Thread by @MilesGCohen

#ElizabethHolmes trial day 26:

The final Theranos lab director, Dr. Kingshuk Das, will be back on the stand when court begins.

Das testified on direct to voiding "50-60k" clinical tests and finding an Edison prototype "unsuitable for clinical use," following a CMS audit

Next week the prosecution will recall Danise Yam (the first witness) so that they can admit one email, we learned in pretrial arguments.

The gov asked the defense to stipulate to its admission, but Holmes' team refused.

Dr. Das is on the stand. Wade is back on for cross.

He's going over Das' qualifications.

Board Certification:
-American Board of Pathology (Clinical Pathology), 2010-

"Your expertise was in clinical pathology, which relates fundamentally to the operation of a clinical laboratory?" Wade asked.

"Yes," Das replied.

Wade cited Das' "numerous fellowships" and also the awards he won as a professor at UCLA.

"Is it fair to say UCLA is a premier institution on the west coast?"

"Yes."

Would you at the time you were applying to Theranos, would you consider yourself a thorough scientist?

Did you like to do thorough and comprehensive research before you came to a conclusion?

...was that the general approach to science that you brought to #Theranos?

Wade brought up Dr. Helfend, who Das testified yesterday was a contract Theranos Lab director when he arrived to the company.

She was part of a team already working to "strengthen" Theranos Lab practices in Dec. 2015 when Das took the job, Das testified.

"I am so impressed by the vision of what you’ve accomplished already, and your plans for the future," Das wrote in a Dec. 7, 2015 email (not admitted for its truth) to #ElizabethHolmes in a follow-up to his job interview with the CEO.

“She was communicating her vision for what she wanted to do for the company,” Wade asked

Das didn't remember the specifics, but, "I remember Elizabeth being very charismatic. It was a very positive meeting," he testified.

"No apologies, take whatever time you need," Wade said to Das as he shuffled for an exhibit in his binder.

The defense attorney's demeanor in this examination is noticeably different from his cross of Dr. Adam Rosendorff — the other Theranos Lab director.

Wade pulls up a Jan, 2016 email from Dan Edlin to Das, cc'ing #ElizabethHolmes titled: “Science Review Meeting Attendees.

In it, a mention of Dr. Bill Foege (former CDC director)

"He worked with [#Theranos] in this period?" the attorney asked the witness

The email listed three PhDs who Foege had suggested adding to the meeting. Wade went over them with Das.

"This was part of those reform efforts that the company was involved in to try to get more dialogue and input from the scientific community?" he asked

Another lab director Dr. Donald Tschirhart was hired alongside Dr. Das. We saw an email from Tschirhart to Das discussing the need to review the CMS deficiency report (which resulted from the Nov. 2015 audit).

"The last sticky part is that both of us answer directly to Elizabeth, but as those are all operational issues, it seems to me that Sunny should sign off on the changes before we go there. do you have a feel for this yet?" Tschirhart wrote to Das.

Historically balwani is in charge of lab, Wade asked and Das confirmed.

But as a result in the desire to make improvements and address some of these reform efforts, for the first time Ms. Holmes was going to come in and have the lab directors report to her?” Wade asked.

Objection -- sustained.

Wade rephrased.

Das testified he was not privy to the reasons for the "switching chain of command."

When you were coming in as lab director you were not going to be reporting to mr balwani

Yes

You were going to be reporting directly to ms holmes

Yes

Was it your understanding that for the first time a lab director reported directly to Ms. Holmes?

Yes.

[#ElizabethHolmes] wouldn’t be qualified to serve as a lab director in a high complexity lab would she?

No.

...You would brief Ms Holmes on what was happening and educate her on different procedures and the like?

Yes.

Tschirhart and Das discussed the need for a "bulldog" for their review of Theranos Lab practices and response to the CMS. Someone who would "dig in and start turning over rocks," Wade asked, and Das agreed.

"Elizabeth and Sunny have been fully supportive so there's absolutely no issues here. they share oversight, depending on the issue, and it's been seamless, so no worries," Das wrote in an email to Tschirhart, which had the subject "Day One."

