Theranos boss Elizabeth Holmes admitted in court this week that she personally added Pfizer and Schering-Plow logos to her startup’s presentations while trying to reach an agreement with Walgreens.
By testifying Tuesday during the fraud trial, the former CEO cursingly revealed that it was her idea to place the pair of Big Pharma logos on Theranos reports and then send them to Walgreens executives.
Holmes is fighting charges she has swindled and conspired to defraud investors out of hundreds of millions of dollars by grossly exaggerating the capabilities of her company’s technology.
Here’s the prelude to this admission: Pfizer and Schering-Plow produced due diligence reports on Theranos for the now imploded startup. Theranos staff took these documents and then made their own laboratory reports boasting of the supposed efficiency of their blood testing machines. These files, adorned with Pfizer and Schering-Plow logos, apparently to give them credibility, were then shared with investors and top-brass at the US pharmacy chain Walgreens.
But staff at Pfizer and Schering-Plow testified that Theranos did not have the right to use the logos, and they were not even aware that the logos were being used in this way. It is also said that the two pharmaceutical giants disagreed with the final reports produced by Theranos, distancing themselves from the upstart.
Now, Holmes has told a jury she added the logos because of her company’s past relationship with Pfizer and Schering-Plow, claiming she did not do this to trick anyone into thinking the couple had approved the lab reports.
“This work was done in collaboration with these companies, and I tried to convey it,” she said, reporting NBC, adding, “I wish I had done it differently.”
Holmes said the document increase took place to win a contract to provide blood testing services at Walgreens. She also admitted that the blood tests were not actually performed with Theranos hardware, but with modified commercially available test equipment.
Holmes said a high demand for testing forced her company to move from testing in stores to a centralized laboratory facility where third-party systems were installed. She said the commercial blood testers had been modified and optimized by Theranos to use less blood for testing, and she could not tell it to her investors because it was a trade secret.
Holmes said she was concerned that if the equipment manufacturers knew how Theranos had changed their devices, they could have reversed the technology and sold it themselves. She insisted she had not misled investors and her business partners by withholding the truth about Theranos’ test regime, that it used off-the-shelf equipment rather than its own machinery.
Her defense brought up an email exchange between Holmes and Theranos’ then-lead researcher Ian Gibbons, who discussed progress with the startup’s own blood test hardware. “Our immunoassays match the best that can be performed in clinical laboratories and work with small blood samples. In general, our analyzes are faster by a factor of three to 10 than kits,” Gibbons wrote.
Holmes testified that she took this as meaning that her products could actually function as advertised. But, as has been previously claimed, the Theranos hardware was wildly inaccurate and was incorrect more than 51 percent of the time. The full picture may never be known when the company’s test results database was mysteriously lost in 2018.
Holmes, who denies any wrongdoing, faces two counts of conspiracy to commit wire fraud and nine counts of wire fraud. Her trial continues. ®