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Elizabeth Holmes SEC Deposition AUG 23, 2017 3 OF 4 redacted — Transcript

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0:01foreign
0:13thank you
0:15a Rupert Murdoch invested in the CT
0:18round of theranos correct yes and he
0:21made his investment around January 2015.
0:26I've had February in my mind um but yes
0:28around then
0:30you were in discussions with him about
0:31investing in theranos around November
0:33December and January a bad time frame
0:36yes
0:38did you review the binder of documents
0:41that there are no sent to Mr Murdock
0:44ahead of his his investment
0:46I don't know that I reviewed it before
0:48he invested I know I've seen it since
0:51then
0:53do you know who put the binder together
0:54I don't
0:57do you know what theranos who at
0:58theranos would have had the
0:59responsibility to do something like that
1:00at the time
1:01again similar to some of the other
1:04projects we had different project
1:05managers who would compile materials
1:07before meetings or to follow up with
1:09people
1:12who would have instructed the project
1:13managers as to what to put into these
1:16binders for investors
1:18I don't know that we gave binders to all
1:22investors my memory is that after Rupert
1:25had said he wanted to invest which was
1:27earlier and we then said we would send
1:30him a set of background materials on
1:33what we were trying to do
1:36okay so you might not have compiled and
1:39sent out binders to all investors or
1:41potential investors but when you did who
1:44would have been deciding what to include
1:46in these Finders
1:49um again I don't think there was one
1:52person who was making decisions about
1:53this I'm sure I had
1:56um discussions with the team about it
1:57sunny mayhave as well and uh people who
2:01were focusing on particular areas of the
2:03business that we want to share material
2:05on would have also
2:08besides you and Mr balwani would there
2:10have been anyone else at theranos who
2:12would have made decision a decision as
2:14to what to include in binders
2:18again I don't have a memory of one of
2:21these specific interactions that my
2:23general memories that
2:26whoever the subject matter
2:29Point person was for a given area would
2:32aggregate materials for that area and
2:34that would be included and who would
2:36have the final say as to what went into
2:37the binders or didn't go into the
2:39binders to investors
2:41but again I I don't know I think it
2:43deferred on the case of a case basis
2:45this was not a consistent practice
2:47across all the investors that we engaged
2:50with
2:52do you recall reviewing this jerem or
2:55not spider before you sent it to him I
2:57do not
2:59what do you recall sending binders to
3:01any other prospective investors other
3:02than Mr Murdock
3:04no
3:06uh what about sort of the similar
3:08binders the similar documents would be
3:10in a binder
3:12electronic that you remember sending
3:13electronic documents to any potential
3:15investors I I don't have memory of it no
3:19okay if you would pick up exhibit 221
3:22again
3:23which is the smartest document over here
3:28you can turn to
3:32uh the page based number ending 6306.
3:37which is Page
3:4058.
3:42of the document
3:453 15 58 yep
3:53do you see there's some text messages
3:54here
3:56um dated December 16 2014 to December 17
4:002014 are you on that page
4:03sorry this is December 13th of 2015.
4:07are you on page 58 oh I'm sorry I was on
4:10350. okay it's age 58 yep
4:22okay
4:27this doesn't look the same as mine
4:32are you sure you're on page 58.
4:36is this
4:38the date should be December 16th to 17
4:412014.
4:506306
4:523 yeah that's the difference
4:57this could be uh
4:59this is 68 is it 68
5:02my puppy looks like 58 but it's probably
5:05right do you see December 16th to 17th
5:082014.
5:10text messages okay yes so if you look
5:13halfway down the page there's a text
5:15message from you to Mr balwani on
5:19December 16 2014 at 11 34 pm
5:24to see that
5:25it says are there any materials in the
5:28binders you think should be removed for
5:29Murdoch slash Muse Corp you see that
5:32text message you do
5:35are you asking Mr belwani for input as
5:37to what to include in the binder that
5:39you were going to provide to Mr Murdock
5:42again I don't remember the specific text
5:45but reading it now I I read it as
5:48asking for his advice on whether the
5:50right materials were in the Murdoch
5:51binder so what does this refresh your
5:54recollection that you would have
5:56reviewed Mr murdot's finder before you
5:58sent it out
5:59no I don't have memory of doing that
6:06you can put that one aside
6:10partner fund management did you
6:12understand that pfm was another way to
6:15that partner fund management was called
6:17for the pfn partner fund management are
6:20the same energy they do okay
6:22uh pfm invested in the C2 round for
6:25thermos correct yes
6:27how much did they invest
6:30I think it was
6:32you were in discussions with pfn in the
6:34late 2014 and January 2014 I'm sorry
6:37late I'm gonna start over again you were
6:39in discussions with pfn in late 2013 and
6:42January 2014 regarding their potential
6:44investment
6:48December of 14 and we had a meeting to
6:50discuss the potential investment in
6:52January I'm sorry December 13 in Metro
6:55for the first time and then in January
6:57of 14 we had a meeting to discuss their
6:59potential investment do you remember
7:00having a series of meetings with them in
7:02January 2014 before their investment
7:05as far as I know there's only one that
7:07that I was in and I understand there
7:10were other interactions also which
7:12meeting was that
7:13I'm meeting in which they came to
7:17discuss theranos and or vision and
7:20whether
7:21get an understanding of whether it would
7:24be the right investment opportunity did
7:26you present any materials to pfn at that
7:28meeting
7:29I don't know
7:31what do you recall telling them about
7:33fairness
7:34I don't recall the discussion very well
7:37I've seen notes of those meetings since
7:40then what whose notes have you seen
7:43um notes that were
7:47taken I think by members of pfm's teeth
7:51which members of pfn's team
7:53I don't know how did you review those
7:56notes I'm with counsel and preparing for
7:59potential litigation with pfm did you
8:02review the notes anytime prior to
8:04reviewing them with Council no
8:08do you remember who from
8:13there unless that you attended
8:16um I I believed it was there as well as
8:18members of this team
8:20um that were doing due diligence I I
8:22don't know what their names were by
8:24memory sitting here now and before that
8:27meeting with me do you remember being
8:29introduced to him in the December time
8:31frame I do were you introduced to anyone
8:34else from pfm was in the first meeting
8:36do you recall whether he was at that
8:39second meeting I don't
8:43uh who was at that meeting from fairness
8:47which meeting the meeting that you were
8:50talking about where you met with pfn and
8:52talked about the vision for the company
8:53in January in January
8:56um at least myself and sunny I don't
8:58know if anyone else was in the meeting
9:04point of hand to you what's been
9:06previously marked fairness visited
9:08255.
9:14is that your coffee
9:18exhibit 255 prefers to be
9:23um and actually I also had a view
9:24exhibit 256 I think both the email and
9:28the attachment were marked separately as
9:30exhibits
9:31um exhibit 255 of course to be a January
9:3517 2014 email from Sunnyvale Lonnie to
9:39subject three
9:40with Base number thp fm0003870572
9:48and exhibit 256 purports to be a
9:53PowerPoint presentation with title
9:56fairness
9:57with starting base number
10:01ts-0315637 have you seen exhibit 255
10:06uh before
10:09I don't think so have you seen exhibit
10:11256 before
10:15um
10:16I don't know it looks like a internal
10:19thermos deck
10:22foreign
10:26so if you turn back to exhibit 255
10:38. is it all part of one
10:40dot or maybe it's just two different
10:41types of paper
10:43I think it might have been printed on
10:44two different reason paper because we
10:46ran out of paper okay but it is one one
10:49document I understand that okay
10:51um
10:52you turn back to exhibit 255.
10:56you'll see there's
10:59an email
11:01on 573 which is the second page of
11:04exhibit 255 from to Sonny balwani
11:09and he says sunny thanks again for the
11:11time we spent with our team walking us
11:12through there in the story it's amazing
11:14to see what you and Elizabeth and the
11:16rest of the theranist team have
11:17accomplished over the last 10 years
11:22was the initial meeting between you Mr
11:25balwani and the pfm team around January
11:2810 2014. I think so would he have been
11:31referring to that meeting with you and
11:33Mr balwani
11:35I don't know I mean I could infer that
11:38from looking at this email right now but
11:40I don't know
11:45you turn
11:47um to is it at 256 then you'll see that
11:52and actually if looking back at exit at
11:54255 we'll see that Mr ball wani is
11:56sending a presentation to
12:00um he says attach please find a PDF
12:02which is a very confidential slide deck
12:03of discussions we had
12:06see that and then he's attaching a very
12:09long presentation which is a 256.
