Today, we learn more about Theranos corporate cosplay. The company loved to cover its reports with logos from pharmaceutical companies, to use the future tense when it would be more appropriate, as well as to repeat its favorite buzzwords on slide after slide.
Elizabeth Holmes lawyers continued cross-examination Lisa Peterson to see if she was a witness against the wire fraud accusations that the government has filed. Lisa Peterson worked for the DeVos family office and was part of the approval process for their investment in the company. Family offices are rich people who believe they can get all the sweet, sweet money from an investment arm. Petersons testimony last week regarding a key Pfizer memo was discredited by the defense. She claimed it was crucial to her belief that the company was onto something.
Problem is? Pfizer didnt write it. An ex-scientist at Pfizer testified that Theranos altered a report that the startup for blood testing had written to include the unauthorised use of the Pfizer logo. The actual conclusion of Pfizers was that Theranos' conclusions in that report weren't believable, a former scientist at Pfizer had testified. Peterson did not know this and relied on the memo for validation.
We ended up discussing verb tenses
Lance Wade, a Homes defense attorney, pointed out that Theranos' physical address and website were located at the bottom of the Pfizer memo in the footer. The footer text was much smaller than the Pfizer logo at top of page. This suggests the relative importance of each piece.
Peterson was able to speak with the prosecution again when they asked her if she believed the footer information would convince her that the memo was not from Pfizer. She said that the logo at the top was too large. She said that when she and her colleagues considered an investment, they relied heavily on the fact she and her colleagues had worked for decades for both pharmaceutical companies and government.
We ended up discussing verb tenses because of this. After Peterson was proven to know the future, the prosecution reviewed some Theranos slides. Theranos' proprietary technology runs extensive blood tests using a fingerstick, one read. Runs indicates that tests are in progress and is present tense.
We actually ran through several slides to talk about verb tenses. All of them were past or present, and not future. Wade had retorted to a theory he had presented earlier during the trial. He said that Theranos investors were skilled and that they'd signed paperwork stating that Theranos was an investment for speculators. Theranos didn't seem to be devious Peterson, but was simply sloppy. Theranos promised what it would do in future.
However, the presentation's language rebutted this idea. A grammarian rejoiced.
I tried to ask questions of other Theranos staff members in the meeting on a few occasions, but Ms. Holmes interrupted the answer.
After Peterson left, we were treated with more testimony from Big Pharma, this time by Constance Cullen who worked at Schering-Plough which was later acquired by Merck. Cullen's boss asked her to review Theranos technology in 2009. Cullen met Holmes and other Theranos employees while doing this. However, it seemed that Holmes was the one who did most of the talking. Cullen testified that I tried to ask questions of other Theranos staff members during the meeting, but Ms. Holmes interrupted the conversation.
Cullen stated that Holmes answered technical questions cagey during the meeting. However, validation data wasn't delivered by Theranos until December 2009. Since Theranos was responsible for the validation studies, the report only included the logo of Theranos. She testified that neither she nor Schering-Plough believed the conclusions to be correct.
Cullen was busy because Merck had just bought her company, and she was now leading a larger team. She put off discussing the report and didn't return to it.
Theranos still approached Walgreens with a version that validated the report in 2010. The Schering-Plough logo was placed on the top of this version. Holmes sent an email to accompany the report. Holmes stated, "As per our discussion," and attached three independent due diligence reports regarding Theranos Systems. These reports were prepared by Schering-Plough, Pfizer, and GlaxoSmithKlein based on their technical validations and field experience with Theranos Systems.
Goodbye, big bad needle.
New conclusions were drawn in the new report. The original report stated that Theranos devices provide accurate and precise results. However, the new logo report claimed that Theranos devices are more precise and accurate than current gold standard reference methods. Schering Plough had not approved the old language and it was certain that it hadn't approved Theranos' new language. Schering-Plough had not responded to the original in any manner and likely was unaware of the enhanced version.
The slideshows and memos were rediscovered in Daniel Mosley's testimony. He had invested just under $6 million in Theranos after Henry Kissinger, his friend, asked him to assess the company.
Mosley, like Peterson was attracted to Theranos' work with large pharma companies and the government. Mosley wrote Kissinger a memo expressing his admiration for the not-Pfizer memo. He even dedicated a section of his memo to its findings. He testified that it wasn't just the logo that convinced him Pfizer was behind this report. The conclusions appeared to be from a third party.
Mosley believed that all Theranos tests were performed by fingerstick because of the Theranos materials he was provided. A slide that Theranos generated of a child with the caption Goodbye big bad needle was shown to us. Another slide showed a Theranos-generated slide that said "Goodbye big bad needle" and another that said "Our certified labs conduct precise tests on a sample 1/11,000 larger than a normal blood draw." There are no large vials to fill. No more looking for a vein.
Rob Walton met one of your board members at the Grove over the weekend.
Mosleys testimony sometimes felt like a live reading from the social register. His job was to advise wealthy people on how to keep their wealth. He previously worked for Cravath, a prestigious and expensive law firm. His clients had invested in Theranos. The DeVos family bought Theranos for $100 million. The Waltons, the Walmart heirs, purchased Theranos for $150 million. The Cox family made $10 million from its cable wealth. The Kissingers trust was purchased for $3 million. Andreas Dracopolous, from the Stavros Niarchos Foundation, was in for $25,000,000, while John Elkann, the owner of Ferrari, was in for $5 million.
Mosley was placed at the centre of a group that included extremely wealthy and influential people. We viewed an email from Holmes to reiterate the point. He offered to introduce her the Walton family the day after he had spoken with her for the first. He then followed up by saying that Rob Walton met one of your board members at the Grove over the weekend.
I'm not sure who this testimony was, but it indicated that Mosley was referring to the exclusive boys club The Bohemian Grove. Unfortunately, he didn't get to the strange naked rituals or any other interest to us plebeians.
As with Peterson, Mosley's defense suggested that Theranos' investors were dumb, rich, and incapable to check on what they had invested their money in. It is obvious that Theranos wanted investors to believe its hype, judging by the language used in its presentations and the tweaked memos it sent that were not from pharmaceutical companies. It is okay to try and trick someone just because they are lazy.