITH PERFORMANCE OF THE CLIA LAB?
MR. DOWNEY: MR. LEACH ALSO ASKED YOU ABOUT ADVISORS THAT YOU WORKED WITH AND INTERACTED WITH WHILE YOU WERE AT THERANOS. DO YOU RECALL THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND HE ASKED YOU ABOUT, FOR EXAMPLE, GENERAL MATTIS. DO YOU RECALL?
ELIZABETH A. HOLMES: I DO, YES.
MR. DOWNEY: AND MR. KISSINGER, AND MR. SHULTZ, AND OTHERS. DO YOU RECALL?
MR. DOWNEY: AND MOST OF THOSE INDIVIDUALS WERE MEMBERS OF THE BOARD OF DIRECTORS; IS THAT RIGHT?
ELIZABETH A. HOLMES: THEY WERE.
MR. DOWNEY: AND YOU WOULD TALK TO THEM IN CONNECTION WITH BOARD AFFAIRS; IS THAT RIGHT?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: BUT IN THE PERIOD BETWEEN 2010 AND 2015, HOW FREQUENTLY DID YOU TALK TO MR. BALWANI ABOUT EVENTS AT THERANOS?
ELIZABETH A. HOLMES: ALL OF THE TIME.
MR. DOWNEY: WHO WAS THE MOST IMPORTANT ADVISOR TO YOU IN CONNECTION WITH THERANOS?
ELIZABETH A. HOLMES: SUNNY WAS.
MR. DOWNEY: I WANT TO ASK YOU LASTLY ABOUT THE END OF THE RELATIONSHIP. MR. LEACH SHOWED YOU SOME TEXTS WHERE YOU HAD SOME TEXTS AFTER YOU DEPARTED FROM THE HOME THAT YOU HAD SHARED WITH MR. BALWANI. DO YOU RECALL THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND SOME OF THOSE TEXTS EXPRESSED, YOU KNOW, STILL AFFECTIONATE FEELINGS TOWARD MR. BALWANI. DO YOU RECALL THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: DID YOU END THAT RELATIONSHIP IN A SINGLE MOMENT, OR WAS IT A PROCESS OF GETTING OUT OF THAT RELATIONSHIP?
ELIZABETH A. HOLMES: IT WAS A PROCESS.
MR. DOWNEY: AND AFTER YOU WERE ABLE TO END YOUR RELATIONSHIP WITH MR. BALWANI, DID YOU SEE HIM AGAIN PRIOR TO, LET'S SAY, JUNE OF 2018?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: ON WHAT OCCASIONS DID YOU SEE HIM?
ELIZABETH A. HOLMES: HE SHOWED UP AT THE CHURCH I WOULD GO TO AT NIGHT AND AT THE DISH, WHICH WAS WHERE I USED TO RUN AROUND STANFORD, THE PLACES I WOULD GO OUTSIDE OF WORK.
MR. DOWNEY: AND DID YOU HAVE ANY CONTACT WITH HIM?
MR. LEACH: YOUR HONOR -- YOUR HONOR, OBJECTION.
JUDGE DAVILA: EXCUSE ME.
MR. LEACH: RELEVANCE, 403 AS TO THE TIME PERIOD.
JUDGE DAVILA: DO YOU WANT TO --
MR. DOWNEY: I DON'T NEED TO EXPAND FURTHER.
JUDGE DAVILA: OKAY. ALL RIGHT.
BY MR. DOWNEY:
MR. DOWNEY: I WANT TO ALSO ASK YOU ABOUT THE LLC THAT MR. LEACH ASKED YOU ABOUT. DO YOU RECALL THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND HE SHOWED YOU A DOCUMENT THAT INDICATED THAT YOU AND MR. BALWANI HAD 50 PERCENT OWNERSHIP EACH IN CONNECTION WITH AN LLC. DO YOU REMEMBER THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND THAT LLC WAS CALLED HMFR?
ELIZABETH A. HOLMES: IT WAS.
MR. DOWNEY: AND THEN MR. LEACH SHOWED YOU A PICTURE OF A HOUSE; CORRECT?
ELIZABETH A. HOLMES: HE DID.
MR. DOWNEY: AND HE ASKED YOU, DO YOU RECALL, IF THAT HOUSE WAS SOLD?
MR. DOWNEY: AND DO YOU RECALL HIM ASKING YOU IF THE LLC OWNED THE HOUSE?
MR. DOWNEY: ALL RIGHT. AND WAS THAT LLC DISSOLVED?
MR. DOWNEY: AND DOES IT EXIST TODAY?
