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A grueling day in Elizabeth Holmes’ trial ended with evidence that Theranos’ tests sucked

A preview of arguments to come

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Theranos Founder Elizabeth Holmes Attends Criminal Trial
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After a tedious day of bickering, Victoria Sung appeared like manna from heaven — to tell us that Theranos’ tests sucked.

Sung worked at Celgene when it contracted with Theranos. Her testimony was brief and to the point: Celgene had not “comprehensively validated” Theranos technology, she said. That would have taken more work than what she did with Theranos’ tests. The work she showed the court from 2012 demonstrated Theranos performed dismally compared to standard testing — often returning results that were “out of range.”

Sung is a teaser for a big part of US v. Elizabeth Holmes

We’ll get to the bickering in a minute, I promise, but Sung is a teaser for a big part of US v. Elizabeth Holmes we haven’t explored much: Theranos’s relationship with pharmaceutical companies. One allegation prosecutor Robert Leach made in his opening statement was that Holmes had deceived Walgreens about its relationship with drug companies. During former employee Surekha Gangakhedkar’s testimony a little over a week ago, she said that she didn’t think pharma company GlaxoSmithKline’s report on Theranos tech “comprehensively validated” it.

This phrase felt familiar, and today I realized from where: Bad Blood, John Carreyrou’s book about Theranos. In the book, Carreyrou wrote that documents Theranos gave Walgreens “stated that the Theranos system had been ‘comprehensively validated over the last seven years by 10 of the largest 15 pharma companies.’”

GSK and Celgene’s acquirer, Bristol-Myers Squibb, certainly rank among the largest pharma companies. They did have contracts with Theranos; in fact, Celgene was Theranos’ largest pharma customer. But neither of the studies those two companies did count as comprehensive validation, according to Sung and Gangakhedkar.

At one point, the two got into a fight about whether Rosendorff had forwarded an email or replied to it

I imagine we will work through Theranos’ other pharma partners later in the trial; Sung’s testimony was brief. She was only on the stand because former lab director Adam Rosendorff had a childcare commitment at 2PM and couldn’t continue his cross-examination, which took most of the day.

Rosendorff had previously testified that Theranos’ tests were bad, even saying he didn’t understand the clinical value of one test.

Lance Wade, Holmes’ attorney, set out to undermine this testimony, and that was the source of a great deal of bickering.  Rosendorff could be persnickety about details; for instance, Wade kept mixing up “proficiency tests” with “precision tests,” and Rosendorff kept correcting him. At one point, the two got into a fight about whether Rosendorff had forwarded an email or replied to it. At least, I think that’s what they were arguing about.

We revisited the lab inspection by the California Department of Public Health, where Theranos employees got instructions not to go in or out of the “Normandy” lab, where the Edison machines were kept. In a previous inspection in New York, bulletin boards had been covered with paper so the inspector couldn’t see what was on them. Wade asked if that was to protect trade secrets. Rosendorff asked who would pin trade secrets to bulletin boards.

“Not as big bucks as you get paid.”

But we did find out the results of the audit: some minor deficiencies, which upset Holmes and Balwani, Rosendorff testified. Later, Wade quipped that supervising quality control tests and making sure laws were followed was “why you get the big bucks, right?”

“Not as big bucks as you get paid,” Rosendorff replied. 

While he was among the highest-paid employees at Theranos, making $240,000 a year, The Wall Street Journal noted that partners at Wade’s firm made an average of about $1.5 million a year. Given the problems at Theranos, as well as lawyers’ fees that stemmed from his time there, he should have been paid more, Rosendorff said. That bit of testimony was struck from the record.

Bickering aside, Wade did make some progress. He put some of the emails Rosendorff had been asked about on direct examination in chronological order with documents Rosendorff had signed, showing that whatever reservations Rosendorff had didn’t stop him from approving tests.

Crucially, Wade got Rosendorff to revise his testimony about proficiency testing, which is required by law. Though proficiency testing wasn’t run on the Edison devices, Rosendorff said, it had been run on the FDA-approved machines in the lab. Wade produced documents from the American Proficiency Institute that graded Theranos “acceptable.”

We have at least one more day of listening to Rosendorff and Wade squabble

This is a significant narrowing of Rosendorff’s testimony from the direct examination. Unlike Wade’s attempted “gotcha” moment yesterday, this did make me reconsider how I felt about Rosendorff’s direct testimony on proficiency testing. It is far less damning to say that proficiency testing had been done everywhere except the Edison, which was used for only seven tests. Rosendorff was testifying to plans for proficiency testing on the Edison machines when he had to leave for the day. (This was when the email dispute occurred.)

Remarks made by counsel after the jury left suggested we have at least one more day of listening to Rosendorff and Wade squabble, which I am not especially looking forward to. But Sung’s testimony did give me something to get excited about: What is the rest of Big Pharma going to say about Theranos?