12:14do you remember presenting this present
12:16president Who and the rest of the pf9
12:19team at that January 2014 meeting
12:22I don't think we presented it
12:24okay what do you what do you recall
12:26presenting
12:27my memory is that we did not present
12:29slides we had a discussion
12:32so your testimony is that you remember
12:34not presenting the slides but having a
12:36discussion
12:37yes and I think there may have been one
12:40slide that was pulled up which resulted
12:42in a request for the deck but I don't
12:43think we did a presentation to a slide
12:46deck I think we we may have used a slide
12:49in support of a discussion point which
12:51slide do you recall using during that
12:53meeting I I don't know I don't remember
12:54it
12:56so you recall a slide being the impetus
13:00for pfn requesting the slide but you
13:03don't remember what that slide was yes
13:07so looking through the presentation
13:15you said that this looks like some kind
13:18of internal uh fairness presentation do
13:20you recall that yes testimony
13:23um who would have prepared this side
13:25deck
13:27I don't think it was one person I think
13:30it was an aggregation of content from
13:33different areas of the company that we
13:34just kept on adding to over time were
13:37you involved in preparing any part of
13:39this presentation
13:41I don't know I haven't gone through the
13:43whole thing I'm just flipping through it
13:46it looks like it's it's a lot of content
13:48about different parts of our company
13:52was Mr balwani involved in preparing
13:55parts of this presentation I
14:01think generally during that January 2014
14:04meeting with PM were there parts that
14:06you discussed with pfm versus parts that
14:10Mr balwani discussed with them
14:13and what are what are some of those
14:15topics you recall discussing with pfm
14:18versus what Mr malwani discussed so I
14:21don't have recollection of specific
14:23conversations in the meeting I know in
14:25general in these initial meetings with
14:27investors I would talk about our vision
14:29and what we were trying to do as a
14:30company
14:32what did you recall Mr balwani talking
14:34about
14:35again I don't have a specific
14:37recollection of what we said in the
14:39meeting
14:40is it General matter would he have a
14:41role in certain topics more
14:44prominently yes on the operations of the
14:48business and on the models or
14:51projections that we were putting
14:52together
14:54so I just want to draw your attention to
14:56a couple of the slides in this
14:58presentation so if you turn to 644
15:10thank you
15:20this slide is titled media do you see
15:23that and the third bullet point was was
15:25that a yes yes
15:27and the third bullet point down it says
15:29not disclosing device work with
15:32hospitals and or the dod or future
15:34Innovations or expansion plans
15:37do you recall ever
15:39putting together slides or documents
15:42with that statement
15:44no
15:45do you know do you have any
15:46understanding as to what this is talking
15:48about
15:49sitting here now I read it to mean that
15:52we were not disclosing to the media uh
15:56essentially the the plan for the mini
15:58lab I
16:00work with hospitals or other future
16:02Innovations or expansion plans
16:04you have that same understanding in
16:06January 2014. I don't know
16:14when she turned to page 651
16:24so here there's a slide titled same test
16:27a whole new approach
16:29and the first line says theranos runs
16:31any test available in central
16:33Laboratories and processes All sample
16:35types
16:37was the statement true in January 2014
16:42I I believe so I don't know
16:46how much of our infrastructure had been
16:48operationalized in January but
16:50essentially the concept that you could
16:52collect any type of sample and through
16:55theranos have it processed and was
16:58certainly the business model
17:01was it true that fairness was could run
17:04any or was running any test available in
17:07central Laboratories
17:10theranos is a lab service offering I I
17:12believe so because we had I think at
17:14that point reference Labs set up to
17:16process some of the samples
17:18so you see there's some pictures above
17:21that statement with what looks like
17:24a collection device is that part of the
17:27nanotainer or the capillary tube yes
17:30leads to Banana Tanner
17:32were you worried at all that this might
17:36create an impression that therapist was
17:38using its
17:41um only its
17:43manufactured devices to run tests
17:48my General recollection is the point we
17:51were trying to make here is that you
17:52could do collection through finger stick
17:54and have an end-to-end lab service
17:57offering and that was the discussion
17:59that would accompany this type of slide
18:02but when you when you say that was the
18:04discussion that would accompany it do
18:06you recall accompanying the slide with
18:08that discussion you just described I I
18:11don't I don't have specific recollection
18:13of discussing this slide but just
18:16sitting here now reading it
18:18um
18:19and knowing how we would generally
18:21describe what we were trying to do and
18:24that's my read on it
18:26okay but you don't recall providing that
18:28sort of commentary in connection with
18:30the slide anyway
18:31I I don't think that these slides were
18:33discussed with pfm what about any other
18:36investor I don't think so
18:38so you I guess just to answer my
18:41question you didn't you don't recall
18:42providing that sort of commentary that
18:44you just described
18:46um in connection with this slide with
18:48any potential investor and thereiness
18:50I I do not I actually think this may
18:52have been on our website in the context
18:55of making that point but I'm not sure
19:00was the statement true in January 2014
19:04that fairness was running any test
19:06available in central Laboratories using
19:08one of your finger stick methods
19:11I don't think that's what this says I
19:13think the point that we were trying to
19:15make here is that you could collect
19:16finger stick for some tests and then
19:18also through theranos as a lab service
19:20provider we could accommodate any sample
19:22and do any tests so people wouldn't have
19:24to go to two different locations so
19:27you're saying that the picture is at the
19:28top and the statement below it are
19:30actually two separate statements I
19:32believe so what about the statement at
19:34the very top the same tests a whole new
19:37approach
19:38uh was there no providing a whole new
19:41approach with respect to
19:43um running any test available in the
19:45central Laboratory
19:48again my my read on this sitting here
19:50now is that the point we were trying to
19:52make was that we were introducing this
19:54finger stick methodology for blood
19:56testing more broadly and you could run
20:00any tests available in in a central or
20:03through theranos as a lab provider in a
20:05central lab
20:07so so with I guess my question is just
20:10the theranos is a central lab provider
20:12was it was it
20:13as a central lab provider was it
20:15offering a whole new approach
20:17we believed so because we were the first
20:20to introduce finger stick the first to
20:23do upfront eligibility telling people
20:26how much they were going to owe the
20:27first to create this consumer experience
20:28and we were trying to offer the ability
20:31to run any test through our laboratory
20:33when patients came to retail
20:39oh
20:40foreign
20:48667.
20:55you'll see there's a slide here with the
20:57title commercial
20:58and the first line under that says
21:01deployments
21:03and then there are a number of bullet
21:04points two of which are emergency rooms
21:06hospitals and provider offices and the
21:08second bullet point underneath is DOD do
21:11you see that yes
21:13was theranis's technology deployed
21:16in emergency rooms hospitals and
21:18provider offices
21:20no
21:22but theranos's technology deployed at
21:25the dod
21:27I believe the burn study was underway at
21:30multiple hospitals at this time but not
21:32otherwise
21:33is that what you would have been talking
21:34about on the slide
21:37no sitting here now my read on this is
21:39that this is our aspiration for what we
21:42thought all the key deployments would be
21:43in building out a commercial
21:45infrastructure was that your
21:46understanding at the time too that these
21:48were aspirational
21:50and I don't remember this specific slide
21:54but yes there's a lot of aspirational
21:56content in this deck of what we were
21:59trying to do with the company
22:01and I guess how
22:03how can you distinguish between what was
22:05aspirational at the time and what
22:06fairness was actually doing at the time
22:07when we're reviewing the slide deck
22:10I don't think the heads were intended to
22:12be Standalone they were
22:14a whole set of content that we would
22:17share as background material that were
22:19intended to be supplemented with
22:21discussion and interaction
22:23so do you do you recall ever providing
22:26that supplemental discussion interaction
22:27with any potential investors
22:30um
22:31I know that we had multiple follow-on
22:34meetings in which investors would ask
22:36questions about areas of the business
22:39that they were interested in I don't
22:41know that investors actually ever read
22:42this deck and and
22:49respect my back to my question do you
22:51recall ever having that sort of
22:52discussion about this deck with any
22:55investors like whether this whole thing
22:57or a subset of it I don't believe an
22:59investor ever asked a question about the
23:00deck that I know of
23:04did you ever provide a subset of this
23:06presentation to any potential investors
23:09I don't know
23:11would it surprise you if you did
23:14not necessarily I don't have memory of
23:16doing that um
23:19if you were providing
23:21um to the extent that you did provide a
23:23subset of this presentation to any of
23:25the potential investors how would that
23:27potential investor know
23:29what was aspirational versus what was
23:31actually the truth at the time that they
23:35were reviewing the presentation
23:38in general my understanding is that
23:40these materials were sent after we had
23:43meetings with
23:44investors or potential investors or
23:47partners and they followed discussions
23:49about what we were trying to do who we
23:51were as a company and were intended as
23:54background material on
23:56exactly what we were trying to do
24:01turn to 682
24:04and 63.
24:08in these meetings that you had with
24:12investors and potential investors
24:14did you talk about what was aspirational
24:18what you wanted to achieve
24:21yes and did you talk about specifically
24:23the technology and blood draw and what
24:27was in place at that time versus what
24:29was aspirational was there a clear
24:30delineation between those two
24:33we tried to do that
24:35looking back on it now and especially in
24:37the case of pfm I wish we had done that
24:40even more explicitly including in
24:42writing we didn't have the same type of
24:44systems in place we have now on things
24:46like sending out materials but we
24:48thought we had at the time
24:49and what specifically do you wish you
24:51would have communicated to pfm at the
24:53time
24:55what I I think we did communicate which
24:58is phase one phase two and what we were
25:01doing in phase one with the business
25:03model was what technology we were using
25:05and what we were doing in phase two and
25:08what technology we were intending to use
25:10in phase two I I know that we also
25:12really thought we were closer to phase
25:15two than we were
25:17I just want to make sure I'm
25:18understanding so you is it your
25:20testimony that you did communicate phase
25:21one and phase two to pfm or you wish you
25:24would have conveyed phase one and phase
25:25two to pfm It's My Testimony that I
25:27think I did we we did theranos did I
25:30don't know if it was me specifically and
25:32it's also my testimony that you know I
25:34understand if you take this document in
25:37isolation and that we could have done a
25:41much better job in creating documents
25:43that we were sending to people we we
25:45didn't intend these documents to be
25:47Standalone and and you know sitting here
25:49now I know we could have been much
25:51better at the way we prepared materials
25:53and shared them um
25:55than we were at the time so is it your
25:58testimony that in the discussions the
26:00meetings that you had with pfm that you
26:03did describe phase one and phase two but
26:05that that's not was what was that was
26:07not necessarily reflected here in the
26:09document that we're looking at
26:11yes it's my testimony that I believe in
26:14the meetings that we had with pfm we did
26:16describe phase one and phase two
26:18and additionally in looking at this
26:20slide deck I don't think this slide deck
26:22does a good job of describing that on a
26:25standalone basis
26:28who Bears responsibility for the
26:30failures of Islamic
26:32it's my understanding that pfm
26:35understood based on what we at least
26:37tried to communicate
26:39um or I guess I I had thought that we
26:42had communicated
26:44um that this was an internal deck that
26:47we were sharing with them for background
26:48purposes not that it was intended to
26:51operate as a standalone document and
26:55I wish we had done a much better job of
26:58you know documenting that in terms of
27:00the communication with them but we had
27:02at least intended to be clear when we
27:04sent it that this was
27:05supposed to be an internal sort of
27:08compilation of materials that we were
27:09sharing for background purposes
27:12sure I understand that but I guess I
27:14think you described as you
27:16um you know you sort of wish it had been
27:19communicated in a different way yeah
27:21um whose responsibility would have been
27:23to communicate in a different way to BFF
27:26at that time
27:29I am
27:32well I mean in retrospect I think we
27:35should have in writing documented what I
27:38think we had said to them which was that
27:40this was a compilation of internal
27:41materials that we would share and
27:43exactly what what the deck was I I think
27:46we we at least attempted to communicate
27:48that verbally but we don't have good