MR. DOWNEY: WHEN THE LLC DISSOLVED, DID YOU GET ANY PROCEEDS IN CONNECTION WITH THE SALE OF THAT HOUSE?
MR. LEACH: OBJECTION. RELEVANCE, 403.
MR. DOWNEY: HE OPENED THE DOOR TO THIS ON DIRECT -- ON CROSS-EXAMINATION. I THINK I'M ENTITLED TO --
JUDGE DAVILA: THERE WAS SOME TESTIMONY. I'LL ALLOW THAT QUESTION TO BE ANSWERED. REASK THE QUESTION.
MR. DOWNEY: RIGHT.
MR. DOWNEY: DID YOU REALIZE ANY MONIES FROM THE ASSETS THAT WERE SOLD AS PART OF THAT LLC?
MR. DOWNEY: I WANT TO ASK YOU FINALLY JUST SOME QUESTIONS ABOUT THE RESEARCH AND DEVELOPMENT PROCESS AT THERANOS AND ABOUT YOUR ROLE WITH REGARD TO THE RESEARCH AND DEVELOPMENT PROCESS. I THINK YOU'VE TESTIFIED ON A FEW OCCASIONS THAT YOU SPENT MUCH MORE OF YOUR TIME WORKING ON RESEARCH AND DEVELOPMENT THAN IN CONNECTION WITH THE CLINICAL LAB; IS THAT FAIR?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: AND THE RESEARCH AND DEVELOPMENT LAB WAS DEVELOPING PROPRIETARY TECHNOLOGY; IS THAT RIGHT?
MR. DOWNEY: DID YOU RECEIVE REGULAR UPDATES ABOUT THAT PROGRESS IN THE PERIOD -- WITH RESPECT TO RESEARCH AND DEVELOPMENT IN THE PERIOD BETWEEN 2010 AND 2013?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: AND WERE THOSE UPDATES FROM THE SCIENTISTS WHO LED THE VARIOUS TECHNOLOGY TEAMS WITHIN THERANOS?
MR. DOWNEY: AND DO YOU HAVE ANY REASON TO DOUBT THEIR SINCERITY IN REPORTING TO YOU WHERE THEY THOUGHT THE PROGRESS OF THAT TECHNOLOGY WAS DURING THAT PERIOD?
ELIZABETH A. HOLMES: NOT AT ALL.
MR. DOWNEY: AND YOU ALSO -- DID YOU RECEIVE UPDATES IN CONNECTION WITH THERANOS'S EFFORT TO HAVE THE 4.0 DEVICE AND THE 4.0 SYSTEM READY TO SUBMIT AN APPLICATION TO THE FDA FOR APPROVAL FOR?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: AND DID THEY -- DO YOU HAVE ANY REASON TO DOUBT WHAT THEY -- THE SINCERITY OF WHAT THEY REPORTED TO YOU IN THAT REGARD?
ELIZABETH A. HOLMES: I DO NOT.
MR. DOWNEY: WHEN YOU SPOKE TO OUTSIDERS, PARTNERS, AND POTENTIAL INVESTORS, WAS WHAT YOU SAID ABOUT THERANOS'S TECHNOLOGY CAPABILITIES INFORMED BY WHAT YOU WERE HEARING FROM THOSE INDIVIDUALS WITHIN THERANOS?
MR. DOWNEY: AND DID YOU UNDERSTAND THAT THE COMPANY HAD DEVELOPED A REAL PRODUCT THAT COULD BE USED IN CONNECTION WITH ANALYSIS OF BLOOD SAMPLES?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: WHEN YOU HAD QUESTIONS TO VERIFY WHETHER OR NOT THE TECHNOLOGY AT THERANOS HAD A PARTICULAR CAPABILITY, WHO DID YOU ASK?
ELIZABETH A. HOLMES: I ASKED OUR SCIENTISTS AND ENGINEERS AND MEMBERS OF THE TECHNICAL TEAMS FOR DIFFERENT TYPES OF TESTS.
MR. DOWNEY: YOU TESTIFIED WHEN MR. LEACH WAS EXAMINING YOU THAT IN YOUR ROLE AS CEO, YOU THOUGHT THAT THE BUCK STOPPED WITH YOU; IS THAT RIGHT?
ELIZABETH A. HOLMES: I DID.
MR. DOWNEY: AND IS THAT AN ACCURATE STATEMENT OF HOW YOU FEEL?
ELIZABETH A. HOLMES: IT IS.
MR. DOWNEY: BUT IS IT ALSO AN ACCURATE STATEMENT THAT BETWEEN 2010 AND 2016, WERE YOU AWARE OF EVERYTHING THAT HAPPENED AT THERANOS?
