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Prosecutors via testimony Friday backed up their claim in their opening statement that Elizabeth Holmes, founder and CEO of Theranos, sent a forged report to Walgreens supposedly showing that pharmaceutical giant Pfizer Inc. had endorsed and validated the now-defunct blood-testing company's technology.
Holmes is on trial in federal court in San Jose for 12 counts of wire fraud and conspiracy to commit wire fraud, facing up to 20 years in prison and $3 million in fines if she is convicted.
The tale unfolded on Friday with the testimony of Shane Weber, a scientist with Pfizer who evaluated Theranos' technology in 2008 and wrote a report recommending that the pharmaceutical company stay away from any partnership with Theranos.
Pfizer was looking for tools that would facilitate patient intake for clinical trials. Weber investigated a Theranos-prepared oncology study in which the company described its own systems as showing "superior performance" and having "excellent" accuracy, performing well when compared to "commercially available gold standards."
Weber concluded that Theranos "does not at this time have any diagnostic or clinical interest to Pfizer," peppering his report with criticisms of the company's lack of transparency.
The report described Theranos as providing "noninformative, tangential, deflective or evasive answers to a written set of technical due diligence questions." Theranos, Weber said, "unconvincingly argues the case for having accomplished tasks of interest to Pfizer."
Referring to the Theranos oncology study, Weber reported that "the nine conclusions in their summary document are not believable based on the information provided."
But the kicker came when prosecutors showed Weber a new version of the original Theranos oncology study the "summary document," as Weber called it now with a Pfizer logo slapped on it. The new version was attached to an email that Holmes sent to Walgreens in 2010 as part of discussions about the use of Theranos technology in Walgreens stores, with the subject line "Pfizer Theranos System Validation Final Report." The clear implication of the email and attachment was that Pfizer had put its stamp of approval on the glowing internal Theranos report.
Asked whether it was fair to say that Pfizer had endorsed Theranos's technology or "comprehensively validated" it, Weber responded "No." In fact, Pfizer came to "the opposite conclusion."
Weber was followed by John Bryan Tolbert, vice president of finance for a company that invested $2 million in Theranos in 2006 and another $5 million on Jan. 31, 2013.
Tolbert taped a Theranos shareholder call in late 2013 in which Holmes referred to the company's "contracts with the military" and touted the quick turnaround of patient samples because of the on-site pharmacy testing available with the company's Edison devices.
She told investors that Theranos was "able to run any kind of test" based on a blood sample collected by a fingerstick test rather than the "big tubes of blood" traditionally required. She also described plans to quickly scale up the Theranos retail presence to 8,000 locations from the dozen or so in place at the time.
Tolbert testified that the technological advantages and plans to use new money to expand as described by Holmes in the call were "significant" in his company's decision to put more money into Theranos 11 days later.
Earlier in the day, the start of the trial was delayed as U.S. District Judge Edward Davila and lawyers met in the judge's chambers to deal with yet another email from one of the jurors. Returning to the courtroom, Davila said, without elaboration, that he had dismissed Juror No. 5 for good cause and replaced her with an alternate.
The switch leaves the gender composition of the jury at eight men and four women.
Two jurors were dismissed earlier in the trial, meaning that there are just two alternates left, with at least six weeks of trial to go.
If the jury runs out of alternates and gets below the required 12 members before starting deliberations, both the prosecution and the defense would have to agree to accept a verdict by a smaller panel of jurors. Without such an agreement, the case would result in a mistrial, leaving prosecutors to decide whether to try again.