27:51record of that who's the we in that
27:53sense
27:54you and sunny is it is it there is the
27:57company who there knows the company I I
27:59can't remember the specifics of the
28:00conversations with pfm and
28:03um you know
28:04the moment when they they asked for the
28:06deck I just know my general
28:08understanding of what happened in the
28:10context of sending this material okay so
28:13can you point to anyone who would be who
28:15you think Bears responsibility for uh
28:19the way in which this deck was sent and
28:20communicated to pfm
28:24um
28:25well I I mean theranos myself sunny in
28:29the context of the engagement
28:32with pfm we were the principals
28:34interacting with them okay
28:36um
28:37I mean I understand that there was an
28:39entity in human Center individuals other
28:41than you and sunny are there any other
28:42individuals you feel their
28:44responsibility for that
28:46for what for for
28:48um you know as you said sort of the the
28:51way in which the side deck was
28:53communicated to pfm
28:56um I don't I don't know if anybody else
28:58had had interaction with them around it
29:00and this was
29:01the way the company was operating at at
29:04this time generally and
29:06we believed at that time that the people
29:08who were interacting with understood
29:09what the content we were sharing was
29:17turned to 682 and 683 and I think here
29:21on 682 right now
29:22but we're also looking at 0683 we're
29:25also looking at 682 as well what were
29:28you trying to convey in these two pages
29:32have you have you seen these slides
29:34before
29:38not
29:41um
29:43I have I remember them as being from the
29:46slide deck we were using with our Retail
29:48Partners to talk about what the process
29:50would be at retail for doing a finger
29:53stick
29:54so here are you trying to convey that
29:56where it says lab today on 682 are you
30:00trying to convey that you know today
30:02blood testing is being done by a
30:06venipuncture using a syringe
30:09is that what you're trying to convey by
30:11the first picture
30:12I I don't know I think in general these
30:15were slides describing finger sticker
30:18retail
30:22okay
30:24um so what what is the message that
30:25you're portraying by 6 3 6 82
30:29do you mind if I take a minute to look
30:31at the slides before
30:33sure
30:52I'm sitting here now my read is that
30:54it's a description of what finger stick
30:56testing would be like at Walgreens
31:00is that meaning aspirationally
31:05I mean my memory is that most of this
31:07deck is aspirational
31:08um
31:09but yes it's I mean it starts with the
31:12sort of Walgreens store and then the
31:15process of doing the collection and what
31:17that process would be like and I again
31:19think these slides were from actually a
31:22retail deck on what the service offering
31:25would be
31:27so turning to 685
31:32there's a slide title of new
31:34possibilities in the lab and it says
31:37under routine specialty and esoteric
31:40testing all 1000 plus currently run
31:43tests CPT codes are available through
31:46theranos and again fairness runs any
31:48test available in central Laboratories
31:51was that a true statement in January
31:532014 that all 1000 plus currently run
31:56tests or CPT codes are available through
31:59to fairness
32:01again I think it's the same comment that
32:03the whole range of tests could be run
32:05through theranos's lab and I I think
32:07that was true in January 14 but
32:10I'm not sure how much of that had been
32:12operationalized in January 14 because we
32:14don't even open for a couple months at
32:16that point
32:17and so this would have been including
32:18tests being run on the modify
32:20commercially available machines test
32:22being run only unmodified commercially
32:24available machines and also tests being
32:26sent out to reference Labs that's right
32:30was that conveyed to potential investors
32:32when you were talking about how a
32:35thousand plus currently run tests were
32:37being offered through fairness labs
32:40I don't know that we were ever talking
32:42specifically about this and I I thought
32:45that we had and talked about
32:48what we were running and that we were
32:50including Reference Lab capabilities in
32:53our service offering in phase one when
32:55you say you thought you had conveyed
32:57that do you know that you conveyed it to
32:58any potential investors again I don't
33:01remember specific conversations on on
33:03these points
33:05okay going to 698 then
33:22there's a slide here titled validation
33:24of fairness
33:25and at the bottom of the slide it says
33:28excerpts from John's Hopkins due
33:30diligence and Technology validation do
33:32you see that yes
33:35did Johns Hopkins conduct a validation
33:37of fairness's Technology
33:41um
33:42but as I understand it they did for
33:44Walgreens
33:46what do you mean as you understand it
33:48they did for Walgreens
33:51um Walgreens team would talk about the
33:52Johns Hopkins validation meaning that
33:54Johns Hopkins signed off on
33:58sort of the architecture of the
34:00technology as a platform that could do
34:02all these things
34:06earlier in your testimony you testified
34:08that no devices were ever given to Johns
34:11Hopkins do you remember that we brought
34:14one to the meeting I believe but yes I
34:17don't think theranos independently
34:18shipped devices to Hopkins
34:20so how did Johns Hopkins conduct a
34:23validation of your technology if it
34:25didn't have access to your your device
34:27again my understanding is that this was
34:29really looking at the design and
34:31architecture of the technology would it
34:33be capable of doing something that no
34:35other point of care technology had ever
34:38been able to do
34:40he also testified earlier that your
34:42understanding of validation included
34:43such factors as linearity and precision
34:46and test specificity do you remember
34:48that the assay or chemistry validation
34:51yes okay do you remember Johns Hopkins
34:53doing any of that uh study on your on of
34:57your either your tests or your devices
34:59no oh wait wait
35:01any of the assays you mean as opposed to
35:04the device
35:05so I'm asking her do you under do you
35:08remember Johns Hopkins doing any
35:11um
35:12work on either validating the tests or
35:16the devices under that framework what we
35:19were just talked about looking at
35:21linearity Precision
35:23testasticity they reviewed some of that
35:25data and they did not perform
35:27validations themselves they just
35:29reviewed data
35:32so you turn to 700
35:36can I ask another question
35:38um 6.98 you see the line above that it
35:40says theranos's lab infrastructure is
35:43validated under FDA ich and World Health
35:46Organization guidelines
35:49was that a true statement as of January
35:512014
35:56I don't know
35:57um I I know that our understanding of
36:00the standards that we were using to
36:02validate our ldts our lab developed
36:05tests changed over time and I think this
36:07is what that is referring to but
36:10um we later
36:12learned that we should be using
36:14different standards
36:15all right guys what do you take lab
36:17infrastructure to mean
36:20I'm not sure I don't know
36:23I I could guess
36:26I mean
36:28is it is is is the rep is the sentence
36:31here theranos's lab infrastructure it's
36:34validated under FDA ich and World Health
36:36World Health Organization guidelines
36:40um a statement that
36:42theranos's tspu has been validated under
36:45these guidelines
36:48I've been sitting here now my read is
36:49that it's talking about the standards
36:52that we were using for validation of the
36:55lab developed tests I get I we're lab
36:58developed tests often called
36:59infrastructure
37:01I don't know
37:02did you ever use that word to call
37:04in referring at lab develop tests I
37:06don't know
37:08can you recall an instance where it was
37:10I can't
37:16I don't know I think again like rid of
37:19these lights
37:19it's an old slide that was carried
37:22through in a lot of decks or and or
37:23updated over time
37:26you turn to 700
37:30slide titled products
37:33and here under device it there's a
37:35bullet point that says mini lad and 4S
37:37for automated processing do you see that
37:40yes
37:41these weren't the only devices that were
37:43used by fairness for patient testing
37:45were they
37:47I don't think either of them were used
37:49for patient testing okay why didn't you
37:51include for instance three 3.5 that was
37:54being used for patient testing here
37:56I believe that this is a specific slide
37:59talking about what products the company
38:01wanted to develop on a go forward basis
38:04what's your basis for that belief
38:07I I generally recognize it and I
38:11generally have memory that we were
38:12trying to distinguish sort of products
38:14from the clinical lab that theranos was
38:16developing products and it also was
38:18operating a lab and that this part of
38:20the discussion was on the technology or
38:22the products that we were trying to
38:24build
38:30do you did you ever talk to investors
38:33and show them this particular slide
38:37again I I don't remember ever having
38:39conversations with investors about the
38:40slide deck
38:42did you but did you ever have any
38:44conversations with investors about this
38:46particular slide I don't think so
38:48what about 701 which is the next page
38:52there are pictures of a number of things
38:57under the title overview fairness
38:59systems
39:01under their nose analyzers there's a
39:03picture of two analyzers there what are
39:06these pictures of
39:08um one is of the the three series device
39:11I don't know if it's a 3.0 or a 3.5 and
39:13the other one is one of the four series
39:15devices and mini labs
39:17okay so here under you know you're given
39:20you're actually showing pictures of
39:22fairness analyzers why didn't you
39:24include other machines that you were
39:26using including the commercially
39:27available machines here
39:29again I don't think this part of the
39:31presentation these slides were used to
39:33support anything about the clinical lab
39:35I think this was talking about the
39:36proprietary technologies that we were
39:38working to develop
39:39for distributed testing
39:41I think that this might give the wrong
39:43impression that the only theranos
39:45analyzers thereiness was using were its
39:48own proprietary devices wasn't using
39:50commercially available machines to
39:51conduct testing not at the time because
39:53we weren't using these decks um
39:58for the purpose of trying to provide a
40:00comprehensive overview of the company
40:01but again we're like preparing this
40:04content now we're we're being very
40:06careful to prepare this content very
40:07differently now
40:12made clear that we not providing an
40:15overall picture of what the company was
40:17doing or using and that it could be more
40:21specific as to the analyzer experience
40:23was using at the time
40:26at the time we did not think that these
40:28slides were
40:30ever going to be looked at as Standalone
40:33descriptions of what we were doing we
40:35thought they were
40:37tools to facilitate different parts of
40:39the discussion
40:41now again we are taking a very different
40:44approach to how we're preparing any
40:46content
40:47Once you turn to 733 sorry before we
40:50leave this light again just the the
40:51slide is titled overview of theranos
40:53systems
40:55sorry is that a yes yes
40:57is it your basic testimony that this
41:00isn't an overview of their owner's
41:02systems it's a overview of theranos's
41:04plan systems
41:07um theranosystems was the word that we
41:09generally use to describe the
41:11proprietary family of technologies that
41:13we were developing with mini lab and yes
41:16it's my general memory that this this
41:19deck was about was aspirational so these
41:22were the Technologies we wanted to take
41:24into the FDA and distribute on the
41:27market but obviously had not done that
41:29yet
41:33um you just said prior to Mr uh Cole
41:36hitard's question that the deck was a
41:39tool to facilitate discussion
41:42um so I know you said that you didn't go
41:44over the deck or other than that one
41:45slide
41:46did you have the deck there in the
41:48meeting and you were going through it
41:50with pfm or how did that work
41:54um
41:55I I don't know that we had the deck with
41:57us um it's my general understanding that
41:59we did not go through a deck with pfm at
42:02all I think that on a computer I don't
42:04know if it was mine or in fact it
42:06probably was not mine because I
42:07generally didn't bring computers to
42:08meetings but a slide was put up to
42:11support a conversation and I generally
42:14understand that after that pfms could
42:17you send the deck which one is from and
42:20we sent this big deck
42:22so when you were having the discussion
42:24with pfm employees did did you have the
42:29deck in front of you even though you
42:30weren't projecting it or any of the
42:32slides from it did you have it as kind
42:34of a tool that you would use either you
42:37or Mr balwani would use to facilitate
42:39the discussion that you previously
42:40testified to I don't think it was up on
42:43the screen I think it was literally
42:45brought up with a slide to facilitate
42:47discussion I
42:49can infer from that that it was on a
42:51computer that was in the room at the
42:53time of the meeting
42:55I guess did you did you have a copy for
42:57yourself of the slide deck for yourself
42:59to use as sort of a set of talking
43:01points no did you generally have a
43:03prepared set of talking points when
43:04meeting with investors
43:06no what did you use to sort of guide the
43:09discussion
43:11um I I would generally speak
43:15in in free form because part of the
43:17conversation that I had was was our
43:19vision so it was about talking about who
43:21we were what we were trying to do and
43:23then I would talk about
43:24the inventions and then from there there
43:28was generally follow-on discussions
43:29where people with due diligence and I
43:32for the most part was not involved in
43:33those next set of conversations
43:36because they were with Mr balwani or
43:38someone else from fairness yes
43:41if you didn't use the deck during the