#ElizabethHolmes

Yesterday the prosecution brought up a CLIA lab regulation which described the "owner's" responsibilities in operating a clinical lab.

"Ultimately an owner who is not qualified to serve as a lab director cannot perform the functions of a lab director?" Wade asked Das.

"There is a degree where the owner is dependent on the lab director to make sure everything is done consistent with the laboratory structure?"

Back to the "buckets"

Das explained he reviewed the following three categories of documents, in his compilation for a response to CMS

1. Validation
2. Quality control results
3. Patient test result distribution analysis

These three buckets, this is a pretty sophisticated analysis correct

Yes

This is not something in your view that someone [without your knowledge] would be able to do?

Yes

Wade got Das to testify the "inappropriate use of those [lab] standards" were a reason behind his decision to void the 50-60k tests.

Dr. Kingshuk attended a meeting with Holmes, Dr. Schirhart, Dr. Helfend and others where the main topic of the discussions was whether all of the Edison 3.5 tests should be voided.

Kingshuk thought the tests should be voided. He didn't remember any disagreement with that idea

"Ms. Holmes fully [supported] your decision to void all of the Edison 3.5 tests?"Wade asked.

"Yes," Das replied.

Big decision at the time?

Yes

Fair Amt of media scrutiny at the time?

YEs

Fair amt of criticism at the time?

Yes

And this was going to have some potentially serious ramifications for the company

(Das asked for Wade to specify)

Big decision to make to void all of the assays for their analyzer

Yes

Wade addressed the PSA example Das testified he gave to #ElizabethHolmes to exemplify the errors in the Edison 3.5. Females shouldn't have PSA, Das explained. But when he told Holmes, she offered an "alternative explanation."

On cross Wade elicits the tests were still voided.

Juror had to go to the bathroom and so we're taking our 30-minute break early.

We're back — Prosecutor John Bostic brought up an "out of court comment by the witness."

Downey will ask Das if he said the statement, but stop there. He won't bring up "sentencing guidelines," he told the judge, which gives us an idea of the statement.

Bostic disagrees w/ the statement being presented to the jury, as it delves into the nature of punishment, he told Judge Davila.

"It would be crossing the line," he said.

"It perhaps touches on his bias, his personal feelings...I don't know what the value of getting the actual punishment tied in," said Davila.

"This statement reveals the severity of the agenda he brings in to testify," Downey told the judge.

"If defense is allowed to go into he content of that question," Bostic proposed, "the government would [request] a reasonable amount of latitude to follow up."

Davila told them both to "tread lightly"

Parties are discussing more evidentiary issues w/ regard to Investor Alan Jay Eisenman's upcoming testimony

Das is back on the stand.

Email from Das to Holmes on April 13, 2016

The subject: Some good news, for once

“I just got done the calculations for the first 2 of the 5 capillary 1800 analyte (glucose and sodium) validations, and they look excellent," Das wrote, referencing the modified ADVIA 1800.

“Now that I've seen 'under the hood' of your instrument.." Das wrote in a March 2016 email.

Wade asked him if this was the new generation of the Edison #Theranos was working on — the witness agreed.

We are looking at a device Das recalled to be the "Minilab."

He can't remember if it was the same device referenced in the March 2016 email.

We see another angle "under the hood" of the device, Wade says.

We can see the chip and some wires

"The company was receiving a fair amount of media scrutiny?"

"From time to time company would be asked to make statements to media outlets."

"You would be asked to review a comment that would be provided."

Wade's line^

He is now trying to admit one of those comments, but Davila asked him to lay a foundation.

Wade gets it in:

March 31, 2016 email from Balwani to Das

King: WSJ has asked if they can use the following statement we provided to them. can you please let me know if this seems reasonable? Thanks.

Das said #ElizabethHolmes would also run statements by him

"That works for me -- it's accurate, in my opinion," Das replied to the statement.

An email from Das to Holmes was admitted which showed Das deciding to shut down the "BUGS" lab.

