Thread by @MilesGCohen

#ElizabethHolmes trial day 12 — likely former Theranos Lab Director Adam Rosendorff's last day on the stand.

A new "local" witness may round out our day.

Stay tuned!

The "local" witness's identity revealed: Steven Burd — the former CEO of Safeway.

#ElizabethHolmes #Theranos

Defense attorney Downey objects to Burd testifying, saying it's, “Leading to a distraction that we don’t need.”

Judge Davila proposed precluding the number of dollars (300 million) that Safeway spent building out their stores — allegedly to equip them with Theranos tech.

"The number itself is evidence of the weight Safeway put on the defendants misrepresentations...Safeway didnt spend 30 bucks building up a store it spent 300 million [building several]," Prosecutor Robert Leach responded.

#ElizabethHolmes

It has been brought to the court's attention that a juror is having anxiety about "the issue of punishment."

"This juror is concerned about punishment and whether or not her continued service will create issues with that," Davila said.

#ElizabethHolmes

Juror #4 is now in the court discussing her Buddhist faith and how it may affect her decision.

"If I vote guilty and then [Holmes] gets punished by the government…I’ve been thinking about that every day.”

#ElizabethHolmes

"If I’m not to vote, I’ll be okay," she continued.

#ElizabethHolmes

Prosecutor Jeff Schenk asks the judge to excuse the juror.

"These are sincere beliefs that are causing her anxiety," he said.

Kevin Downey doesn't ask for an excusal but said he didn't have an issue w/ it

#ElizabethHolmes

Judge Davila just excused juror #4.

#ElizabethHolmes

Alternate #2 — the juror who was slated to take juror #4s spot on the jury — "expressed similar concerns about continuing her service."

She's now being brought in for questioning.

"It's my first time in this situation and it's [Elizabeth Holmes'] future. I don’t know if im 100% ready to participate in something like this," she told Davila, also noting English is not her first language.

#ElizabethHolmes #Theranos

"She's so young," the juror told the judge.

Davila told her she is not to consider that at all in her deliberations. "That has to be off the table," he said.

Alt. Juror #2 leaves the courtroom.

Prosecutor Jeff Schenk is in favor of keeping her.

Defense attorney Kevin Downey also thinks the juror should continue.

So she will. We are down to 15 jurors — twelve active and three alternates.

#ElizabethHolmes

Rosendorff is back on the stand. Bostic on again for redirect.

He brings up the "spate" of low HDL results, which has been discussed on direct, then cross, and now redirect.

#ElizabethHolmes

“Not to be too critical but at times I didnt fully trust the data that was coming out of [the] r&d [lab] for troubleshooting. Even after there so called fixes I was still seeing anomalies of results,” Rosendorff said in response to a question about his decision to leave #Theranos

Bostic then attempted to rebut Wade's suggestion of a "soft launch" in Sept. 2013. He showed Rosendorff the email Holmes sent to shareholders on Sept 6, which she then forwarded to Gen. Mattis on Sept. 7.

#ElizabethHolmes

The Sept. 6 email from #ElizabethHolmes

To our shareholders,

I am delighted to share that we have now begun the commercial launch of the new products and services we’ve been working on for the past years.

The forward to Mattis:

General mattis

FYI the below will go out to our shareholders tonight. We have begun the launch.


Looking forward to our next conversation

"Do you see any mention of a soft launch in this message?" Bostic asked Rosendorff.

"No," the lab director responded.

#ElizabethHolmes #theranos

Bostic then showed Rosendorff a Theranos press release and pointed out there was no mention of a "soft launch."

"The phrase "soft launch." is that a medical term?" he asked.

"no," Rosendorff replied.

Some laughs in courtroom

#ElizabethHolmes

Bostic moved to the topic of frequency of physician/patient complaints at Theranos. Wade attempted to impeach Rosendorff on this yesterday, getting the lab director to admit his testimony was different from what he had said in a prior deposition.

Here is the exchange:

Was the level of complaints you saw at Pittsburgh equally troubling to you?

No... the complaints were not about test accuracy per say. They were questions about results that didn't make sense. None of the clinicians were questioning the accuracy of the laboratory.

(University of Pittsburgh being his previous employer)

Then Bostic moved to proficiency testing — an area Rosendorff has given conflicting testing about. He said on direct there were no formal proficiency processes.

"Was there something that confused you that caused you to give that answer?" Bostic asked

"I wanted to clarify …I had written an SOP (standard of procedure) for AAP (Alternative Assessment of Performance) ..but it wasn’t being implemented across all the assays," the lab director replied.