43:44meeting and you didn't use it yourself
43:47as a tool to facilitate the discussion
43:49then my question would be what then is
43:51the point of the deck
43:53the the deck was a an amalgamation of
43:57slides theranos had it was used by
44:00different teams different people for
44:02different purposes it's it's literally a
44:05set of marketing content a set of
44:07content from the website a set of
44:08content about the labs a set of content
44:10about our retail relationships you know
44:12data and it was a working tool that
44:15different people throughout the company
44:16would use if they needed to pull a piece
44:20of information to support a discussion
44:22so if they wanted for example a picture
44:24of the system if they were trying to
44:26describe the system they would pull that
44:28slide from the deck to support
44:29discussion so your testimony as I
44:32understand it is you have this deck
44:35already in place and there was a
44:37discussion during the meeting with pfm
44:39in which you pulled out one slide
44:42projected that and then pfm from that
44:44point said hey can we get later on said
44:46can we get a copy of the deck that you
44:47used yes
44:50who pulled up that slide
44:53no it wasn't Mr baloney
44:56again I don't know I I know that I
44:58generally didn't bring computers to
44:59meetings so probably but I don't
45:01remember it specifically
45:03if you go to page 733
45:08there's a slide titled clinical data
45:11and then a whole section full of slides
45:14behind it
45:16yes
45:20[Applause]
45:22and let's just take a look at a specific
45:25slide so 754
45:33[Applause]
45:36looks like there's a chart for ferritin
45:38do you see that yes what is this chart
45:43uh supposed to convey
45:47data that we thought was representative
45:50and as to the performance of the
45:52chemistry and that was
45:56designed to be able to handle small
45:57sample volumes
46:00okay so so take me through what's being
46:03compared here so is this a correlation
46:06graph
46:08it's a method comparison graph a method
46:10comparison graph so what are you
46:12comparing here
46:14you're comparing the theranos assay to
46:16one by alpco
46:20Diagnostics I think is their name
46:22and what are each of these assays being
46:25tested on what what device or platform
46:28are they being tested on
46:30um I believe ferritin was on the
46:32theranos tspu and the alpco is on a kit
46:37okay and the kit is that what is that is
46:40that like a manual kit
46:43I I think so I don't know for sure okay
46:45so you're comparing the performance of a
46:48fairness assay on the tsp versus
46:51um
46:52a reference essay using
46:55some other platform is that fair yes
46:58okay and so is this trying to show that
47:00the theranos method is quite close to
47:03the reference method
47:06it's showing what the concordance is at
47:08the time we thought this was really good
47:10and today we actually wouldn't accept
47:13this as being as good as we we thought
47:16it was
47:17why do you say that
47:21um we we used to believe that cutoffs
47:24like r squared and about this many
47:26samples were sufficient to show
47:28validation of a test and we have much
47:31more comprehensive mechanisms in place
47:34right now for the standards to which
47:35we're validating
47:37so you understood in January 2014 though
47:41that ferritin wasn't actually being
47:43tested on the tsp and patient testing
47:45though correct
47:47I don't know that I understood that in
47:50January 2014. I knew there was a limited
47:52number of tests on the tsp in the lab
47:55would it surprise you if you knew that
47:57ferriting was being interested on a
48:00commercially available machine at that
48:01time
48:02I don't think I would have known that um
48:04but it wouldn't surprise me if it was
48:06being tested on a commercial machine
48:08do you think that the fact that you're
48:10including these correlation graphs that
48:12compare the theranos methods to
48:14reference methods and their their nose
48:16methods being on the tsp
48:18would create the impression to people
48:22who are reviewing these slides that
48:24theranos was using it's tspu for all of
48:27these tests at that time why
48:30because these data were intended to
48:33reflect
48:34fact that we had worked on a large
48:36number of chemistries
48:38to handle small sample volumes and that
48:41we would work to bring those up in the
48:43lab over time this was not intended to
48:45reflect the clinical lab
48:47this is all under a section called
48:49clinical data yes is that right can you
48:51just differentiate being your mind the
48:53difference between clinical lab and
48:55clinical data
48:57I believe clinical data is the term to
48:59reflect plots when you're using actual
49:02clinical samples for the plot as opposed
49:04to some of the experiments that you were
49:06referencing earlier which are not done
49:08on on actual live samples they're done
49:11on
49:12contrived materials
49:14um
49:15this part of the discussion was broadly
49:19about the the assays that we were
49:21developing to the extent that we showed
49:23this data
49:25so are you saying that patient samples
49:27were being used in order to do this
49:30method comparison yes
49:33so like leftover material from a
49:36from a test runner on a traditional
49:38machine could be used in to to test a
49:42different asset so the the last part of
49:46an assay sort of validation process as I
49:49understand it is the method comparison
49:50and that's where you take an actual
49:52sample and compare two methods the rest
49:56of the steps like linearity or Precision
49:58are not done with actual patient samples
50:01and that's why it says clinical data
50:04this is that last step where you're
50:06actually doing the comparison with the
50:07clinical sample
50:10why don't we take a short break uh we're
50:12off the Record at 206 P.M
50:22we're back on the record at 2 20 p.m Ms
50:25Holmes did you have any substantive
50:27conversations with the SEC staff during
50:28the break I did not
50:32ever send a subset of the
50:36internal slide to add something similar
50:38to exhibit 256 to I don't know
50:43would it surprise you if you did
50:46no
50:48why not
50:50the tool that we use yeah in supporting
50:55discussions
50:57you'd earlier said that
50:59you wouldn't provide the slides without
51:02explanation about those slides no I'm
51:06sorry what I was trying to say I don't
51:07think that's what she said
51:09yeah what I was trying to say was that
51:11the slides were
51:14not created to be Standalone material
51:20so what were they created for
51:22they were created to support discussions
51:25I don't know how that's any different
51:27from what I just asked you I'm sorry
51:30maybe I misunderstood the question I had
51:32understood you to say that the slide
51:34deck wasn't meant to be sent to other
51:38um other people such as potential
51:40investors without an explanation for
51:42those slides
51:47maybe I've
51:49didn't communicate clearly I what I was
51:51attempting to communicate is that
51:54when those slides were created they were
51:57not created to operate in a standalone
52:00way yeah
52:01we would share them yeah and generally
52:04with people with whom we were in active
52:06discussion
52:08do you recall sending materials to more
52:10generally what what they're connected to
52:12exhibit 256 or otherwise
52:15I might I recall that he was advising on
52:18me and and us in the early days of my
52:22relationship with him he even acted as
52:24my counsel for a period of time and
52:27so we shared a lot of information with
52:29him
52:30you share any information with him in
52:32connection with obtaining potential
52:34Investments In fairness
52:37um we shared information with him in the
52:39context of the C2 round and the people
52:42who we were
52:44I'm talking to and I remember asking for
52:47his advice on you know what information
52:49would make sense to to share
52:54the
52:56uh
52:57okay
52:58I guess is it your testimony that you
53:00retained to provide you with legal
53:01advice from that issue
53:05I I'm just trying to be careful about
53:07how it was
53:08his home's lawyer for a significant
53:11amount of time
53:12on a number of issues
53:14and
53:16we didn't talk about whether this goes
53:18into it or not they'll always have one
53:19one second there's a lot of stuff that
53:21was clearly attorney-client privilege
53:23we're off the Record at 2 23 p.m yeah
53:30we're on the record at 2 33 p.m Ms
53:34Collins did you have any sensitive
53:35conversations with the SEC staff during
53:37the parade no
53:38so just to follow up on a question did
53:40you understand did you have an
53:42understanding in 2014 that certain
53:45materials were provided in connection
53:47with his potential investment at
53:48theranos yes or no
53:51um
53:54I understood that they were generally
53:57being provided for advice in connection
53:59with the C2 round that we were
54:03that we were working toward what
54:05materials were those
54:07I don't remember specifically I know
54:09that he had access to a number of
54:10documents that we sent documents to him
54:12uh do you remember who at theranos sent
54:14him those documents
54:16I don't
54:17um but I I
54:19would assume that I sent some of them to
54:22him
54:24do you know if you pass those materials
54:26on to
54:27potential C2 investors
54:30I don't know if you passed them on I
54:32think he may have shown materials that
54:35he had to certain potential investors
54:38did you understand at the time that
54:41materials were being provided to him
54:42that he was intending to show those
54:44materials to potential investors and no
54:48I think he did that later
54:51did they ever attend meetings that you
54:54had with potential C2 investors at
54:56theranos yes yes would that include
55:03this is from Clarity six since there's a
55:05uh sure Cox Investments yes
55:08um who who else did he attend along with
55:12um he was at one of the meetings with uh
55:16um it wasn't at theranos but it was
55:19um about investing in theranos and
55:23he may have been it at others as well
55:26uh did he attend a meeting with
55:28um representatives from the niarcos
55:30foundation
55:32yes
55:35it
55:37actually I think so he may have been on
55:39the phone I'm not sure
55:42um
55:43did
55:45in any of those meanings
55:48do you recall presenting a selection of
55:51the slides that we saw in exhibit 256.
55:54I don't have memory of that now
56:02earlier in your testimony you testify
56:05that BDT Capital was hired as a
56:08financial advisor to fairness do you
56:10remember that testimony
56:11as an advisor initially yes or that we
56:14engaged with them I don't know we've
56:16hired them per se
56:18and in late 2014 you understood that
56:21they were considering to invest in
56:23fairness that they were a potential
56:24investor as well correct I did
56:28I'm going to hand to you what's been
56:29marked as thereiness is it at 266.
56:39is it at 266 it reports to be a December
56:446th I'm sorry December 19 2014 email
56:48from Elizabeth Holmes to sunnyvalewani
56:51Cedric line is forward project Test
56:54Company overview memo version 025 dot
56:59PDF with starting base number thp
57:02fm00389-1168
57:06with an attachment with Bates number
57:09starting
57:11thpfn0003891169
57:16have you seen exhibit 266 before
57:21I don't know I I don't remember it but I
57:24don't have reason to doubt the email
57:25exchange
57:26what is exhibit 266
57:30and it looks like an email exchange yeah
57:33I'm with an attachment from
57:42did you receive the email on December 18
57:452014.
57:47from
57:49honor about
57:51December 18 2014.
57:55again I don't remember it but I assume I
57:57did
57:58and you also received a following email
58:01around the same date from
58:04it looks like it did yes
58:07did you understand to her addresses on
58:10these emails
58:14so you'll see here at the bottom of 1168
58:17on exhibit 266 there's an email from to
58:21you
58:22and he says Elizabeth attached is the
58:25preliminary draft of our company
58:26overview that we would plan to send to
58:28the pre-approved co-investor targets do
58:31you see that
58:32I do
58:36did you understand that information that
58:39they were including on this memo that
58:40he's attaching to this email was based
58:42on conversations that he had with you
58:43and Mr balwani
58:47again I don't remember
58:49receiving this email and I I don't know
58:51that I ever read the attachment
58:54had you had discussions with capital
58:56prior to December 18 2014.
59:02and in those discussions have you
59:04described theranos's
59:06vision and its operations
59:10yes
59:16and by the time of this email that
59:18Capital had repaired a memo in order to
59:21send out to potential co-investors
59:24I I don't know my my memory generally is
59:28that we were deciding whether or not to
59:30have invest and ultimately decided not
59:32to proceed
59:34did you have any discussions with
59:36capital about them going out to find
59:39co-investors to invest together In
59:41fairness with
59:43um my memory is that they already had
59:45entities that were interested in
59:47investing
59:48um but I don't remember specific
59:50conversations about that
59:53you know at the bottom he says feel free
59:55to make any changes edits see that yes
59:59did you end up making any changes to the
1:00:02memorandum that he attached and did you
1:00:06ever send that back to the capital
1:00:08again I don't recognize the document so
1:00:11I don't know that we ever went through
1:00:13it I think we ended up deciding not to
1:00:15proceed with the financial investment
1:00:17from
1:00:18okay and after admissions email then he
1:00:21sends another email and she attaches
1:00:23instead of a pdv a pdf version of the
1:00:25memorandum she sends a word version of
1:00:28the document
1:00:29do you see that I do so she was
1:00:31intending to make it easier for you and
1:00:32Mr balwani or at least for you to make
1:00:34changes to the document correct yes okay
1:00:37and then you send it you forward the
1:00:40email to Mr Melanie do you see that at
1:00:42the top yes what was your purpose in
1:00:43signing into Mr Balor
1:00:46I don't know I can't remember what he
1:00:48didn't see you
1:00:53can keep that in front of you
1:00:55I'm going to chant to you what's been
1:00:58marked there a nice visited 267.