Holmes was fully supportive in this decision, he testified

"Was this exactly the kind of work and discovery that ms holmes was asking you to do?" Wade asked.

"Yes," Das replied.

Wade brought up the BUGS lab, and mentioned the HIV test we saw referenced in one of Das' emails.

"That was an FDA approved test you were looking at?"

"Yes," Das replied, agreeing it was not #Theranos tech.

Das pointed out to Holmes and others in a 4/2016 email re BUGS lab, "there’s a culture over there that needs changing."

He suggested a person be removed, and testified Holmes supported that choice.

"Thanks, all, for your support -that means A LOT to me," Das wrote the chain

The Newark (CA) Theranos Lab did 890-900k tests on an annual basis, Das estimated.

Do you recall in total the entity performed about eight million tests? Wade asked

I dont recall that number specifically, Das replied.

“I use CLIA [standards] only as a last resort, since it’s akin to hitting the broad side of a barn," Das emailed #ElizabethHolmes in May 2016.

Das proposed another standard which he preferred using — an example of him sharing his expertise with the CEO, Wade elicited

"Just a couple more questions for you sir," Wade said.

Das left #Theranos June 2018, Wade finished his cross.

Prosecutor Robert Leach will begin his redirect

"That next generation device was never used in a clinical lab correct?" Leach asked, about the device we saw pictures of and which came up throughout Wade's cross.

Das confirmed.

Holmes did not mention anything about the CMS inspection or “the possibility of a statement of deficiencies” to Das during his job interview, Leach elicited.

"If [#ElizabethHolmes] didn’t like the job you were doing, she could fire you?" Leach asked

"Yes," Das replied.

If you need resources for your CLIA lab who would you go to?

Ms. Holmes

Why?

She had control of those resources.

Das consistently asks lawyers for specificity. He is the first witness to do so.

Das never learned about the circumstances by which Dr. Adam Rosendorff left #Theranos, he testified

"When you voided the tests on the Edison 3.5 device were you being conservative?" Leach asked

"I was just following the data," Das testified.

"There was a characterization of why the voiding was done, with which I disagreed," Das testified. "Problem was due to Quality Control and Quality Assurance rather than the instruments."

Leach ends his redirect there.

Wade on for recross.

Did you feel that [#ElizabethHolmes] had experience in CLIA laboratory operations

No

Clia laboratory regulations

No

Expertise in validation

No

Expertise in pathology

No

"Everything will be all right in the end, and if it’s not all right, it’s not the end."

Wade asked Das to recite one of his "favorite" movie quotes to end his recross.

The government called #Theranos investor Alan Jay Eisenman to the stand.

Eisenman described himself as a former money manager. (He is now retired).

One of Eisenman's close friends in Houston — who also invested in #Theranos — was a financial advisor for the Holmes family. His friend told him Holmes was brilliant, she was dropping out of school, and that she was well on her way.

His friend, Mr. Harris, connected Holmes and Eisenman, and the pair had several convos on the phone.

In those conversations, Eisenman remembers hearing about Larry Ellison (first mention of Ellison in front of the jury, if I'm not mistaken) — how he was on the board.

"I understood the tech to be significantly far along for an early stage company," Eisenman testified about his understanding of Theranos in 2006.

He understood Theranos to have contracts with 5-6 pharmaceutical companies. The former lawyer offered he has "contemporaneous" notes

Eisenman got his info primarily from phone calls with "Elizabeth."

"[Holmes] said at the time of my investment they were already talking to bankers…about an IPO…Which was another reason that compelled me to make my investment," Eisenman testified.

He said the revenue estimates he received from Holmes were 50-60 million in the coming year (2007), 200 million in 2008

Eisenman and his family ended up investing between $1.1-$1.2 million in Theranos

Eisenman had an in-person meeting with Holmes in approx 2008-2009, where he visited the Theranos Lab and saw an early version of the Theranos device.

What eisenman remembered about the tech:

"some kind of a box."

"fairly small...1/2 inch by 4 inches"

"rectangular"

Holmes told Eisenman Theranos would be cash flow positive by the end of 2008, he testified.