#ElizabethHolmes

Bostic moves to the email chain about testosterone results brought up by Wade, in which Rosendorff wrote "Please let Christian handle this," in reference to a physician phone call.

Bostic asks Rosendorff why he asked Christian to call:

"In order to talk honestly and transparently with the doctor I needed more info from the ELISA group on that particular assay...I did not receive that so I didnt feel like I was equipped to address the issues of the doctor."

More on AAP:

Balwani wrote to Rosendorff on 10/9/2014 in an email,

"We are doing monthly (most cases weekly) IQP (AAP) for each assay on Edisons & other devices downstairs."

Rosendorff said he did not agree with the statement, citing incomplete data.

If true, the Balwani email would contradict his testimony today regarding AAP and proficiency testing.

#ElizabethHolmes

Talks of Dr. Mark Pandori — for a time, Rosendorff's co-lab director. His number two.

Bostic asked if Dr. Pandori supported the use of AAP?

Rosendorff didn't think he had an opinion either way.

Bostic asked why Dr. Pandori left #Theranos

Downey objected — sustained.

Lots of talk during Rosendorff's testimony about the "Immulite" — the third party device that Dr. Rosendorff had recommended Theranos switch all of their hCG testing to.

We are now looking at a manual for the machine.

#ElizabethHolmes

Back to the 2013 inspection. Bostic again pulls up Elizabeth Holmes' 11/27 email she sent to her colleague.

"let me know if the path for walking the auditors in and downstairs has been cemented so we avoid areas that cannot be accessed, and what the path is." she wrote.

A new email admitted from Daniel Young to Rosendorff (Holmes not cc'd)

"Let's not remind [the inspector] about the downstairs lab unless she asks again. Just simpler if we can just show her the lab upstairs."

The topic has been discussed at length on direct and cross.

Bostic points out that Holmes initial email about the path for inspectors was also sent to Daniel young.

And then we see that Rosendorff forwarded the Daniel Young email to his Gmail a year later in Nov 2014.

"I wanted to have documentation of the discussions around the day of the inspection...it appears from Daniel young email that [Elizabeth Holmes] had asked about it."

On 12/3/2013 Balwani emailed Rosendorff and other theranos colleagues on the date of the inspection which mentioned "dividers" in the normandy lab.

Rosendorff said Edisons were kept behind those dividers.

#ElizabethHolmes

Is it normal to give the lab director directions on how to respond to inspectors? Bostic asked

No, Rosendorff replied

On Theranos Lab:

"The most complicated laboratory I’ve ever had to supervise," Rosendorff said.

Bostic brings up the lawsuit Rosendorff was considering while at Theranos. He asked him what the goal of it was

"I felt the responsibility for this to see the light of day," he said.

#ElizabethHolmes

"It was about patient care and my integrity as a physician," Rosendorff said of his departure from #Theranos

#ElizabethHolmes

Bostic: Lets talk about actual power at theranos. In your experience at the company what was the power dynamic between you on the one hand and Elizabeth Holmes on other hand.

Bostic clarifies: In your role as lab director at theranos did you have coequal power in the company?

"Well mr Balwani was heavily involved in [the lab] …he would make firing decisions without me, and also as we’ve seen numerous lab operational decisions that didn’t involve me. And I assumed he was discussing those w/ Elizabeth," Rosendorff testified

#ElizabethHolmes

Bostic: Generally speaking who had more power. You or the CEO Ms Holmes.

Rosendorff: Ms holmes

Bostic: Did it the [power dynamic] come from CLIA regulations?

Rosendorff No it came from business priorities

"Sunny had a strong hand in the operations of the lab...Daniel Young was heavily involved in CLIA lab operation... And Ms. Holmes was aware of all that," Rosendorff testified.

On July 19, 2014 in an email Balwani wrote “as you know, I am running CLIA lab now.” Rosendorff — who at was then still with Theranos — was not surprised by the statement. Sunny once told him “he had a unique set of skills and talents that would allow him to direct the CLIA lab.”

Rosendorff: Both sunny and Elizabeth are above me. I report to them…on the other hand CLIA regulations say I'm responsible for everything in the lab.

Bostic: Did sunny and Elizabeth defer to you based on the CLIA regulations

Rosendorff: At times

Bostic: All the time?

No.

Bostic ends by asking Rosendorff about the other labs he's worked at in his 13 years as a the lab director.