MR. DOWNEY: AND BETWEEN 2010 AND 2016, WERE YOU INVOLVED IN ALL OF THE DECISIONS THAT THE COMPANY MADE?
ELIZABETH A. HOLMES: I WAS NOT.
MR. DOWNEY: DID YOU EVER AT ANY TIME TAKE STEPS TO TRY TO MISLEAD PEOPLE WHO INVESTED IN THERANOS?
ELIZABETH A. HOLMES: NEVER.
MR. DOWNEY: AND YOU RECOGNIZED THAT THEY INVESTED IN THE VISION THAT YOU ARTICULATED AND ULTIMATELY LOST YOUR MONEY -- LOST THEIR MONEY?
MR. LEACH: OBJECTION. OBJECTION. LEADING.
JUDGE DAVILA: SUSTAINED.
BY MR. DOWNEY:
MR. DOWNEY: WELL, DO YOU RECOGNIZE THAT THEY LOST MONEY?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: WAS THAT THE RESULT OF YOUR ATTEMPTING TO MISLEAD THEM IN CONNECTION WITH ASKING THEM TO INVEST IN THERANOS?
ELIZABETH A. HOLMES: OF COURSE NOT.
MR. DOWNEY: YOU ALSO TALKED FREQUENTLY ABOUT THE BENEFITS FOR PATIENTS OF THERANOS SYSTEMS. DO YOU REMEMBER THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND DID YOU AT ANY TIME TRY TO LEAD PATIENTS TO BELIEVE THAT THERANOS COULD OFFER ACCURATE AND RELIABLE SERVICES WHEN YOU KNEW IT COULDN'T?
ELIZABETH A. HOLMES: OF COURSE NOT.
MR. DOWNEY: IN CONNECTION WITH GAINING CONFIDENCE IN THE CAPABILITIES OF THERANOS AND WHAT YOU WERE SAYING ABOUT IT, YOU'VE TESTIFIED SEVERAL TIMES THAT YOU HIRED A NUMBER OF SCIENTIFIC LEADERS. DO YOU RECALL THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND DID THAT INCLUDE DR. YOUNG?
MR. DOWNEY: AND DR. PANGARKAR?
MR. DOWNEY: AND DR. ANEKAL?
MR. DOWNEY: AND DR. SIVARAMAN?
MR. DOWNEY: AND DR. SAKSENA?
MR. DOWNEY: AND WERE ALL OF THEM LEADERS OF VARIOUS RESEARCH GROUPS WITHIN THERANOS?
ELIZABETH A. HOLMES: THEY WERE.
MR. DOWNEY: AND ARE ALL OF THEM WORKING TODAY IN CONNECTION WITH OTHER TECHNOLOGY AND BIOTECH VENTURES?
ELIZABETH A. HOLMES: THEY ARE.
MR. DOWNEY: AND YOU ALSO WERE COUNSELLED BY CAPABLE EXPERTS IN MARKETING; IS THAT FAIR TO SAY?
MR. DOWNEY: AND DID THERANOS HAVE IN-HOUSE LAWYERS TO CONSULT IT IN CONNECTION WITH ITS ACTIVITIES?
ELIZABETH A. HOLMES: WE DID.
MR. DOWNEY: MR. LEACH ASKED YOU A NUMBER OF QUESTIONS ABOUT THE NUMBER OF SHARES THAT YOU OWNED IN THERANOS. DO YOU REMEMBER THAT?
ELIZABETH A. HOLMES: I DO.
MR. DOWNEY: AND HE SHOWED YOU A PARTICULAR NUMBER. IT WAS SEVERAL HUNDRED MILLION SHARES. DO YOU RECALL THAT?
MR. DOWNEY: AND WAS IT EVER THE CASE AT ANY TIME BETWEEN THE FOUNDING OF THE COMPANY AND THE TIME THAT THE COMPANY CEASED ITS EXISTENCE IN 2018 THAT YOU EVER SOLD A SINGLE SHARE OF THAT STOCK?
MR. DOWNEY: WHEN YOU WERE OUT ASKING OTHERS TO INVEST IN THE COMPANY THAT YOU HAD FOUNDED, WHAT DID YOU TYPICALLY WANT TO CONVEY TO THEM AS A QUESTION OF WHY THEY SHOULD INVEST IN THERANOS?
ELIZABETH A. HOLMES: I WANTED TO CONVEY THE IMPACT THE COMPANY COULD MAKE FOR PEOPLE AND FOR HEALTH CARE. THEY WERE PEOPLE WHO WERE LONG-TERM INVESTORS, AND I WANTED TO TALK ABOUT WHAT THIS COMPANY COULD DO A YEAR FROM NOW, FIVE YEARS FROM NOW, TEN YEARS FROM NOW. THEY WEREN'T INTERESTED IN TODAY OR TOMORROW OR NEXT MONTH. THEY WERE INTERESTED IN WHAT KIND OF CHANGE WE COULD MAKE.