1:01:03foreign
1:01:08chords to be a December 23 2014 email
1:01:12from to Elizabeth Holmes with a copied
1:01:15subject lines free follow-up to our call
1:01:17with starting base number BDT sec
1:01:22underscore
1:01:23[Music]
1:01:25pst005074 have you seen exhibit 267
1:01:28before
1:01:30and I don't recognize it but I don't
1:01:32have reason to doubt the document and
1:01:34was he also a member of the BBT team I
1:01:37think so
1:01:39so if you look
1:01:42um
1:01:43on the bottom of exhibit 267 5074 there
1:01:48is an email from you on December 23rd
1:01:512014.
1:01:53did you send that email on or about
1:01:55December 23 2014.
1:01:59again I don't remember it but I don't
1:02:00have reason to doubt the document okay
1:02:02and so you're sending an email to
1:02:05um
1:02:07it looks like
1:02:09and here he's you note in your email so
1:02:14it's a fourth paragraph down you say
1:02:16with respect to the investment memo our
1:02:18team had a mini heart attack seeing our
1:02:20complete strategy future plans
1:02:22unannounced deals and profit margins
1:02:24delineated in a single document like
1:02:26that especially without any encryption
1:02:27of the document do you see that
1:02:30yes does this refresh your recollection
1:02:33that you review the memo at the time
1:02:35no
1:02:37how would she know that the memo
1:02:39included all of these things like
1:02:41theranos's complete strategy future
1:02:43plans unannounced deals and profit
1:02:44margins unless we reviewed it
1:02:47looks like our team reviewed it I don't
1:02:49know who
1:02:51[Applause]
1:02:52who on your team would have reviewed and
1:02:54then uh I don't know
1:02:56who else received the memo besides you
1:02:58and Mr balwani I don't know
1:03:01if you look a little further down that
1:03:03same paragraph that says let me know if
1:03:06the intent is for this to go only to
1:03:08persons who have committed to
1:03:09participate
1:03:12through co-investment to a broader group
1:03:15a semicolon I'd like to get a sense of
1:03:16what the purpose of the document is at
1:03:18the stage and we can then send back our
1:03:20thoughts and edits based on what we're
1:03:22trying to do with it at this point
1:03:26you see that yes what were you asking me
1:03:29there
1:03:30Sydney you're reading it now I assume
1:03:32I'm saying what what is the purpose of
1:03:34the document and then we'll edit it
1:03:36based on the intended audience
1:03:38did you did you not understand the
1:03:39purpose of the document before asking
1:03:42him
1:03:44I mean I'm assuming not given that I'm
1:03:46asking here
1:03:50so going back to exhibit 266
1:03:55you want to turn to the attachment to
1:03:57the email just have a look at
1:04:00page number ending with dates remember
1:04:03ending 1172
1:04:12so actually first appreciate
1:04:14um actually start on
1:04:161169
1:04:24you'll see this is the cover page of the
1:04:26memoranda
1:04:31and it's titled project test you see
1:04:33that yes did you understand your
1:04:36discussions with BDT Capital that they
1:04:38were using test as a code name for
1:04:40fairness
1:04:42I I don't remember that um but it looks
1:04:45like it was okay when she turned to 1172
1:04:55so I want to focus on the portion of
1:04:59this page under compelling strategic
1:05:01plan
1:05:02you'll see on the third paragraph down
1:05:04it says in conjunction with its
1:05:07execution of its seven-pronged strategic
1:05:09plan the company is currently
1:05:11negotiating the terms of the contract
1:05:12with the US government to provide
1:05:14testing services for Ebola within U.S
1:05:17airports and alongside the U.S military
1:05:19and Aid agencies in West Africa
1:05:23did you tell Edith
1:05:27I don't remember a specific conversation
1:05:30to that effect do you remember a general
1:05:32conversation to that effect
1:05:35I don't remember General conversations
1:05:37to that effect I know at the time we
1:05:39were devoting a lot of resources to the
1:05:42submission of an emergency use
1:05:43authorization for Ebola and we're
1:05:45hopeful that we would be able to engage
1:05:47in Contracting opportunities
1:05:51so you remember that you were and you
1:05:55were hopeful about engaging in contract
1:05:57opportunities were you
1:06:00were you negotiating the terms of a
1:06:02contract with the US government at that
1:06:04time with respect to Ebola
1:06:07not that I can recall so would the
1:06:09statement be true as of late 2014
1:06:15I don't think so but I I can't remember
1:06:17exactly who we were engaging with on
1:06:20Ebola Contracting
1:06:23we know the answer that
1:06:26um I don't know I don't know we need to
1:06:29look back at how we were doing this at
1:06:32that time
1:06:33haven't thought about it for a long time
1:06:36did you hear Mr balwani make a statement
1:06:38to this effect that the company is
1:06:40currently negotiating the terms of a
1:06:42contract with the U.S government respect
1:06:44to Ebola
1:06:46I can't remember any discussions to that
1:06:48effect
1:06:51return to the next page which is 1173
1:06:56under technology and Hardware the second
1:06:58paragraph down
1:07:00the memorandum says samples for all
1:07:03tests are run on one proprietary
1:07:04diagnostic machine and unprecedented
1:07:06capability in testing and a significant
1:07:09technological competitive Advantage
1:07:11versus peers did you tell me that
1:07:16uh to the extent we were discussing the
1:07:18mini lab and yes that's what mini lab is
1:07:22architected to do
1:07:24it says all tests are run on one
1:07:27is this an aspirational statement that
1:07:29in your mind or
1:07:32um yes it's
1:07:33description of the design of the mini
1:07:35lab we
1:07:41did you tell the capital that theranos
1:07:44was not actually using
1:07:46its proprietary diagnostic machine to
1:07:49perform patient tests
1:07:51for all patient tests rather that it was
1:07:53only performed that was it was only
1:07:55being used to perform a small subset of
1:07:57the test
1:07:58I don't think we had discussions about
1:08:00what it was being used to do in the in
1:08:02the clinical lab
1:08:04why not
1:08:06because the bulk of our Focus was on
1:08:08phase two of our model and getting the
1:08:10machine out and distributed
1:08:12Capital wasn't interested in what
1:08:14fairness was doing at the time
1:08:16I don't know what they were interested
1:08:18in did they ever ask you questions about
1:08:20what theranos was doing at the time
1:08:22again I can't remember the specifics of
1:08:24the conversations with them
1:08:28Mr balwani make a statement like this
1:08:30today that samples of all tests are run
1:08:32on one proprietary diagnostic machine
1:08:36again I can't remember the specifics of
1:08:38conversations
1:08:41you turn to 1174
1:08:50under test accuracy second paragraph
1:08:53down it says a validation study
1:08:56published by Johns Hopkins in 2010
1:08:59concluded that the technology is novel
1:09:01and sound it can accurately run a wide
1:09:03range of routine and special assays and
1:09:06that no major weaknesses were identified
1:09:09did you tell that there was a validation
1:09:11study that was published by Johns
1:09:13Hopkins in 2010 that concluded that
1:09:17I don't think we told them my memory is
1:09:20they actually got access to the Johns
1:09:23Hopkins document in and of itself
1:09:25your memories that they got access to
1:09:27the Johns Hopkins document are you
1:09:29talking about the April 2010 document
1:09:31document I think so yeah
1:09:33how did they gain access to that
1:09:36time I'm not sure if we gave it to them
1:09:38or somebody else gave it to them I'm not
1:09:40sure
1:09:41did you ever describe the dot the April
1:09:462010 document from Johns Hopkins as a
1:09:48validation study
1:09:51I don't remember specific conversations
1:09:53to that effect
1:09:55other than the Johns Hopkins report do
1:09:57you remember anything else that was
1:09:58provided
1:10:01I don't I know we were actively engaged
1:10:03with them over a period of months on a
1:10:06lot of different aspects of our business
1:10:07so I'm sure they had access to a lot of
1:10:09content
1:10:11did you hear Mr balwani make the
1:10:13statement gee that there was a
1:10:15validation study that was published by
1:10:17Johns Hopkins and 2010
1:10:19not that I can remember
1:10:22on that same page under select clinical
1:10:24correlations
1:10:26the memorandum States
1:10:28the company has validated all of its
1:10:29tests versus traditional laboratory and
1:10:32reference methods to just demonstrate
1:10:34their accuracy
1:10:36did you tell this
1:10:38I don't know
1:10:41was this true in
1:10:44December 2014.
1:10:47uh my again I haven't read the document
1:10:49so I'm not sure specifically whether
1:10:52this is referring to product development
1:10:53or
1:10:54the clinical lab and we we thought we
1:10:57had done this
1:10:58um both in tests we developed on the
1:11:01product development side as well as
1:11:03tests we had validated as ldts in the
1:11:06clinical lab
1:11:07did you make clear to me at this time in
1:11:09December or late 2014 that the clinic
1:11:13the clinical data that you were showing
1:11:15them pertain to uh
1:11:18data that was generated in the r d lab
1:11:21and not in the clinical lab that was
1:11:24performing patient testing
1:11:26I don't know if we showed them data from
1:11:29the lab the ldts or R data certainly to
1:11:32the extent that we showed R data in my
1:11:35memories we generally would describe it
1:11:36as product development data on all the
1:11:39tests we created
1:11:45turning to
1:11:47page 1175 under Manufacturing
1:11:53the memorandum States test currently
1:11:55manufactures 100 of its diagnostic
1:11:58machines and Associated consumables in a
1:12:01single plan in Newark California
1:12:03did you tell the capital of that
1:12:05theranos currently manufactured 100 of
1:12:08its diagnostic machines in Newark
1:12:10California
1:12:12as of December 2014.
1:12:15to the extent it's referring to the mini
1:12:18lab and all of the components in the
1:12:20mini lab
1:12:22what you did you did tell Capital that I
1:12:25don't know that I personally said that
1:12:27but that was something that theranos was
1:12:29very proud of that every component of
1:12:32mini lab was manufactured in this Newark
1:12:34facility
1:12:36the mini lab wasn't 100 of theranos's
1:12:39diagnostic machines at the time was it
1:12:43no I'm just 100 of the mini lab was
1:12:47manufactured in the Newark facility
1:12:50so was the statement true as of December
1:12:532014
1:12:56um only with respect to the mini lab
1:13:01this team isn't qualified with respect
1:13:02to main lab is it
1:13:06no again I I don't think I've ever read
1:13:08this whole document so I'm not sure
1:13:11if this is talking about the clinical
1:13:13lab or the technology we were working to
1:13:15develop
1:13:18did you ever hear Mr balani make this
1:13:21statement to Capital
1:13:23not that I can remember
1:13:27the third paragraph down it says unlike
1:13:30other sector participants test operates
1:13:33a vertically integrated manufacturing
1:13:35model
1:13:36the company receives raw materials
1:13:38EG plastic aluminum Etc and constructs
1:13:42each and every component of the finished
1:13:43products diagnostic machines and
1:13:46Associated consumables did you tell me
1:13:48this
1:13:49again I don't remember specific
1:13:51conversations with
1:13:53did you hear Mr balwani make this
1:13:55statement not that I can remember was
1:13:57the statement true as of December 2014.