At any other lab did you resort to forwarding evidence to your email b/c you were worried about future investigations into lab practice ?

No

Defense Attorney Wade is arguing with the judge that the final question line has "opened the door" to the three labs Rosendorff worked at with "major issues"

Yesterday the line (which included a firing and mishandled tests) was precluded due to prejudice.

#ElizabethHolmes

Judge Davila said "I'll allow some limited — very limited — probing of this. I actually think the probing may enhance the damage [of the testimony], but you know, it’s your case."

Wade responds, asking for the final question line to be stricken and the gov. to be "admonished."

Judge Davila said he will have the last question and answer stricken.

Wade asked the judge to tell the jury "that was not an appropriate answer and not an appropriate question for this trial," says its not an adequate remedy. "You can't unring that bell."

#ElizabethHolmes

"I know you want me to chastise the government in front of the jury, I don't think that is needed," the judge replied, noting he will admonish the prosecutors.

We're breaking -- the resolution to the final question line will play out when we get back!

#ElizabethHolmes

We're back. Wade reiterates he would like to go into Rosendorff's lab work history.

"of course. of course you do!" Davila responds to wade.

Davila sees the discussion as a "mini trial" and says that it could put [#ElizabethHolmes] at great risk.

What if they decide theranos was worst place [Rosendorff] worked?" the judge said. "My concern is that they might inappropriately use that to judge your client."

"I think there’s great peril for Ms. Holmes if [the jury] decides [Rosendorff] is right," he continued.

Judge Davila decides to strike the last question and answer from Bostic's redirect of Rosendorff.

The defense handed an instruction for Davila to read to the jury — which he will read, minus the proposed line "that was an inappropriate question."

#elizabethholmes

"At the end of his redirect examination Dr. Rosendorff was asked to compare Theranos w/ other labs where he has worked. You must entirely disregard both the question and Dr. Rosendorff's answer. It would be improper for u to give any weight either to the question or the answer."

That's the instruction Judge Davila will read to the jury when they enter the courtroom for the afternoon session.

#ElizabethHolmes #Theranos

Here we go: Jurors in chairs. Davila read the instruction.

"Good afternoon Dr. Rosendorff."

Wade is back on for the defense. His recross begins.

Wade pulled up the July 19 email where Balwani said he is "running the CLIA lab."

You thought this was inappropriate right?

Yes

You mentioned this but he had no response right?

Yes

#ElizabethHolmes

No we are looking at a June 14, 2014 email where as Wade pointed out Balwani "specifically" mentioned he was, "Taking over the CLIA Lab operations 100%," as Balwani wrote in the email.

"Since you [Adam] are out for next few days this is needed no matter what," Balwani continued.

"[Balwani] was getting involved in the lab from an operational standpoint?" Wade asked

"He was doing far more than that," Rosendorff replied.

"You agreed right?" Wade asked pointing out Rosendorff's response which began "Ok - thanks"

"And the gov didn't show you this either"

Wade pulled up the press release from earlier.

The gov showed you the 1st and 3rd paragraphs. Let's look at the middle paragraph:

"Theranos and Walgreens are taking the first step in making this service available to consumers with the first Theranos Wellness Center location"

"It doesn't say [the launch] is going to happen on Sept. 9," Wade asked

#ElizabethHolmes

An alternate juror just lowered her head and rubbed her eyes in the midst of one of Wade's questions.

Wade is asking questions about the 2013 inspection — which Bostic addressed in his redirect.

"you never concealed anything from these inspectors did you?"

"No."

...

"You showed them an Edison validation report?"

"correct"

"you discussed the Edisons with them?"

"yes "

Wade gets Rosendorff to testify that had the inspector asked him to see #Theranos' downstairs he "would have walked her right down, right?

Rosendorff agreed.

#ElizabethHolmes

Wade moves to AAP, which Bostic addressed on redirect.

Rosendorff corrected a word in his question

"Thank you again, doctor," Wade said, who has fielded dozens of these corrections from the former lab director.

"And Ms. Holmes never did that, did she? She never overruled or directed you on things to do, did she?" Wade asked Rosendorff after asking him a string of questions about his "ultimate" responsibility as prescribed by CLIA regulations in the lab.

#ElizabethHolmes

Rosendorff "respectfully asked the court" if he could be excused by 2 p.m. so he could go pick up his daughter.