MR. DOWNEY: WELL, DID YOU EVER FOCUS IN YOUR COMMENTARY ON THE CURRENT TEST MENU IN THE CLIA LAB, FOR EXAMPLE?
ELIZABETH A. HOLMES: I DID NOT.
MR. DOWNEY: DID YOU FOCUS IN YOUR COMMENTS ON THE TECHNOLOGY THAT THERANOS HAD INVENTED AND ITS CAPABILITIES OVER THE LONG RUN?
ELIZABETH A. HOLMES: I DID. I TALKED ABOUT WHAT WE'D CREATED AND WHAT IT COULD DO, WHAT WAS POSSIBLE.
MR. DOWNEY: OKAY. YOUR HONOR, MAY I JUST HAVE ONE MOMENT? I WANT TO GET ONE DOCUMENT.
JUDGE DAVILA: YES.
(DISCUSSION AMONGST DEFENSE COUNSEL OFF THE RECORD.)
MR. DOWNEY: YOUR HONOR, I JUST WANTED TO MAKE SURE I RESERVE THE ABILITY TO CLEAR UP ANY ISSUES TO THE REDUCED EXHIBIT, AND THEN I'LL BE DONE.
JUDGE DAVILA: OKAY. THAT'S FINE. THANK YOU.
MR. DOWNEY: THANK YOU, MS. HOLMES.
ELIZABETH A. HOLMES: THANK YOU.
JUDGE DAVILA: DO YOU HAVE RECROSS?
MR. LEACH: BRIEFLY, YOUR HONOR, YES.
RECROSS-EXAMINATION BY MR. LEACH:
MR. LEACH: GOOD MORNING, MS. HOLMES.
ELIZABETH A. HOLMES: GOOD MORNING.
MR. LEACH: YOU WERE ASKED A NUMBER OF QUESTIONS ON REDIRECT EXAMINATION ABOUT 15055, AN EMAIL REGARDING TRADE SECRET POLICY REMINDER. DO YOU RECALL TESTIFYING ABOUT THAT?
ELIZABETH A. HOLMES: I DO.
MR. LEACH: MS. KRATZMANN, IF I COULD USE THE ELMO FOR THIS?
COURT CLERK: YES, COUNSEL.
BY MR. LEACH:
MR. LEACH: DO YOU SEE THE DATE OF MAY 2ND, 2012, MS. HOLMES, ON THIS EMAIL?
ELIZABETH A. HOLMES: I DO.
MR. LEACH: AND THIS IS FROM ONE OF YOUR ATTORNEYS, DAVID DOYLE?
ELIZABETH A. HOLMES: IT IS.
MR. LEACH: HE WAS IN-HOUSE AT THERANOS?
ELIZABETH A. HOLMES: HE WAS.
MR. LEACH: AND IN THIS TIME PERIOD, YOU WERE EMBROILED IN A PATENT LAWSUIT REGARDING SOME OF YOUR TECHNOLOGY; CORRECT?
ELIZABETH A. HOLMES: WE WERE.
MR. LEACH: OKAY. AND THE IDEA OF TRADE SECRETS WAS TOP OF MIND TO YOU IN THIS TIME PERIOD. DID I HEAR YOU TESTIFY TO THAT?
ELIZABETH A. HOLMES: IT WAS.
MR. LEACH: OKAY. AND YOU WERE ASKING MR. DOYLE TO PUT TOGETHER A POLICY SO THAT PEOPLE UNDERSTOOD WHAT THEY COULD DO, WHAT THEY COULDN'T DO, AND WHAT THEY SHOULD DO; CORRECT?
ELIZABETH A. HOLMES: I DID.
MR. LEACH: OKAY. AND PART OF THAT POLICY SAYS, "A TRADE SECRET IS" INFORMATION" -- "IS SIMPLY ANY INFORMATION THAT: (A) THE OWNER MAKES REASONABLE EFFORTS TO KEEP SECRET; AND, (B) HAS ECONOMIC VALUE BECAUSE IT IS NOT GENERALLY KNOWN (TO THE PUBLIC OR A COMPETITOR);" CORRECT?
MR. LEACH: NOW, WALGREENS WAS NOT YOUR COMPETITOR; CORRECT?
ELIZABETH A. HOLMES: THEY WERE NOT.
MR. LEACH: THEY WERE YOUR PARTNER?