1:14:00with respect to our mini lab
1:14:03is the statement in any way qualified
1:14:04with respect to the mini lab
1:14:08again I haven't read this document so I
1:14:10don't know what the pretext to this is
1:14:12this section just talks about uh
1:14:18diagnostic machines
1:14:20and fairness was using other diagnostic
1:14:23machines besides the local Mini lab in
1:14:25December 2014 correct in its clinical
1:14:28lab yes
1:14:34if you turn to
1:14:361178 and 1179
1:14:40starting on page 1178 there's a section
1:14:44called Walgreens do you see that halfway
1:14:46down the page yes okay if you flip over
1:14:49to 1179 at the very top
1:14:55the very top of the page there's a
1:14:57sentence that starts the contract does
1:15:00not limit
1:15:02so the memo is talking about Walgreens
1:15:04and it says that the contract does not
1:15:06limit or restrict tests from opening
1:15:08additional locations of the company
1:15:10chooses to do so did you tell Apple that
1:15:14in December around December 2014.
1:15:17I don't think so my memory is we gave
1:15:20them access to the Walgreens agreement
1:15:21and they reviewed it directly
1:15:23did you hear Mr balwani make this
1:15:25statement to the capital no again I
1:15:27don't remember any specifics of the
1:15:28conversations Maybe was the statement
1:15:31true as of December 2014.
1:15:36do you mind if I read the paragraph sure
1:16:08I don't know
1:16:11was it true that
1:16:14the contract
1:16:16the Walgreens contract didn't doesn't
1:16:19restrict fairness from opening
1:16:21additional locations of fairness shows
1:16:24to do so
1:16:27I don't know
1:16:29doesn't it true that Walgreens and
1:16:30fairness had to work together to plan
1:16:32out additional locations taken it
1:16:36I yes I remember that in certain
1:16:39versions of the contract I'm not
1:16:41sure what this is referring to
1:16:45so if you look down another
1:16:49two paragraphs from there
1:16:51the memorandum States as part of the
1:16:53agreement and this is talking about the
1:16:55Walgreens agreement again the two
1:16:57companies will partner together to make
1:16:59tests the largest Clinical Laboratory in
1:17:02the U.S this development is On Target
1:17:04and the two companies anticipate
1:17:06achieving this Milestone by the end of
1:17:082016.
1:17:09did you tell Apple that in late 2014
1:17:15um I don't think so
1:17:17did you hear Mr balwani make the
1:17:18statement capital I I can't remember the
1:17:21specifics of conversations
1:17:23was the statement true as of December
1:17:252014. I don't know
1:17:30do you ever recall time in which uh
1:17:31Walgreens
1:17:33stated it was going to make theranos the
1:17:35largest Clinical Laboratory in the U.S
1:17:40um certainly
1:17:43the the prior
1:17:47um
1:17:48Walgreens management team had that
1:17:50Vision I don't remember specific
1:17:51conversations to that effect
1:17:56the vision would be the sort of the
1:17:57pre-boost leadership yeah
1:18:01yes if you look down another paragraph
1:18:04under that in the middle of the next
1:18:06paragraph that says in 2015 the company
1:18:10plans to dramatically expand its
1:18:12Wellness Center penetration to several
1:18:14hundred stores across multiple States
1:18:18did you get the capital
1:18:19that's
1:18:23no I don't think so did you hear Mr
1:18:25balwani make that statement to Capital
1:18:28I I can't remember any of the specifics
1:18:30of the conversations
1:18:31with that statement tree as of December
1:18:332014
1:18:37again my read on this sitting here now
1:18:39is that this was the conclusions they
1:18:41drew from reading the contract
1:18:43themselves
1:18:45but you don't have any recollection and
1:18:47that's the basis for the statement here
1:18:49I I don't I just remember giving them
1:18:51access to the agreement okay so we now
1:18:54talked about the the agreement and then
1:18:55the Johns Hopkins report do you remember
1:18:57giving them access to any other
1:18:58information
1:19:01um
1:19:03I'm just thinking
1:19:05um
1:19:11I don't know specifically I I generally
1:19:13remember that because we had met them in
1:19:16the context of wanting them to advise us
1:19:18that we gave them broad access to a lot
1:19:21of content internally I don't I can't
1:19:23sit here and remember another specific
1:19:24document
1:19:27so if you turn the page to 1180
1:19:32a third down the page there's a section
1:19:34on Safeway do you see that
1:19:36the second paragraph starts the company
1:19:38projects to launch wellness centers
1:19:40within Safeway stores in 2015 to getting
1:19:42in California did you tell the capital
1:19:45that
1:19:48I don't think so
1:19:50did Mr balani
1:19:51told keppel that I don't know
1:19:54was that statement true as of December
1:19:572014
1:19:58I don't know
1:20:01[Applause]
1:20:02going on to page with babe sending one
1:20:06one eight three
1:20:10see there is a table here in the middle
1:20:12of the page that's titled company
1:20:14projections do you see that yes
1:20:19and this shows that fairness is earning
1:20:25eight million dollars from Physicians
1:20:28offices and 43 million dollars from
1:20:32hospital Courier Services and
1:20:35fourth quarter of 2014. do you see that
1:20:39I do did you provide these projections
1:20:42to be no
1:20:44did Mr balwani provide these projections
1:20:46I don't know
1:20:48were these projections reasonable in
1:20:50December 2014 that fairness was set to
1:20:53make eight million dollars in revenue
1:20:55from Physicians offices and 43 million
1:20:58dollars from hot hospitals through
1:21:01careering samples I don't think so
1:21:05why not
1:21:06I I don't think we
1:21:09um deployed the retail locations to do
1:21:11this in uh 2014.
1:21:16did theranis end up earning any revenues
1:21:19from these two sectors in fourth quarter
1:21:222014. I don't know
1:21:27you'll also see that
1:21:31on the same page on the company
1:21:33projections
1:21:35page
1:21:37and that same table we were looking at
1:21:38under pharmaceutical services
1:21:41there's a projection of eight million
1:21:43dollars for pharmaceutical services and
1:21:45a fourth quarter of 2014 for a total of
1:21:4940 million projected revenues and in uh
1:21:532014 for the year see that
1:21:56did you tell Capital that fairness was
1:21:58on the road to achieving 40 million
1:22:01dollars in revenues from the
1:22:03pharmaceutical services I don't think so
1:22:06did you hear Mr balwani made that
1:22:09statement to again I can't remember any
1:22:12of the specifics of the conversations
1:22:13with you
1:22:15so if you look at those two numbers it
1:22:18would appear that theranos would have
1:22:20generate about 32 million dollars in
1:22:23revenues from pharmaceutical services
1:22:25for the rest of the year first quarter
1:22:27to third quarter of 2014. do you see
1:22:30that
1:22:31I do
1:22:33had fairness
1:22:36um generated 32 million dollars from
1:22:38pharmaceutical services
1:22:40in first quarter to third quarter 2014.
1:22:44I don't think so
1:22:48if you look on the bottom of the page
1:22:51under retail pharmacies
1:22:53for memorandum States Walgreens
1:22:55locations
1:22:57Tess currently has 41 wellness centers
1:22:59and Walgreens stores 40 in Arizona one
1:23:02in Palo Alto California and plans to
1:23:05open wellness centers in 900 total
1:23:07Walgreens pharmacies by year and 2015
1:23:10did you tell capital of this
1:23:13I don't think so did you hear Mr balwani
1:23:16make this statement to Capital
1:23:18again I can't remember any of the
1:23:20specifics of the conversations with
1:23:22was this a true statement that theranos
1:23:24was planning to open Wellness Center's
1:23:25900 total Walgreens pharmacies by year
1:23:28end 2015.
1:23:32I don't know
1:23:38you turn the page to 1184
1:23:41under Physicians offices
1:23:46second bullet point down it says
1:23:48locations the company is currently in
1:23:50101 physician offices and plans to be in
1:23:53approximately 700 offices by year and
1:23:562015. did you tell Capital this no did
1:24:00you hear Mr ball want to make this
1:24:01statement to Bethel I don't think so was
1:24:04the statement true as of December 2014
1:24:10I don't know I think if if we were doing
1:24:13physician pickup it may have been
1:24:15reflective of that I don't know when we
1:24:16were doing that
1:24:17was there and is currently at that time
1:24:20in December 2014 in 101 Physicians
1:24:23offices I don't know
1:24:27was it ever
1:24:29we were picking up samples from
1:24:31Physician Offices I don't know how many
1:24:33Physician Offices we were picking up
1:24:34from
1:24:37if you turn to the next page 1185
1:24:41under pharmaceutical Services the first
1:24:43bullet point says cartridges
1:24:45Tess currently runs 3 000 samples per
1:24:48month 100 per day given current
1:24:51contracts that it's that's this number
1:24:53to increase to 5 000 in the second half
1:24:55of 2015.
1:24:57as you tell Capital that theranos is
1:25:01currently running 3 000 samples from per
1:25:04month under pharmaceutical Services
1:25:07contracts no
1:25:09did you hear Mr balwani made this
1:25:11statement to Capital not that I can
1:25:13remember was the statement true as of
1:25:15December 2015. I'm sorry it was this was
1:25:18this accurate in December 2014
1:25:23um
1:25:25no I don't think so
1:25:37did you ever tell the capital that given
1:25:40current contracts and pharmaceutical
1:25:41services that theranos expected the
1:25:44number of samples run each month to
1:25:46increase to 5000 in the second half of
1:25:492015.
1:25:50I don't think so
1:25:52did you ever hear Mr balani make that
1:25:55statement to the capital
1:25:56not that I can remember was the
1:25:58statement true as of December 2014. I
1:26:02don't know
1:26:09you mentioned earlier that there were
1:26:12others on your team who might have
1:26:13reviewed the memorandum and told you
1:26:16that it included complete notes about
1:26:19Uranus's complete strategy future plans
1:26:21had announced deals and profit margins
1:26:23do you remember that testimony
1:26:26just that I was inferring that from the
1:26:28email you showed me
1:26:30so you don't know whether somebody might
1:26:31have told you that
1:26:33again I don't remember sending this
1:26:35email and just looking at the language
1:26:37in it now and the fact that I said our
1:26:40team as opposed to I
1:26:43likely means that did anyone raise any
1:26:46issues with respect to the accuracy of
1:26:48the statements made in this memorandum
1:26:50to you from your team
1:26:53I honestly don't know that we've read
1:26:55the memoranda
1:26:57in detail and it looks like some people
1:26:59looked at it but I don't remember ever
1:27:01reading it
1:27:04it was about before about having a lot
1:27:06of access to information up there on us
1:27:08right and uh at this time they were
1:27:11they've been working with the company
1:27:12for some time was that fair yes uh in a
1:27:15few months in that in those few months
1:27:18you met with a couple times is that fair
1:27:20yes and with his associates several
1:27:22times
1:27:23I think so yes and it was your
1:27:25understanding Mr bomb wanted to do the
1:27:26same yes uh is does it concern you at
1:27:30all that this is the impression they've
1:27:31formed on the company
1:27:33given the level of interaction they had
1:27:36by December 2014.
