The Elizabeth Holmes Trial: Defense Shows Safeway Vetted Theranos Partnership

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Email in court reveals former CEO said grocery chain spent hundreds of hours of due diligence before signing Theranos deal

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Kevin Downey, one of Ms. Holmes’ attorneys for Williams & Connolly LLP, argued that Mr. Bird had at his disposal experienced lawyers, experienced board members, health experts on staff, and connections in the medical field, which led to Safeway’s partnership with Theranos. helped inform. In 2010, which eventually collapsed. Despite Mr. Bird’s close relationship and regular communication with Ms. Holmes, the CEO admitted during questioning of Mr. Downey that he would never rely solely on him to make a decision to partner and invest with Theranos. fell.

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Ms. Holmes faces a dozen counts of wire fraud and conspiracy to commit wire fraud. Prosecutors allege that she knew her startup’s technology was unreliable and yet told patients, business partners and investors that Theranos’ finger-prick blood test could accurately test for more than 200 conditions.

Ms. Holmes’s lawyers have tried to put the blame on her top deputy and ex-boyfriend, Ramesh “Sunny” Balwani, for any misrepresentation, saying that running a failed company is not a crime.

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Mr Balwani has a dozen similar cases facing him and a separate trial is planned early next year. He has pleaded not guilty.

Mr Downey submitted an email to the court on Mr Bird’s behalf in which the CEO said that Safeway spent hundreds of hours doing due diligence on Theranos and communicated almost daily with Holmes for more than a year.

“You were the person at Safeway who actually supported the Theranos project, right?” asked Mr Downey.

“I hold myself responsible for completing and executing this deal,” said Mr. Bird.

Defense lawyers argued that Mr. Bird received encouragement from a number of eminent voices before striking a deal with Theranos. Mr Bird said he consulted with laboratory directors at Johns Hopkins University and the University of California, San Francisco about Theranos’ claims. A doctor, who dined with Ms. Holmes and Mr. Bird, determined that if his company could do what they claimed, it would be “a game changer”, Mr. Bird testified. Internally, executives leading Safeway’s health and pharmacy businesses studied Theranos, Mr. Bird said.

When asked by prosecutors, Bird described his efforts to make the partnership a success, offering Theranos all the resources at his disposal. But Theranos delayed the partnership launch without offering a real explanation, he said, and testing the startup’s pilot project was sloppy testing the blood of Safeway employees. Mr. Bird’s frustration grew as his testimony increased.

Safeway had the option to terminate its relationship with Theranos with 30 days’ notice, including whether it was dissatisfied with the pilot blood test project or in the event that the Food and Drug Administration threatened regulatory action. was granted, according to a document displayed in the court. Ms. Holmes’ lawyer. Mr. Bird also acknowledged that the lawyers who helped draft the agreement for Safeway included clauses that financially protected Safeway.

Mr Bird confirmed in testimony that the legal agreement with Theranos did not have a specific time frame, and he understood that it was difficult to set a time frame for developing the new technology. But there were expectations: A presentation to the Safeway board in 2010 showed a general timeline that the companies agreed upon, including a pilot program in the first quarter of 2011 and an official launch in Safeway stores in the second and third quarters of 2011.

“I was never told there was a technical problem with the box itself,” said Mr. Bird.

Safeway and Theranos each had plans for a public relations blitz around their partnership. According to a document shown in court, Ms. Holmes’ meeting with the editorial boards of all local newspapers was involved. Safeway planned a “shock and awe” strategy to launch Theranos testing service in 22 states or more than 900 stores. This never happened.

By the time Safeway’s partnership with Theranos ended in 2015, Mr. Bird was retired and the grocery store worked to bring the Theranos-owned finger-prick blood test to newly built clinics in more than 900 grocery stores. Spent five years. Theranos.

Mr. Downey asked Mr. Bird if he knew what was in these clinics today. Mr. Bird replied that he knew of at least one Safeway pharmacy that has a laboratory for Quest Diagnostics. Inc.,

A one-time rival of Theranos.

Heather Somerville at [email protected]

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