ELIZABETH A. HOLMES: THEY WERE. WE WERE WORRIED ABOUT THEM POTENTIALLY GETTING INTO THE LAB BUSINESS DIRECTLY, BUT THEY WERE A PARTNER.
MR. LEACH: THEY WERE YOUR PARTNER. AND YOU HAD A CONFIDENTIALITY AGREEMENT WITH THEM?
ELIZABETH A. HOLMES: WE DID.
MR. LEACH: AND THEY WEREN'T THE PUBLIC, THEY WERE YOUR PARTNER?
MR. LEACH: AND LATER ON THE POLICY THAT YOU PUT TOGETHER WITH MR. DOYLE SAYS, "THE DEFINING CHARACTERISTIC OF A TRADE SECRET, IN FACT, IS THAT IT IS NEVER DISCLOSED PUBLICLY;" CORRECT?
MR. LEACH: AND YOU SAID MANY THINGS TO WALGREENS THAT YOU DIDN'T SAY PUBLICLY; CORRECT?
ELIZABETH A. HOLMES: CORRECT.
MR. LEACH: AND IT ALSO SAYS, "PROVIDED THE HOLD" -- LET ME START AGAIN. "PROVIDED THE HOLDER EMPLOYS REASONABLE EFFORTS TO PROTECT A TRADE SECRET, HE OR SHE MAY FILE SUIT WHENEVER THE SECRET IS DISCLOSED THROUGH 'IMPROPER MEANS.'" DO YOU SEE "IMPROPER MEANS" IN QUOTES?
ELIZABETH A. HOLMES: I DO.
MR. LEACH: AND IMPROPER MEANS INCLUDES "THEFT, BRIBERY, MISREPRESENTATION, BREACH OF A DUTY (CONTRACTUAL OR OTHERWISE)." DO YOU SEE THAT?
ELIZABETH A. HOLMES: I DO.
MR. LEACH: AND YOU UNDERSTOOD THIS TO MEAN THAT IMPROPER MEANS MIGHT BE IF A PARTY HAS A CONFIDENTIALITY AGREEMENT, BUT BREACHES IT?
MR. LEACH: AND PART OF THE MEASURES YOU AND MR. DOYLE ARE DISCUSSING HERE ARE REQUIRING VISITORS TO THERANOS FACILITIES TO SIGN A CDA. THAT'S A CONFIDENTIAL DISCLOSURE AGREEMENT?
ELIZABETH A. HOLMES: IT IS.
MR. LEACH: AND ANOTHER ONE YOU'RE TALKING ABOUT REQUIRING ALL VENDORS OR OTHER POTENTIAL BUSINESS PARTNERS TO SIGN AN ENTITY CDA PRIOR TO COMMENCING DISCUSSIONS OF ANY THERANOS CONFIDENTIAL INFORMATION; CORRECT?
MR. LEACH: AND SO YOUR POLICY CONTEMPLATED DISCLOSING CONFIDENTIAL INFORMATION TO PARTNERS WITH A CDA; CORRECT?
ELIZABETH A. HOLMES: YES, YES.
MR. LEACH: AND, IN FACT, YOU TOLD WALGREENS MANY CONFIDENTIAL ASPECTS OF YOUR BUSINESS; CORRECT?
ELIZABETH A. HOLMES: WE DID.
MR. LEACH: AND YOU TOLD PHARMACEUTICAL COMPANIES MANY CONFIDENTIAL ASPECTS OF YOUR BUSINESS; CORRECT?
MR. LEACH: BECAUSE YOU HAD AN AGREEMENT WITH THEM WHERE THEY AGREED TO KEEP YOUR SECRETS; CORRECT?
ELIZABETH A. HOLMES: WE HAD A CONFIDENTIALITY AGREEMENT WITH THEM.
MR. LEACH: YEAH. AND YOU WERE COMFORTABLE WITH THAT?
ELIZABETH A. HOLMES: I WAS.
MR. LEACH: ANOTHER PROVISION HERE IS REQUIRING ALL NEW AND EXISTING EMPLOYEES, CONSULTANTS, AND OTHER TEAM MEMBERS TO SIGN INDIVIDUAL CDA'S, AS WELL AS PROJECT SPECIFIC CDA'S. DO YOU SEE THAT?
MR. LEACH: AND SO YOUR POLICY CONTEMPLATED GIVING CONFIDENTIAL INFORMATION TO CONSULTANTS WHO WERE NOT EMPLOYEES OF THERANOS; CORRECT?
ELIZABETH A. HOLMES: IT DID.
MR. LEACH: AND YOU HAD A NUMBER OF CONSULTANTS WHO WORKED WITHIN THE FOUR WALLS OF THERANOS, BUT YOU GAVE THEM CONFIDENTIAL INFORMATION; CORRECT?