1:27:38I I'm a little bit confused by it I'm
1:27:41not quite sure
1:27:44where it's coming from or if it was just
1:27:47intended to be a sales piece that we
1:27:49were to edit I'm I'm not I'm not sure
1:27:54certainly I I
1:27:56don't think we conveyed some of the
1:27:58things that were in it
1:28:01did it concern you that they were
1:28:03intending to send that memorandum to
1:28:05co-investors even though it included
1:28:07some inaccurate statements
1:28:10again I don't know that I read it at the
1:28:12time and we certainly would have wanted
1:28:14to make sure it was accurate if it were
1:28:16going to have gone out
1:28:18why didn't you review it and make
1:28:20changes and edits to it considering that
1:28:22they asked you to do that
1:28:24I think at this time we were
1:28:26um
1:28:28beginning to think that we were not
1:28:29going to be doing a deal with so we
1:28:30weren't paying a lot of attention to it
1:28:32did you tell us at that time that you
1:28:34weren't going to be doing a deal with
1:28:35them I think a couple weeks later or a
1:28:38week or so later you continue to meet
1:28:40with you know late December 2014 time
1:28:42period right I think so yes did I ask
1:28:44you again for your feedback on this
1:28:46document I don't know
1:28:48did anyone who I don't know
1:28:54did you ever tell pfm in early 2014 that
1:28:58theranos had 300 machines that were
1:29:00running in theranis's labs
1:29:04not that I can remember did you hear
1:29:07sunnyvalewani make the statement to pfn
1:29:09not that I can remember
1:29:15did you ever tell pfm in early 2014 that
1:29:18theranos had the capability to
1:29:19manufacture 280 labs not that I can
1:29:23remember did you hear Sonny balwani make
1:29:25this statement to pfm
1:29:28again I can't remember specifics of the
1:29:30conversation was that statement true as
1:29:32of January 2014.
1:29:35I don't know
1:29:41did she ever tell pfm that theranos had
1:29:45a road map to 1 300 assays
1:29:49I don't know did you hear Sunny ball
1:29:51wanted me that statement to pfn
1:29:54not that I can remember
1:29:55with the statement have been true as of
1:29:58January 2014.
1:30:01in a product development sense yes
1:30:06did you ever tell pfm in January 2014
1:30:10that theranos had developed almost all
1:30:12of the 1 300 assays and have launched
1:30:15some of the 1 300 assays
1:30:19yeah I don't remember specific
1:30:21discussions to that effect did you hear
1:30:23Mr balwani ever make that statement to
1:30:25pfm not that I can remember was that
1:30:27statement true as of January 2014. it's
1:30:30actually compound sector there's
1:30:32multiple multiple students sure we can
1:30:35go through them one by one so did you
1:30:37ever tell pfm that there has developed a
1:30:40thousand three hundred assays no did you
1:30:43ever hear Mr palawani made that
1:30:45statement to pfl not that I can remember
1:30:46was that statement true as of January
1:30:482014. no
1:30:54did you ever tell pfm that
1:30:59theranos can put uh
1:31:04let's write that
1:31:10the Drone Partners was a C2 investor
1:31:12correct yes
1:31:13and uh Greg Penner was the member of the
1:31:17Walton family that was considering an
1:31:18investment In fairness on behalf of the
1:31:20Nigerian partners
1:31:22I think Greg and Rob both yes ragged
1:31:24Robin yeah you were in discussions with
1:31:27both Mr Penner and Mr Walton uh in the
1:31:30fall of 2014 to invest in therapists
1:31:35tell Mr Penner that theranos could
1:31:39execute just with the cash that it had
1:31:40at the time and the cash flow that it
1:31:43had achieved through its contracts
1:31:46in the fall of 2014 yes
1:31:50um I don't know
1:31:51did you ever hear Mr balwani make that
1:31:53statement
1:31:54I don't know
1:31:56would that have been true in uh late
1:31:592014.
1:32:03I don't know
1:32:28did you ever tell capital in September
1:32:31of 2014 that fairness's goal was to be
1:32:35in 800 stores by the end of 2015.
1:32:38I don't know did you ever hear Mr wallan
1:32:41you make that statement
1:32:43not that I can remember
1:32:45did you ever tell Capital that
1:32:48theranos's machines cost 35 to 40 000
1:32:52versus a million dollars for fairness's
1:32:56competitors
1:32:58not that I can remember did you ever
1:33:00hear Mr baloney make that statement to
1:33:01the capital I don't know
1:33:03was that statement true that fairness's
1:33:06machines cost thirty five to forty
1:33:07thousand dollars
1:33:09and that's that's in the range of the
1:33:12what the cost of goods of the mini lab
1:33:13likely was at that time
1:33:16so that
1:33:17what do you mean by cost of goods
1:33:20um the the cost to make a mini lab
1:33:25just the components for the labor and I
1:33:28believe all of the above that fully
1:33:30loaded cost because
1:33:33did you ever tell Capital that all of
1:33:38theranos's devices work on one box
1:33:41which is a significant Advantage versus
1:33:43their nurses competitors
1:33:46I'm not sure I understand the question
1:33:48all of the devices maybe it's all of
1:33:50their tests did you ever tell Capital
1:33:52that all of your tests work on one box
1:33:55which is different from your competitors
1:33:56I don't remember saying that but that's
1:33:59what the mini lab is designed to do
1:34:03did you ever hear Mr balwani make that
1:34:05statement together
1:34:12you ever tell the capital that there are
1:34:15no solves a fundamental problem for the
1:34:17military
1:34:18because their nose can run tests quickly
1:34:20on one portable machine where no one
1:34:22else can
1:34:24I don't know if we said that
1:34:26did you ever hear Mr valwani make that
1:34:28statement I don't know
1:34:31did you ever tell Capital that all of
1:34:34dearness's tests can be run on one
1:34:36machine with one disposable cartridge
1:34:39again I I don't remember the specifics
1:34:42of conversations but that's what mini
1:34:43lab is designed to do did you ever hear
1:34:46Mr balwani make that statement I don't
1:34:48know
1:34:50so of course that wouldn't have applied
1:34:52to the test that theranos was conducting
1:34:54in patient testing correct
1:34:57okay I'm sorry
1:34:59what do you mean so it's not true that
1:35:02all of all of fairness's tests were
1:35:04being performed on the mini lab correct
1:35:06correct that a majority of the tests
1:35:08were actually performed on commercially
1:35:09available machines correct absolutely
1:35:20foreign
1:35:26group
1:35:29it's a fund that marriage is mostly the
1:35:32Bechtel family money
1:35:34were you in discussions in late 2014
1:35:37about a possible investment In fairness
1:35:39from Fremont Bridge
1:35:42who were your discussions with
1:35:44I'm primarily was there anyone else who
1:35:47was involved in those discussions
1:35:49um there was
1:35:51um and I I don't remember the names of
1:35:52the principals it was one of them I
1:35:54think so
1:35:58give me another I don't know
1:36:02did you give Fremont group a copy of
1:36:04theranos's financial model which showed
1:36:06projections
1:36:08I did not I don't know
1:36:12I did not I don't know if anyone else at
1:36:14theranos did
1:36:16Sunny balwani provide Financial
1:36:18projections to Fremont group I don't
1:36:20know
1:36:23did you tell Fremont group in late 2014
1:36:26that the financial numbers
1:36:29the fairness is financial numbers were
1:36:31based on no new contracts
1:36:34I don't think no
1:36:37did you hear Mr balwani make the
1:36:38statement to Fremont grief in late 2014.
1:36:41not that I can remember was this
1:36:43statement true as of late 2014
1:36:47I don't know
1:36:49decently one from the Fremont group that
1:36:51darrenos is assay run test time was
1:36:53always less than one hour
1:36:56I don't know
1:36:57would that you were call Mr ball wine
1:36:59saying that anyone from the freed my
1:37:00group not that I can recall would that
1:37:03have been a true statement in uh October
1:37:05of 2014.
1:37:09we were talking about the design of the
1:37:10mini lab
1:37:11but not test in our clinical lab
1:37:16did you tell Fremont Creed thank you
1:37:20did you tell Fremont food in late 2014
1:37:22that devices now cost forty thousand
1:37:26dollars fully loaded
1:37:29not that I can remember did you hear Mr
1:37:32ball want to make that statement Fremont
1:37:33proof I don't know
1:37:35was that statement true in late 2014
1:37:39I don't know
1:37:45did you tell we not grieved in late 2014
1:37:48that theranos had put its tspu on a
1:37:50Medevac helicopter
1:37:54somebody's saying no
1:37:57because I know I've never said that
1:37:59you've never said that okay
1:38:01um did you hear Sunny balwani make this
1:38:03statement to Fremont group
1:38:07would this statement have been true in
1:38:08late 2014 no
1:38:21did you tell capital in October 2014
1:38:24that theranos had an auditor and that
1:38:29its financial statements were audited as
1:38:31well
1:38:35um I I don't know I know we were
1:38:37discussing a new audit
1:38:39what do you recall about your
1:38:41conversations regarding the new audit
1:38:44um that we were discussing with them
1:38:46engaging with KPMG to get an audit done
1:38:52oh in what context were they surprised
1:38:54they dearness wasn't getting an audits
1:38:57done
1:38:58and no I believe we were talking about
1:39:00getting audits done on a go forward
1:39:02basis
1:39:05do they request to see audited
1:39:07financials the historical financials
1:39:10I don't know
1:39:12they might have I can't remember
1:39:20did you ever tell Capital that KPMG was
1:39:23theranos's current auditor in late 2014.
1:39:27I don't know
1:39:28could you hear Mr balwani make that
1:39:30statement yeah
1:39:32what do you mean like current auditor
1:39:34that KPMG had been hired by theranos to
1:39:37act as his auditor
1:39:39as of late 2014.
1:39:43um we may have discussed it in terms of
1:39:45past years but I know we discussed with
1:39:48that we didn't have in certain years
1:39:50audited
1:39:51did you hear Mr balwani made that
1:39:53statement to Capital that KPMG was there
1:39:56in its current auditor as of late 2014.
1:39:59I'm not quite sure what current auditor
1:40:01means but no I don't remember the
1:40:03specifics of conversations did fairness
1:40:05have an auditor as of late 2014.