Wade expects to be done much earlier than that, he said

#ElizabethHolmes

To hCG testing we go. An email we've seen (3?) times is back on the jurors' screens — it's Rosendorff in all caps ordering is lab staff move all hCG testing to the IMMULITE (third party device)

#ElizabethHolmes

"You don't remember any of this do you?" Wade asked.

"That's a very broad question," Rosendorff answered, admitting he doesn't remember the specifics of the hCG incident.

"it was more than 7 years ago"

Rosendorff told Wade he thinks they have already gone through this email chain.

"Is it necessary to revisit it?" the lab director asked the defense attorney.

"Your objection is noted," Wade quipped back.

#ElizabethHolmes

"There's nothing in any of these emails that says they are going to release results, right?"

On redirect, Bostic's question line appeared to suggest that top Theranos brass had disregarded Rosendorff’s order to only run the pregnancy detecting test on third party devices.

Rosendorff shook his neck / body out before answering one of Wade’s hCG questions. He’s been “on the stand” for almost two weeks now.

#ElizabethHolmes

Wade goes back to Rosendorff's testimony about frequency of complaints at Theranos as compared to his work at the University of Pittsburgh.

He's refreshing the former lab director on his prior AZ depo testimony which he used to impeach the doctor on cross.

#ElizabethHolmes

"You were truthful in this testimony, right?"

"Yes."

Wade wraps there. It's been nearly two weeks — Rosendorff is excused!

#ElizabethHolmes

"The United States Calls Steve Burd."

Appears Robert Leach is on for direct of the former Safeway executive

Steve Burd is on the stand. He was the CEO of Safeway from May of 1993 to 2013, he testified.

Leach asked Burd what Safeway's annual revenue was — Burd went on to note the number of states and countries (Canada) where the grocery giant has its stores.

Around 2010 Burd testified he became familiar with Theranos.

[Theranos] was a fascinating concept...The cost reduction appealed to me. The idea of getting a blood test in 20-30 minutes appealed to me...this was an opportunity to bring extra business to the store," Burd said.

"I knew this would have not only a profit interest of its own but it would attract shoppers to Safeway at large," he said.

From March to Sept of 2010 he had "more than one" convo with Holmes which led to a "commercial agreement," as Leach said.

Burd wanted the "exclusive."

On #ElizabethHolmes, "I was very impressed...I was eager to meet her," he said.

"There were very few people in business that I can say are charismatic. She was very charismatic. She was very smart..."

Burd's vision for the Theranos tech was that shoppers could get their test, do their shopping for 30 minutes and "And when you leave, you’re gonna know the results," he testified.

#ElizabethHolmes

At a Safeway board meeting Burd said Holmes presented the Edison.

"A board member offered to be a test case, and we said lets do a PSA (prostate) test... The machine made a bunch off noise, it wasn’t that loud, but we never got a result," Burd testified.

Leach asked him about what Holmes had told him about the machine's accuracy.

"In one of her presentations there was something about the accuracy being even more accurate than traditional testing units, but we never had any deep info...”

#ElizabethHolmes

Leach asked about the number of tests he believed the Edison could run. He said the implication was over 300 tests and that, "We were consistently told it essentially replaces a traditional full blown lab."

We looked at a powerpoint Burd prepared to presumably show his board members. The former Safeway executive testified it was,"Common practice to review a [powerpoint] with Elizabeth before I presented it."

(though he noted he didn't remember if he had shown her this one)

Leach highlighted slide 5: TECHNOLOGY PARTNER THERANOS

One bullet read: “Currently cash flow neutral with a client base of pharmaceutical companies”

Burd explained, "If you are cash flow neutral...it suggests that we can easily get profitability.”

"If theranos was not cash flow neutral would that have been a deterrent [to going forward]?" Leach asked

Burd testified it wouldn’t be a deal breaker but it would be a consideration.

We are breaking for a bit.

#ElizabethHolmes

One detail I missed in the onslaught of Burd's testimony.

The former Safeway CEO likened his idea for the Theranos tech to a watermelon he had once implemented.

#Elizabethholmes

Back from break.

Leach showed Burd another slide from his presentation created for a "potential rollout for the Theranos device in Safeway stores."

Next slide: "Anticipated Program Roll-out"

Burd testified the slide represented his and Holmes rollout timeline in May 2010

The date "consistently" changed he said throughout his talks with #ElizabethHolmes

This is what the timeline looked like

(Activities/Worksteps)

-Reimbursement negotiations

-Close Deal

-Under-the-Radar test

-Northern California Pilot

-SWY Chain Roll-oiut

-Network Roll-out

On July 30, 2010 Elizabeth Holmes sent an email to Burd and then Safeway CFO Robert Edwards with the subject "Theranos Financial Projections"

"Dear Steve, Robert, As promised, please find high level projections attached to this email," Holmes wrote.