MR. LEACH: AND PURSUANT TO THOSE AGREEMENTS, YOU TRUSTED THEM TO HONOR THOSE SECRETS; CORRECT?
MR. LEACH: YOUR POLICY ALSO CONTEMPLATED PROACTIVELY EDUCATING NEW EMPLOYEES, PARTNERS, AND OTHERS AS APPROPRIATE ABOUT YOUR CONFIDENTIALITY EXPECTATIONS; CORRECT?
MR. LEACH: AND SO YOUR POLICY IS CONTEMPLATING TALKING TO PARTNERS ABOUT THEIR CONFIDENTIALITY OBLIGATIONS; CORRECT?
MR. LEACH: AND WALGREENS WAS A PARTNER?
ELIZABETH A. HOLMES: THEY WERE.
MR. LEACH: AND YOU ALSO TALKED ABOUT REMINDING PARTNERS OF THEIR ONGOING CONFIDENTIALITY OBLIGATIONS. WAS THAT A PART OF THE POLICY --
MR. LEACH: -- IN THAT LAST BULLET?
MR. LEACH: SO IF YOUR RELATIONSHIP WITH WALGREENS FOR WHATEVER REASON ENDED, THIS CONTEMPLATES TALKING TO YOUR PARTNER ABOUT THEIR CONFIDENTIALITY AGREEMENTS, THE SECRETS THAT YOU SHARED WITH THEM?
ELIZABETH A. HOLMES: IT DOES.
MR. LEACH: OKAY. YOU WERE ALSO ASKED SOME QUESTIONS ABOUT GSK. DO YOU RECALL GSK?
ELIZABETH A. HOLMES: I DO.
MR. LEACH: OKAY. AND I WANT TO SHOW YOU WHAT IS IN EVIDENCE AS 14111. DO YOU RECALL SOME TESTIMONY ABOUT THIS AGREEMENT?
ELIZABETH A. HOLMES: MY TESTIMONY?
MR. LEACH: YES.
MR. LEACH: AND ARE YOU AWARE OF ANY OTHER AGREEMENTS WITH GSK?
ELIZABETH A. HOLMES: I AM.
MR. LEACH: WHICH ONE?
ELIZABETH A. HOLMES: THERE'S A MASTER SERVICES AGREEMENT THAT IS ENTERED INTO I THINK IN 2010 OR SO.
MR. LEACH: OKAY. OTHER THAN THAT MASTER SERVICES AGREEMENT, ANYTHING ELSE?
MR. LEACH: WHICH ONE?
ELIZABETH A. HOLMES: THERE'S A STATEMENT OF WORK THAT IS ENTERED INTO WITH GSK BIOLOGICALS.
MR. LEACH: IN WHAT YEAR?
ELIZABETH A. HOLMES: I THINK 2010ISH.
MR. LEACH: OKAY.
ELIZABETH A. HOLMES: I'M NOT EXACTLY SURE.
MR. LEACH: OKAY. OTHER THAN THAT, ANYTHING ELSE?
MR. LEACH: OKAY. AND YOU -- THIS AGREEMENT TALKS ABOUT -- LET ME START WITH PARAGRAPH 6. DO YOU SEE THE HEADING "CONFIDENTIALITY"?
ELIZABETH A. HOLMES: I DO.
MR. LEACH: AND MANY OF YOUR PHARMA AGREEMENTS WOULD HAVE CONFIDENTIALITY AGREEMENTS GOVERNING THE SHARE OF INFORMATION?
MR. LEACH: AND THIS ONE SAYS IN 6.2, "THERANOS AND GSK EACH HEREBY RECOGNIZE AND ACKNOWLEDGE THAT THE OTHER PARTY'S CONFIDENTIAL INFORMATION CONSTITUTES VALUABLE AND PROPRIETARY INFORMATION." CORRECT?
ELIZABETH A. HOLMES: IT DOES.
MR. LEACH: AND YOU WERE COMFORTABLE SHARING VALUABLE AND PROPRIETARY INFORMATION WITH GSK AND OTHER PHARMACEUTICAL COMPANIES BECAUSE YOU KNEW THAT YOU HAD THESE AGREEMENTS WHERE THEY WOULD KEEP YOUR SECRETS?
ELIZABETH A. HOLMES: I WAS.
MR. LEACH: OKAY. YOU WERE ALSO ASKED SOME QUESTIONS ABOUT A RENT MODEL WITH WALGREENS.
MR. LEACH: AND YOU HAD DISCUSSIONS WITH MR. GOURLAY ABOUT THAT?