1:40:09not for calendar year 2014 no
1:40:13we were engaged with KPMG at that time
1:40:16about auditing uh recent years
1:40:21did you ever tell engaging with them I'm
1:40:23sorry no I apologize
1:40:24dad does that cover it yes
1:40:28I was trying to be complete no I
1:40:30appreciate it the uh did you ever tell
1:40:31any prospective investors that they
1:40:34couldn't see theranos's audited
1:40:36financials because they revealed
1:40:38commercially sensitive information about
1:40:39the company
1:40:41not that I can remember I I believe that
1:40:44was a discussion about how we would
1:40:46share go forward financials but not
1:40:49historical ones
1:40:51uh what do you mean by that
1:40:54um we were very focused in getting
1:40:56audits had we proceeded with getting
1:40:59audits done at that time uh about the
1:41:02disclosure of those materials once they
1:41:04were complete uh with respect to how
1:41:07they handled footnotes on the Walgreens
1:41:08and Safeway contracts specifically
1:41:11so you were anticipating sharing audited
1:41:13financials with the shareholders on a go
1:41:16forward basis
1:41:18I I'm not sure exactly I don't remember
1:41:20the discussions very specifically but I
1:41:22know that was an area of focus when we
1:41:25were talking about starting to get
1:41:27audited financials done at that time
1:41:30did the board ever encourage you to get
1:41:32completed audited financials
1:41:34not that I can remember
1:41:36did you tell the board that their owners
1:41:38had not completed a annual audits in
1:41:40some time yes
1:41:44did she have to tell potential investors
1:41:46That theranos Couldn't share audited
1:41:48financials with them because it wasn't
1:41:50sharing audited financials with other
1:41:52investors
1:41:55and we generally disclosed that we
1:41:57didn't have audited financials as my
1:41:58memory
1:42:00again there's a specific conversation I
1:42:03could try to speak to it more
1:42:04specifically who do you recall having a
1:42:06conversation with about the fact that
1:42:08theranos had no audited Financial
1:42:11I I don't recall a specific conversation
1:42:13I just know we were very open about it
1:42:19in 2014 that there were no proximity
1:42:22let's start over again did you ever tell
1:42:24capital in late 2014 that there were no
1:42:27proximity limitations in the Walgreens
1:42:29contract just time exclusivity
1:42:33I don't know what that means
1:42:35did you ever tell Capital that
1:42:38um
1:42:41that uh there were no Geographic
1:42:46limitations to the rollout of fairness
1:42:48services at Walgreens locations in late
1:42:502014.
1:42:52I'm sorry just so I can answer the
1:42:54question what is a geographic limitation
1:42:56that there was no that the company that
1:42:58the two companies had not discussed any
1:43:00limitations as to the rollout of their
1:43:03own services in the Walgreens stores in
1:43:072015.
1:43:08sorry uh Jessica so I don't understand
1:43:10what you're asking
1:43:12I didn't want to start over again yeah
1:43:14did you ever tell Capital that there
1:43:17were no geographical limitations to
1:43:19where theranos could roll out its
1:43:20services and Walgreens stores
1:43:24so just making sure I'm answering the
1:43:27question you're asking the question is
1:43:28that we could roll out anywhere in the
1:43:31country yes
1:43:33um I don't remember specifically saying
1:43:35that did you ever hear Mr balwani making
1:43:37that statement capital
1:43:40not that I can remember
1:43:42was that true as of late 2014 what was
1:43:46lecture that statement
1:43:48can you say one more time because none
1:43:50of us we were all having a hard time so
1:43:51I want to make sure she knows
1:43:54what you're asking what state that there
1:43:56were no Geographic limitations to the
1:43:58rollout of theranos services in
1:44:00Walgreens stores
1:44:01did you ever hear Mr valwani make that
1:44:03statement
1:44:04it's a capital note that I can recall
1:44:06was that a true statement as of 2014
1:44:10I I don't really understand it
1:44:12um but I mean again I know I'm at access
1:44:16to the Walgreens agreement
1:44:18and it was true that theranos had to
1:44:20work with Walgreens in order to decide
1:44:21which additional stores to rule out
1:44:23there are no Services incorrect
1:44:26I mean as we've discussed today that
1:44:29relationship evolved so much that I
1:44:31don't know what the state of it was in
1:44:33December 14 from memory
1:44:39it's true that theranos couldn't
1:44:40unilaterally decide to roll out in any
1:44:43number of Wall Street stores without
1:44:45Walgreens
1:44:46consent correct of course they had to
1:44:49work with us on it okay
1:44:53okay and you guys you understood that in
1:44:54December 2014 is that correct
1:44:57yes there are stores they would have to
1:44:59be compliant with us showing up in them
1:45:04did you ever tell capital in late 2014
1:45:08that you were fairly confident on
1:45:11hitting the 2014 Financial projections
1:45:15I don't think so
1:45:17did you ever hear Mr balwani made that
1:45:19statement
1:45:20not that I can remember
1:45:30did you ever tell capital in late 2014
1:45:32that with respect to 2015 projections
1:45:35you believe that there could be a plus
1:45:37or minus 30 variance due largely to risk
1:45:40of execution I don't think so did you
1:45:43ever hear Mr balwani make that statement
1:45:44I'm not that I can remember
1:45:54foreign
1:46:06you testified earlier that rdb
1:46:08Corporation is the DeVos family correct
1:46:10yes
1:46:12who are your contacts at rdb
1:46:14appropriation
1:46:16at what time
1:46:18around the time that they were
1:46:20considering to invest in fairness
1:46:22um I believe
1:46:24did you understand that I'm a part of
1:46:27this team
1:46:28I don't know if I knew that at that time
1:46:30I met I think later
1:46:33and fairness was having discussions with
1:46:35rdd Corporation in late 2014 about
1:46:38possibly investing in there and as
1:46:39correct
1:46:41yes
1:46:43tell RDV Corporation in late 2014 that
1:46:47instead of vials of blood one for every
1:46:51test needed that theranos required
1:46:53requires only a pinprick and a drop of
1:46:55blood to perform hundreds of tests
1:46:58I don't know was that statement true as
1:47:01of late 2014 could you perform hundreds
1:47:04of tests on one pin pin prick of blood
1:47:07we had developed hundreds of tests to
1:47:10run on a brick of blood at that time
1:47:12from a product development standpoint so
1:47:15earlier we had talked about how it was
1:47:1770 tests on one pinprint of blood so now
1:47:20you're saying that hundreds of tests
1:47:22could be performed on one finger prick
1:47:25sample of blood Jesse you just
1:47:27mischaracterized them one you
1:47:30mischaracterized the earlier testimony
1:47:32right now and what she just said in
1:47:33response to your question there are two
1:47:34different questions I mean that
1:47:36Elizabeth can answer but I think you
1:47:39should ask the question rather than
1:47:40suggest that she's saying one thing now
1:47:42versus one thing earlier well can you
1:47:44square those two that was what I
1:47:45understood that you said so can you
1:47:47square those two
1:47:48which one is accurate
1:47:51so you're assuming that only one can be
1:47:52that's not okay so if both of them are
1:47:55accurate how are they both accurate yeah
1:47:56I believe earlier today we were talking
1:47:58about how from a product development
1:48:01standpoint the
1:48:03the novel chemistries that we developed
1:48:05could work with a as low as a microliter
1:48:08or less of blood and and therefore if
1:48:11you you could run 70 of them for example
1:48:13from a single sample
1:48:16additionally by this time fall of 14
1:48:20theranos had created developed and had
1:48:23development in what we thought were
1:48:24validation reports for hundreds
1:48:28of chemistries that we had actually made
1:48:30the reagents for made the chemistry for
1:48:32shown that the chemistry worked on small
1:48:34sample volumes from a product
1:48:37development standpoint so so your
1:48:40testimonies is that the uh if there's a
1:48:43reference to hundreds off of a off of a
1:48:46drop of blood it's
1:48:49not hundreds of tests with the same drop
1:48:51of blood but one drop
1:48:53for each of those hundred tests
1:48:55or something that was my understanding
1:48:57of the statement that you just
1:48:59um made
1:49:04did you ever hear Mr balwani made the
1:49:06statement that Theron is required is
1:49:08only a pinprick and a drop of blood to
1:49:10perform hundreds of tests
1:49:13I don't know
1:49:21did you tell RDV Corporation in late
1:49:252014 that fairness is revenue for 2015
1:49:28is projected to be 990 million dollars I
1:49:32don't think so did you ever hear Mr
1:49:34balwani make that statement not that I
1:49:37can remember
1:49:39did you ever tell RDV corporation that
1:49:43theranos would open
1:49:45or was on the path to opening 900
1:49:48Walgreens fairness centers by 2015. I
1:49:52don't think so did you ever hear Mr
1:49:54balwani make that statement
1:49:56not that I can remember
1:49:58did she ever tell RDV corporation that
1:50:00fairness has no debt
1:50:02and has no plans to take on any debt
1:50:04financing I don't think so did she ever
1:50:07hear Mr valwani make that statement not
1:50:09that I can remember is that statement
1:50:10true as of late 2014.
1:50:13I think
1:50:15the sitter uh the Walgreens convertible
1:50:18note and the Safeway convertible node is
1:50:20debt
1:50:22I I don't know
1:50:24what did you consider that as
1:50:28I'm not sure I don't know was there
1:50:31interest that fairness was paying on
1:50:33that loan those two loans
1:50:36at that time I I don't know if we were
1:50:39thinking that that loan was going to
1:50:40convert into Equity I'm not sure how we
1:50:42were thinking about it
1:50:46so it's been a little over an hour if we
1:50:47take a break
1:50:49you know I'm still in the middle of this
1:50:51document so I only have a few more
1:50:53questions and then we can take a break
1:50:55sorry for being totally area I have
1:50:57three more questions not from totally
1:50:59families for the day why don't we talk
1:51:02about that at the break and I think
1:51:03there's just a couple more questions on
1:51:04this kind of theme and then
1:51:07did you ever tell RDV Corporation in
1:51:09late 2014 that cash you would raise from
1:51:12them would be used to redeem earlier
1:51:14investors with shorter term investment
1:51:16in Horizons can you read that again
1:51:19did you ever tell Capital that
1:51:22sorry rdb I'm sorry did you ever tell
1:51:24RDV Corporation in late 2014 that cash
1:51:28you were going to raise from them and
1:51:31other investors would be used to redeem
1:51:33earlier investors with shorter term
1:51:35investment Horizons
1:51:37I don't know if I said that but that was
1:51:39definitely one of the strategies for
1:51:41raising money from long-term family sort
1:51:44of controlled companies but investment
1:51:46entities did you ever hear Mr baloney
1:51:48make that statement I don't know
1:51:53did theranos have a redeem earlier
1:51:55investors with the C2 proceeds
1:51:59the way we had wanted which was
1:52:02assertive to buy out
1:52:06certain entities that we had learned did
1:52:09not have sort of a long-term interest in
1:52:11holding the shares and we did a little
1:52:13bit of exercising the writer first
1:52:16refusal to make sure that shares didn't
1:52:19end up in secondary markets I guess why
1:52:21didn't thereinos sort of pursue that
1:52:25shareholder consolidation strategy more
1:52:27aggressively
1:52:29yeah shortly after we closed this round
1:52:31we started dealing with the Wall Street
1:52:33Journal and then very shortly after that
1:52:35we're in
1:52:38a crisis mode trying to deal with the
1:52:40issues with the journal and then
1:52:42Regulators there's just general timing
1:52:45yes we didn't get a chance to execute on
1:52:47the plan we had
1:52:50did you tell RDV Corporation in late
1:52:522014 that theranos uses its own analyzer
1:52:55equipment
1:52:57I I don't know if I did I'm I'm not sure
1:53:01did you ever hear Mr balwani made that
1:53:03statement again I can't remember the
1:53:05specifics of these conversations I don't
1:53:07I don't know
1:53:09did you ever tell RDV Corporation in
1:53:12late 2014 that the fairness analyzer is
1:53:16a small fraction of the size of the
1:53:17current lab
1:53:20I can't remember the specifics of the
1:53:22conversation
1:53:24that's reflective of many love
1:53:27did you ever hear Mr balwani make that
1:53:29statement I'm sorry to rdb corporations
1:53:31I don't know
1:53:34foreign

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