#ElizabethHolmes

"We wanted to understand how they were projecting the future, and how fast they were ramping up,” Burd testified.

"[The] revenue projections were very strong, and the operating expenses were obviously less... we would be profitable, #Theranos would be profitable.”

"If they weren’t going to be profitable then this partnership wasn’t going to last long. So we wanted to see how they would project their own results," Burd continued.

#ElizabethHolmes

Leach took Burd through the numbers in the pro-forma spreadsheet, attached to the Holmes email.

He asked if they were consistent with being cash flow neutral.

"We didn’t get any confirmation [of that]," Burd said, other than what Holmes had told him earlier

In another Burd / board presentation a bullet read:

“January 2011 scheduled for initial test”

#ElizabethHolmes

Leach published the Sept. 2010 agreement with Theranos he has referenced in question line to the jury. It's titled the "Theranos Master Purchase Agreement."

Burd said he negotiated it, "almost exclusively with Elizabeth Holmes," he testified, noting Balwani was also involved.

"What was unusual about it is we never saw an attorney," Burd said, pointing out it's "customary" that attorneys are also present for those kinds of negotiations. "I've never seen that done."

#ElizabethHolmes

Leach pointed out Holmes signature on the agreement. It is written in all caps, in a slanted print form.

Leach is now going through the language of the Theranos/Safeway agreement.

"Theranos has developed, and is developing, generations of mini-lab (Edison) devices that can run any blood test in real time in less than the traditional cost of central lab tests…," one clause read.

After Leach highlights a clause from the agreement he asks Burd if the wording is consistent with what #ElizabethHolmes had told him.

"Yes," Burd confirmed each time.

Another sentence from the agreement read, "The ability to run blood tests from a finger-stick in thirty minutes or less."

Did you ever discuss putting third party machines in safway stores

No

How bout machines manufactured by a company other than theranos

No

Leach asked Burd who was in charge in meetings with Holmes and Co.

"Elizabeth …she never looked over at Sunny [to see] what he might have been thinking. She answered these questions herself, she’s the kind of leader in many ways — I'm that leader."

#ElizabethHolmes

“Not all CEO’s are alike. [Holmes] would rise to the top of the pile in terms of vision, in terms of command of the information, clearly in terms of delivery," Burd testified.

“Whenever she was talking she owned the room,” Burd testified, noting he has met four U.S. presidents who also "owned the room."

He went on glowingly:

"Her style was warm, friendly, it wasn’t dictatorial. I always thought she was a good listener."

#ElizabethHolmes

Burd described in more detail the time his board member had his finger pricked, during a meeting with Holmes.

Burd said again they didn't get a result, but that Holmes had "said something that made us think we we would get it later."

They never did get a result, Burd testified.

We just saw a wire transfer from Safeway to Theranos for the amount of $30 million, in part for "payment of convertible notes."

Burd said over time he became frustrated with the slowed rollout.

"Deadlines were continuing to be missed, we often weren’t given a lot of explanation for that…I kept asking, give me some details … Maybe we can help, we are a Big company with lots of resources," he said.

He once offered up his engineering team to help with a heat issue.

"[#ElizabethHolmes] said they would solve it," Burd testified.

Burd acknowledged he knew #Theranos was sending some of their tests out to other labs.

"In 2012 would it surprise you that no mini-lab was used in the CLIA lab?" Leach asked

"Yes…because I thought they were using predominately their minilab," Burd testified.

Burd wrote Holmes in Dec. 2012 frustrated. He typed it was possible that the rollout had been "far too ambitious."

"I always wanted to make sure that we had nailed everything down. I kept asking what are the obstacles what’s getting in the way," Burd testified.

Burd brought up Holmes purported work w/ Department of Defense as one of her reasons for the delay.

"She told me they had been doing work for the DoD, that her device was in medivac units around the world...In places that a lot of Americans didn’t even know we were,” he said.

"Did she tell you that this info could be widely shared?" Leach asked.

"She said it was very confidential,” Burd replied.

"I was bothered by it, disappointed, it seemed plausible. It just seemed like one more delay for us,” Burd testified.

That's it for today — we ran out of time. When we return next Tuesday he will be back on the stand for the rest of Leach's direct examination.

#ElizabethHolmes #Theranos