Biotechnology entrepreneur and former billionaire Elizabeth Holmes on Tuesday denied intentionally misleading her company’s investors and said she “naively” believed her blood testing startup’s technology actually worked.
Founded by Ms Holmes in 2003, her company Theranos claimed that their technology could run diagnostic tests faster and more accurately than traditional lab testing with only a drop of blood from a finger prick.
The promises eventually unraveled in 2015 after a series of explosive articles in The Wall Street Journal exposing the problem with the technology. An audit by federal regulators brought to the fore serious and potentially dangerous flaws in the company’s blood tests, wiping out Ms Holmes’ fortune as the company collapsed in 2018.
Theranos had raised more than $940m with investments from powerful figures like media tycoon Rupert Murdoch, Oracle founder Larry Ellison and the family of former Trump administration education secretary Betsy DeVos.
The trial of Ms Holmes is being closely watched as a de facto referendum on Silicon Valley and its frequent culture of bending the truth to build hype and secure funding for prototype products.
Charged with two counts of conspiracy to commit wire fraud and nine counts of wire fraud, Ms Holmes, 37, has pleaded not guilty. She claimed in her third day of testimony, that she never stopped believing that Theranos would revolutionise health care with its technology and was also supposed to be able to detect a wide range of diseases from those few drops of blood.
This, even when the technology was confronted with adversity, as she showed the jurors encouraging emails from scientists discussing the potential for a small machine to run any kind of test and progress on developing it.
"It is never smooth," Ms Holmes said, as she took the stand. "There’s always challenges."
The prosecution had earlier argued that Ms Holmes knowingly misled investors and customers about the capabilities of her "Edison" device, a PC-sized box that could supposedly perform cheap blood tests at pharmacies or supermarkets without a typical needle. "Out of time and out of money, Elizabeth Holmes decided to lie,” lead prosecutor Robert Leach had said.
Her lawyers, however, claimed earlier that Ms Holmes "naively underestimated" the challenges for her business, painting a picture of a driven young woman fighting for her vision in a culture that encourages founders to be bold.
"In the end, Theranos failed, and Ms Holmes walked away with nothing,” said her lawyer Lance Wade in his opening argument. “But failure is not a crime. Trying your hardest and coming up short is not a crime."
Ms Holmes, however, admitted on Tuesday that she added the logos of drug companies to Theranos’ reports just before sending them to pharmacy operator Walgreens, which was discussing a partnership with Theranos in 2010, to convey the drugmakers’ involvement in the promising studies using the company’s technology.
The admission came after drug makers Pfizer and Schering-Plough told the court that they had neither written nor approved of the reports.
"I’ve heard that testimony in this case and I wish I had done it differently," she said.
She, however, testified that she did not conceal the addition from Pfizer, showing jurors an email where the report with the logo was sent to individuals at Pfizer in 2014.
The jurors also heard Ms Holmes setting aside the prosecutors claim that she was secretly doing most of its blood tests using commercially available “big, clunky third-party machines" like that of Siemens, and not its own.
Ms Holmes said that she did not tell investors, partners and her board member that the company was doing most of the tests on Siemens as the company had modification to those machines and feared that their trade secret might get stolen.
"The big medical device companies like Siemens could easily reproduce what we had done," she said.
Ms Holmes is scheduled to return to the stand on Monday.
Additional reporting from the wires