ELIZABETH A. HOLMES: I DID.
MR. LEACH: NOTHING EVER CAME OF THE RENT MODEL; CORRECT?
MR. LEACH: YOU NEVER MODIFIED YOUR AGREEMENT WITH WALGREENS?
ELIZABETH A. HOLMES: WE STARTED TO. WE WERE GOING THROUGH CONTRACT AMENDMENTS.
MR. LEACH: OKAY. BUT YOU NEVER CONSUMMATED ANYTHING; CORRECT?
ELIZABETH A. HOLMES: WE DID NOT.
MR. LEACH: OKAY. AND YOU NEVER EXPANDED BEYOND THE 41 STORES THAT WE TALKED ABOUT ON CROSS-EXAMINATION?
ELIZABETH A. HOLMES: THAT'S RIGHT.
MR. LEACH: OKAY. YOU WERE ALSO ASKED A NUMBER OF QUESTIONS ABOUT THERANOS'S CASH POSITION IN SEPTEMBER OF 2013 ON REDIRECT. DO YOU RECALL THAT TESTIMONY?
ELIZABETH A. HOLMES: I DO.
MR. LEACH: OKAY. AND I'D LIKE TO SHOW YOU EXHIBIT -- THE NATIVE FILE FOR EXHIBIT 5172. DO YOU RECALL BEING ASKED QUESTIONS ABOUT THIS ON CROSS-EXAMINATION, MS. HOLMES?
ELIZABETH A. HOLMES: I DO.
MR. LEACH: AND MR. DOWNEY SHOWED YOU AN EMAIL FROM WADE MIQUELON IN THE SEPTEMBER 2013 TIME PERIOD WITH A DRAFT TERM SHEET ON IT; CORRECT?
ELIZABETH A. HOLMES: HE DID.
MR. LEACH: OKAY. AND THAT'S EXHIBIT 1083. IS THAT CONSISTENT WITH YOUR MEMORY?
ELIZABETH A. HOLMES: I DON'T KNOW.
MR. LEACH: OKAY. BUT HE SHOWED YOU AN EMAIL WITH A DRAFT AGREEMENT FROM THE SEPTEMBER TIME PERIOD; CORRECT?
ELIZABETH A. HOLMES: HE DID.
MR. LEACH: AND THE ACTUAL AGREEMENT THAT YOU REACHED WITH WALGREENS IS AT THE END OF DECEMBER 2013; CORRECT?
MR. LEACH: AND THE 75 MILLION THAT YOU'RE TALKING ABOUT IN THAT DECEMBER 2013 AGREEMENT DOESN'T COME IN UNTIL JANUARY OF 2014; ISN'T THAT CORRECT?
ELIZABETH A. HOLMES: I'M NOT -- I REMEMBERED IT AS DECEMBER 31ST, BUT IT COULD HAVE BEEN JANUARY.
MR. LEACH: LET'S LOOK AT THE SPREADSHEET. DO YOU SEE IN COLUMN EN WHERE THERANOS HAS $587,000 IN ITS COMERICA BANK ACCOUNT?
ELIZABETH A. HOLMES: I DO.
MR. LEACH: AND THIS IS THE END OF SEPTEMBER OF 2013?
MR. LEACH: AND IF WE COULD ZOOM OUT A LITTLE BIT, MS. HOLLIMAN. A LITTLE BIT MORE. THANK YOU. AND IF WE CAN SCROLL DOWN A LITTLE BIT MORE TO THE OTHER. THANK YOU. AND WE TALKED A LITTLE BIT ON DIRECT EXAMINATION ABOUT THE MONIES THAT COME IN FOR OPTION/STOCK PROCEEDS AT THE END OF SEPTEMBER. DO YOU RECALL THAT TESTIMONY?
ELIZABETH A. HOLMES: OPTION/STOCK PROCEEDS? I DO. I DO.
MR. LEACH: IF YOU LOOK IN ROW 27, AND IN EL, THAT'S THE MONEY FROM PEER VENTURES AND DON LUCAS JUNIOR'S FUND?
ELIZABETH A. HOLMES: IT IS.
MR. LEACH: AND IF WE SCROLL TO THE RIGHT, MS. HOLLIMAN. RIGHT THERE. DO YOU SEE IN F, COLUMN FC, THERE'S THE AMOUNT IN ROW 26 OF $75 MILLION?
MR. LEACH: THAT'S THE INNOVATION FEE THAT WALGREENS ADVANCED AT THE END OF 2013, BEGINNING PART OF 2014; CORRECT?
ELIZABETH A. HOLMES: IT IS.