"It's a huge milestone, b/c your company is no longer a seed company...it's at a much later stage..much less risky and much more valuable," he explained to the jury.

Bostic is back on asking Eisenman questions.

He introduced a May 2010 email from Eisenman to #ElizabethHolmes which shows the investor scheduling a meeting with the CEO.

"During this time period had you still been having those quarterly update calls w/ ms holmes?"

"Yes."

In his email he asked Holmes for statistics about the revenue #Theranos was generating off of cartridges.

"This was an effort by you to better understand what your investment was worth?" Bostic asked.

"Exactly," Eisenman replied.

"June is a tough month for us and I dont know when we can do our next call. As you know, we dont do quarterly calls with our other investors, many of whom invested much greater amounts than you did," #ElizabethHolmes wrote Eisenman, as Bostic read out loud.

"There was no explanation," Eisenman testified.

“We recognize you have been an investor for some time, and if we proceed with the transaction we are proposing, we can provide you with a >5x return on your investment in Theranos,” Holmes wrote Eisenman, as he was considering to exit his investment.

“There was not just a limited amount of information, there was no information from the company,” Eisenman testified.

“That was a sign of trouble.”

Eisenman testified the quarterly calls with Holmes were 20-30 minutes.

Bostic did the math: approx 1-2 hours of updates a year?

My questions were merely a follow up from our December call when you said that:

1. You were close to achieving 200 million in sales for 2009 and would update us when he final accounting was done. Can you disclose the final figure?" Eisenman asked Holmes in a follow-up.

Did ms holmes ever provide that info? Bostic asked

There was a later email that said that goal was stretched another year, eisenman answered

In Nov 19, 2012 Eisenman emailed Holmes.

"We have communicated about this multiple times before yet you choose to continue going down this path," Holmes wrote to Eisenman.

"It has been over 2 years since you have communicated with your investors," the witness wrote back.

And yet there came a time, when Eisenman considered another investment in Theranos in 2013. He referenced the "publicity surrounding their launch."

Eisenman had a call with Balwani, where the COO was "unusually friendly" after a period of "hostility," he testified.

"In retrospect they were raising money, and sometimes when you’re raising money you put on a different face," Eisenman testified.

Eisenman testified that b/c he was an early investor, he was told he would have an opportunity to buy more shares before others — at a price of $15/share.

Bostic pulled up Joe Rago's WSJ article which prosecutors have shown to other investors.

“Faster cheaper, and more accurate than the conventional methods and require only microscopic blood volumes, not vial after vial of the stuff," Bostic read out loud.

As an investor, Important fact to you ? he asked

“Yes...This is a breakthrough in terms of the volume of the blood, the quantity of the tests, and the speed of the results back to the patient,” Eisenman testified.

"She compared her tech to the two big players in the market: Labcorp and Quest. She said hers were cheaper, faster, more accurate, smaller blood draw," Eisenman recounted from a conversation he had with #ElizabethHolmes.

The same representations that you see in the article in front of you?



yes

Did holmes tell you Theranos was purchasing analyzers form other manufacturers?

Never

In Dec 2013, Eisenman received an email from [e-mail].

"My understanding was the tech was proven, and they were offering the shareholders a discounted price [for more shares.]”

On Dec 23, 2013 Eisenman sent the shareholder email a note, where he noted he was considering a $1 million investment.

Balwani wrote back and offered to call the shareholder in 5-10 minutes

Eisenman described this communication as "shocking," again citing prior "hostility."

Bostic moves to the website — another core of the government's case.

Did the info on the website also make you feel positive or inclined to invest in theranos?


Yes

We looked at the Fedwire transfer Eisenman sent to Theranos (presumably in 2013) for the amount of $99,000

"Why did you’d decide to invest in theranos following that experience?" Bostic asked.

He said that given info from the press, third parties, and Sunny and Elizabeth, he’d gleaned that Theranos was successful, “that they’d cross the finish line,” he testified.

"They told us it was a special valuation for shareholders," he continued.

His offer was $15 / share. It would become $17 / share for others, he recalled.