MR. LEACH: SO THAT MONEY DOES NOT COME IN IN SEPTEMBER, IT COMES IN IN JANUARY OF 2014?
ELIZABETH A. HOLMES: CORRECT.
MR. LEACH: YOU WERE ALSO ASKED SOME QUESTIONS ABOUT THE SALE OF 227 PARK LANE IN ATHERTON. DO YOU RECALL THAT TESTIMONY?
ELIZABETH A. HOLMES: I DO.
MR. LEACH: THAT HAPPENS IN 2018, DOESN'T IT?
ELIZABETH A. HOLMES: I HAVE NO IDEA WHEN IT WAS SOLD.
MR. LEACH: THAT HAPPENS IN 2018 WELL -- AT THE SAME TIME PERIOD THAT YOU AND MR. BALWANI ARE UNDER SOME SCRUTINY BY THE S.E.C.; ISN'T THAT CORRECT?
ELIZABETH A. HOLMES: I DO NOT KNOW IF HE SOLD HIS HOUSE.
MR. LEACH: YOU DON'T KNOW THE TIME PERIOD OF WHEN THAT LLC WAS DISSOLVED?
ELIZABETH A. HOLMES: I FOUND OUT THAT IT WAS DISSOLVED LATER.
MR. LEACH: BUT YOU DON'T KNOW WHEN?
ELIZABETH A. HOLMES: I DON'T.
MR. LEACH: OKAY. AND YOU DON'T KNOW WHETHER IT WAS AT A TIME PERIOD WHEN BOTH YOU AND MR. BALWANI WERE UNDER SCRUTINY BY THE S.E.C.; CORRECT?
ELIZABETH A. HOLMES: I DON'T. I DIDN'T DISSOLVE IT.
MR. LEACH: YOU WERE ASKED QUESTIONS ABOUT WHAT INVESTORS EXPECTED FROM YOU IN TERMS OF YOUR -- WHAT YOU WERE TRYING TO COMMUNICATE TO THEM IN TERMS OF YOUR VISION. DO YOU RECALL SOME TESTIMONY AT THE END ABOUT THAT?
ELIZABETH A. HOLMES: I DO.
MR. LEACH: YOU MADE REPRESENTATIONS TO THERANOS INVESTORS ABOUT THERANOS'S CURRENT CAPABILITIES, DIDN'T YOU?
ELIZABETH A. HOLMES: I'M SURE IN SOME CASES WE TALKED ABOUT IT.
MR. LEACH: OKAY. AND YOU UNDERSTOOD THAT THEY WERE ENTITLED TO TRUTHFUL ANSWERS ABOUT THERANOS'S CURRENT CAPABILITIES; CORRECT?
ELIZABETH A. HOLMES: OF COURSE.
MR. LEACH: MAY I HAVE A MOMENT, YOUR HONOR?
JUDGE DAVILA: YES.
(DISCUSSION AMONGST GOVERNMENT COUNSEL OFF THE RECORD.)
MR. LEACH: I HAVE NO FURTHER QUESTIONS, YOUR HONOR. THANK YOU, MS. HOLMES.
ELIZABETH A. HOLMES: THANK YOU.
MR. DOWNEY: NOTHING FURTHER.
JUDGE DAVILA: MR. DOWNEY?
MR. DOWNEY: YOUR HONOR, I HAVE NO FURTHER QUESTIONS SUBJECT TO HOW YOUR HONOR WANTS TO HANDLE THAT EXHIBIT THAT I PASSED UP IN THE BINDER.
JUDGE DAVILA: ALL RIGHT. THANK YOU. LET ME ASK YOU, SHOULD WE HAVE MS. HOLMES THEN STAND DOWN NOW? DO YOU NEED HER?
MR. DOWNEY: IF -- I DON'T NEED HER FURTHER, I THINK, TO AUTHENTICATE IT, SO I THINK WE COULD HAVE THAT DISCUSSION WITHOUT MS. HOLMES.
JUDGE DAVILA: ALL RIGHT. YOU CAN STAND DOWN. THANK YOU. LET ME ASK YOU, MR. DOWNEY, DO WE NEED TO RESOLVE THIS BEFORE I ASK YOU ABOUT ANY OTHER EVIDENCE?
MR. DOWNEY: I THINK THAT MIGHT BE USEFUL, YOUR HONOR.
JUDGE DAVILA: OKAY. ALL RIGHT. THANK YOU. LET'S TAKE JUST A COUPLE OF MINUTES, LADIES AND GENTLEMEN. WE'RE GOING TO TAKE A RECESS. I NEED TO TALK TO THE LAWYERS ABOUT SOMETHING. SO WE'LL TAKE A BRIEF RECESS.